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## Assignment: Commercial Insurance Reimbursement and Capitation This assignment will help you apply key concepts in revenue cycle management by analyzing how healthcare organizations are reimbursed under both fee-for-service and capitation payment models. You will calculate patient and insurance re…

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Assignment Prompt & Instructions

## Assignment: Commercial Insurance Reimbursement and Capitation

This assignment will help you apply key concepts in revenue cycle  management by analyzing how healthcare organizations are reimbursed  under both fee-for-service and capitation payment models. You will  calculate patient and insurance responsibilities, forecast revenue, and  prepare an executive summary with recommendations for leadership.

### **Scenario**

You have recently joined Nash Medical Center and Clinics as the  Billing Manager. One of your first responsibilities is to review how the  organization is reimbursed for patient services. Leadership has asked  you to:

– Calculate **how much patients and insurance companies owe** for different services.

– Forecast **monthly and annual revenue** under a capitation agreement.

– Prepare an **executive summary** highlighting your findings, key trends, and any recommendations for improvement.

Your work will help senior leadership evaluate the organization’s  financial performance and make informed decisions about future payer  contracts.

You were provided with the following report.

Service

Charge

UCR

Patient's Copay

Patient's Coinsurance

Insurance Pays

Patient Owe

Internal medicine

$120.00

$120.00

Physical therapy

$150.00

$97.00

X-ray

$115.00

$73.00

MRI

$1,845.00

$147.00

Specialty visit

$165.00

$90.00

Specialty visit

$75.00

$70.00

Lab test

$32.00

$19.00

Lab test

$45.00

$29.00

Mammogram

$151.00

$95.00

## Instructions for this assignment:

### **Assignment Instructions**

#### **Part I: Fee-for-Service Reimbursement Calculations**

You have been provided a table listing charges and **usual, customary, and reasonable (UCR)** amounts for multiple services.

– Assume **deductibles have been met** for all patients.

– Apply **80/20 coinsurance**: insurance pays 80%, patients pay 20%.

– Include **copays**:

– $20 for primary care visits

– $40 for specialty visits

– $0 for all other services

**Your tasks:**

1. Calculate the **patient’s copay** (if applicable).

2. Determine the **patient’s coinsurance** (20%).

3. Calculate the **insurance payment** (80%).

4. Find the **total patient responsibility** (copay + coinsurance).

#### **Part II: Capitation Revenue Forecast**

The medical center has negotiated a **$750 per member per month (PMPM)** capitation rate for **6,525 members**. The **expected cost** is **$610 PMPM**.

You will calculate:

– **Monthly revenue** and **monthly profit**

– **Annual revenue** and **annual profit**

– **Variance** between annual revenue and the **budgeted amount of $1,575,000**

– Possible **reasons for any differences**, such as membership changes or cost fluctuations

#### **Part III: Executive Summary**

After completing your calculations, prepare a **3–5 page executive summary** (excluding title page, abstract, and references) that includes:

– **Introduction:** Purpose and scope of your report

– **Reimbursement Findings:** Key results from Part I, including patterns or trends

– **Capitation Forecast Findings:** Key results from Part II, including any budget variances

– **Recommendations:** At least **two actionable strategies** to improve revenue cycle efficiency or forecasting accuracy

– **Conclusion:** Summary of financial insights for leadership

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