Our model must now consider significant changes that will occur next year: Medic
ID: 366774 • Letter: O
Question
Our model must now consider significant changes that will occur next year:
Medicare reimbursement will decline to $90 per case.
Medicaid Volume will increase to 150 cases due to the ACA.Reimbursement will decrease to $50 per case.
Managed Care Plan #1 remains unchanged.
Managed care plan #2wants to pay a lower cost per case and is willing to send 250 more patients (350 total) to the clinic in return for a rate of $110 per case.
Uninsured volume will decrease to 50 cases due to the ACA,
A new Managed Care Plan #3 contract has been negotiated which will reimburse 80% of BC and the expected volume is 100 cases.
As a result of the increased volume, the average cost per case will decrease to $95 due to increased volume, economies of scale and product standardization efforts.
Original Position
Total Cost $100,000
Total Volume 1,000
Average Cost $100
Desired Net Income $5,000
Revenue
Volume
Per Case Revenue
Amount
Medicare
400
$95.00
$ 38,000.00
Medicaid
100
$75.00
$ 7,500.00
Managed Care Plan #1
300
$110.00
$ 33,000.00
Total Fixed Schedule Payers
$ 78,500.00
Revenue
Volume
Per Case Revenue
Amount
Managed Care Plan #2
100
100 x 80% x $294.44
$ 23,555.20
Uninsured
100
100 x 10% x $294.44
$ 2,944.40
Total % BC Payers
$ 26,499.60
We calculated that the new required price is $294.44
Shortfall is $26,500 ($100,000 + $5,000) - $78,500)
Divide $26,500 by 90 = $294.44
Projected Position Next Year
Total Cost $128,250 (1350 x $95)
Total Volume 1,350
Average Cost $95
Desired Net Income $5,000
Revenue
Volume
Per Case Revenue
Amount
Medicare
400
$90.00
$ 36,000.00
Medicaid
150
$50.00
$ 7,500.00
Managed Care Plan #1
300
$110.00
$ 33,000.00
Managed Care Plan #2
____
$110.00
$ ________
Total Fixed Schedule Payers
$ ___________
Revenue
Volume
Per Case Revenue
Amount
Managed Care Plan #3
100
100 x 80% x $_______
$_________
Uninsured
50
50 x 10% x $_______
$_________
Total % BC Payers
$_________
New Required Price____________
Revenue
Volume
Per Case Revenue
Amount
Medicare
400
$95.00
$ 38,000.00
Medicaid
100
$75.00
$ 7,500.00
Managed Care Plan #1
300
$110.00
$ 33,000.00
Total Fixed Schedule Payers
$ 78,500.00
Revenue
Volume
Per Case Revenue
Amount
Managed Care Plan #2
100
100 x 80% x $294.44
$ 23,555.20
Uninsured
100
100 x 10% x $294.44
$ 2,944.40
Total % BC Payers
$ 26,499.60
We calculated that the new required price is $294.44
Shortfall is $26,500 ($100,000 + $5,000) - $78,500)
Divide $26,500 by 90 = $294.44
Projected Position Next Year
Total Cost $128,250 (1350 x $95)
Total Volume 1,350
Average Cost $95
Desired Net Income $5,000
Revenue
Volume
Per Case Revenue
Amount
Medicare
400
$90.00
$ 36,000.00
Medicaid
150
$50.00
$ 7,500.00
Managed Care Plan #1
300
$110.00
$ 33,000.00
Managed Care Plan #2
____
$110.00
$ ________
Total Fixed Schedule Payers
$ ___________
Revenue
Volume
Per Case Revenue
Amount
Managed Care Plan #3
100
100 x 80% x $_______
$_________
Uninsured
50
50 x 10% x $_______
$_________
Total % BC Payers
$_________
New Required Price____________
Explanation / Answer
-Managed care plan 2 volume =100,per case $110 Amount=$110*100=$11,000
Total Fixed Schedule Payers= $36,000+$7,500+$33,000+$11,000=$87,500
We calculated that the new required price is $481
Shortfall= ($128,250 + $5,000) - $87,500)=$45,750 Divide $45,750 by $95 = $45,750/95=$481
Managed Care Plan #3=100 x 80% x $481=$38480
Uninsured=50*10%*$481=$2405
Total amount= $38480+$2405=$40,885
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