chapter7

Cost shifting is the practice of

shifting costs from some payers to offset losses from another

Financial expediency is a method of setting charges on the basis of

the financial needs of the provider

What factors are taken into consideration when using financial expediency as a method of setting charges?

A. Cost of providing services to charge-based patients B. Losses to Medicare and Medicaid C. Cost of bad debt and charity care D. All of the above

Departments that use the hourly rate method of setting charges

A. include physical therapy and radiology B. charge per hour or modality of time for services D. (a) and (b)

Pricing products and services low in the long term by making fundamental changes to the products or services is known as ______ pricing.

A. slash

Using the surcharge method of setting charges, calculate the charge necessary to cover total costs for 250,000 admission kits given that at East Side Clinic total projected cost of kits and administration = $375,000 and total projected cost of admission kits = $250,000.

B. $1.50

Departments that know the cost of their products use which method of setting charges?

B. surcharge method

Most providers agree that the following method of reimbursement is the least favorable.

B.capitation

What two factors have led to lower charges in the healthcare industry?

B.managed care; prospective payment systems

Using the hourly rate method of setting charges, calculate the charge per modality necessary to recover total costs given that at Stretch Sports Medicine Clinic total projected costs per year = $600,000, total projected hours of use per year = 15,000, and modality = 20 minutes.

C. $13.33

Using the __________ method of setting charges, providers can set charges to break even or realize a profit.

C. RVU

Pricing products or services relative to the market leader is known as _________ pricing.

C. follower

Providers set charges on the basis of _________ in competition-driven charging.

C. what the market will bear

What does the Patient Protection and Affordable Care Act of 2010 require not-for-profit hospitals to do regarding charges?

D. Limit charges to patients who are eligible for assistance

Most providers agree that the following method of reimbursement is the most favorable.

D. charges

Charge master enrichment ensures that

a. healthcare organizations are charging only for items third-party payers recognize as legitimate charges

Price-driven costing is the practice of

b. cutting costs to break even with charges

Charge capture assessment ensures that

b. healthcare organizations do not lose charges

Charging analysis ensures that

c. charges set for specific items result in maximum reimbursement

Setting charges on the basis of consensus provokes

cost shifting