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Hypotheses testing for insurance data

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C. 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

The solution provides step by step method for the calculation of hypotheses testing for insurance data . Formula for the calculation and Interpretations of the results are also included.