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Your facility has the following payer mix:
40% commercial insurances
25% Medicare insurance
15% Medicaid insurance
15% liability insurance
5% 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?)
Answers:
1. Commercial $6,820.00,
Medicare $6,200.00
Medicaid $4,030.00
Liability $12,400.00
Self-pay/Others $6200.00
Total A/R: $14,105,000.00
2. $12,400*125% = $15,500.00, $15,500*2000= $31,000,000
3. $16,895,000.00; You may not collect over R/C contracted fees if you are a Participating Provider. However you would be able to collect the difference on a self-pay patient. Differences for contractual payers would need to be a write-off
4. Fixed: Wages-salaried (nurses, technicians) , Licensing of facility, Insurances (malpractice, business etc.)
Variable: Utility, building, usage exp (lights, heat, technology), materials/supplies (gowns, drapes, bedsheets), Medications, Per diem staff;
Direct: Wages-salaried (nurses, technicians), materials/supplies (gowns, drapes, bedsheets), Medications, Per diem staff;
Indirect: Utility/building, Licensing of facility, Insurances
5. Contribution Margin = Sales—Variable Costs $14,105,000.00-($3395.00*2000)= $7,315,000.00; $7,315,000/2000= CM per case of $3657.50
6. Breakeven Volume = Fixed Costs / Contribution Margin per unit , $4,350,000/3657.50= 1189.3
7. Profit = (volume x contribution margin per unit) – fixed costs,
$150,000.00= $3657.50V – $4,350,000,
$4,500,000=$3657.50V
$4,500,000/$3657.50=V
1230.3=V
Volume required to generate $150,000 is 1230 units.
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