Thank you Doctor mitch for you help.
Week 3 HLTH420 IP Assignment due Sunday 5.15.16 w/attachment included:
Your facility has the following payer mix:
40% commercial insurances
25% Medicare insurance
15% Medicaid insurance
15% liability insurance
5% all others including self-pay
Write a 3-4 page report that addresses the following requirements:
Assume that for the time in question you have 2000 cases in the proportions above. (what are the proportions of the total cases for each payer?)
The average Medicare rate for each case is $6200- use this as the baseline. Commercial insurances average 110% of Medicare, Medicaid averages 65% of Medicare, Liability insurers average 200% of Medicare and the others average 100% of Medicare rates. (what are the individual reimbursement rates for all 5 payers?)
What are the expected rates of reimbursement for this time frame for each payer? What is your expected A/R?
What rate should you charge for these services (assuming one charge rate for all payers)? (This gives you your total A/R.) Calculate the total charges for all cases based on this rate.
What is the difference between the two A/R rates above? Can you collect it from the patient? What happens to the difference?
Which of these costs are fixed? Which are variable? Direct or indirect?
materials/supplies (gowns, drapes, bedsheets)
Wages (nurses, technicians)
Utility, building, usage exp (lights, heat, technology)
Medications
Licensing of facility
Per diem staff
Insurances (malpractice, business etc.)
Calculate the contribution margin for one case (in $) with the following costs for this period, per case: a. materials/supplies: $2270 b. Wages: $2000 c. Utility, building, usage exp: $1125 d. Insurances (malpractice, business etc.): $175
Using the above information, determine which is fixed and which cost is variable. Then calculate the breakeven volume of cases in units for this period.
Suppose you want to make $150,000 profit between this period and next period to fund an expansion to the NICU, how many cases would you have to see? At what payer mix would this be optimal?
Your assignment will be graded in accordance with the following criteria. Click
here
to view the grading rubric.
Please submit your assignment.
Instructions/Calculations for IP 3
Please include your calculations in your submission!
Otherwise, I cannot give you any partial credit if the final answer is incorrect.
What are the expected rates of reimbursement for this time frame for each payer? What is your expected A/R?
The average Medicare rate for each case is $6200- use this as the baseline.
(Commercial insurances average 110% of Medicare, Medicaid averages 65% of
Medicare, Liability insurers average 200% of Medicare and the others average 100% of Medicare rates)
Payers (% of
Medicare payment)
% of Cases
# of Cases
2000
Pay per Case
# of Cases x
Pay
A/R per Payer
Commercial (110%)
40%
800
6,820.00
$6,820 * 800
5,456,000.00
Medicare (100%)
25%
500
6,200.00.
Thank you Doctor mitch for you help.Week 3 HLTH420 IP Assignment d.docx
1. Thank you Doctor mitch for you help.
Week 3 HLTH420 IP Assignment due Sunday 5.15.16
w/attachment included:
Your facility has the following payer mix:
40% commercial insurances
25% Medicare insurance
15% Medicaid insurance
15% liability insurance
5% all others including self-pay
Write a 3-4 page report that addresses the following
requirements:
Assume that for the time in question you have 2000 cases in the
proportions above. (what are the proportions of the total cases
for each payer?)
The average Medicare rate for each case is $6200- use this as
the baseline. Commercial insurances average 110% of Medicare,
Medicaid averages 65% of Medicare, Liability insurers average
200% of Medicare and the others average 100% of Medicare
rates. (what are the individual reimbursement rates for all 5
payers?)
What are the expected rates of reimbursement for this time
frame for each payer? What is your expected A/R?
What rate should you charge for these services (assuming one
charge rate for all payers)? (This gives you your total A/R.)
Calculate the total charges for all cases based on this rate.
What is the difference between the two A/R rates above? Can
you collect it from the patient? What happens to the difference?
Which of these costs are fixed? Which are variable? Direct or
indirect?
materials/supplies (gowns, drapes, bedsheets)
Wages (nurses, technicians)
Utility, building, usage exp (lights, heat, technology)
Medications
2. Licensing of facility
Per diem staff
Insurances (malpractice, business etc.)
Calculate the contribution margin for one case (in $) with the
following costs for this period, per case: a. materials/supplies:
$2270 b. Wages: $2000 c. Utility, building, usage exp: $1125 d.
Insurances (malpractice, business etc.): $175
Using the above information, determine which is fixed and
which cost is variable. Then calculate the breakeven volume of
cases in units for this period.
Suppose you want to make $150,000 profit between this period
and next period to fund an expansion to the NICU, how many
cases would you have to see? At what payer mix would this be
optimal?
Your assignment will be graded in accordance with the
following criteria. Click
here
to view the grading rubric.
Please submit your assignment.
Instructions/Calculations for IP 3
Please include your calculations in your submission!
Otherwise, I cannot give you any partial credit if the final
answer is incorrect.
What are the expected rates of reimbursement for this time
frame for each payer? What is your expected A/R?
The average Medicare rate for each case is $6200- use this as
the baseline.
(Commercial insurances average 110% of Medicare, Medicaid
averages 65% of
Medicare, Liability insurers average 200% of Medicare and the
others average 100% of Medicare rates)
3. Payers (% of
Medicare payment)
% of Cases
# of Cases
2000
Pay per Case
# of Cases x
Pay
A/R per Payer
Commercial (110%)
40%
800
6,820.00
$6,820 * 800
5,456,000.00
Medicare (100%)
25%
500
6,200.00
$6,200 * 500
3,100,000.00
Medicaid (65%)
15%
5. .)
Calculate the total charges for all cases based on this rate.
Please see the bold italicized wording--
one charge rate for all payers and calculate total charges based
on this rate
.
You cannot charge different amounts to different payers.
There must be one charge rate applied to all.
Then, based on government reimbursement rates and contracts
with managed care, you will receive different reimbursements
from each payer.
Each one of these are represented as a percentage of Medicare
reimbursement ($6200).
To answer this question, you need to come up with a single rate
that you would charge for all payers.
While there is no single correct answer, your single charge rate
should exceed the maximum amount that you are reimbursed,
which happens to be Liability at 200% of Medicare
reimbursement.
Your charge rate should exceed maximum reimbursement rate,
as no payer is going to pay more than what you are charging.
Typically, you would see the charge exceed your maximum
reimbursement by at least 20-25%.
So, you would multiply your maximum reimbursement by 120-
125% to determine your charge rate.
6. Then, you need to multiply that charge rate by the total number
of cases.
What is the difference between the two A/R rates above? Or,
what is the difference between your total charges and your total
A/R?
Can you collect it from the patient? What happens to the
difference?
Charge/Case x 2000= “Other A/R”
or TTL Gross Charges
TTL Gross Charges – Total A/R = Difference
This cannot be collected for any contractual payers (Medicare,
Medicaid,
Liability or Commercial).
These are written off as contractual allowances
Which of these costs are fixed? Which are variable? Direct or
indirect?
materials/supplies (gowns, drapes, bedsheets)
Wages (nurses, technicians)
Utility, building, usage exp (lights, heat, technology)
Medications
Licensing of facility
Per diem staff
Insurances (malpractice, business etc.)
Variable:
7. Hourly (
Per Diem
) labor is variable, Salaried (
Wages
) are fixed , Direct Materials (variable with production), Other
expenses that seem to vary with production. Utility costs are
actually mixed but are variable for this assignment,
Fixed:
Expenses that don’t vary with production like Salaried Wages,
Insurance,
Licensing
Direct Costs:
Costs that are related to specifically to the production of the
product or service (supplies, labor, etc . . . )
Indirect Costs:
Costs not specifically related to producing the product or
service (Licensing, etc . . .)
Cost
Fixed
Variable
Direct
Indirect
9. Licensing of Facility
Insurances
PerDiem Staff
Calculate the contribution margin for one case (in $) with the
following costs for this period, per case: a. materials/supplies:
$2270 b. Wages: $2000 c. Utility, building, usage exp: $1125 d.
Insurances (malpractice, business etc.): $175
YOU NEED TO USE THE FOLLOWING FORMULA:
10. Contribution Margin = Sales (Total A/R)—Total Variable Costs
(Total VC)
CM per Case (per unit) = Total Contribution Margin / Volume
(2000)
So, take the Total A/R and divide by 2000 (# of cases), then
subtract the variable costs per case.
That will equal your CM per Case
Using the above information, determine which is fixed and
which cost is variable. Then calculate the
breakeven volume
of cases in units for this period.
Breakeven volume is the number of cases that must be generated
to cover your fixed costs (breakeven point).
Use the following formula:
Breakeven Volume = Total Fixed Costs / Contribution Margin
per unit
*Also, remember when calculating B/E volume you must use the
contribution margin per unit NOT the charge per unit
Suppose you want to make $150,000 profit between this period
and next period to fund an expansion to the NICU, how many
cases would you have to see? At what payer mix would this be
optimal?
You need to use the following formula to calculate:
11. Profit = (volume x contribution margin per unit) – fixed costs
For example only—don’t use these numbers for your answer . . .
$1000 = (
X
(cases) x $10 (CM per unit)) - $20 (fixed cost/per unit)
$1000
+ $20
= ( X (cases) x $10 (CM per unit)) - $20 (fixed cost/per unit)
+ $20
$1020 =
X
(cases) x $10 (CM per unit)
$1020/$10 =
X
(cases)
102 Cases required to generate $1000.00 in profit
