1. Prepare a revenue budget for Saunders Home Health Agency. Blue Cross members

Question

1. Prepare a revenue budget for Saunders Home Health Agency. Blue Cross members can only be charged $60 for a nurse visit by the agency, even though the agency normally charges $75. Aetna Insurance Company has agreed to pay 80% of the agency’s normal charge. Medicaid regulations call for it to pay the cost of care, and that the cost of each visit is $45. Suppose further that Medicare has a fee schedule that calls for it to pay $50 for this type of patient. The agency gives a $50 discount to poor uninsured patients, charging them only $25. Saunders expects 40 Blue Cross, 15 Aetna, 20 Medicaid, 50 Medicare, 25 uninsured and 20 self-pay visits. Of the self-pay patients, three-quarters pay their full charge, but one-quarter never pay any of their bill. Prepare a revenue budget for Saunders Home Health Agency.

Will Saunders have a profit or loss?

Explanation / Answer

Blue Cross Aetna Medicaid Medicare Uninsurance Self paid Total No of Patient 40 15 20 50 25 20 170 Charges per Patient $        60.00 $    60.00 $     45.00 $        50.00 $           25.00 $        75.00 Sales Volume $ 2,400.00 $ 900.00 $ 900.00 $ 2,500.00 $         625.00 $ 1,500.00 $ 8,825.00 Less: Cost of Visit @$45 each $ 1,800.00 $ 675.00 $ 900.00 $ 2,250.00 $     1,125.00 $     900.00 $ 7,650.00 Less: Bad debt $     375.00 $     375.00 Net Profit $     600.00 $ 225.00 $            -   $     250.00 $       (500.00) $     225.00 $     800.00 Saunders have a profit of 800 dollars.

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