19. Revenue budget: calculating net revenues. Calculate ZMG Hospitalist Practice

Question

19. Revenue budget: calculating net revenues. Calculate ZMG Hospitalist Practice’s January, February, and March Medicaid/Self-Pay net revenues if the fee for an admission is $200 and the fee for a follow-up encounter is $100 (Exhibits I.1e and I.2a). Assume that Medic- aid reimburses at a rate of 30% of charges.

Exhibit 1.1e Weighted Encounters by payor and type

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Total

Commercial

Admissions

1,892

1,768

1,908

1,772

1,692

1,736

1,776

1,828

1,760

1,860

1,788

1,968

21,748

Follow-up

2,838

2,652

2,860

2,656

2,540

2,606

2,664

2,740

2,638

2,792

2,684

2,950

32,620

Total

4,730

4,420

4,768

4,428

4,232

4,342

4,440

4,568

4,398

4,652

4,472

4,918

54,368

Medicare

Admissions

2,944

2,748

2,964

2776

2636

2704

2760

2844

2736

2896

2784

3060

33,832

Follow-up

4,416

4,124

4,448

4,132

3,952

4,054

4,142

4,264

4,104

4,342

4,176

4,588

50,742

Total

7,360

6,872

7,412

6,888

6,588

6,758

6,902

7,108

6,840

7,238

6,960

7,648

84,574

Medicaid/Self Pay

Admissions

420

392

424

392

376

388

396

408

392

412

396

436

4,832

Follow-up

630

590

636

590

564

580

592

610

586

620

596

656

7,250

Total

1,050

982

1,060

982

940

968

988

1,018

978

1,032

992

1,092

12,082

Total

13,140

12,274

13,240

12,298

11,760

12,068

12,330

12,694

12,216

12,922

12,424

13,658

151,024

Note: Computed by multiplying the projected encounters by type and payor in Exhibit 1.1c by the RVUs (4 for admissions, 2 for follow-up) in exhibit 1.1d, rounded to the nearest whole number

EXHIBIT I.2a ILLUSTRATION OF HOW JANUARY’S NET PATIENT SERVICE REVENUES IN THE ZMG HOSPITALIST PRACTICE’S OPERATING BUDGET (EXHIBIT 10.10) WERE DEVELOPED

A

Weighted

Encountersa

B

Feesb

C

Gross Patient Service Revenues

(A x B)

D

Discount

Percentageb

E

Discountc

F

Net Patient

Service

Revenues

(C – E)

Commercial

Admissions

1,892

$52.50

$99,330

Follow-up

2,838

$52.50

$148,995

Total

4,730

$248,325

30%

$74,498

$173,828

Medicare

Admissions

2,944

$52.50

$154,600

Follow-up

4,416

$52.50

$231,840

Total

7,360

$386,400

40%

$154,560

$231,840

Medicaid/Self Pay

Admissions

420

$52.50

$22,050

Follow-up

630

$52.50

$33,075

Total

1,050

$55,125

70%

$38,588

$16,538

Charity Care

1%

$165

Total

13,140

$689,850

$267,810

$422,040

aExhibit I.1d.

bNew information.

cThe discount is computed by multiplying the total of gross charges for each payor by the discount percentage. In the case of Medicaid/Self-Pay, 1 percent of Medicaid/Self-Pay net revenues is considered charity care; therefore, this additional discount is computed by multiplying Medicaid/Self-Pay net patient service revenues by 1 percent.

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

Total

Commercial

Admissions

1,892

1,768

1,908

1,772

1,692

1,736

1,776

1,828

1,760

1,860

1,788

1,968

21,748

Follow-up

2,838

2,652

2,860

2,656

2,540

2,606

2,664

2,740

2,638

2,792

2,684

2,950

32,620

Total

4,730

4,420

4,768

4,428

4,232

4,342

4,440

4,568

4,398

4,652

4,472

4,918

54,368

Medicare

Admissions

2,944

2,748

2,964

2776

2636

2704

2760

2844

2736

2896

2784

3060

33,832

Follow-up

4,416

4,124

4,448

4,132

3,952

4,054

4,142

4,264

4,104

4,342

4,176

4,588

50,742

Total

7,360

6,872

7,412

6,888

6,588

6,758

6,902

7,108

6,840

7,238

6,960

7,648

84,574

Medicaid/Self Pay

Admissions

420

392

424

392

376

388

396

408

392

412

396

436

4,832

Follow-up

630

590

636

590

564

580

592

610

586

620

596

656

7,250

Total

1,050

982

1,060

982

940

968

988

1,018

978

1,032

992

1,092

12,082

Total

13,140

12,274

13,240

12,298

11,760

12,068

12,330

12,694

12,216

12,922

12,424

13,658

151,024

Explanation / Answer

The calculation of Net revenues for January, February and March, for Medi aid/Self pay is done below:

       CALCULATION OF NET REVENUES OF MEDI AID/SELF PAY Gross Net Weighted Patient Discount Patient Encounters Fees Revenues % Discount Rvenues A B C D E C - E JANUARY Admissions 420 200 84000 30 25200 58800 Follow up 630 100 63000 30 18900 44100 1,050 147000 44100 102900 Charity Care 1 1029 Total for January 1,050 147000 45129 101871 FEBRUARY Admissions 392 200 78400 30 23520 54880 Follow up 590 100 59000 30 17700 41300 982 137400 41220 96180 Charity Care 1 962 Total for February 982 137400 42182 95218 MARCH Admissions 424 200 84800 30 25440 59360 Follow up 636 100 63600 30 19080 44520 1,060 1,060 44520 103880 Charity Care 1 1039 Total for March 1,060 1,060 45559 102841

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