PMPM: Per Member Per Month
PMPM is the standard healthcare payment and cost unit. Total cost (or revenue) over a period divided by member-months yields the PMPM. Used in capitation rates, ACO benchmarking, value-based contract design, and risk-adjusted comparisons.
How to calculate PMPM
PMPM = total dollars / total member-months. Member-months = sum of months each enrollee was eligible during the period. A 12,000-life ACO with members enrolled all 12 months has 144,000 member-months. $122.4M annual spend = $850 PMPM.
Why PMPM is the canonical comparison unit
- It normalizes for enrollment changes within the period.
- It allows comparison across populations of different sizes.
- Risk-adjusted PMPM (PMPM ÷ RAF) compares populations with different acuity.
- Capitation contracts are denominated in PMPM, making contract negotiation directly comparable.
Where PMPM matters in MSSP / REACH
MSSP shared savings calculations and REACH benchmark calculations are PMPM-based at the core. A 1% PMPM swing in attribution or in cost trajectory translates to material reconciliation dollars at the population scale. Continuous PMPM monitoring (vs annual reconciliation) is the difference between an ACO that anticipates results and one that explains them.
Where Vizier fits
Vizier computes PMPM and risk-adjusted PMPM continuously for ACO populations, surfaces trajectory by service line and patient cohort, and benchmarks against historical baseline. The view tells the population health team where intervention will move PMPM most before reconciliation.