40% commercial insurances 25% Medicare insurance 15% Medicaid insurance 15% liability insurance 5% all others including self-pay
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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?)
1. What are the expected rates of reimbursement for this time frame for each payer? What is
your expected A/R?
2. What rate should you charge for these services (assuming one charge rate for all payers)?
(This gives you your total A/R.) Calculate the total charges for all cases based on this
3. What is the difference between the two A/R rates above? Can you collect it from the
patient? What happens to the difference?
4. Which of these costs are fixed? Which are variable? Direct or indirect?
o materials/supplies (gowns, drapes, bedsheets)
o Wages (nurses, technicians)
o Utility, building, usage exp (lights, heat, technology)
o Licensing of facility
o Per diem staff
o Insurances (malpractice, business etc.)
5. Calculate the contribution margin for one case (in $) with the following costs for this
period, per case: a. materials/supplies: $2270 b. Wages: $2000 c. Utility, building, usage
exp: $1125 d. Insurances (malpractice, business etc.): $175
6. Using the above information, determine which is fixed and which cost is variable. Then
calculate the breakeven volume of cases in units for this period.
7. Suppose you want to make $150,000 profit between this period and next period to fund
an expansion to the NICU, how many cases would you have to see? At what payer mix
would this be optimal?
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