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Insurance Auditor Hypothesis Testing

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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 Summary

This response states the hypothesis and the decision rule on insurance claims for oral surgeries.

Solution Preview

a) Since the p-value is not less than 0.05, the null hypothesis is not rejected. Therefore, there is ...

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