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)
ICU Accommodations
CCU Accommodations
ANCILLARY SERVICES
Ambulance
Anesthesia
Blood
Blood Administration
Cardiology Catheterization
Cardiology Non-Catheterization
-
Revenue Centers:
48X (Excluding 481 Cardiology Catheterization) and 73X
-
Cost Centers:
Worksheet C, Part I, lines 69
Clinic
CT Scan
Dialysis
-
Revenue Centers:
80X, 82X - 88X
-
Cost Center:
Worksheet C, Part I, line 74
Durable Medical
Equipment
Emergency Room
Implantable Devices
-
Revenue Center: 275, 276, 278, 624
-
Cost Center:
Worksheet C, Part I, line 72
Lab, EEG
-
Revenue Centers: 30X, 31X, 74X, 75X
-
Cost Centers: Worksheet C,
Part I, lines 60, 70
Labor and Delivery Room
MRI
Occupational Therapy
Operating and Recovery Room
-
Revenue
Centers: 36X, 71X (Excluding 716), 79X
-
Cost
Centers: Worksheet C, Part I, lines 50, 51
Organ
Acquisition
-
Revenue
Centers: 81X, 89X
-
Cost
Centers: Worksheet C, Part 1, lines 105 - 112
Outpatient Services
-
Revenue
Centers: 49X, 50X
-
Cost
Centers: Worksheet C, Part 1, lines 75
Pharmacy
-
Revenue Centers: 25X, 26X, 63X
-
Cost Centers: Worksheet
C, Part I, lines 64, 73
Physical Therapy
Radiology
-
Revenue Centers 28X, 32X, 33X, 34X, 40X
-
Cost Centers: Worksheet
C, Part I, lines 54 - 56
Repiratory Therapy
-
Revenue Centers:
41X, 46X
-
Cost Centers: Worksheet C, Part I, lines 65
Speech Therapy
-
Revenue Centers:
44X, 47X
-
Cost Centers: Worksheet C, Part I, lines 68
Supplies
-
Revenue Centers: 270 - 274, 277, 279, 62X (Excluding 624)
-
Cost Centers: Worksheet C,
Part I, line 71
Other
-
Revenue
Centers: 002-099, 22X, 23X, 24X, 52X, 53X, 55X - 60X, 64X - 70X, 76X - 78X, 90X - 95X, 99X
-
Cost Centers: Worksheet C,
Part I, line 76, 92 - 94, 98, 99
________________
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. |