13 (Combined) The Statistics Budget and Calculating RVUs.

In Table I.1a on page 500, the encounters are calculated with the expectation that the company is getting a lucrative contract and their visits will increase by 5%. For Problem #9, the situation has changed and you need to recalculate the encounters.

• You must calculate the number of Admission visits and Follow-up visits for 20X2 that will be from commercial payors. We are only doing the first quarter not the whole year.

In addition, in Problem #13 the RVUs have changed.

• You must calculate the total number of RVUs that will now be generated by the Admission and Follow-up Commercial visits.

Givens from Problem 9:

• ZMG Hospitalist Practice will NOT get an HMO Contract.
• Monthly encounters are expected to rise by 1.8% (0.018) from the previous year.

Givens from Problem 13:

• Relative Value Weight for Admissions is 3.80.
• Relative Value Weight for Follow-ups is 1.90.

Steps involved in creating a statistics budget:

• Develop an overall volume projection. This is done by multiplying the previous years numbers by the projected change in volume, then adding this to the previous years volume.
• Categorize volume projection by payor and encounter type. In Exhibit I.1b on page 501 you are told what percentage of the overall visits for the company come from Commercial, Medicare, and Medicaid/Self-Pay. According to that information, Commercial Admission visits are equal to 9% (.09) of the total, and Commercial Follow-up Visits are 27% (0.27) of the total.
• Convert encounters to weighted encounters. This process is explained on page 501 in your text. In Problem #13 you are given the Relative Value Weights (RVUs) for both Admission and Follow-up visits.

USING THE INFORMATION ABOVE, AND THE FORMULAS GIVEN IN THIS TABLE, MAKE THE INDICATED CALCULATIONS.

	FORMULAS	JAN	FEB	MAR	TOTAL
A. TOTAL 20X1 ENCOUNTERS		5007	4676	5044	14727
B. PROJECTED PERCENT OF GROWTH		0.018	0.018	0.018	0.018
C. TOTAL 20X2 ENCOUNTERS	A + (A x B)
D. PERCENT OF ADMISSION VISITS FROM COMMERCIAL PAYORS		.09	.09	.09	.09
E. NUMBER OF COMMERCIAL ADMISSION VISITS	D x C
F. RVUs PER COMMERCIAL ADMISSION VISIT		3.80	3.80	3.80	3.80
G. TOTAL RVUs FOR COMMERCIAL ADMISSION VISITS	F x E
H. PERCENT OF FOLLOW UP VISITS FROM COMMERCIAL PAYORS		.27	.27	.27	.27
I. NUMBER OF COMMERCIAL FOLLOW-UP VISITS	H x C
J. RVUs PER COMMERCIAL FOLLOW-UP VISIT		1.90	1.90	1.90	1.90
K. TOTAL RVUs FOR COMMERCIAL FOLLOW-UP VISITS	J x I

Problem #18 The Revenue Budget and Exhibit I1.e.

This problem looks at calculating the gross and net patient revenues from Medicare encounters.

Givens:

• Charge for a Weighted Medicare Admission Visit is $300.00.
• Charge for a Weighted Medicare Follow-Up Visit is $200.00.
• Medicare Discounts payments by 40% (.40).

USING THE INFORMATION ABOVE, AND THE FORMULAS GIVEN IN THIS TABLE, MAKE THE INDICATED CALCULATIONS.

	FORMULAS	JAN	FEB	MAR	TOTAL
A. MEDICARE WEIGHTED ADMISSION VISIT		2944	2748	2964	8656
B. PRICE OF WEIGHTED MEDICARE ADMISSION VISIT		$300.00	$300.00	$300.00	$300.00
C. GROSS REVENUE FROM MEDICARE ADMISSION VISIT	A x B
D. PAYMENT RATE		.60	.60	.60	.60
E. NET REVENUE FROM MEDICARE ADMISSION VISITS	D x C
F. MEDICARE WEIGHTED FOLLOW-UP VISITS		4416	4124	4448	12988
G. PRICE OF WEIGHTED MEDICARE FOLLOW-UP VISIT		$200.00	$200.00	$200.00	$200.00
H. GROSS REVENUE FROM MEDICARE FOLLOW-UP VISIT	F x G
I. PAYMENT RATE		.60	.60	.60	.60
K. NET REVENUE FROM MEDICARE FOLLOW-UP VISIT	H x I