HCM 520 Academy College Health Care HRM Costs Accounting Worksheet

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hcm 520

Academy College

HCM

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  1. The partners of Ortho Inc. are planning for the upcoming fiscal year. For every 1,000 patients you can expect the following rates:
  • 350 Medicare patients, in which the government will reimburse $1,200 per procedure;
  • 50 Medicaid patients, in which the state of Virginia will reimburse $750 per visit;
  • 100 Blue Cross patients in which your contract states will pay you charges less a 30% discount;
  • 100 patients from United in which the contract pays the lesser of $1,400 or 75% of charges;
  • 100 private pay patients who will pay 100% of charges;
  • 25 Charity patients who you are required to render healthcare to; and
  • 75 Self-Pay patients who will pay (on average) of 15% of our total charges.

200 Aetna patients, in which you have a negotiated contract at charges less a 15% discount;

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HCM 520 In-class Assignment 1. Name___________________ The partners of Ortho Inc. are planning for the upcoming fiscal year. For every 1,000 patients you can expect the following rates: • 350 Medicare patients, in which the government will reimburse $1,200 per procedure; • 50 Medicaid patients, in which the state of Virginia will reimburse $750 per visit; • 200 Aetna patients, in which you have a negotiated contract at charges less a 15% discount; • 100 Blue Cross patients in which your contract states will pay you charges less a 30% discount; • 100 patients from United in which the contract pays the lesser of $1,400 or 75% of charges; • 100 private pay patients who will pay 100% of charges; • 25 Charity patients who you are required to render healthcare to; and • 75 Self-Pay patients who will pay (on average) of 15% of our total charges. Charity and Self-Pay patients originated from the Hospital’s Emergency department and were a result of Ortho Inc.’s on-call commitments. Next year, Ortho Inc.’s costs will be $1,150 per patient. 1.) Calculate the gross charge necessary to recover Ortho Inc.’s total cost of operations. Be sure to consider United’s “lesser or” clause in their reimbursement rate. Hint: Profit = Total Revenue – Total Cost/ Profit Margin = Total Profit/Total Revenue. 2.) Calculate the gross charge necessary for Ortho Inc.’s to realize a 15% profit margin on its 1,000 patients. 3.) United presents a proposal to your group. They have offered to send an additional 100 patients per year to your group at a reduced rate of $1,200 per case. This rate would only pertain to the incremental patients. The marginal cost for the incremental patients is $900 per case. The practice needs to maintain its 15% profit margin; can the practice afford to accept this proposal and maintain its profit margin? Type of Payor Medicare Medicaid AETNA Blue Cross United Private pay Charity Self-pay Number of Patients Actual Rate/Visit Total Revenue - 1 Cost Total Cost Number of Patients Actual Rate/Visit Total Revenue - 1 Cost Total Cost Number of Patients Actual Rate/Visit Total Revenue - 1 Cost Total Cost Total Profit Margin Margin % Type of Payor Medicare Medicaid AETNA Blue Cross United Private pay Charity Self-pay Total Profit Margin Total Profit Margin Type of Payor Medicare Medicaid AETNA Blue Cross United United Private pay Charity Self-pay Total Profit Margin Total Profit Margin Charge Charge Charge
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Explanation & Answer

Hi, please find the attached

Type of Payor
Medicare
Medicaid
AETNA
Blue Cross
United
Private pay
Charity
Self-pay

Number of
Patients
350
50
200
100
100
100
25
75

Actual
Total
Rate/Visit
Revenue - 1 Cost
1200
420,000
750
...


Anonymous
Excellent resource! Really helped me get the gist of things.

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