CHFD 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
- Revenue reported at the transaction price after deducting contractual adjustments and implicit price concessions, recognized as performance obligations are satisfied under ASC 606.
- Charity care vs bad debt
- Charity care is free or discounted care to patients who cannot pay and is excluded from revenue and disclosed; bad debt is uncollectible amounts from patients able but unwilling to pay, recorded as expense.
- Third-party settlement estimates
- Amounts due to or from Medicare and Medicaid based on cost reports that are estimated and later adjusted; changes in estimates are recognized in the period of change.
- Donor-restricted net assets
- Net assets subject to donor-imposed stipulations on use or timing; reported separately from net assets without donor restrictions on the statement of financial position.
- Contribution margin per unit
- Price minus variable cost per unit; used to compute break-even volume and to evaluate the incremental profitability of additional volume or a new service.
- Break-even volume formula
- Fixed costs divided by contribution margin per unit; break-even revenue equals fixed costs divided by the contribution margin ratio.
- High-low cost estimation
- Method that estimates variable cost per unit as the change in cost divided by the change in volume between the highest and lowest activity periods.
- Activity-based costing
- Costing method that assigns overhead using cost drivers such as patient days, admissions, or nursing hours, improving accuracy over a single allocation base.
- Relevant cost rule
- Only future costs and revenues that differ between alternatives are relevant; sunk costs and unchanged allocated fixed costs are excluded from the decision.
- Flexible budget variance
- Difference between actual results and the flexible budget recalculated at actual volume; isolates rate and efficiency effects from volume effects.
- Volume variance
- Difference between the flexible budget and the static budget caused solely by actual volume differing from budgeted volume, valued at budgeted contribution margin per unit.
- Zero-based budgeting
- Budgeting approach requiring each department to justify its entire proposed spending from a zero base rather than adjusting the prior year's budget incrementally.
- Rolling forecast
- Forecast that adds a new future period as each period expires, maintaining a constant horizon and incorporating the latest actual results.
- Cash budget purpose
- Projects cash receipts and disbursements by period, accounting for collection lag and write-offs, to identify borrowing needs or surplus cash.
- Days in accounts receivable
- Accounts receivable divided by average daily net revenue; measures how many days of revenue are tied up in unpaid claims.
- Clean claim rate
- Percentage of claims accepted on first submission without edits, denials, or rework; a key indicator of front-end revenue cycle accuracy.
- MS-DRG payment formula
- Medicare inpatient payment equals the DRG relative weight multiplied by the base rate, adjusted for wage index, indirect medical education, disproportionate share, and outliers.
- Net collection rate
- Payments received divided by net expected reimbursement after contractual adjustments; measures effectiveness of collecting what is owed.
- Operating margin
- Operating income divided by operating revenue; measures profitability of core patient care operations before nonoperating items such as investment income.
- Days cash on hand
- Unrestricted cash and investments divided by daily cash expenses, where daily expenses equal total expenses minus depreciation divided by 365.
- Debt service coverage ratio
- Cash available for debt service divided by required principal and interest payments; a common bond covenant threshold is 2.0x or higher.
- Sensitivity analysis
- Varying key assumptions such as volume, payer mix, or labor cost to test how projections respond to changes and to identify the most influential drivers.
- Net present value rule
- Accept independent projects with positive NPV, computed as the present value of incremental cash inflows minus the initial investment, discounted at the cost of capital.
- Internal rate of return
- Discount rate at which a project's net present value equals zero; a project is acceptable if its IRR exceeds the hurdle rate or cost of capital.
- Payback period limitation
- Payback measures time to recover the initial investment but ignores cash flows after payback and, unless discounted, ignores the time value of money.
- Weighted average cost of capital
- Blended required return on debt and equity, computed as after-tax cost of debt times debt weight plus cost of equity times equity weight; used as the discount rate.
- COSO control environment
- The tone at the top, integrity, ethical values, governance structure, and commitment to competence that form the foundation for all other internal control components.
- Segregation of duties
- Separation of custody of assets, authorization, recording, and reconciliation so that no single individual can both perpetrate and conceal an error or fraud.
- Anti-Kickback Statute
- Federal law prohibiting knowingly offering or receiving remuneration to induce referrals of items or services reimbursed by federal healthcare programs, with limited safe harbors.
- Stark Law
- Physician self-referral prohibition barring referrals of designated health services to entities with which the physician or immediate family has a financial relationship, absent an exception.
- Service-line profitability
- Analysis comparing a service line's net revenue with its direct and allocated costs to guide decisions to invest, grow, or divest the service.
- Fair market value requirement
- Physician compensation and arrangements with referral sources must be commercially reasonable and at fair market value to satisfy Stark and Anti-Kickback requirements.