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

Nursing Salaries X XPhysical Therapist X

Salaries

Occupational Thera- X

pist Salaries

Cardiac Rehab Salaries X

Pulmonary Rehab Salaries X

Patient Education Coordin- X

ator Salary

Nursing Supplies X XPhysical Therapist Supp. X

Occupat. Rehab Supplies X

Cardiac Rehab Supplies X

Pulmon, Rehab Supplies X

Training Supplies X

Clerical Office Supplies X

Supplies

Employee Education X X X XAssignment 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:

30-days pre-transplant= $56, 800

Procurement= $130,500

Hospital transplant admission= $777,000

Physician during transplant= $81,000

180-days post transplant discharge= $169,100

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