1 Third-party payors contract with the organization to reimburse a set amount, a
ID: 2500533 • Letter: 1
Question
1
Third-party payors contract with the organization to reimburse a set amount, and the organization risks a loss if costs are greater than the amount reimbursed.
Any amount not reimbursed by a third-party payor or paid by the patient must be included in the amount reported as charity care.
2.
The controller for Bloomingfield Regional Hospital estimated that the uncollectible patient accounts have increase by $152,000. The controller’s journal entry included a debit to bad debt expense and a credit to allowance for uncollectible receivables. Based on this, Bloomingfield Regional Hospital is
Why are health care organizations motivated to track the actual costs of services?Explanation / Answer
1. The health care organisation must record the actual cost of services since third party payors will reinburse the same.
2.The hospital is properly recording the estimate for uncollectable accounts under the FASB and GASB standards
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