In a PMPM model, providers absorb risk based on what uncertainty?

In a Per Member Per Month (PMPM) model, the focus is on the financial risk associated with managing the healthcare of a population over a specific period. Providers are essentially tasked with predicting and managing costs associated with patient care.

The correct choice highlights the uncertainty surrounding how many patients will require high levels of care, which directly impacts overall costs. Providers often must predict which individuals within a patient population may need expensive, extensive care due to chronic conditions or severe health issues. This uncertainty can significantly influence financial planning and resource allocation, as high-acuity patients can lead to elevated expenses.

In contrast, determining the exact costs of services delivered does not align with the inherent uncertainty; rather, it’s a retrospective analysis that may not capture the forecasting required in risk management. The number of staff needed to provide care is also a logistical concern, but it does not encapsulate the risk dynamic between patient need and service intensity. Similarly, the rate of patient turnover, while impactful on healthcare delivery, pertains more to filling available slots than to the financial uncertainty provided in a PMPM context. Therefore, it is the potential variability in patient needs—particularly those who require high levels of care—that truly defines the risk absorption for providers in a PMPM payment model.