Posted: September 13th, 2017

Health Care Financ/Assignment Exercise 4–1: Contractual Allowances/

Health Care Financ/Assignment Exercise 4–1: Contractual Allowances/

Physician Office Revenue for Visit Code 99214 has a full established rate of $72.00. Often different payers, there are nine 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 Payer Rate

(less)

Contracted Rate

=

Contratural Allowance

FHP $72.00

$35.7

$36.30
Assignment Exercise 6–1: Allocating Indirect Costs (note there is a worksheet attached)
Study Table 6-1 in your text (page 54), Example of Rehab Cost Center Direct and Indirect Cost Totals, and Table 6-2 (page 55), Example of Indirect Costs Allocated to Rehab Cost Center, and review the chapter text describing how the indirect cost is allocated. This assignment will change the allocation bases input for A) Number of Visits (Volume), B) Proportion of Direct Costs, and C) Number of Computers in Service.
Required
Compute the costs allocated to cost centers “Clerical Salaries”, “Administrative Salaries”; and “Computer Services” using the new allocation bases shown below. Use  worksheet #1 that replicates the set up in Table 6-2. Total the new results.
The new allocation bases are:
A= # Visits (Volume): PT=9,600/OT=4,000/ST=2,400/Total=16,000(16,000 x $3.50=$56,000)
B= Proportion of Direct Costs: PT=60%/OT=25%/ST=15%/Total =100%(%x$55,000)
C= #Computers in Service: PT=10/OT=3/ST=3/Total = 16 (16x$5,000 each = $80,000).
Using worksheet #2 that replicates the set up in Table 6-1, enter the new direct cost and the new totals for indirect costs resulting from your work. Total the new results.

Assignment Practice Exercise 7–1: Analyzing Mixed Costs
The Metropolis Health System has a system-wide training course for nurse aides. The course requires a packet of materials that MHS calls the training pack. Due to turnover and because the course is system-wide, there is a monthly demand for new packs. In addition the local community college also obtains the training packs used in their credit courses from MHS.
The Education Coordinator needs to know how much of the cost is fixed and how much of the cost is variable for these training packs. She decides to use the high-low method of computation.
Required
Using the monthly utilization information presented below, find the fixed and variable portion of costs through the high-low method.

Month    Number of Training Packs    Cost
January    1,000    $6,200
February    200    1,820
March    250    2,350
April    400    3,440
May    700    4,900
June    300    2,730
July    150    1,470
August    100    1,010
September    1,100    7,150
October    300    2,850
November    250    2,300
December    100    1,010

Assignment Exercise 7–1: Analyzing Mixed Costs
The Education Coordinator decides that the Community College packs may be unduly influencing the high-low computation. She decides to re-run the results omitting the Community College volume.
Required
1.    Using the monthly utilization information presented below, and omitting the Community College training packs, find the fixed and variable portion of costs through the high-low method. Note that the college only acquires packs in three months of the year: January, May, and September. These dates coincide with the start dates of their semesters and summer school.
2.    The reason the Education Coordinator needs to know how much of the cost is fixed is because she is supposed to collect the appropriate variable cost from the Community College for their packs. For her purposes, which computation do you believe is