A Hospital Had Capitation Agreements with Several Health Maintenance Organizations

A hospital had capitation agreements with several health maintenance organizations to provide services.The hospital received $12 million of capitation fees for the year.The hospital also calculated that: (a) its costs to provide these services were $11.8 million;and (b) the value of these services at established billing rates were $16 million.How should the hospital report this information on the face of its financial statements?

A) report $200,000 as a separate item of revenue,labeled net premium revenue.
B) add $16 million to Net patient service revenue,and deduct $4 million in a separate item labeled Adjustment for capitation premiums.
C) report Premium revenue of $12 million as a separate item of revenue,and report cost of serving HMO patients of $11.8 million as a separate item of expense.
D) report premium revenue of $12 million as a separate item of revenue,if significant.