HCA/270 - Contractual Allowances & Grouping Revenue & Expenses Week 2

HCA/270 Health Care Finance PART I - Contractual Allowance Background: Each health plan negotiates specific contracts with the physician or hospital. Each procedure code has an established rate and a contracted rate. Let's say that the established rate for the code 99214 is $84. The physician bills the insurance company $72 for the patient visit. The physician has a contract where it was agreed that the health plan would pay $45 for a patient visit. Therefore, the contractual allowance is the difference between the established rate of $84 and the agreed-upon amount of $45. Directions: Contractual allowances represent the difference between the full established procedure rate and the rate that will be paid to the physician practice based upon the agreed-upon contractural rate. For Part I of this assignment, assume that each payer listed below have negotiated a Managed Care contract with the physician. The physician has performed 10 new patient physicals, one for each payer, and will bill each of the health plans the established rate of $174 for procedure code 98235. The contracted rate is listed in Column B. You must find the contractural allowance for each health plan and place the result in Column C. New Patient Physical Exam Code is 99385 . Established rate of $174. Column A Column B Column C Health Plan Payer Contracted Rate Contractual Allowance HAP Tricare HPM Medicaid Medicare BCN PPO BCBS Humana CCN Priority Health $110.00 $98.00 $142.95 $60.45 $70.20 $135.90 $152.00 $112.00 $74.35 $128.25 There are three parts to this assignment. Each part is located under a different tab in this document. To move onto Part II, click on the Part II tab at the bottom left of the screen. If you do not see the Part II and Part III tabs, open the spreadsheet fully by clicking the double squares in the upper right corner. HCA270 Health Care Finance PART II - Grouping Revenue by Payer Source Background: The Metropolis Health System (MHS) 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 service revenue is then grouped by payer. Directions: For each situation, enter an X in the column that represents the correct revenue sources for the item. The ten situations are as follows: (1) Insured patient had in vitro fertilization performed. Services not covered under patient's insurance. (2) Patient admitted to emergency room via the county jail. The emergency room visit was billed to the jail. (3) Pathology tests performed and billed to employee's insurance program. (4) Emergency room visits and subsquent admission billed to member's preferred plan organization plan. (5) An intensive care unit stay was billed to a county health plan. (6) Series of allergy tests run for eligible Medicaid beneficiary. (7) Outpatient surgery performed and billed to Tricare Prime. (8) Infant labor and delivery billed to Blue Cross Blue Shield. (9) Mammogram performed and billed to Medicare beneficiary. (10) Emergency visit for patient without insurance. # 1 2 3 4 5 6 7 8 9 10 Medicare Medicaid Other Public Programs Patients Commercial Insurance Managed Care Contracts Appendix C - HCA/270 Health Care Finance PART III - Grouping Expenses by Cost Center Background: Cost centers are used in an organization to group expenses. For example, the patient registration department would be a cost center. All costs associated with operating the patient registration department would be grouped into this cost center. Items such as paper, copier rental, education and training for new employees, and computers used by the registration employees would be allocated to this cost center. Directions: The Ascension Health System's rehabilitation center offers outpatient physical therapy, occupational health services, plus cardiac and pulmonary rehabilitation to get people back to a normal way of living. Place an X for each expense in the box that corresponds with the appropriate cost center. The rehabilitation center expenses include the following: (1) Physical therapist salaries (2) Customer service call center (3) Electrocardiography machine for evaluating cardiac patients (4) Nurse manager salary (5) New exercise mats used for physical therapy (6) TV commercials and billboards (7) Walkers, canes, transfer bars, barbells, and Weights (8) Office supplies (9) Employee attended health care seminars (10) Pulmonary function test machine (11) Patient education pamphlets and videos (12) Pots and pans, large utensils, reachers, and other help aids (13) New employee orientation (14) Occupational therapists' salaries (15) Copier maintenance Expense Cost Centers Professional Services: RN, therapy 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Cardiac/ Pulmonary Rehab Therapy Rehab Marketing Administrative Training