PMPM Normalization Engine

python
# PMPM Normalization Framework
def calculate_member_months(enrollment_data):
    """
    Calculate exact member-months accounting for:
    - Mid-month enrollments/terminations
    - Coverage tier (EE, EE+Spouse, EE+Child, Family)
    - Part-time vs. full-time status
    """
    member_months = 0
    
    for enrollment in enrollment_data:
        # Days enrolled in each month
        for month in enrollment.coverage_periods:
            days_in_month = get_days_in_month(month)
            days_enrolled = enrollment.days_covered_in_month(month)
            
            # Fractional member-month
            fraction = days_enrolled / days_in_month
            
            # Coverage tier multiplier
            covered_lives = get_covered_lives(enrollment.tier)
            
            member_months += fraction * covered_lives
    
    return member_months

def calculate_pmpm_costs(claims, enrollment):
    """
    Convert absolute costs to PMPM
    """
    total_claims = sum(claims.allowed_amount)
    total_member_months = calculate_member_months(enrollment)
    
    pmpm = total_claims / total_member_months
    
    return {
        'total_claims': total_claims,
        'member_months': total_member_months,
        'pmpm': pmpm,
        'annualized_pmpy': pmpm * 12
    }

# Example: Mid-Year Acquisition Impact
# Q1 2024: 1,000 members, $2.85M claims
#   - Member-months: 3,000 (Jan-Mar)
#   - PMPM: $950
# 
# Q2 2024: 1,450 members, $3.95M claims (acquired 450 employees in April)
#   - Member-months: 4,200 (Apr-Jun, accounting for April mid-month start)
#   - PMPM: $941
#
# Conclusion: PMPM actually DECREASED by 0.9% despite absolute 
# claims increasing 38% due to acquisition