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N471 > Week 9: Budget > Flashcards

Week 9: Budget Flashcards

1
Q

___ is responsible for cost

A

Everyone

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2
Q

Patient Protection and Affordable Care Act

A

Act that reduces the uninsured, increases access to care, and gives help for preexisting conditions

Ongoing Topic Politically

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3
Q

Accountable Care Organizations

A

Groups of providers and suppliers of service who work together to better coordinate care for Medicare patients (does not include Medicare Advantage) across care settings

Goals of seamless quality care and coordination of care

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4
Q

Medical Home

A

Team like process for improved access to services, quality, and outcomes of patient care

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5
Q

Pandemic Strain

A

High surge of patients with longer hospital stays

Also add on state and federal mandates, loss of nursing personnel, worker burnout, and financial issues

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6
Q

What are some ways to manage cost while maintaining quality of care

A

Effective and quality services

Efficient services

Equals out in revenue

Culture where everyone is responsible

Responsibility is on the unit manager - manage budgets and QI Projects which are then reported to directors

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7
Q

Budget

A

a financial plan

must be as accurate as possible

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8
Q

Fixed Expenses

A

Expenses that do not vary with volume

ex: mortgage payment, salary

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9
Q

Variable Expenses

A

Expenses that vary with volume

Payroll of hourly employees, cost of supplies

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10
Q

Controlled Expenses

A

Expenses the manager has full control over

ex: how many people work during a shift

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11
Q

Uncontrollable Expenses

A

Emergency Spending, things that cannot be fully controlled

Ex: Emergencies needing more staff/time, supplies needed to care for patients

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12
Q

Steps to Budgeting

A
  1. Assess - what are the needs
  2. Diagnosis - goal/what needs to be accomplished
  3. Plan - set time
  4. Implementation - continue to assess for change
  5. Evaluation - review, add, remove
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13
Q

3 Important Types of Budgets

A

Personnel Budget

Operating Budget

Capital Budget

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14
Q

What type of budget is the largest expenditure for the hospital

A

Personnel Budget

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15
Q

Operating Budget

A

Expenses that change in response to the volume of service

Ex: Electricity, repairs, maintenance, supplies

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16
Q

Capital Budget

A

Expenses on buildings and major equipment that increase agency capital

For major improvement spending

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17
Q

Insurance Reimbursement Options for Services

A

Medicare

Medicaid

Prospective Payment System

Managed Care Organization

Private Insurance Companies

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18
Q

Medicare (MC)

A

Federally funded program for seniors over age 65 of disabled

Recipients pay into the insurance plan, several parts of MC that cover a variety of services

Medicare coverage also is available to certain groups of people with catastrophic or chronic illness, such as patients with renal failure requiring hemodialysis, regardless of age.

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19
Q

Medicaid (MA)

A

Federal/State Plan to assist indigent population, disabled, and long term care

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20
Q

Prospective Payment Systems (PPS)

A

What providers can charge - ICD codes, DRGs which connect to payout for specific dx group

Medicare is paying based on a predetermined fixed amount based on dx and then the provider should keep below that to make money

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21
Q

Managed Care Organization (MCO)

A

Health programs that look at efficiency, access, and cost, PCP as gatekeepers

Partly employee and partly employer pays

There is a network of providers that the patient can see in which they are covered

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22
Q

Private Insurance Companies

A

Employer sponsors or recipient private pays for insurance coverages, employees pay into the system for coverage

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23
Q

What are some opportunities for the RN to work in budgeting specifically

A

Staff nursing

Managers and Leaders

Quality Control

Technology

Fiscal Budgeting

Supply Allocation / Distribution Buyer / Manager

Vendor Representative

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24
Q

Volume v Value

A

Volume - Considers how much of a product is purchased

Value - Considers quality, efficiency, safety and cost

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25
Q

Forecasting

A

Making an educated budget estimate using historical data

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26
Q

Cost Containment

A

Refers to the effective and efficient delivery of services while generating needed revenues for operations

It is the responsibility of every health care provider and the viability of most health care organizations today depend on their ability to use financial resources wisely

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27
Q

Cost Effective

A

Not the same as being inexpensive

Means producing good results for the money spent

the product is worth the price

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28
Q

Responsibility Accounting

A

Each of an organizations revenues, expenses, assets and liabilities is someone’s responsibility

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29
Q

A budgets value is directly related to its ____

A

accuracy

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30
Q

Acuity Index

A

weighted statistical measurement that refers to severity of illness of patients for a given time. Patients are classified according to acuity of illness, usually in one of four categories. The acuity index is determined by taking a total of acuities and then dividing by the number of patients.

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31
Q

Affordable Care Act

A

officially known as the Patient Protection and Affordable Care Act, this act passed in March 2010 to provide more Americans access to affordable health insurance

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32
Q

Assets

A

financial resources that a health-care organization receives, such as accounts receivable

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33
Q

Baseline Data

A

Historical information on dollars spent, acuity level, patient census, resources needed, hours of care, and so forth.

This information is used as basis on which future needs can be projected.

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34
Q

Break Even Point

A

point at which revenue covers costs. Most health-care facilities have high fixed costs. Because per-unit fixed costs in a noncapitated model decrease with volume, health-care facilities under this model need to maintain a high volume to decrease unit costs.

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35
Q

Bundled Payment

A

A payment structure in which different health-care providers who are treating a patient for the same or related conditions are paid an overall sum for taking care of that condition rather than being paid for each individual treatment, test, or procedure.

In doing so, providers are rewarded for coordinating care, preventing complications and errors, and reducing unnecessary or duplicative tests and treatments

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36
Q

Capitation

A

a prospective payment system (PPS) that pays health plans or providers a fixed amount per enrollee per month for a defined set of health services, regardless of how many (if any) services are used

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37
Q

Case Mix

A

type of patients served by an institution

A hospital’s case mix is usually defined in such patient-related variables as type of insurance, acuity levels, diagnosis, personal characteristics, and patterns of treatment.

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38
Q

Cash Flow

A

rate at which dollars are received and dispersed

39
Q

Controllable Costs

A

Costs that can be controlled or that vary

An example would be the number of personnel employed, the level of skill required, wage levels, and quality of materials.

40
Q

Cost Benefit Ratio

A

numerical relationship between the value of an activity or procedure in terms of benefits and the value of the activity’s or procedure’s cost. The cost–benefit ratio is expressed as a fraction.

41
Q

Cost Center

A

smallest functional unit for which cost control and accountability can be assigned. A nursing unit is usually considered a cost center, but there may be other cost centers within a unit (orthopedics is a cost center, but often, the cast room is considered a separate cost center within orthopedics).

42
Q

Diagnosis Related Groups (DRGs)

A

rate-setting PPS used by Medicare to determine payment rates for an inpatient hospital stay based on admission diagnosis. Each DRG represents a case type for which Medicare provides a flat dollar amount of reimbursement. This set rate may be higher or lower than the cost of treating the patient in a particular hospital.

43
Q

Direct Costs

A

costs that can be attributed to a specific source, such as medications and treatments; costs that are clearly identifiable with goods or service

44
Q

Fee for Service (FSS) system

A

a reimbursement system whereby insurance companies reimburse health-care providers a billed amount for services after the services are delivered

45
Q

Fixed Budget

A

Style of budgeting that is based on a fixed, annual level of volume, such as number of patient-days or tests performed, to arrive at an annual budget total. These totals are then divided by 12 to arrive at the monthly average

The fixed budget does not make provisions for monthly or seasonal variations.

46
Q

Full Costs

A

total of all direct and indirect costs

47
Q

Full Time Equivalent (FTE)

A

number of hours of work for which a full-time employee is scheduled for a weekly period.

For example, 1.0 FTE = five 8-hour days of staffing, which equals 40 hours of staffing per week. One FTE can be divided in different ways. For example, two part-time employees, each working 20 hours per week, would equal 1 FTE. If a position requires coverage for more than 5 days or 40 hours per week, the FTE will be greater than 1.0 for that position. Assume a position requires 7-day coverage, or 56 hours, then the position requires 1.4 FTE coverage (56 / 40 = 1.4). This means that more than one person is needed to fill the FTE positions for a 7-day period.

48
Q

Health Maintenance Organization

A

A prepaid organization that provided health care to voluntarily enrolled members in return for a preset amount of money on a per-person, per-month basis

Often referred to as a managed care organization

49
Q

Hours Per Patient Day (HPPD)

A

hours of nursing care provided per patient per day by various levels of nursing personnel. HPPD are determined by dividing total production hours by the number of patients.

50
Q

Indirect Costs

A

costs that cannot be directly attributed to a specific area. These are hidden costs and are usually spread among different departments. Housekeeping services are considered indirect costs.

51
Q

International Classification of Disease (ICD) Codes

A

coding used to report the severity and treatment of patient diseases, illnesses, and injuries to determine appropriate reimbursement; currently in its 10th revision (ICD-10)

52
Q

Managed Care

A

term used to describe a variety of health-care plans designed to contain the cost of health-care services delivered to members while maintaining the quality of care

53
Q

Not for Profit Organization

A

this type of organization is financed by funds that come from several sources, but the providers of these funds do not have an ownership interest. Profits generated in the not-for-profit organization are frequently funneled back into the organization for expansion or capital acquisition.

54
Q

Operating Expenses

A

daily costs required to maintain a hospital or health-care institution

55
Q

Patient Classification System

A

method of classifying patients. Different criteria are used for different systems. In nursing, patients are usually classified according to acuity of illness.

56
Q

Pay for Performance (P4P) Programs

A

incentives are paid to providers to achieve a targeted threshold (typically a process or outcome measure) of clinical performance, typically a process or outcome measure associated with a specified patient population

57
Q

Pay for Value Programs

A

incentive payments that are linked to both quality and efficiency improvements

58
Q

Preferred Provider Organization (PPO)

A

health-care financing and delivery program with a group of providers, such as physicians and hospitals, who contract to give services on an FFS basis. This provides financial incentives to consumers to use a select group of preferred providers and pay less for services. Insurance companies usually promise the PPO a certain volume of patients and prompt payment in exchange for fee discounts.

59
Q

Production Hours

A

total amount of regular time, overtime, and temporary time. This also may be referred to as actual hours.

60
Q

Prospective Payment System

A

a hospital payment system with predetermined reimbursement ratio for services given

61
Q

Staffing Mix

A

ratio of registered nurses (RNs), licensed vocational nurses (LVNs)/licensed practical nurses (LPNs), and unlicensed workers (e.g., a shift on one unit might have 40% RNs, 40% LPNs/LVNs, and 20% others). Hospitals vary on their staffing mix policies.

62
Q

Third Party Payment System

A

a system of health-care financing in which providers deliver services to patients, and a third party, or intermediary, usually an insurance company or a government agency, pays the bill

63
Q

Turnover Ratio

A

rate at which employees leave their jobs for reasons other than death or retirement. The rate is calculated by dividing the number of employees leaving by the number of workers employed in the unit during the year and then by multiplying by 100.

64
Q

Value Based Purchasing

A

a payment methodology that rewards quality of care through payment incentives

65
Q

Variable Costs

A

costs that vary with the volume. Payroll costs are an example.

66
Q

Workload Units

A

in nursing, workloads are usually the same as patient-days. For some areas, however, workload units might refer to the number of procedures, tests, patient visits, injections, and so forth.

67
Q

Fiscal Year Budget v Perpetual Budget

A

Fiscal year - Plan (3rd Step) for the 12 month period

Perpetual - makes it so 12 months are always available as time goes on not just a year block

68
Q

A budget that is predicted too far in advance has…

A

greater probability for error

69
Q

Most Staffing is based on a predetermined ___

A

standard (like HPPD)

70
Q

What makes up the personnel budget

A

Worked Time (Productive Time/Salary Expense)

Time the organization pays the employee for not working (nonproductive or benefit time)

71
Q

Next to personnel costs, ____ are typically the second most significant component in the hospital budget

A

supplies

72
Q

4 Most common Budgeting Methods

A

Incremental Budgeting (flat percentage increase budgeting)

Zero based budgeting

Flexible budgeting

Performance budgeting

73
Q

Incremental Budgeting (Flat Percentage increase Method)

A

Simplest budgeting method

multiply current year expenses by a certain figure to know next years budget

usually inefficient fiscally since no motivation to contain costs and no need to prioritize programs and services occur

74
Q

Zero Based Budgeting

A

Method where managers must re-justify their programs or needs every budgeting cycle

Does not automatically assume that because a project was funded in the past it should continue to be funded

More labor intensive for managers

Decision package to set funding priorities is a key feature

75
Q

Key Components of Decision Packages in Zero Based Budgeting

A
  1. Listing of all current and proposed objectives or activities in the dept
  2. Alternative plans for carrying out these activities
  3. Costs for each alternative
  4. Advantages and disadvantages of continuing or discontinuing an activity
76
Q

Flexible Budgets

A

budgets that flex up or down over the year depending on volume

automatically calculates expenses on volume occurring

77
Q

Performance Budgeting

A

emphasizes outcomes and results instead of activities or outputs

the manager budgets as needed to achieve specific outcomes

78
Q

Critical Pathways (Clinical Pathways/Care Pathways)

A

a strategy for assessing, implementing, and evaluating the cost effectiveness of patient care

predetermined courses of progress that patients should make after admission for a specific diagnosis or after a specific surgery

79
Q

Patient progress that differs from the critical pathway prompts …

A

a variance analysis

80
Q

Medicare Part A, B, C, D

A

A - hospital insurance program

B - supplementary medical insurance program that pays for outpatient care and physician services

C - Medicare Advantage - allows pt more choices for participating in managed care plans

D - allows medicare patients to purchase at least limited prescription drug coverage, either through stand alone prescription drug plans or medicare advantage prescription drug plans

81
Q

Because of PPS (Prospective Payment System) and the need to contain costs…

A

the length of stay for most hospital admissions has decreased greatly

82
Q

Balanced Budget Act (BBA)

A

act containing numerous cost containment measures, including reductions in provider payments for traditional FFS medicare program participants

the bulk of the savings results from limiting the growth rates for hospital and physician payments

83
Q

Selective Contracting

A

whereby providers agree to lower reimbursement levels in exchange for patient population contracts

84
Q

Utilization Review

A

process used by insurance companies to assess the need for medical care and to assure that payment will be provided for the care

common component of managed care

85
Q

Capitation

A

whereby providers receive a fixed monthly payment regardless of services used by that patient during the month

86
Q

Point of Service (POS)

A

type of MCO

the patient has the option, at the time of service, to select a provider outside the network but will pay a higher premium and copayment for the flexibility to do so

87
Q

Exclusive Provider Organization (EPO)

A

type of MCO

enrollees must seek care from the designated HMO provider or pay all of the cost out of pocket

88
Q

Preferred Provider Organization (PPO)

A

Type of MCO

render services on an FFS basis but provide financial incentives to consumers (paying less) when the preferred provider is used

89
Q

Moral hazard

A

the risk that the insured will overuse services just because the insurance will pay the cost

refers to the propensity of insured patients to use more medical services than necessary because their insurance covers so much of the cost

90
Q

4 Models of Bundled Care

A

3 are retrospective payment and one is prospective

91
Q

What is a staff HMO?

A

providers are salaried by the HMO and are under direct control of the HMO

92
Q

What is an independent practice association (IPA) HMO?

A

HMO contracts with a group of physicians through an intermediary to provide services

93
Q

What is a group HMO?

A

HMO contracts directly with one independent physician group

94
Q

What is a network HMO?

A

HMO contracts with multiple independent physician group practices

N471 (12 decks)

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