HCA $512$ Signature Assignment on Health Care Finance Insurance and Reimbursement

Part One: Per Diem$/$Per Unit Reimbursement

$1.$ Consider the following utilization and payment rate data from Top Employer Health Plan at your facility in the past year. Top Employer pays all inpatients units as per diem rates and all outpatient units as per item rates. Complete this Excel schedule using formulas to calculate the Total Net Revenue $($payments$)$ from this contract. Format your cells with a dollar sign and no decimal points $($these numbers are in thousands$).$

$2.$ Next, assume that the agreement with Top Employer will expire in $60$ days and they have initiated negotiations with you for the next contract. They propose the following terms:

$$ An increase in inpatient rates of $3\%.$

$$ A decrease in outpatient rates by $5\%.$

$$ Clean claims must be submitted within $45$ days or they will be denied for timely filing.

$$ Inpatient stays must be precertified after the first day.

$$ Clean claims must be paid within $45$ days. $($They are currently paying in an average of $53$ days.$)$

Calculate the effect of the payer$$s proposal by updating the payment rates and calculating the proposed total net revenues in the following table.

a$.$ Are there revenue cycle procedures that you need to address if you accept the proposal? List them and explain how you would address them.

$3.$ As you know from this week$$s readings and lectures, knowing YOUR data when negotiating a new contract with a payer is critical for success. You know personnel, supply and other expenses will increase roughly $3\%$ next year due to salary increases and price inflation. Therefore, your net revenues need to increase by $3\%$ from last year to keep pace with these rising expenses. Top Employer has stated that the $5\%$ decrease in outpatient rates in non$-$negotiable, but they have implied that they are willing to consider changes to the proposed inpatient rates.

A$.$ Calculate the percentage change in inpatient rates to yield a net revenue increase that is $3\%$ above the amount you calculated in part $1$ above. Calculate your target total net revenues at $3\%$ above the amount from #$1$:

B$.$ Calculate the target subtotal inpatient net revenues: Target total net revenues $-$ subtotal outpatient net revenues under the new contract proposal.

C$.$ Divide target subtotal inpatient net revenues by original subtotal inpatient net revenues to calculate the percentage increase that you need.

D$.$ How does this compare to their proposed inpatient rate? Do you think that you can successfully negotiate this? Why or why not?

$4.$ In the Excel table below, change the inpatient rates to be increased by the percentage you just calculated in $3$C$.$ Use three or more decimal points for the most accuracy. The outpatient rates should remain the same as in question $2,$ and your total net revenue should equal the target total net revenues that you calculated in $3$A$,$ although your answer may still be slightly off due to rounding. Calculate the new Total Net Revenue.

$5.$ Finally, examine the utilization from this health plan. Does anything stand out to

you? What plan of action would you propose?

excel for $1.$ Inpatient Medical$/$Surgical $414$ $$917,424$ $$1,525$

Inpatient ICU $225$ $$1,068,750$ $$3,075$

Inpatient Obstetrics $18$ $$161,910$ $$4,000$

Subtotal Inpatient

Outpatient Surgery $29$ $$209,525$ $$875$

Outpatient Diagnostics $748$ $$160,072$ $$89$

Outpatient ER $1167$ $$2,475,795$ $$225$

Subtotal Outpatient

Total Inpatient and Outpatient

excel for $2.$Service Units $($in thousands$)$ Total Gross Revenue $($in thousands$)$ Payment$/$Unit Total Net Revenue $($in thousands

Inpatient Medical$/$Surgical $414$ $$917,424$

Inpatient ICU $225$ $$1,068,750$

Inpatient Obstetrics $18$ $$161,910$

Subtotal Inpatient

Outpatient Surgery $29$ $$209,525$

Outpatient Diagnostics $748$ $$160,072$

Outpatient ER $1167$ $$2,475,795$

Subtotal Outpatient

Total Inpatient and Outpatient

excel for $4.$ Service Units $($in thousands$)$ Total Gross Revenue $($in thousands$)$ Payment$/$Unit Total Net Revenue $($in thousands

Inpatient Medical$/$Surgical $414$ $$917,424$

Inpatient ICU $225$ $$1,068,750$

Inpatient Obstetrics $18$ $$161,910$

Subtotal Inpatient

Outpatient Surgery $29$ $$209,525$

Outpatient Diagnostics $748$ $$160,072$

Outpatient ER $1167$ $$2,475,795$

Subtotal Outpatient

Total Inpatient and Outpatient