Question

Patient service revenues are to be reported in the operating statement Net of the provision for Uncollectible account and estimated contractual adjustment with Medicare, Medicaid, or insurance company. T/F

Answer 1

True, patient service revenues are reported net of uncollectible accounts and contractual adjustments. Healthcare providers may operate under fee-for-service or HMO models, with risks such as adverse selection influencing insurance markets.

Step-by-step explanation:

The statement is true: Patient service revenues are indeed reported in the operating statement net of the provision for uncollectible accounts and estimated contractual adjustments with Medicare, Medicaid, or insurance companies. Healthcare organizations must account for these deductions to reflect a more accurate picture of the revenue that can be expected to be received. The fee-for-service system and health maintenance organizations (HMOs) are two different models for health care financing. In fee-for-service, reimbursement is according to service cost, whereas in HMOs, it is based on patient numbers. Additionally, the concept of adverse selection presents a risk in insurance markets due to information asymmetry between buyers and the insurance company, which may affect the pricing and viability of insurance offerings.