Cost-Shifting Self-Quiz Problem: Assume your organization has 100 patients analy
ID: 2815565 • Letter: C
Question
Cost-Shifting Self-Quiz Problem: Assume your organization has 100 patients analyzed in the following manner: 15 Medicare patients, who pay $2,000 per diagnosis 25 Medicaid patients, who pay $1,800 per diagnosis 20 managed care patients, who pay charges minus a 20% discount 10 managed care patients, who pay charges minus a 25% discount 10 private insurance patients, who pay charges 10 charity care patients, who pay nothing 10 bad debt patients, who pay nothing Your organization’s average cost per patient is $2,000. Calculate the charge necessary to recover your cost.
Cost Cutting Self-Quiz Problem: Using the data from the self-quiz problem on cost shifting, assume those who pay charges will allow a maximum charge of $2,100. Calculate the amount of costs you will need to cut to break even.
Explanation / Answer
Hello Sir/Mam
Total Cost of organisation = 2000*100 = $200000
Hence, solving for X, charges necessary to recover the cost = $3731.34
(b) If we can recover a maximum of $2,100, thw break even costs = $75000+33.5*2100 = $145,350
I hope this solves your doubt.
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Number of Patients Revenue Per Patient Total Revenue Medicare 15 2000 30000 Medicaid 25 1800 45000 Managed Care@20%discount 20 0.8X 16X Managed Care@25%discount 10 0.75X 7.5X Private Insurance 10 X 10X Charity Care 10 0 0 Bad Debt 10 0 0 100 75000+33.5X