A hospital gets 60% of its revenue from Medicare and Medicaid patients, 38% from patients with healthcare insurance that base reimbursements on the Medicare model, and 2% of its revenue from uninsured patients who pay the full standard fees for medical services. The hospital increases its base service charge by 10%. If all other factors remain the same, revenues from patient care will increase by only 0.2%.

Question

Quizplus · Accepted Answer

Raising the base service charge will have no effect on revenues from Medicaid, Medicare, and the insurers, since those payers reimburse based on Diagnosis Related Groups, not on the hospital's service charges. Only the patients paying full price for their care will pay 10% more. Since they contributed only 2% of revenues, the increase in revenues will be 10% x 2% = 0.2%.

A Hospital Gets 60% of Its Revenue from Medicare and Medicaid