SOLUTION: 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

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Question 189500: 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?

Answer by stanbon(57424) About Me  (Show Source):
You can put this solution on YOUR website!
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?
Ho: u = 250
Ha: u is not equal to 250
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Test statistic:
t(275.66) = 25.66/[78.11/sqrt(25)] = 1.6426
p-value = P(t > 1.6426 with df=24) = 0.05675
Conclusion: Since the p-value is greater than 5%, fail to reject Ho.
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State your hypotheses and decision rule.
(b) Is this a close decision?
Pretty close.
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Cheers,
Stan H.