Discuss Contractual Allowances

Required

• 1. Set up a worksheet with individual columns across the top for six revenue sources (payers): Medicare, Medicaid, Other Public Programs, Patients, Commercial Insurance, and Managed Care Contracts.
• 2. Certain situations concerning the Intensive Care Unit and the Laboratory are described below. Set up six vertical line items on your worksheet, numbered 1 through 6. Six situations are described below. For each of the six situations, indicate its number (1 through 6) and enter the appropriate cost center (either Intensive Care Unit or Laboratory). Then place an X in the column(s) that represents the correct revenue source(s) for the item. The six situations are as follows:
  • (1) ICU stay billed to employee’s insurance program.
  • (2) Lab test paid for by an individual.
  • (3) Pathology work performed for the state.
  • (4) ICU stay billed to member’s health plan.
  • (5) ICU stay billed for Medicare beneficiary.
  • (6) Series of allergy tests run for eligible Medicaid beneficiary.

  Headings for your worksheet:

  	Medicare	Medicaid	Other Public Programs	Pat Assignment Exercise 4–1: Contractual Allowances Physician office revenue for visit code 99214 has a full established rate of $72.00. Of 10 different payers, there are 9 different contracted rates, as follows: Payer Contracted Rate FHP $35.70 HPHP 58.85 MC 54.90 UND 60.40 CCN 70.20 MO 70.75 CGN 10.00 PRU 54.90 PHCS 50.00 ANA 45.00 Rates for illustration only. Required 1. Set up a worksheet with four columns: Payer, Full Rate, Contracted Rate, and Contractual Allowance. 2. For each payer, enter the full rate and the contracted rate. 3. For each payer, compute the contractual allowance. The first payer has been computed below:   Full   Contracted   Contractual Payer Rate (less) Rate (equals) Allowance FHP $72.00   $35.70   $36.30 Example 4B: Revenue Sources and Grouping Revenue Sources of healthcare revenue are often grouped by payer. Thus, services might be grouped as follows: Revenue from the Medicare Program (payer = Medicare) Revenue from the Medicaid Program (payer = Medicaid) Revenue from Blue Cross Blue Shield (payer = Commercial Insurance) or Revenue from Blue Cross Blue Shield (payer = Managed Care Contract)   Assignment Exercise 4–2: Revenue Sources and Grouping Revenue 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 services revenue is then grouped by payer. Required 1. Set up a worksheet with individual columns across the top for six revenue sources (payers): Medicare, Medicaid, Other Public Programs, Patients, Commercial Insurance, and Managed Care Contracts. 2. Certain situations concerning the Intensive Care Unit and the Laboratory are described below. Set up six vertical line items on your worksheet, numbered 1 through 6. Six situations are described below. For each of the six situations, indicate its number (1 through 6) and enter the appropriate cost center (either Intensive Care Unit or Laboratory). Then place an X in the column(s) that represents the correct revenue source(s) for the item. The six situations are as follows: (1) ICU stay billed to employee’s insurance program. (2) Lab test paid for by an individual. (3) Pathology work performed for the state. (4) ICU stay billed to member’s health plan. (5) ICU stay billed for Medicare beneficiary. (6) Series of allergy tests run for eligible Medicaid beneficiary. Headings for your worksheet:   Medicare Medicaid Other Public Programs Pat