A hospital accepts both fee for service (FFS) and capitation payers and breaks o

Question

A hospital accepts both fee for service (FFS) and capitation payers and breaks out its revenues into FFS revenue and capitated revenue.The hospital created a static budget prior to the year and now the actual results are available so it is completing a flexible budget.If the actual number of visits for its capitated patients was higher than the budgeted number of visits (from the static budget), the total revenues for the capitated group on the flexible budget would be ________?

Higher than on the static budget

The same as on the static budget

Lower than on the static budget

Explanation / Answer

Answer is 1st option I.e. higher than on the static budget

Since the number of visit of capitated patients was higher the total revenues for the capitated group on the flexible budget would be HIGHER THAN ON THE STATIC BUDGET

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