MMHA 6540 Week 7 PMPM Staffing Budget Example

What the Falls Program Costs per Participant and per Member per Month: A Staffing and PMPM Budget for Prairie Gate

Student Name

Walden University

MMHA 6540: Population Health Management Applications

Instructor Name

Month Day, Year

What the Falls Program Costs per Participant and per Member per Month: A Staffing and PMPM Budget for Prairie Gate

Approach

This budget prices Prairie Gate Health Plan's falls prevention program for one year at full operation. It builds the cost from one participant upward, then adds staff and evaluation, and finally converts the total into a per member per month figure, the unit in which a Medicare Advantage plan receives its revenue and judges its spending. Every figure is illustrative and would be replaced with contract rates and salary scales before the budget is approved, and the finance office will review the final version. Building from the participant makes each assumption visible: if the cost of a home visit or the average modification changes, the effect on the total can be traced directly (Reiter & Song, 2021).

Cost of One Participant

Table 1 prices the services one participant receives.

Table 1

Cost per Participant (Illustrative)

Annual Program Cost

Table 2 builds the annual cost for 600 participants, the number the blueprint expects to enroll.

Table 2

Annual Program Cost (Illustrative)

Per Member per Month

Table 3 converts the total into the units Prairie Gate's leaders use.

Table 3

Program Cost in Plan Units (Illustrative)

Reading the Figures

At $2.75 per member per month, the program is a small share of what the plan spends on its older members' care, and it is easy to compare with other supplemental programs. Per participant, the cost is about $1,100, which leaders should compare with the cost of a fall-related admission, the outcome the program aims to prevent. National estimates show that the medical costs of falls among older adults are large and fall mainly on Medicare (Florence et al., 2018), and a single admission for a hip fracture can cost many times the per-participant figure. Whether the program pays for itself depends on how many admissions it prevents, which the payer brief examines next.

Staffing

Two care coordinators are budgeted because the program's steps are mostly delivered by partners, and the coordinators' job is outreach, enrollment, scheduling and follow-through. At about 300 participants each per year, or 75 active at a time, two coordinators can manage 600 participants. If enrollment rises above the expected level, or if rural members need extensive help with transportation, a third coordinator would add about $70,000, raising the per member per month cost to about $3.04. The budget does not include the second repair crew discussed in the readiness map, which would be funded through a higher per-home rate to the nonprofit for the first year; that cost is included in the $400 average only if the nonprofit's rate stays unchanged, an assumption to confirm.

Sensitivity

Three assumptions move the total most. If enrollment reaches only 400 participants, service costs fall to $320,000 and the total to $500,000, about $2.08 per member per month, but staff costs per participant rise. If average modifications cost $600 instead of $400, service costs rise by $120,000 and the total to $780,000, about $3.25 per member per month. If class participation is lower than expected, costs fall slightly, but so may effectiveness, since exercise is one of the components with the strongest evidence (Sherrington et al., 2019). The modification average is the riskiest figure, because older rural homes may need more work than metro homes, and it should be tracked monthly against the nonprofit's completion reports.

What the Budget Excludes

The budget excludes the plan's existing costs that the program will use without adding to them, such as the care management software and supervisor time. It also excludes any change in other medical spending, whether savings from avoided falls or added costs from medication changes and follow-up visits. Those belong in the return on investment analysis rather than the program budget. Finally, it excludes start-up costs such as coordinator recruitment and partner contract negotiation, which are modest and would be absorbed in the plan's administrative budget.

How the Budget Will Be Managed

Spending will be tracked monthly against the budget by service line. Each partner invoices the plan for completed services, and the program manager reconciles invoices against the coordinators' records, so that the plan pays only for visits, modifications, class seats and reviews that members actually received. The average modification cost will be watched most closely, because it is the most uncertain figure and the one most likely to rise in older rural homes. If the monthly average exceeds $500 for two consecutive months, the program manager will review a sample of completed homes with the nonprofit to see whether the work exceeded what the therapists recommended or whether the homes simply needed more.

The budget also sets a simple rule for the cost cap. Modifications above $1,000 per home require the program manager's approval and are paid only when the therapist documents that the additional work addresses a specific fall hazard. This keeps the program focused on falls rather than general home repair, which other community programs already fund for eligible homeowners. At year end, the program manager will report actual cost per participant, actual per member per month cost and the distribution of modification costs to the population health director, so that the second year's budget rests on experience rather than estimates.

References

Florence, C. S., Bergen, G., Atherly, A., Burns, E., Stevens, J., & Drake, C. (2018). Medical costs of fatal and nonfatal falls in older adults. Journal of the American Geriatrics Society, 66(4), 693-698. https://doi.org/10.1111/jgs.15304

Reiter, K. L., & Song, P. H. (2021). Gapenski's healthcare finance: An introduction to accounting and financial management (7th ed.). Health Administration Press.

Sherrington, C., Fairhall, N. J., Wallbank, G. K., Tiedemann, A., Michaleff, Z. A., Howard, K., Clemson, L., Hopewell, S., & Lamb, S. E. (2019). Exercise for preventing falls in older people living in the community. Cochrane Database of Systematic Reviews, 2019(1), Article CD012424. https://doi.org/10.1002/14651858.CD012424.pub2