Author Question: A hospital entered into a retrospective billing arrangement with a third-party payer, calling for ... (Read 81 times)

sammy · **on:** Jul 5, 2018

A hospital entered into a retrospective billing arrangement with a third-party payer, calling for interim billing rates, subject to final settlement after the year's end.

Final settlement was to be based on the hospital's submission of costs and audit by the third-party payer. During the year, the hospital provided services to patients covered by this third party, billing for 4.8 million at the hospital's established rates. However, the hospital's services at the interim billing rates were 25 percent less than the established rates. Before issuing its financial statements for the year, the hospital analyzed its costs and estimated that the rates charged to the third-party payer were 300,000 too high. For this third party, how much was the total contractual adjustment for the year?
a. 300,000
b. 1,200,000
c. 1,500,000
d. 1,700,000

Question 2

In an REA diagram, the rectangle is used to represent the composite attribute.
Indicate whether the statement is true or false