| Course | HC 306 Healthcare Finance |
|---|---|
| Unit | Unit 4 |
| Paper type | Charge and reimbursement comparison |
| Length | About 880 words, 6 pages |
| Format | APA 7 student paper |
| School | Herzing University |
| Program | BS in Healthcare Administration |
| Updated | October 2026 |
Free sample paper for HC 306 Unit 4
One Office Visit, Six Prices, a Cost of $148.40: A Charge and Reimbursement Comparison Across Bayside's Payers
Student Name
Health Care Administration, Herzing University
HC 306: Healthcare Finance
Instructor Name
February 5, 2026
One Office Visit, Six Prices, a Cost of $148.40: A Charge and Reimbursement Comparison Across Bayside's Payers
The Service
The service is the established-patient office visit of moderate complexity, billed with code 99214, the visit Bayside, our composite Florida clinic, bills more than any other, at about 4,200 visits a year. It is performed often enough that a few dollars of difference per visit adds up to real money, and it is paid by every payer the clinic serves.
The Three Anchoring Figures
Charge on the fee schedule: $260. This is the clinic's list price, set once a year and the same for every patient.
Estimated cost to deliver: $148.40, built from the time and resources the visit uses rather than from an average of all visits, following the logic of time-driven costing (Kaplan & Porter, 2011). Physician time, 25 minutes at $2.40 a minute, including salary and benefits: $60.00. Medical assistant time, 20 minutes at $0.62 a minute: $12.40. Front desk and billing work per visit: $18.00. Occupancy, equipment, supplies, malpractice insurance and administration, spread per visit: $58.00. Total: $148.40.
Payment agreed with each payer: shown in the table below.
The Comparison
One payer per row. The contractual allowance is the charge minus the allowed amount, the part of the list price the clinic agreed not to collect. Margin is the allowed amount minus the $148.40 cost.
| Payer | Payment method | Allowed amount | Contractual allowance | Typical patient share | Margin per visit |
|---|---|---|---|---|---|
| Medicare fee-for-service | Fee for each service from the federal fee schedule | $128.00 | $132.00 | 20% coinsurance after the deductible, $25.60 | −$20.40 |
| Medicaid managed care | A per-service fee set by the plan, which the state itself pays a monthly amount for each member | $86.00 | $174.00 | None | −$62.40 |
| Employer PPO plan A | Negotiated fee schedule, set at 126% of Medicare | $162.00 | $98.00 | $30 copayment | $13.60 |
| Marketplace silver plan | Negotiated fee for each service | $148.00 | $112.00 | $40 copayment | −$0.40 |
| Medicare Advantage plan, capitated | Fixed $48 per member per month for primary care, regardless of visits | About $134.80 per visit at current use | Not applicable | $0 to $10 copayment | About −$13.60 |
| Uninsured, self-pay | Clinic's self-pay rate | $150.00 | $110.00 | The full $150.00 | $1.60 if paid; lower after bad debt |
The Payment Methods Behind the Rows
Fee for each service. Medicare, Medicaid managed care, the PPO and the marketplace plan all pay a set amount each time the service is performed. Medicare's amount comes from a published formula that multiplies three sets of relative value units (for the physician's work, the cost of running a practice, and malpractice coverage), each adjusted for local costs, by a national conversion factor (42 C.F.R. § 414.20). Commercial plans often set their fees as a percentage of Medicare's, which is why the PPO's $162 is simply 126% of $128.
Capitation. The Medicare Advantage plan pays $48 per member per month for the clinic's 1,100 attributed members, whether they visit or not: $633,600 a year. Those members made about 4,700 visits last year, all types included, so the effective payment is about $134.80 a visit. Under capitation the clinic's payment per visit falls when members visit more and rises when they visit less, so the clinic bears the risk of use.
Other methods the clinic does not use for this service include a fixed payment for an episode of care, such as a bundled payment for a joint replacement, and a rate per day, common for hospital and nursing facility stays.
What Survives
Only one payer, the employer PPO, pays clearly more than the visit costs. The marketplace plan roughly breaks even. Medicare pays about $20 less than cost and Medicaid about $62 less. The self-pay rate covers cost only if the patient pays in full; the clinic collects about 65% of self-pay balances, so the expected payment is about $97.50, well below cost.
At Bayside's payer mix, the clinic loses money on this visit for most patients and relies on commercial volume, on other services with better margins, and on keeping cost per visit down. The analysis also shows why the charge of $260 matters so little: no insured payer pays it, and the self-pay rate is set separately. The gap between list charges and actual payments is a central theme of the course text (Pink & Song, 2020).
How Sensitive the Cost Figure Is
The margins depend on the $148.40 cost estimate, so it deserves testing. The largest element is the $58 of overhead per visit. It was calculated by dividing the clinic's annual occupancy, equipment, supply, insurance and administrative costs by its 14,000 visits, which treats every visit as using the same amount of overhead. A moderate-complexity visit probably uses slightly more room time than an average visit, so if anything the true figure is a little higher. The physician's time is the second-largest element. The 25 minutes come from a two-week time study of 60 visits of this type, with a median of 24 minutes and most visits between 18 and 32.
If physician time were 20 minutes rather than 25, the cost would fall by $12 to about $136.40, and Medicare's payment would come within $8.40 of cost. If it were 30 minutes, cost would rise to about $160.40 and even the marketplace plan would lose about $12 a visit. The direction of the findings does not change under either assumption: Medicaid and Medicare pay less than cost, the PPO pays more, and the self-pay rate covers cost only when collected in full. What changes is how large the gaps are, which matters when the clinic argues its case at contract renewal.
Implications for the Clinic
Three actions follow. First, at the next contract renewal, the clinic should ask its largest commercial plans for rates closer to 135% of Medicare, showing them the cost figure. Second, it should review how the $58 of overhead per visit is spread, since that is the largest cost element it controls. Third, it should track visit rates for its capitated members monthly, because under capitation each extra visit lowers the payment per visit; better care management that prevents unnecessary visits improves the margin instead of hurting it.
References
Formula for computing fee schedule amounts, 42 C.F.R. § 414.20 (2025).
Kaplan, R. S., & Porter, M. E. (2011). How to solve the cost crisis in health care. Harvard Business Review, 89(9), 46-52.
Pink, G. H., & Song, P. H. (2020). Gapenski's fundamentals of healthcare finance (3rd ed.). Health Administration Press.
Reading the HC 306 Unit 4 instructions
Unit 4 asks you to compare charges, reimbursement and cost for one service across payers. Expect to describe the service, set the charge, cost and allowed amounts, build a comparison table, explain payment methods, interpret margins, test the cost estimate and draw implications. Students often ask how to estimate cost. Build it from the time and resources the service uses, such as physician and staff minutes, supplies and a share of overhead, and show each part. Calculate the contractual allowance and margin for every payer. Explain how each payer sets its rate. Test the largest uncertain piece of the cost. Recommend specific steps, such as targets for contract renewal.
How this HC 306 Unit 4 example is built
The comparison opens with the visit code, volume and why it was chosen. The anchoring section explains the fee schedule charge, how the cost estimate was built and what an allowed amount is. A table lists six payers with allowed amount, contractual allowance and margin against cost. The methods section explains fee-for-service payment, Medicare's formula and the self-pay discount. The interpretation section shows which payers cover cost and which do not. The sensitivity section tests the $58 overhead share by changing visit volume. The implications section recommends asking commercial plans for rates near 135% of Medicare, reviewing the self-pay discount and tracking cost per visit each year.
Where the points sit in the HC 306 Unit 4 rubric
Herzing's rubric for a charge and reimbursement comparison typically covers the service, the anchoring figures, the comparison table, payment methods, interpretation, sensitivity and implications. A cost estimate built from components and tested for sensitivity draws the most points, since every margin depends on it. Service points reward a clear choice with volume. Table criteria look for allowed amount, allowance and margin for each payer. Method credit goes to how each payer sets its rate. Interpretation points reward a clear statement of which payers cover cost. Implications should be specific and actionable. The Medicare fee schedule formula at 42 C.F.R. § 414.20, Kaplan and Porter's costing article and Gapenski's finance text support the comparison.
Common HC 306 Unit 4 mistakes, and how to avoid them
Charge comparisons in HC 306 Unit 4 tend to stumble when charges are treated as what the clinic is paid. Another frequent problem is a cost figure with no build. Students often skip the contractual allowance. Margins are calculated against charges instead of cost. Payment methods are not explained. Sensitivity of the overhead share is ignored. Self-pay rates are left out. Implications are vague, such as negotiate better. Volume is ignored, though a small margin on 4,200 visits a year adds up to real money for a four-physician clinic. Finally, build the cost from its parts, because graders reward a comparison that lets the clinic see which payers cover the cost of care and which do not.
Get a HC 306 Unit 4 example written to your instructions
Send the Unit 4 instructions and the rubric from your HC 306 classroom, plus the service and the payers your comparison has to cover. We write a custom example carrying charge, cost and payment side by side, the contractual allowance shown as arithmetic and the margin read row by row, back in 24 to 48 hours. The first custom sample is free.
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HC 306 Unit 4 questions, answered
Where can I find payment rates to use?
Public fee schedules and published rate files cover the government programs, and industry reporting gives you defensible ranges for commercial contracts, which are rarely public. Say where each figure came from and mark anything estimated as an estimate. What matters more than precision is that the three columns stay distinct and that your subtraction between them is right.
How do I estimate what a service costs?
Assemble it rather than quote it. Staff minutes priced at a published wage, the consumables the service consumes, and a stated share of departmental overhead give you a number whose parts a reader can inspect. Name the method and say what it omits, because every costing omits something. Two sentences of visible method beat a confident total nobody can take apart.
How many payers should the table carry?
Three or four handled properly. One government program, one commercial contract and self-pay already produce the contrast the unit wants, and adding rows past that point mostly repeats a comparison you have made. Choose payers whose payment methods differ in kind rather than in amount, because two rows paid the same way at different rates teach a reader very little.
Where can I find a free HC 306 Unit 4 sample paper?
Read the complete HC 306 Unit 4 charge and reimbursement comparison here at no charge, one office visit priced six ways against a built cost. Ask for a custom comparison for another service.
Why is a hospital's charge different from what insurance pays?
The charge is a list price; each payer pays an allowed amount set by formula or contract, and the difference is written off. This sample compares six payers against the cost of one visit.