The intensity of care delivered dropped from a budgeted case mix of 0.90 to an actual case mix of 0.85. Using the formula (budget case mix index – actual case mix index) *actual members, this resulted in a $2,100 increase in actual costs.
To generate the required $80,000 profit from 10,000 projected procedures with a budgeted cost of $400,000, the break-even payment rate that needs to be set was calculated based on the provided payer mix and discount percentages.
The variance attributed to the difference between the budgeted wage rate per hour of $16 and actual rate of $17 is $1,024, which is a favorable variance.
The intensity of care delivered dropped from a budgeted case mix of 0.90 to an actual case mix of 0.85. Using the formula (budget case mix index – actual case mix index) *actual members, this resulted in a $2,100 increase in actual costs.
To generate the required $80,000 profit from 10,000 projected procedures with a budgeted cost of $400,000, the break-even payment rate that needs to be set was calculated based on the provided payer mix and discount percentages.
The variance attributed to the difference between the budgeted wage rate per hour of $16 and actual rate of $17 is $1,024, which is a favorable variance.
The intensity of care delivered dropped from a budgeted case mix of 0.90 to an actual case mix of 0.85. Using the formula (budget case mix index – actual case mix index) *actual members, this resulted in a $2,100 increase in actual costs.
To generate the required $80,000 profit from 10,000 projected procedures with a budgeted cost of $400,000, the break-even payment rate that needs to be set was calculated based on the provided payer mix and discount percentages.
The variance attributed to the difference between the budgeted wage rate per hour of $16 and actual rate of $17 is $1,024, which is a favorable variance.
The intensity of care delivered dropped from a budgeted case mix of 0.90 to an actual case mix of 0.85. Using the formula (budget case mix index – actual case mix index) *actual members, this resulted in a $2,100 increase in actual costs.
To generate the required $80,000 profit from 10,000 projected procedures with a budgeted cost of $400,000, the break-even payment rate that needs to be set was calculated based on the provided payer mix and discount percentages.
The variance attributed to the difference between the budgeted wage rate per hour of $16 and actual rate of $17 is $1,024, which is a favorable variance.
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Problem 1.
Formulate your answer based on the below information. The intensity of
care delivered dropped from a budgeted case mix of 0.90 to an actual case mix of 0.85. What dollar effect did this have on actual costs?
You have been asked by management to explain the variances in costs under your inpatient capitated contract. The following data is provided. Use the following data to calculate the variances.
Budget Actual
Inpatient Costs $12,568,500 $16,618,350
Members 42,000 42,000
Admission Rate 0.070 0.095
Case Mix Index 0.90 0.85
Cost Per Case (CMI = 1.0) $4,750 $4,900
To calculate the variances and find the dollar effect on actual costs the following formula must be used: (budget case mix index – actual case mix index) *actual members (0.90 - 0.85) * 42,000 = 2,100 0.05 * 42,000 = 2,100 (Budget Case Mix Index) 0.90 * (Members) 42,000 = 37,800 (Actual Case Mix) 0.85 * (Members) 42,000 = 35,700 37,800 – 35,700 = 2,100 ANSWER The dollar effect had an increase on actual costs Problem 2. Based on the information below, what rate must be set to generate the required $80,000 in profit in the preceding example?
You have been asked to establish a pricing structure for radiology on a per-procedure basis. Present budgetary data is presented below:
Budgeted Procedures 10,000
Budgeted Cost $400,000
Desired Profit $80,000
It is estimated that Medicare patients comprise 40 percent of total radiology volume and will pay on average $38.00 per procedure. Approximately 10 percent of the patients are cost payers. The remaining charge payers are summarized below:
Payer Volume % Discount %
Blue Cross 20 4
Unity PPO 15 10
Kaiser 10 10
Self-Pay 5 40
50% Problem 3. What is the amount of variance that is attributed to the difference between the budgeted and actual wage rate per hour? Use the following data to calculate the variances. The following information has been prepared for a home health agency.
Budget Actual
Wage Rate Per Hour $16.00 $17.00
Fixed Hours 320 320
Variable Hours Per 1.0 1.1
Relative
Relative Value Units 1,000 1,200
(RVUs)
Total Labor Hours 1,320 1,640
Labor Costs $21,120 $27,880
Cost Per RVU $21.12 $23.23
Budgeted costs at actual volume would be $25,344 ($21.12 × 1,200), and the total variance to be explained is $2,536 Unfavorable ($27,880 - $25,344). Be sure to specify whether the variance is favorable or unfavorable.
(Budgeted Volume – Actual Volume) * Budgeted Fixed Cost Per Unit
(1,000 – 1,200) * $5.12 = $1,024 The variance is favorable Budgeted Fixed Cost Per Unit = (320 Hours * $16.00)/1,000 Units = $5.12
