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ESTIMATING the COST of PREVENTIVE SERVICES
in Mental Health and Substance Abuse Under Managed Care

Figure 1: Two Critical Formulas For Understanding PMPM Costs in an MCO

1.  Total Cost = (Users/1000) X (Units/User) X (Cost/Unit)

2.  Cost per Member per Month (PMPM)

($ PMPM) = (Total costs) / (Total Members) / 12 months

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