Assignment: Commercial Insurance Reimbursement and Capitation

You have been hired as the billing manager for Nash Medical Center and Clinics. One of your responsibilities is to calculate what the patient owes and what the insurance company owes, so that you can determine what revenue to expect for these services. You have the charge and the usual, customary, and reasonable (UCR) amount. The reimbursement will be calculated on the 80/20 distribution. The deductibles for each of these patients have been met. Under this insurance plan, $20.00 copays are due for primary care physician office visits and $40.00 copays for specialists. There is no copay for other services.

The Medical Center also recently negotiated with a group of employers to treat their patients based on a capitated amount of $750 per person per month (pmpm) This group of employers has combined 6,525 employees. You predict that your cost will be $610 per month per person.

The budgeted revenue was initially $1,575,000.

You were provided with the following report.

ServiceChargeUCRPatient’s CopayPatient’s CoinsuranceInsurance PaysPatient Owe
Internal medicine$120.00$120.00    
Physical therapy$150.00$97.00    
Specialty visit$165.00$90.00    
Specialty visit$75.00$70.00    
Lab test$32.00$19.00    
Lab test$45.00$29.00    

Instructions for this assignment:

Part I: Determine the patient’s responsibility by completing the chart.

Using the reimbursement information, calculate:

  • Patients Copay amount (if applicable)
  • Coinsurance
  • Amount insurance will pay
  • How much the patient owes

Part II: Based on the negotiated capitation (pmpm) amount, predict:

  • Expected revenue and total profit per month
  • Expected revenue and total profit per year

An executive summary is a document or proposal that provides a brief overview or summary. In this case, it is used to summarize the findings of your report.  

In a 1-2 page executive summary:

  • Calculate the reimbursement amount for each service.
  • Calculate expected revenue and total profit per month and per year.
    • Summarize your reimbursement data
  • Summarize your prediction and forecasting data.
    • Compare to the budgeted revenue.
  • Explain potential reasons for budget variances.

Submit your executive summary and calculations.

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