The taxable income of Provident

2.1 (A) Provident health system, with a taxable income of $ 1000 000. The tax rate is set at 30%. Provident's taxable income is 30% * $1000000 = $300000.

After taxes, the net income is $1000000 - $300000 = $700000

(a) Carl Johnson is paid $100,000 in dividends. Carl pays a 15% tax rate. As a result, his tax is $10000 * 15% = $1500.

Dividends after taxes are $10000 - $1500 = $8500.

2.2 The dividends received total $100,000, with only 30% taxed. The taxable dividends are thus $100000 * 0.3 = $30000. The tax on these dividends is $300,000 * 35% = $10,500.

Dividends after taxes are $100000 - $10500 = $89500.

2.4 Assume Jane Smith has invested $1000 in the tax-exempt bond; her interest is $1000 * 0.07 = $70. If Jane invests in Beverly Enterprises whose bonds are taxable at 40%, the interest rates should be at least: $1000 * 0.4x = $70. Therefore, $400x = 70. The interest rates of the bond should, therefore, be 70/400 = 17.5%

3.1 Major third party payers

Also known as third party administrator are entities separate from the patient and the health care provider who reimburses the health care provider for services offered to the patient. The major third party payers are insurance companies, employers, and government agencies.

3.2 Primary characteristics of managed care organizations.

They emphasize on keeping enrollees healthy to minimize the use of service.

They offer monetary incentives for enrollees to use their provider and all the procedures associated with the plan.

They offer explicit standards for choosing providers.

They have formal programs for continuing quality enhancement and utilization assessment.

Different Types of Managed Care Organizations

Preferred Provider Organisations (PPOs)

This type of health plan has contracts with a network of several providers from which one can choose. The patient does not need to select a single PCP, and they do not require referrals to see other providers in the network.

Point of Service Plan

This is a plan similar to both health maintenance organization and a preferred provider organization. In POS, the patient picks a primary care doctor who manages and coordinates the patient's care. It also allows the patient to choose a provider outside the network, though in this case, the patient pays more.

Difference between fee-for-service Reimbursement and Capitation

In Capitation, the risk is assumed by healthcare providers while in fee for service the risk is borne by the payers who are the insurance companies. In capitation, a fixed per capita payment is made periodically to the medical provider by a managed care group, whereby, I return the medical care provided enrolls individuals. In fee for service, there are no fixed payments. The bill of the service providers is paid on predetermined rates for each service (Christine Tobin, 2015).

3.5 (a) Cost-based.

The incentive of this method is that the provider's cost will be covered by the revenue generated from the provision of those services though the amount is limited to allowed cost. The risk is born by the third parties.

(b) Charge based

The health care provider is paid for all the services they provide based on a pre-determined discount off the normal charges charged in the local area. The risk in this method is spread between the service provider and the third parties (Christine Tobin, 2015).

(c) Prospective payment

This method offers little cost containment potential. The method distributes risk between third parties and the providers and offers a trade-off between investment and current consumption.

(d) Capitation

This method only reimburses fixed amount covered per covered life per period. It does not consider a number of services provided. The risk in capitation method is borne by the providers of health services.

Reference

Christine Tobin, MBA, RN, CDE. (2015). Managed Health Care. Retrieved from https://nfb.org/images/nfb/publications/vodold/mngdcare.htm