HSA 525-Contractual Allowances

Physician office revenue for visit code 99214 has a full established rate of $72.00. Of 10 different payers, there are 9 different contracted rates, as follows:

Payer Contracted Rate
FHP $35.70
HPHP 58.85
MC 54.90
UND 60.40
CCN 70.20
MO 70.75
CGN 10.00
PRU 54.90
PHCS 50.00
ANA 45.00
Rates for illustration only.

Required

  • 1. Set up a worksheet with four columns: Payer, Full Rate, Contracted Rate, and Contractual Allowance.
  • 2. For each payer, enter the full rate and the contracted rate.
  • 3. For each payer, compute the contractual allowance.

The first payer has been computed below:

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  Full   Contracted   Contractual
Payer Rate (less) Rate (equals) Allowance
FHP $72.00   $35.70   $36.30

Example 4B: Revenue Sources and Grouping Revenue

Sources of healthcare revenue are often grouped by payer. Thus, services might be grouped as follows:

  • Revenue from the Medicare Program (payer = Medicare)
  • Revenue from the Medicaid Program (payer = Medicaid)
  • Revenue from Blue Cross Blue Shield (payer = Commercial Insurance)
  • or
  • Revenue from Blue Cross Blue Shield (payer = Managed Care Contract)