Net Revenue Patient Day - Multi-Pedia

Net Patient Revenue / Patient Day = Net Patient Revenue / number of Patient-Days in the Period

This number indicates, on average, how much revenue is received for each Patient-Day of service. If this varies significantly from your billing rates, you may have large adjustments to revenue (Contractual Allowance, Bad Debt, etc.), or revenue amounts may be recorded incorrectly in the General Ledger.

We encourage Hospices to bill a "normal and customary" rate well above the amount set by Medicare. This serves several purposes:

It protects the organization against billing at a rate lower than the amount set by Medicare. Legally, Medicare FIs only have to pay the lesser of the Medicare Rate or billed charges. That means that if your bill is $90 a day and the Medicare Rate is $100, the Medicare Administrative Contractor will only pay you $90...and you can never get that $10 back!
It standardizes charges for a Hospice. There is one rate for Routine.
If the amount is set high, it allows room to negotiate with Private Insurance entities.
It sets a value for services that you feel you are worth.

This will, of course, result in adjustments to revenue, and "Net Patient Revenue" used in the calculation includes the effect of those adjustments.

Revenue amounts can be incorrect for a variety of reasons including software problems, human error or a combination of the two. A Revenue Test, though some would think it is unnecessary, will give a CFO and CEO comfort and it only takes a few minutes. Auditors often perform this type of calculation at the end of the fiscal year only to discover that revenue is off by a material amount. Avoiding indigestion at year-end is a good thing!

A Revenue Test is a periodic test of Medicare and Medicaid revenue which helps ensure that the amounts recorded in the General Ledger are reasonable and make sense. It is a simple test; however, it is surprising how revenue amounts may not jive over time. MVI provides the CAP and Revenue Test Tool to help a Hospice keep on top of this area. The revenue testing part of the tool multiplies the number of YTD Medicare and Medicaid patient-days billed by the corresponding rates for each level of care.