Back to Financial and Actuarial Basics
Module 3
Setting the Number
Rates, benchmarks, and reconciliation: how the number you are measured against is built, and why its assumptions decide the outcome in advance.
3 lessons About 14 min
By the end of this module, you will be able to:
- Describe how a capitation rate is built and what makes it actuarially sound
- Explain how benchmark and target-price assumptions decide outcomes before care is delivered
- Trace how reconciliation converts a year of performance into a settlement
- Actuarial Soundness and Rate Setting Someone has to decide what a population should cost. This lesson covers how capitation rates are built and what 'actuarially sound' actually requires. About 5 min
- Benchmarks and Target Prices Shared savings and bundles both compare actual spending to a number set in advance. This lesson shows how that number is built and why it decides everything. About 5 min
- Reconciliation: Settling Up Months after the year ends, the payer and provider settle savings and losses. This lesson explains the reconciliation that turns performance into a check. About 4 min
Module quiz
Answer all questions to see your score.
1. An actuarially sound capitation rate is one that:
Soundness means adequacy and accepted methods; a rate set too low fails the standard as much as one set too high.
2. A benchmark or target price represents:
Savings and losses are the gap between actual spending and the benchmark, so its construction decides outcomes before care is delivered.
3. Why does final reconciliation happen months after the performance year ends?
Actual cost is not known until the claims lag resolves, so reconciliation waits for runout, then settles savings or losses.