A not-for-profit hospital signs a contract with an insurance company in which the company agrees to pay it $9 million in capitation fees for the year July 1, 2011, through June 30, 2012.Between July 1, 2011 and December 31, 2011, the hospital provides services that, at its standard rates, would bill at $5.1 million.Between January 1, 2011, and June 30, 2012, it provides services that it would bill at $4.2 million.For the year ending December 31, 2011, the hospital should recognize capitation revenue of

Question

Quizplus · Accepted Answer

Capitation revenue should be recognized based on the services actually provided, not the full amount that would be billed at standard rates. Therefore, the hospital should recognize $5.1 million in capitation revenue for the year ending December 31, 2011, which represents the amount of services provided from July 1, 2011, through December 31, 2011.

A Not-For-Profit Hospital Signs a Contract with an Insurance Company