Memorial Hospital is trying to calculate its expected payments from a proposed f
ID: 2781950 • Letter: M
Question
Memorial Hospital is trying to calculate its expected payments from a proposed fee structure with a local health plan. The health plan projects its hospital budget at 465 patient days per 1,000 members, with a payment rate of $1,000 per patient day. The covered population is 25,000 members, which produces a hospital budget of $11,625,000 [(465/1,000) × 25,000 × $1,000)]. The health plan proposes that a 10% withhold be put into effect, which translates to an actual per diem payment of $900. The risk pool would be shared equally by the doctors (one half) and the hospital (one half). Any negative balance in the risk pool would be assumed by the health plan. Calculate the amount of payment to Memorial Hospital under two assumptions: 500 patient days per 1,000 and 400 patient days per 1,000.
Explanation / Answer
Calculation For 500 patient days per 1000:
Hospital Payment @ 900 per day = patient per thousand * Covered population * Payment by hospital = (500/1000) * 25000 * 900 = $11250000
Risk Pool = Budget - Paid = 11625000 - 11250000 = $375000
Hospital Share of Risk Pool = 375000 * 50% = $187500
Total Hospital Payment = 11250000 + 187500 = $11437500
Calculation For 400 patient days per 1000:
Hospital Payment @ 900 per day = patient per thousand * Covered population * Payment by hospital = (400/1000) * 25000 * 900 = $9000000
Risk Pool = Budget - Paid = 11625000 - 9000000 = $2625000
Hospital Share of Risk Pool = 2625000 * 50% = $1312500
Total Hospital Payment = 9000000 + 1312500 = $10312500