Explore BrainMass

Healthcare Revenue Determination

This content was STOLEN from BrainMass.com - View the original, and get the already-completed solution here!

Describe what is revenue determination? List and discuss the three payment-determination bases? Explain the difference between a "specific services" payment unit compared to a "bundled services" payment unit? Describe the three major ways that health care providers can control their revenue functions?
Please include references & citations.....!

© BrainMass Inc. brainmass.com December 20, 2018, 12:40 pm ad1c9bdddf


Solution Preview

Revenue Determination
Revenue determination is healthcare is a complex. In most industries revenue determination is straightforward. In retail, the price is stated on a tag, little or no negotiation takes place between buyer and seller. Even in the high-negotiation world of B2B (business to business), terms of a contract are agreed upon by both parties and payment is in full is expected by the deadline stated in contract. As we know, in healthcare things are very different.

The Importance of Revenue Determination
After services are performed in a healthcare facility, either upfront collections are made, or an accounts receivable account is increased in the general ledger. Eventually AR must turn into cash in order for healthcare facility to remain pay its bills and remain open. The rate and percent that AR turns into cash is vitally important in controlling accounts payable for any healthcare facility. If a claim isn't filed accurately or in a timely manner, a final denial may be issued, which means no payment ever. Even delayed payment is not optimal. You may have heard the mantra "money now is better than money later". This is true because money that is not in the bank cannot be used to pay off debts, which can increase the risk of bankruptcy. In addition, some debts accrue interest and/or late charges. Also, revenue that cannot be made liquid cannot be used to invest and earn money. Any increase in the net value of an organization increases its stability and chances of survival.

The Effects of Increasing Self-pay AR
Revenue determination is critical in to financial solvency for any organization. Financial professionals at healthcare facilities are navigating through a changing landscape of high deductible plans and higher copays. The effect of this is an ever increasing amount of AR that is selfpay. Although the vast majority of the population has insurance, the payment behavior of the population would very much resemble un-insured accounts. That is because the risk of non-payments on accounts that are primarily patient pay is much higher than for accounts that would rely more on insurance payments. ...

Solution Summary

Healthcare revenue determination is examined. The expert lists and discusses the three payment-determination bases. The difference between a `specific services