Paying for Hospital Services Operating Payment

Paying for Hospital Services

Operating Payment

            Operating payment = (Relative Weight x ((Labor Related Large Urban Standardized Amount x San Francisco CBSA Wage Index) + (Nonlabor Related National Large Urban Standardized Amount x Cost of Living Adjustment)) x (1 + IME + DSH)). (Kronenfeld, 2011).

The case weight for the kidney transplant is 4.1370 while the Medicare approved cost is $ 150000.

Therefore operating expense will be 4.137 x ((3397.52 x 1.5419) + (1476.09 x 1) x ( 1 + 0.0744 + 0.1413)) based on table of values used in calculations.

                        = (4.137 x (3399.0619 + 1476.09) x (1.2157))

                        = 24518.8496

Operating payment therefore = $ 24518. 85

 

Capital Payment

Capital Costs = ((DRG Relative Weight x Federal Capital Rate x Large Urban Add-On x Geographic Cost Adjustment Factor x COLA) x (1 + IME + DSH)) (Neun & Santerre, 2012).

For the case of kidney transplant with case weight of 4.1370 the capital cost will therefore be = (( 4.1370 x 427.03 x 1.03 x 1.3452 x 1) x (1 + 0.0243 + 0.0631)

            = 2447.75525 x 1.0874

            = 2661.689

Capital Payment therefore = $ 2661.69

 

 

Eligibility Criteria

            Operating cost, in this case, will be

                        Billed charges x operating cost to charge ratio

                        = 150000 x 0.38

                        = $ 57000

            Capital cost will be

                        Billed charges x capital cost to charge ratio

                        = 150000 x 0.04

                        = $ 6000

The outlier threashold will be

Operating CCR = (operating cost/total costs) (Neun & Santerre, 2012)

                                    = 57000/ (57000+6000)

                                    = 57000/63000

                                    = 0.9048

Operating Outlier Threshold = ((Fixed Loss Threshold x ((Labor related portion x San Francisco CBSA Wage Index) + Non-labor related portion)) x Operating CCR to Total) + Federal Payment with IME and DSH (Tomkins, 2010)

                        ((24485 x ((0.697 x 1.5419) + 0.303)) x 0.9048) + 24518.85)

                        = $ 55039.85

           

Capital CCR = (capital cost/total costs)

                                                = 6000/63000

                                                = 0.0952

Capital Outlier Threshold = (Fixed Loss Threshold x Geographic Adj. Factor x Large Urban Add-On x Capital CCR to Total CCR) + Federal Payment with IME and DSH

= (24485 x 1.3452 x 1.03 x 0.0952) + 2661.69

=$ 5891.38

Total operating costs are not greater than the total outlier threshold (McAneny, 2010)

            This is = 57000 + 6000 = 63000

            And = 55039.85 + 5891.38 = 60931.23

Therefore, the hospital will qualify for Medicare outlier payment.

 

Total Payment to the Hospital

Operating outlier payment = (operating costs – operating outlier threshold) x marginal cost factor

= (57000 – 55039.85) x 0.8

= $ 1568.12

Capital Outlier Payment = (Capital Costs - Capital Outlier Threshold) x Marginal Cost Factor)

            = (6000 – 5891.38) x 0.8

            = $ 86.90

Total payment = (57000+6000+1568.12+86.90)

                        = $ 64655.02

 

 

 

 

 

Paying for Physician Services

Medicare Payment for a Participating Physician

Cost Incurred = [(work RVU x work GPCI) + (Practice Expense RVU x Practice Expense GPCI) + (Malpractice RVU x Malpractice GPCI)] x Conversion Factor] (Brennan, Dosoretz & Falit, 2013)

Where RVU is the relative value unit and the GPCI is the geographical cost index

= [(27.45 x 1.092) + (43.05 x 1.743) + (10.32 x 0.543)] x 64.43

= (29.98 + 75.04 + 5.60) x 64.43

= $ 7127.25

            Medicare payment for participating physicians is 80%

            Therefore in this case the Medicare payment =

                        0.8 x 7127.25

                        = $ 5701.80

 

In this case, the patient is responsible for settling 20% of the approved amount.

            Since Medicare covers 80% of the total amount incurred ($5701.80), the patient will pay the remaining amount from the total ($ 7127.25) payment at 20% that constitutes

                        = $ 1425.45

 

 

 

 

 

Medicare Payment for a Non-Participating Physician Electing Assignments

            A participating physician takes all the assignments for all Medicare claims and receives full Medicare compensation for the cost incurred (Medicare Contracting Reform, 2008). For non-participating physicians, the allowable amount from Medicare constitutes 95% of the total amount allowed for attending physicians. For a doctor who elects assignments, Medicare only covers 80% of the total amount incurred whereas the physician receives the remaining 20% as deductibles to the client (Tomkins, 2010). The doctor agrees not to charge the patient any amount above the agreeable 20% in deductions.

In this case, for therefore Medicare will pay;

            (95/100  x 7127.25) x 80/100

            = $ 5416.71

Medicare directly pays 80% to the physician therefore 80% 0f 5416.71

            = $ 4333.37

 

            In this instance, therefore, the patient will cover the remaining amount from out of pocket, which is the full Medicare fee schedule less the amount directly paid by Medicare.

            = 7127.25 – 4333.37

            = $ 2793.88

 

 

 

 

 

Medicare Payment for a Non-Participating Physician Not Electing Assignments

For non-participating physicians, the allowable amount for Medicare constitutes 95% of the total amount allowed for attending physicians (Medicare Contracting Reform, 2008). For a doctor who does not select tasks, Medicare therefore, will cover 95% of the total amount incurred whereas the 5% applies in every aspect.

In this case, for therefore the payment will be;

(95/100  x 7127.25)

= $ 6770.89

80% of 6770.89 = 5416.71

Therefore, Medicare will directly pay $ 5416.71

 

In this case, therefore, the patient will cover the remaining amount from out of pocket, which is the whole Medicare fee schedule less the amount directly paid by Medicare (Neun & Santerre, 2012).

            = 7127.25 – 5416.71

            = $ 1710.54

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