Math Problem: Payment For Physician And Hospital Services (Math Problem Sample)

Paying for Hospital and Physician Services
Name:
Institution:
Paying for Hospital and Physician Services
Part I-Paying for Hospital Services
Mr. Scott is a 69-year old hospitalized at Hillcrest Hospital in Cleveland for a permanent cardiac pace maker procedure. The hospital incurred $150,000 as Medicare approved charges for treating him. Below is also a table of DRG for services provided at Hillcrest Hospital. These rates together with the MH4 Hospital payment examples are very useful in calculating the amount that Mr. Scott was supposed to pay for receiving the kidney transplant treatment.
DRG

Description

Case weight

115

Permanent cardiac pacemaker

3.5513

302

Kidney transplant

4.1370

441

Hand procedure/surgery

0.8785

Question 1: Operating payment for kidney transplant
What is the operating payment to be paid to the hospital for kidney transplant?
From the table above, the DRG case weight for kidney transplant is 4.1370, therefore, the computation of the operating system is as follows “DRG Relative Weight x ((Labor Related Large Urban Standardized Amount x Core-Based Statistical Area [CBSA] wage index) + (Non-labor Related National Large Urban Standardized Amount x Cost of Living Adjustment)) x (1+ Indirect Medical Education + Disproportionate Share Hospital)” (Module 4-Home).
Operating payment=4.1370 x (3,397.52x1.5419) + (1,476.97x1) x (1+0.00744+0.1413)
=4.1370x (5,238.636+ 1,476.97) x 1.2157
=4 .1370 x 6,715.606 x 1.2157
From the computation above, the operating payment for Mr. Scotts Kidney transplant is
$33,775.139
Question 2: Capital payment for kidney transplant
What is the capital payment to be paid to the hospital for kidney transplant?
To calculate the capital payment to be paid at the hospital for kidney transplant, the following computation is derived with the help of MH4 Hospital payment figures: “DRG relative Rate x Federal Capital Rate x Large Urban Add-On x Geographic Cost Adjustment Factor x Cost of Living Adjustment x (1+ Indirect Medical Education + Disproportionate Share Hospital)” (Module 4-Home).
Capital payment for kidney transplant= 4.1370 x 427.03 x 1.03 x 1.3 4.1370 x 427.03 x 1.03 x 1.3452 x 1 x (1 + 0.0243+0.0631)
=2447.755 x 1.0874
From the computation above, the capital payment to the hospital for Mr. Scotts kidney transplant is $2,661.689
Question 3: Hospital medical outlier payment
Will the hospital be eligible for the Medicare outlier payment?
According to MEDPAC (2014), “The outlier policy acts as stop-loss insurance” since they are very large amounts that results into losses, which may be costly for the hospital to make up for. Since Mr. Scott’s $ 150,000 incurred at the Hillcrest Hospital is Medicare-approved, the bill was fully catered for. That means that the hospital is not qualified for outlier payment for the total bill incurred.
Question 4: Total payment to the hospital
What is the total payment to the hospital?
The total amount paid to the hospital for Mr. Scott’s kidney transplant is the total sum of the capital payment for kidney transplant and operating payment.
Therefore, Total payment for kidney transplant = 33,775.139 + 2,661.689
$36,436.828 is the amount that Mr. Scott should pay the hospital for kidney transplant.
Part II: Paying for Physician Services
Mr. Robert, a 66-year-old Medicare beneficiary has sought for treatment from Doctor Robinson. After treatment, the cost is shared between Mr. Roberts out-pocket and the Medicare. In order to calculate the payment rate for Dr. Robinsons, the value of products provided in the table below is summed up and then the result is multiplied by the conversion factor.
Categories

RVU

Geographic cost index

Product

Work

27.45

1.092

29.98

Practice expense

43.05

1.743

75.04

Malpractice

10.32

0.543

5.60

Conversion factor

64.43



Therefore, payment rate= (29.98 + 75.04 + 5.60) x 64.43
From the calculation above, the payment rate for Dr. Robinson services is $7,127.247
Question 1: Medicare and out-of-pocket amount of payment if Dr. Robinson is a Medicare participating physician
How much will Medicare pay Dr. Robinson if Dr. Robinson is a Medicare participating physician? How much out-of-pocket payment will Mr. Roberts be responsible for?
If Dr. Robinson is a Medicare participating physician, the Medicare guidelines clearly states that both the Medicare and patients are catered for fully by the Medicare approved fee for the physician services. In this case Mr. Robert will make an out-pocket payment of 20% of the total bill and Medicare will pay for the remaining charges, that account for 80%.
Medicare payment = 80% of 7,127.247
From that computation, the Medicare will be responsible for paying Dr. Robinson $5,701.798
Mr. Roberts out-of-pocket payment= 20% of 7,127.247
From the calculations above, Mr. Robert will have to pay out-of-pocket money amounting to $1,425.449
Question 2: Medicare non-participating physician who elect assignments
How much will Medicare pay Dr. Robinson if Dr. Robinson is a Medicare non-participating physician who elects assignment? How much out-of-pocket payment will Mr. Roberts be responsible for? 
In a situatio...