American Hospital Directory - Methodology for Allocating Costs

Costs are allocated on a patient-by-patient basis. Each patient's bill contains charges by revenue center. We convert these charges to costs using a cost-to-charge ratio (RCC) for each revenue center. The corresponding RCCs are derived from the hospital's cost report per the chart below.

For example, if a patient had $300 in pharmacy charges and the hospital's RCC for pharmacy was 0.5000, then the cost would be allocated as $150 (300 x 0.5000 = 150).

Revenue center costs are then totaled to determine the total costs for each patient. Patients are subsequently summarized for reporting by DRG, by Medical Service, etc.

The following information details how revenue (from patient bills) and cost to charge ratios (from hospital cost reports) are cross-referenced for cost allocations:

ROUTINE SERVICES ---

- Routine Accommodations (Private, Semi-Private, and Wards)

Revenue Codes: 11X, 12X, 13X, 14X, 15X
Cost Center: Worksheet C, Part I, line 25

- ICU/CCU Accommodations

Revenue Centers: 20X, 21X
Cost Center: Worksheet C, Part I, lines 26-30

ANCILLARY SERVICES ---

- Ambulance

Revenue Centers: 54X
Cost Centers: Worksheet C, Part I, line 65

- Ambulatory Surgery

Revenue Centers: 49X, 50X
Cost Center: Worksheet C, Part I, line 58

- Anesthesia

Revenue Center: 37X
Cost Centers: Worksheet C, Part I, line 40

- Blood

Revenue Centers: 38X, 39X
Cost Centers: Worksheet C, Part I, lines 46, 47

- Cardiology

Revenue Centers: 48X, 73X
Cost Centers: Worksheet C, Part I, lines 41 (echocardiography only), 53

- Clinic

Revenue Center: 51X
Cost Centers: Worksheet C, Part I, lines 60, 63.50-63.99

- Dialysis

Revenue Centers: 80X, 82X, 83X, 84X, 85X, 86X, 87X, 88X
Cost Center: Worksheet C, Part I, line 57

- Durable Medical Equipment

Revenue Centers: 290, 291, 292, 293
Cost Centers: Worksheet C, Part I, lines 66-67

- Emergency Room

Revenue Center: 45X
Cost Center: Worksheet C, Part I, line 61

- Lab

Revenue Centers: 30X, 31X, 74X, 75X
Cost Centers: Worksheet C, Part I, lines 44 (except oncology), 45, 54

- Operating Room

Revenue Centers: 36X, 71X, 72X, 79X
Cost Centers: Worksheet C, Part I, lines 37-39

- Organ Acquisition

Revenue Centers: 81X, 89X
Cost Centers: Worksheet E, Part B, lines 3, 8

- Pharmacy

Revenue Centers: 25X, 26X, 63X
Cost Centers: Worksheet C, Part I, lines 48, 56

- Physical/Occupational/Speech Therapy

Revenue Centers: 42X, 43X, 44X, 47X
Cost Centers: Worksheet C, Part I, lines 50, 51, 52

- Radiology

Revenue Centers 28X, 32X, 33X, 34X, 35X, 40X, 61X
Cost Centers: Worksheet C, Part I, lines 41 (except echocardiography), 42, 43, 44 (oncology only)

- Respiratory Therapy

Revenue Centers: 41X, 46X
Cost Centers: Worksheet C, Part I, line 49

- Supplies

Revenue Centers: 27X, 62X
Cost Centers: Worksheet C, Part I, line 55

- Other

Revenue Centers: 002-099, 22X, 23X, 24X, 52X, 53X, 55X, 56X, 57X, 58X, 59X, 60X, 64X, 65X, 66X, 67X, 68X, 69X, 70X, 76X, 77X, 78X, 90X, 91X, 92X, 93X, 94X, 95X, 99X
Cost Centers: Worksheet C, Part I, lines 59, 62, 63, 64, 68

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TECHNICAL NOTES:
Cost allocations are based on a hospital's cost reporting period most closely coinciding with the federal fiscal year of its Medicare claims data. Costs are not allocated for hospitals that do not have a recent cost report (i.e. a cost reporting period ending no more than 30 months prior to the federal fiscal year end of claims data) or that do not have sufficient data (i.e. a recent reporting period of at least six months with both costs and charges reported). If a departmental cost-to-charge ratio is zero, indefinable, or unreasonable then a national median ratio is used.


	Methodology for Allocating Costs Close Window Costs are allocated on a patient-by-patient basis. Each patient's bill contains charges by revenue center. We convert these charges to costs using a cost-to-charge ratio (RCC) for each revenue center. The corresponding RCCs are derived from the hospital's cost report per the chart below. For example, if a patient had $300 in pharmacy charges and the hospital's RCC for pharmacy was 0.5000, then the cost would be allocated as $150 (300 x 0.5000 = 150). Revenue center costs are then totaled to determine the total costs for each patient. Patients are subsequently summarized for reporting by DRG, by Medical Service, etc. The following information details how revenue (from patient bills) and cost to charge ratios (from hospital cost reports) are cross-referenced for cost allocations: ROUTINE SERVICES --- - Routine Accommodations (Private, Semi-Private, and Wards) Revenue Codes: 11X, 12X, 13X, 14X, 15X Cost Center: Worksheet C, Part I, line 25 - ICU/CCU Accommodations Revenue Centers: 20X, 21X Cost Center: Worksheet C, Part I, lines 26-30 ANCILLARY SERVICES --- - Ambulance Revenue Centers: 54X Cost Centers: Worksheet C, Part I, line 65 - Ambulatory Surgery Revenue Centers: 49X, 50X Cost Center: Worksheet C, Part I, line 58 - Anesthesia Revenue Center: 37X Cost Centers: Worksheet C, Part I, line 40 - Blood Revenue Centers: 38X, 39X Cost Centers: Worksheet C, Part I, lines 46, 47 - Cardiology Revenue Centers: 48X, 73X Cost Centers: Worksheet C, Part I, lines 41 (echocardiography only), 53 - Clinic Revenue Center: 51X Cost Centers: Worksheet C, Part I, lines 60, 63.50-63.99 - Dialysis Revenue Centers: 80X, 82X, 83X, 84X, 85X, 86X, 87X, 88X Cost Center: Worksheet C, Part I, line 57 - Durable Medical Equipment Revenue Centers: 290, 291, 292, 293 Cost Centers: Worksheet C, Part I, lines 66-67 - Emergency Room Revenue Center: 45X Cost Center: Worksheet C, Part I, line 61 - Lab Revenue Centers: 30X, 31X, 74X, 75X Cost Centers: Worksheet C, Part I, lines 44 (except oncology), 45, 54 - Operating Room Revenue Centers: 36X, 71X, 72X, 79X Cost Centers: Worksheet C, Part I, lines 37-39 - Organ Acquisition Revenue Centers: 81X, 89X Cost Centers: Worksheet E, Part B, lines 3, 8 - Pharmacy Revenue Centers: 25X, 26X, 63X Cost Centers: Worksheet C, Part I, lines 48, 56 - Physical/Occupational/Speech Therapy Revenue Centers: 42X, 43X, 44X, 47X Cost Centers: Worksheet C, Part I, lines 50, 51, 52 - Radiology Revenue Centers 28X, 32X, 33X, 34X, 35X, 40X, 61X Cost Centers: Worksheet C, Part I, lines 41 (except echocardiography), 42, 43, 44 (oncology only) - Respiratory Therapy Revenue Centers: 41X, 46X Cost Centers: Worksheet C, Part I, line 49 - Supplies Revenue Centers: 27X, 62X Cost Centers: Worksheet C, Part I, line 55 - Other Revenue Centers: 002-099, 22X, 23X, 24X, 52X, 53X, 55X, 56X, 57X, 58X, 59X, 60X, 64X, 65X, 66X, 67X, 68X, 69X, 70X, 76X, 77X, 78X, 90X, 91X, 92X, 93X, 94X, 95X, 99X Cost Centers: Worksheet C, Part I, lines 59, 62, 63, 64, 68 ________________ TECHNICAL NOTES: Cost allocations are based on a hospital's cost reporting period most closely coinciding with the federal fiscal year of its Medicare claims data. Costs are not allocated for hospitals that do not have a recent cost report (i.e. a cost reporting period ending no more than 30 months prior to the federal fiscal year end of claims data) or that do not have sufficient data (i.e. a recent reporting period of at least six months with both costs and charges reported). If a departmental cost-to-charge ratio is zero, indefinable, or unreasonable then a national median ratio is used.