Healthcare Finance: HLTH420 – 1304A – 01

Baker & Baker – Chapters 9-12Healthcare Finance: HLTH420 – 1304A – 01Unit3 – Individual Project500-700 words Your facility has the following payer mix:

40% commercial insurances = 80025% Medicare insurance = 500 15% Medicaid insurance = 300 15% liability insurance = 300 5% all others including self-pay = 100

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?) (Calculated above )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?)

Calculating Individual Reimbursement Rates for the 5 Payers (Commercial Medicare Medicaid Liability Self pay / OtherMedicare Rate (Baseline) $6200Commercial Insurance 110%Medicaid 65% of MedicareLiability Insurers 200% of MedicareOthers Average 100% of Medicare Rates 1. What are the expected rates of reimbursement for this time frame for each payer? What is your expected A/R?2. 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.3. What is the difference between the two A/R rates above? Can you collect it from the patient? What happens to the difference?Rate to be charged for Services $12,400 *125% Total= $15,500 2000 *$15,500= 31,00,000.00You may not collect over R/C contracted fees if you are a Participating Provider. However you would be able to collect on a self-pay patient.Differences would need to be a write-off. Cost Fixed Variable Direct IndirectMaterials/Supplies Variable Direct Wages Fixed Direct Utility/Building Variable Indirect Medications Variable Direct Licensing of Facility Fixed Indirect Insurances Fixed Indirect PerDiem Staff Variable Direct Materials/Supplies $ 2,270.00 Wages $ 2,000.00 Utility/Building 1,125.00 Insurances $ 175.00 TFC/TVC $2,175.00 $3,395.00 Contribution Margin $14,105,XXX-XX-XXXX000 $5,565,000.00 CM per case (NNN) NNN-NNNN2000 $2,782.50 BREAK EVEN $2600000/$2782.5 934.41 $150,000 PROFIT 150,000=2782.50V -(NNN) NNN-NNNN  P=(V x AR) – TFC V= (NNN) NNN-NNNN  The only payers possible to use for an NIC4. Which of these costs are fixed (does not change z)? Which are variable(changes)? Direct or indirect? Your costs can be either direct or indirect, which is a description of how they are associated with production. (Direct costs are associated with specific units while indirect costs are a lump sum that goes into doing business in general and cannot be easily measured with the production of a specific thing).o materials/supplies (gowns, drapes, bedsheets) variable indirecto Wages (nurses, technicians) fixed indirecto Utility, building, usage exp (lights, heat, technology) fixed indirecto Medications fixed directo o Licensing of facility fixed indirecto Per diem staff fixed indirecto Insurances (malpractice, business etc.) fixed direct5. 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.): $1756. Using the above information, determine which is fixed (remains the same ) and which cost is variable (changes). Then calculate the breakeven volume of cases in units for this period.7. 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 t