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.alculate the charge Using the practice problem on cost shifting, assume that those payers that pay charges, or charges minus a discount, limit XYZ’s charges to $1,050 per patient. Calculate the amount of costs that XYZ will need to cut, or cover with additional revenues, to break even (realize no profit or loss).ssary to recover your cost.

*Easy format please.

Answer 1

		Reimbursement
Nature	People	Costs	Charges per paitient	Collection	Profit / (Loss)
Medicaid	25	50000	1800	30000	0
Medicare	15	30000	2000	45000	-5000
MC#1	20	40000	C	0.8*20*C	0.8*20*C - 40000
MC#2	10	20000	C	0.75*10*C	0.75*10*C - 20000
Private	10	20000	C	10*C	10*C - 20000
Charity	10	20000	0	0	-20000
Bad Debts	10	20000	0	0	-20000
Total	100	200000
Here C stands Charge

Then,

we need to calculate the value of charges-

Total = 30000+45000+0.8C*20+0.75C*10+C*10 = $2,00,000

41C = $2,00,000

C = $3,048.78

If cost is required to be cut then charges stable to $1,050.

Here, C = $1,050

Total Collection = 75,000 + C*41

So,

Total Collection = 75,000 + 1,050 * 41

Total Collection = 1,91,100

Then,

Total cost = 2,00,000

Cost Saving or revenue required to Break even = $2,00,000 - $1,91,100

Cost Saving = $80,899 (approx)

Thanks