Revenue Cycle

Scenario: Calculating a patient's coinsurance amount at a Method I CAH

Medicare Update for CAHs, April 18, 2012

Question: If a hospital charges $1,000 for an outpatient procedure and the cost of the procedure has been determined to be $500 based on its outpatient cost-to-charge ratio of .50, then under Method I billing, what will be the total payment to the CAH, including the patient’s coinsurance amount?

Note: Calculate the patient’s coinsurance amount and the FI/MAC payment to the CAH to get the total reimbursement amount.

Answer: Under Method I billing, the hospital would be paid $200 from the patient and $305 from the FI/MAC for a total payment of $505. (500 X 1.01 = $505; patient pays 20% of charges = $200; FI/MAC pays 101% of cost minus coinsurance=$505-$200=$305.)

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