DRGs - Correct Answers -Diagnostic-Related Groups: payment rate based on specific
diagnoses
Prospective Payment System - Correct Answers -Used by Medicare-participating
hospitals: pretreatment diagnosis billings based on DRGs; rate decided ahead of time
between insurance companies and hospitals
Exclusive Provider - Correct Answers -Used by HMO's: insurance coverage for
contracted providers or institutions
HMOs - Correct Answers -Health maintenance organizations: comprehensive
healthcare to people who pay a fee for a fixed period of time
Capitation - Correct Answers -Fixed rate paid to provider per member per month for
healthcare services; set fee paid by insurance company per month for all the patient
needs
PPOs - Correct Answers -Preferred provider organizations: special reduced rate for
services when customers use certain providers approved by the insurance company;
usually fee-for-service
IPAs - Correct Answers -Individual provider arrangements: provide care in their offices
for prepaid plans; coalition of physicians who serve HMO patients and third-party
patients
Capital Expenses - Correct Answers -Long-term equipment or physical purchases:
usually over $500-$1000 that will last years and depreciate over time and be used
multiple times
Zero-Based Budget - Correct Answers -With each new budget (i.e. fiscal year), it is
determined which programs/areas get money; no historical context is used; may rank
packages and then only fund top-ranked ones; can be time-consuming way to create a
budget
, Variance Calculation & Reminders - Correct Answers -Variance $ /Budgeted $ X 100 =
% difference; contract staff on separate line of budget; many staff sick costs more than
a few staff on LOA
Cost of Nursing Services Calculation - Correct Answers -Nurse Time X (Avg. RN Hourly
Rate + Benefits + Indirects) = Total Nursing Cost per DRG
General Nurse Staffing Calculation - Correct Answers -# of RNs needed X days open /
# days worked per RN
FTE Definition & Calculation - Correct Answers -Full-time equivalent = full-time
employee paid for 1 year
FTE = (Hours per shift X # of days worked) / 40 hours
Fixed Costs - Correct Answers -Stay the same no matter the census: manager salaries,
keeping phones on, rent, etc.
Variable Costs - Correct Answers -Change with census and how much staffing is used
Net Revenue Calculation - Correct Answers -Gross Revenue - Deductions from
Revenue (DRGs and the Contractual allowances paid by insurance companies)
ADC - Correct Answers -Average daily census (patients in a bed at midnight)
Total Patient Days Calculation - Correct Answers -ADC X Days open per year (for SCH
- ADC X 365)
Nurse Hours Per Patient Day (HPPD) Calculation - Correct Answers -Total Direct Care
Hours / Total Patient Days = # of RN hours needed to provide care for a pt. for 24
hours.
For example - for 12 hour staff and 12 workers each shift you multiply 12 staff X 2 shifts
= 24 staff X 12 hours each = 288 divided by midnight census of 31 = NHPPD
VBP - Correct Answers -Value-based purchasing: how CMS determines how much to
reimburse a hospital for care (benchmarked standards and how they are meeting it);
quality of care & following best practice & patient experience
Per Diem Rate - Correct Answers -Negotiated pay for services by insurance companies
regardless of what services were actually completed; per day admitted
UOS - Correct Answers -Unit of service: patient days for inpatient nursing but could be
visits or # of procedures or whatever that healthcare organization counts
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