Title: Budgeting in the Not-for-Profit Ambulatory Healthcare Environment
Abstract: CASE DESCRIPTION This case illustrates the crucial role third party insurer and patient mix plays in establishing the amount of federal grant funds a Community Health Center is eligible to receive. The federal grant financing of these centers is designed to provide the necessary funds to provide care for the indigent patient population. The case allows for the discussion of Medicare and Medicaid prospective payments systems as well as the traditional indemnity insurers such as Blue Cross Blue Shield. The case is targeted to senior level and MBA students and requires approximately two to three hours of outside class preparation. It may be covered in one or two class periods, depending upon the complexity of the issues introduced by the instructor. CASE SYNOPSIS The Healthcare delivery system has gone through major changes over the past ten years. While significant attention has been given to the plight of not-for-profit hospitals, little attention has been given to the financial issues of not-for-profit ambulatory Healthcare providers in general and Community Health Centers (CHC) in particular. The dilemma Health Centers face each year is budgeting and justifying the amount of federal support funds they should receive. This budgeting process is complicated by the potential loss of Medicaid patients to a state 's HMO plan, reduction in allowable charges by traditional indemnity plans, disallowance of non-Medicare cost in CHC cost reports and a host of other issues. This case revolves around the financial debriefing between Marty (CEO) and the departing Rita (CFO) of the People 's Family Health Center. Lynn, the newly hired accountant, must provide Marty the necessary financial information he needs to negotiate the federal grant with the regional office of the Department of Health and Human Services. The issue to be decided is how much of a federal grant is required to balance the health center's budget so they can continue providing the same level of medical care to the indigent population in the county. CASE SUMMARY The Healthcare delivery system has gone through major changes over the past ten years. Employers provided employees Health Maintenance Organizations (HMO) as an option to the traditional indemnity plans. Several states initiated Medicaid HMO's as an alternative to their traditional Medicaid programs. Medical savings accounts have been incorporated in some employers' cafeteria plans. All of these actions have been undertaken to arrest the spiraling cost of health care. While significant attention has been given to the plight of not-for-profit hospitals, little attention has been given to the financial issues of not-for-profit ambulatory Healthcare providers in general and Community Health Centers (CHC) in particular. The Community Health Center program is authorized under section 330 of the Public Health Service Act, Public Law 94-63. The objective of the program is to provide support for the care of medically underserved populations in rural and inner city areas. At the end of 2002, there were 3400 sites across the country, serving approximately 11 million patients. The centers are required to establish a fee schedule designed to cover the reasonable cost of providing care to all of its patients and are mandated to make reasonable collection efforts. Medicaid and Medicare reimburses the centers prospectively based upon a per visit capitation rate that encompasses all medical services provided. The amount reimbursed in any year is based upon the allowable cost as determined from the preceding year's cost report. The dilemma Health Centers face each year is budgeting and justifying the amount of federal support funds they should receive. This budgeting process is complicated by the potential loss of Medicaid patients to a state's HMO plan, reduction in allowable charges by traditional indemnity plans, disallowance of non-Medicare cost in CHC cost report and a host of other issues. …
Publication Year: 2004
Publication Date: 2004-05-01
Language: en
Type: article
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