CHFA flashcards
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32 cards. Read the term and the definition here. The deck at the top of this page is optional.
- Net patient service revenue
- Gross patient charges less contractual allowances, discounts, and charity care (if included). It is the amount the organization expects to collect for services.
- Charity care vs bad debt
- Charity care is free or discounted care for eligible patients who cannot pay; bad debt is unpaid amounts from patients who could pay but did not. They are reported separately.
- Contribution margin
- Revenue minus variable costs. It measures the amount available to cover fixed costs and contribute to profit.
- Break-even point
- The volume at which total revenue equals total costs (fixed plus variable). Calculated as fixed costs divided by contribution margin per unit.
- Step-down allocation method
- A cost allocation method that distributes support department costs to other support and patient service departments in a sequential order, closing each department after allocation.
- Flexible budget
- A budget adjusted for actual volume. It allows comparison of actual costs to what costs should have been at the actual level of activity.
- FTE calculation
- Full-time equivalents are calculated by dividing total paid hours by 2,080 (the standard annual hours for one full-time employee).
- Zero-based budgeting
- A budgeting approach requiring each cost center to justify all expenses from zero each period, rather than starting from prior period amounts.
- Days in accounts receivable
- A measure of how long it takes to collect payments, calculated as (net accounts receivable ÷ net patient service revenue) × 365.
- Current ratio
- Current assets divided by current liabilities. It measures the ability to meet short-term obligations.
- Operating margin
- Operating income divided by operating revenue, expressed as a percentage. It shows profitability from core operations.
- Net present value
- The present value of a project's cash inflows minus its initial investment. A positive NPV indicates the project adds value.
- Internal rate of return
- The discount rate that makes a project's NPV equal to zero. Projects with IRR above the cost of capital are acceptable.
- Weighted average cost of capital
- The blended cost of debt and equity financing, weighted by their proportions in the capital structure. Used as a hurdle rate for investments.
- Clean claim rate
- The percentage of claims accepted on first submission without errors. Calculated as clean claims divided by total claims submitted.
- Case mix index
- The average DRG relative weight per discharge. A higher CMI indicates a more complex patient mix and generally higher reimbursement.
- Contractual allowance
- The difference between gross charges and the amount a payer has agreed to pay. It is deducted from gross revenue to arrive at net patient service revenue.
- Moral hazard
- The tendency for insured individuals to use more healthcare services because insurance reduces the marginal cost to them.
- Adverse selection
- A situation where individuals with higher expected healthcare costs are more likely to purchase generous insurance, potentially leading to higher premiums.
- Price elasticity of demand
- The percentage change in quantity demanded divided by the percentage change in price. Healthcare demand is often inelastic for urgent services.
- Payer mix
- The proportion of total revenue or volume contributed by each payer type, such as Medicare, Medicaid, and commercial insurers.
- Capitation
- A payment model that pays a fixed amount per member per month regardless of services used, shifting utilization risk to the provider.
- Risk adjustment
- A method that adjusts payments based on patient acuity, often using hierarchical condition categories (HCCs), to compensate for caring for sicker populations.
- Segregation of duties
- An internal control principle that separates authorization, custody of assets, and recordkeeping to prevent fraud and errors.
- False Claims Act
- A federal law that prohibits knowingly submitting false claims for government payment and provides for treble damages and whistleblower protections.
- Anti-Kickback Statute
- A law that prohibits offering or receiving remuneration to induce referrals for services covered by federal healthcare programs, subject to safe harbors.
- Stark Law
- A law that prohibits physician referrals of designated health services to entities with which the physician has a financial relationship, unless an exception applies.
- COSO framework
- A widely used internal control framework with five components: control environment, risk assessment, control activities, information and communication, and monitoring.
- Days cash on hand
- A liquidity measure calculated as cash and equivalents divided by daily cash operating expenses (total expenses minus depreciation, divided by 365).
- High-low method
- A cost estimation technique that uses the highest and lowest activity levels to separate fixed and variable costs.
- Profitability index
- The present value of future cash flows divided by the initial investment. A PI greater than 1 indicates an acceptable project.
- Net collection rate
- Payments divided by charges minus contractual adjustments, expressed as a percentage. It measures the effectiveness of collections.