Your facility has the following payer mix:40% commercial insurances25% Medicare insurance15%...

Question

Your facility has the following payer mix:
40% commercial insurances25% Medicare insurance15% Medicaid insurance15% liability insurance5% 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?

David · Accepted Answer

1. Expected rates of reimbursement for the time frame for each of the payer and the expected A/R is computed below:
· Expected rates of reimbursement
	Name of Payer
	Computation
	Result
	Commercial insurance
	
	$6,820
	Medicare insurance
	
	$4,030
	Liability insurance
	
	$12,400
	Other insurance
	
	$6,200
· Expected A/R
Expected A/R = /2000
2. Total charge for all cases based on rate needs to be computed. 
The charge rate for all payer = Total revenue/(Total cases * base rate) = 14105000/(2000*6200) = 1.1375
Hence, a hike of 13.75% needs to be given
	Name of Payer
	Computation
	Result
	Commercial insurance
	
	$7,052.5
	Medicare insurance
	
	$7,052.5
	Liability insurance
	
	$7,052.5
	Other insurance
	
	$7,052.5
Total A/R would be equal to $ 7,052.5 since all the services are priced at the same price.
3.

Your facility has the following payer mix: 40% commercial insurances25% Medicare insurance15% Medicaid insurance15% liability insurance5% all others including self-pay Write a 3-4 page report that...

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