Overview
PMPM  Per Member Per Month  is a significant metric for evaluating your network or comparing two networks. To create these metrics we need to consider costs, patient attribution and eligibility, and then apply a risk factor conversion in order to provide a level playing field for comparison. CMS provides extensive details that we follow to calculate this metric.
Where you will find PMPM Metrics 

DCEs on the Home page  MSSP ACOs on the Analyze page 
How we calculate PMPM
PMPM is the average costs per beneficiary per month. The name itself, Per Member Per Month, pretty much says it all.
So, here are the steps we use. And yes, this is an oversimplification at an almost epic scale.
 Add up all costs reimbursed to a given network for a chosen year.
 Identify "eligible" patients
 Count the months in which a patient was eligible as a beneficiary.
 Use the following formula to calculate PMPM
Determining Eligibility Months
To calculate on a monthly basis we need to identify eligibility for each beneficiary to assure that we only use costs and count months for which each beneficiary meets certain criteria. Think of it as making sure that the average isn't skewed through the inclusion of wrong data. Some examples will show how we limit eligibility months:
 Any patient who dies six months into the year is only counted for six months, not for the whole period.
 The beneficiary must be enrolled in Part A and Part B for the entire 2 year alignment period
 The beneficiary can't be enrolled in Medicare Advantage.
 The beneficiary can't be using Medicare as a secondary payer.
To simplify, for each month we check to see if the beneficiary is eligible and if so, we add that month to the overall count that we use in the denominator of the equation above.
How does Risk Score impact PMPM
In order to have a level playing field for comparison, we create a risk score adjustment to the final cost. We also use a normalization factor to "center" risk scores around 1.0 for the population being evaluated. Doing so provides an accurate basis for comparison:
 A normalized risk score of 1.0 means that beneficiary/physician is at the average risk level for the population.
 A normalized risk score of 2.0 means that beneficiary/physician is at twice the average risk level for the population.
The normalization factors that we have used are in the following table:
Performance Year  Factor applied 
2017  1.136307 
2018  1.149652 
2019  1.179996 
2020  1.196384 
2021  0.915175 
Example of 2021 Risk Score Normalization
For MSSP ACOs and DCEs, Trella has normalized patient risk scores based on the national average FFS risk scores (note this is not limited to just DCE assigned lives) and now performs the adjustment at the aggregate cost level, rather than at the beneficiary level. Normalization creates an index that allows for a more accurate comparison of risk across providers and better aligns our methodology to what CMS uses.
The normalization factor centers risk scores around 1.0 for the patient population being evaluated. A beneficiary with a normalized risk score of 1.0 carries the same level of risk as the population average. For providers, a normalized risk score of 1.0 indicates a patient population with the same level of risk as the overall FFS population. Along the same lines, a normalized risk score of 2.0 indicates a beneficiary carries twice the level of risk as the population average. Providers with a normalized risk score of 2.0 treat a patient population that carries twice as much risk as the FFS average.
Some equations:
Keep these ready on the blackboard, we will come back and use them:
Table of samples
Physician  Beneficiary  Unadjusted Risk Score  Unadjusted Cost ($) 
Dr. I. Jones  Patient Doe  1.123  132,554 
Dr. I. Jones  Patient Buck  1.023  213,243 
Dr. I. Jones  Patient Ram  0.987  218,612 
Dr. I. Jones  Patient Lamb  0.957  123,432 
Dr. E. Brown  Patient Sturgeon  0.998  174,633 
Dr. E. Brown  Patient Palver  1.342  194,432 
Dr. E. Brown  Patient Parker  1.256  212,283 
Example 1  Dr. I. Jones
Four patients, Doe, Buck, Ram, and Lamb.
Use Equation to calculate the Unadjusted Physician Risk Score
Thus, the Unadjusted Physician Risk Score is 1.0225
Use Equation to calculate the Normalized Risk Score
The Normalized Risk Score for the physician is 1.0743
Next we add up the Unadjusted Physician Cost:
132,554 + 213,243 + 218,612 + 123,432 = $687,481
Use equation to put all the pieces together:
The Adjusted Physician Cost is $640,269
Example 2  Dr. E. Brown
Three patients, Sturgeon, Palver, Parker.
Use Equation to calculate the Unadjusted Physician Risk Score
Thus, the Unadjusted Physician Risk Score is 1.1987
Use Equation to calculate the Normalized Risk Score
The Normalized Risk Score for the physician is 1.3098
Next we add up the Unadjusted Physician Cost:
174,633 + 194,432 + 212,283 = $581,348
Use equation to put all the pieces together:
The Adjusted Physician Cost is $443,845
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