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    An Auditor Review for Surgery Insurance Claims

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    An Auditor reviewed 25 oral surgery insurance claims from a particular surgical office determining that the mean out of pocket patient billing above the reimbursed amount was $275.66 with a standard deviation of $78.11. (a) At the 5 percent level of significance, does this sample prove a violation of the guideline that the average patient should pay no more than $250 out of pocket? State your hypotheses and decision rule. (b) Is this a close decision?

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    Solution Preview

    Hi,

    a) We will perform a t-test

    Null hypothesis: The average out of pocket expense for oral surgery is $250
    Alternative hypothesis: The average out of pocket expense for oral surgery is more then $250

    Our formula would be:

    our cost - ...

    Solution Summary

    The solution examines an auditors review for surgery insurance claims. A hypothesis and decision rules are determined.

    $2.19

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