SOLUTION: An auditor review 25 oral surgery insurance claims from a particular surgical office, determining that the mean out-of-pocket patient billing above the reimbursed amount of $275.66
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Question 132768: An auditor review 25 oral surgery insurance claims from a particular surgical office, determining that the mean out-of-pocket patient billing above the reimbursed amount of $275.66 with a standard deviation of $78.11.
a. At the 5% level of significance, does this sample prove 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?
Answer by stanbon(75887) (Show Source): You can put this solution on YOUR website!
An auditor review 25 oral surgery insurance claims from a particular surgical office, determining that the mean out-of-pocket patient billing above the reimbursed amount of $275.66 with a standard deviation of $78.11.
a. At the 5% level of significance, does this sample prove violation of the guideline that the average patient should pay no more than $250 out-of-pocket? State your hypotheses and decision rule.
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Ho: mu = 250
Ha: mu is not 250
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Critical Values for 2-tail T-test with df=24 and alpha=5%: t = +/- 2.064
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Test statistic: t(275.66) = (275.66-250)/[78.11/sqrt(25)]= 1.64255...
p-value = 2*tcdf(1.64255,10,24) = 2*0.5675..=0.1135...
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b. Is this a close decision?
p-value is greater than 5% by a significant amount.
I'll let you decide if this is a close decision.
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Cheers,
Stan H.
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