HSA 525 Health Financial Management

Assignment Exercise 4-1: Contractual Allowances

Physician office revenue for visit code 99214 has a full established rate of $72.00. Of ten different payers, there are nine different contracted rates, as follows:

  Payer                                           Contracted Rate

FHP                                                    $35.70

HPHP                                                   58.85

MC                                                       54.90

UND                                                     60.40

CCN                                                      70.20

MO                                                       70.75

CGN                                                     10.00

PRU                                                      54.90

PHCS                                                    50.00

ANA                                                     45.00

 

For each payer, compute the contractual allowance.

 

Payer              Full Rate                  Contracted Rate               Contractual Allowance

FHP                 $72.00                         $35.70                                  $36.30

HPHP                72.00                           58.85                                    13.15

MC                    72.00                           54.90                                    17.10

UND                   72.00                           60.40                                    11.60

CCN                    72.00                           70.20                                      1.80

MO                     72.00                           70.75                                      1.25

CGN              72.00                             10.00                                           62.00

PRU                72.00                            54.90                                          17.10

PHCS              72.00                            50.00                                          22.00

ANA                72.00                           45.00                                           27.00

 

Assignment Exercise 4-2 Revenue Sources and Grouping Revenue

The Metropolis Health System has revenue sources from operations, donations, and interest income. The revenue from operations is primarily received for services. MHS groups its revenue

first by cost center. Within each cost center the services revenue is then grouped by payer.

For each of the six situations, indicate its number(1 through 6). Then place and X in the column(s) that represent the correct revenue source(s) for the item. The six situations are:

• ICU stay billed to employee’s insurance program.-Intensive Care Unit cost center
• Lab test paid for by an individual.- Laboratory cost center
• Pathology work performed for the state.- Laboratory cost center
• ICU stay billed to member’s health plan.- Intensive Care cost center
• ICU stay billed for Medicare beneficiary.- Intensive Care cost center
• Series of allergy tests run for eligible Medicaid beneficiary.- Laboratory cost center

 

 

 

 

 

 

Medicare    Medicaid   Other Public       Patients     Commercial       Managed

Programs                                 Insurance       Care Contracts

 

 

(1)                                                                                             X

(2)                                                                X

(3)                                    X

(4)                                                                                                                 X

(5)   X

(6)                X

 

Assignment Exercise 5-1 Grouping Expenses by Cost Center

The Metropolis Health System’s Rehabilitation and Wellness Center offers outpatient therapy and return-to-work services plus cardiac and pulmonary rehabilitation to get people back to a normal way of living. The Rehabilitation and Wellness Center expenses include the following:

• Nursing Salaries
• Physical Therapist Salaries
• Occupational Therapist Salaries
• Cardiac Rehab Salaries
• Patient Education Coordinator Salary
• Nursing Supplies
• Physical Therapist Supplies
• Occupational Therapist Supplies
• Cardiac Rehab Supplies
• Pulmonary Rehab Supplies
• Training Supplies
• Clerical Office Supplies
• Employee Education

Decide how many cost centers should be used for the above expenses at the Center and where each expense should be located.

Physical/Occupational        Cardiac          Training       Administrative

Therapy Rehabilitation      Pulmonary

1. Nursing Salaries  X                           X
2. Physical Therapist X

Salaries

3. Occupational Thera-  X

pist Salaries

 

4. Cardiac Rehab Salaries X

 

5. Pulmonary Rehab Salaries                           X

 

6. Patient Education Coordin- X

 

ator Salary

 

7. Nursing Supplies X                         X

 

8. Physical Therapist Supp.  X

 

9. Rehab Supplies X

 

10. Cardiac Rehab Supplies X

 

11. Pulmon, Rehab Supplies X

 

12. Training Supplies X

 

13. Clerical Office Supplies X

 

Supplies

14. Employee Education X                   X                             X                                 X

 

Assignment Exercise 5-2

Find a listing of expenses by diagnosis or by procedure. The source of the list can be internal or external. Comment upon whether you believe the expense grouping used is appropriate. Would you have grouped the expenses in another way?

The list of expenses for a heart transplant can cost around $1.3 million once the costs are itemized such as:

1. 30-days pre-transplant= $56, 800
2. Procurement= $130,500
3. Hospital transplant admission= $777,000
4. Physician during transplant= $81,000
5. 180-days post transplant discharge= $169,100
6. OP Immuno-suppressant and other drugs=$33,300

With a grand total of $1,248,000

I do agree that the expense grouping that is used is appropriate, but the only thing I would have done differently is to name what is all included in the hospital transplant admission. In this procedure, there are so many variables such as medications, nurses, anesthesiologist and such more that goes into the hospital transplant admission.

Reference:

Benley, T.S. & Hanson, S.G. (2011). U.S. organ and tissue transplant cost estimates and discussion. Retrieved July 13, 2014, from http://publications.milliman.com/research/health-rr/pdfs/2011-us-organ-tissue.pdf

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