Ruby Ruth Hospital had the following transactions during the year ended December 31: 1. The hospital provided services to patients insured by third-party payer A amounting to $9.0 million at its established billing rates. The hospital’s prospective billing arrangement with this third party stipulates payment to the hospital of 70 percent of its established rates for services performed. All billings were paid during the year.
Accounting for patient service revenue
Ruby Ruth Hospital had the following transactions during the year ended December 31:
1. The hospital provided services to patients insured by third-party payer A amounting to $9.0 million
at its established billing rates. The hospital’s prospective billing arrangement with this third party
stipulates payment to the hospital of 70 percent of its established rates for services performed.
All billings were paid during the year.
2. The hospital provided services to patients insured by third-party payer B amounting to $5.4 million
at its established billing rates. Its retrospective billing arrangement with this third party stipulates
that the hospital should receive payment at an interim rate of 90 percent of its established rates,
subject to retrospective adjustment based on agreed-upon allowable costs. By year-end, B had paid
all the billings. Before issuing its financial statements, the hospital estimated that the probable
amount it will need to refund to B is $450,000, based on allowable costs.
3. The hospital provided services to charity patients amounting to $1.8 million at its established
billing rates.
a) Prepare
If no adjustment is necessary, select 'No debit (or credit) entry needed' in the account fields
and enter 0 in the amount fields.
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