# How much is the net revenue per procedure for each payer, and how much is the contractual allowance per procedure for each payer? Practice Exercise 13–III: Contractual Allowance

#### How much is the net revenue per procedure for each payer, and how much is the contractual allowance per procedure for each payer? Practice Exercise 13–III: Contractual Allowance

Assumptions:
1. Your unit’s gross charges for the period to date amount to \$200,000.
2. The uniform gross charge for each procedure in your unit is \$100.
3. The unit receives revenue from four major payers. For purposes of this exercise, assume the revenue volume from each represents 25% of the total. (The equal proportion is unrealistic, but serves the purpose for this exercise.)
4. The following contractual payment arrangements are in effect for the current period. The percentage of the gross charge that is currently paid by each payer is as follows: Payer 1 = 90% Payer 2 = 80% Payer 3 = 70% Payer 4 = 50%
Q: How many procedures has your unit recorded for the period to date?
Q: Of these, how many procedures are attributed to each payer?
Q: How much is the net revenue per procedure for each payer, and how much is the contractual allowance per procedure for each payer?
Assignment Exercise 13–3
As a follow-up to the previous Practice Exercise, new assumptions are as follows:

1. Your unit’s gross charges for the period to date amount to \$200,000.
2. The uniform gross charge for each procedure in your unit is \$100.
3. The unit receives revenue from four major payers. The number of procedures performed for the period totals 2,000. Of that total, the number of procedures per payer (stated as a percentage) is as follows: Payer 1 = 30% Payer 2 = 40% Payer 3 = 20% Payer 4 = 10%
4. The following contractual payment arrangements are in effect for the current period. The percentage of the gross charge that is currently paid by each payer is as follows: Payer 1 = 80% [Medicare] Payer 2 = 70% [Commercial managed care plans] Payer 3 = 50% [Medicaid] Payer 4 = 90% [Self-pay]
Q: How many procedures are attributed to each payer?
Q: How much is the net revenue per procedure for each payer, and how much is the contractual allowance per procedure for each payer?
Q: How much is the total net revenue for each payer, and how much is the total contractual allowance for each payer?

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