Paying for hospital and physician services


Assignment Overview

Third-party payers are the insurers that reimburse physicians and health care systems for services rendered – which identifies them as a central source of revenue for physicians and health care systems. This includes the two main categories of payers: the private insurances (such as Blue Cross/Blue Shield, etc.), and the public/government programs (such as Medicare/Medicaid/SCHIPs).

Third-party payers use a variety of reimbursement methods to pay providers and hospitals, depending on the specific payer involved and also the specific service(s) provided (outpatient or inpatient). The calculations vary and can be complicated, but they are critical to understand in terms of the basic math behind them. It’s also important to understand how the different payers compare in terms of reimbursement levels. Let’s move forward to examine how services are paid for by the third-party payers.

Case Assignment

Using the information in the Module 4 overview and required readings, as well as some additional research in peer-reviewed sources, complete your Case assignment by answering the questions in the following two-part assignment. Please show all formulas and calculations of your work in your paper.

Part I – Paying for Hospital Services – Overview

Mrs. Jones is a 74-year-old woman who is currently hospitalized for an ischemic stroke. She’s at a large urban Philadelphia hospital, and in the past few days, she’s incurred $189,000 in Medicare-approved charges for her care. Using the information provided in this Module, as well as the Hospital Payments Example (found in the Course’s table of contents link under “Presentations”), use the DRG table below to answer the following questions. Be sure to include all formulas and calculations used in your paper.



Case Weight


Ischemic stroke



Appendix removal



Septicemia/severe sepsis


Part I – Assignment

In approximately three pages, answer the following questions related to Mrs. Jones’ ischemic stroke. Show all formulas and calculations of your work.

  1. What is the operating payment to be paid to the hospital?
  2. What is the capital payment to be paid to the hospital?
  3. Will the hospital be eligible for the Medicare outlier payment for this patient?
  4. What is the total payment due to the hospital?

Part II – Paying for Physician Services – Overview

Mr. Thompson is an 83-year-old Medicare beneficiary. He is under the care of Dr. Heintz. Assume the following values for services provided by Dr. Heintz:



Geographic Cost Index






Practice Expense








Conversion Factor: 51.52

Part II – Assignment

In approximately three pages, answer the following questions. Show all formulas and calculations of your work.

  1. How much will Medicare pay Dr. Heintz if he is a Medicare participating physician? How much out-of-pocket payment will Mr. Thompson be responsible for?
  2. How much will Medicare pay Dr. Heintz if he is a Medicare non-participating physician who elects assignment? How much out-of-pocket payment will Mr. Thompson be responsible for?
  3. How much will Medicare pay Dr. Heintz if he is a Medicare non-participating physician who does not elect assignment? How much out-of-pocket payment will Mr. Thompson be responsible for?

Assignment Expectations

  1. Conduct additional research to gather sufficient information to support your analysis.
  2. Provide a response of 3-5 pages, not including title page and references. It is required that you show the formulas and calculations performed to arrive at your answers.
  3. There are multiple required items to be addressed herein; please use subheadings to show where you are responding to each required item and to ensure that none are omitted.
  4. Support your paper with peer-reviewed articles, with at least 3 references. Use the following link for additional information on how to recognize peer-reviewed journals:
    Angelo State University Library. (n.d.). Library Guides: How to recognize peer-reviewed (refereed) journals. Retrieved from
  5. You may use the following source to assist in formatting your assignment:
    Purdue Online Writing Lab. (n.d.). General APA guidelines. Retrieved from
  6. For additional information on reliability of sources, review the following source:
    Georgetown University Library. (n.d.). Evaluating internet resources. Retrieved from
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