Contractual Adjustments

all right today we're gonna be talking

about control offices a little bit about

what it's about we get to the definition

here structure allows us the differences

between what our hospital bills and what

they receive from third-party payers

which can be like government programs

like Medicare or commercial payers like

insurance companies in the second

definition and the in the case of the

commercial payers they would uh go

against the charge master which I will

talk about in the coming slides and then

the insurance companies and the

hospitals would negotiate a certain

payment first second procedure or list

of procedures the services that the

hospital offers and then was that is

agreed upon that would be your

contractual house yes so let's look at

some examples let's say you had a

discharge at a hospital it could be any

hospital and uh now the charge for this

procedure was eight thousand dollars and

you'd the patient have to pay one

thousand and you're insured just agreed

to pay two thousand which was that you

know agreement between them in the

hospital for this procedure they were

paid two thousand we would take one now

there's a balance which would be five

thousand and I would be considered the

contractual adjustment that's what's

left of thirteen thousand eight the

hospital charged for that procedure

doing the cha-cha-cha is just me it can

be recorded at the time of billing by

saying like this discharge was recorded

on which today's 11th it was of course a

day the charge would be recorded it'll

be for $0 but it is recorded as I would

see the contractor just would recorded

for $5,000 because that would be after

the payment has been made and insurance

company has paid and even paid you for


another example would be Medicare it's a

nun example of how hospitals get payment

Medicare is a government program it's

big government programs provides care

for a lot of soldiers now so basically

nature meets up with hospitals and

aspera has to agree to Medicare's rates

services excuse me the services and

payments now the hospital agrees to the

terms of Medicare for this list of

services and then you have a case where

the hospital might charge $8,000 for

procedure now Americans are in

determined ethical okay $10,000

regardless of what the hospital may

charge but let's just say you Medicare's

agreed ten thousand the hospital is

charging eighteen thousand still if the

hospital submits a claim to Medicare

Medicare will pay the hospital ten

thousand dollars

why because they agree to pay ten

thousand dollars in there are doing the

participation when the hospital agree to

put sustained a Medicare they agreed to

that if many campaigns on this amount

this is what they would take so many

crews gonna paid on tenth

dollars and the remaining 8,000 will be

now be considered that contractual of

adjustment from that whole bill when it

costs the commercial insurance this is a

little different they don't really have

that power to like like Medicare to just

say okay this is re innocence or an

effect it kind of have to negotiate with

the hospital or healthcare service

organization in the chargemaster

basically solicited procedures that the

hospital procedures for services of the

hospital provides to the public and uh

give me like dental service exams things

like getting hearing aids now if a

hospital shouldn't be swearing assured

and they agree to pay 75% of the DOE

charge to the patient and uh hospital

charges eighteen thousand for that same

procedure the thirteen thousand thirteen

thousand five hundred dollars we paid

from the insurance company to the

hospital for that procedure in the four

thousand family to reconsider the

contractual amount so there chef

something he's not gonna pay fool

eighteen thousand they're gonna pay

seventy five percent because I was

agreed upon during the negotiation stage

and it is an example at the hospital if

their insurance company was to the

recent contract of sixty thousand

dollars for the same procedure of

eighteen thousand the contractual

allowance would be $7,200 so eight ten

thousand eight hundred would be given to

the hospital and you would have a

several thousand for a dollar

tractor allowance amount and it's also

good for hospitals to keep track of

these things so that you know that they

can obtain a fair amount

not every procedure or service will have

a contractual language there are things

out there that your insurance company

might not pay for and you as a patient

as if you're responsible if you know

this is what my insurance company covers

and doesn't cover because you don't want

to have situation where you have to go

in and give us a procedure a service on

the hospital and then you have to carry

the fool along because your insurance

company won't cover that alone so is

good to know what procedures no your

insurance companies will cover for

contractual justly it's a limit you know

the cost of what you have to pay for

work why do we have contractual

adjustments basically providers can

ensure that they paid a significant

portion of their feet so you know people

getting cheated out of you know the

opinions cuz they are given a service

center do new CD feed and not everything

will have a contractual hours so is good

for the patient had the hospitals about

it details in the billing and but your

insurance companies covers so you're

wearing you're not blindsided by

something that happens when you're given

a bill