Question

Prepare journal entries for the following transactions.
1. Mt. Helen hospital billed the state Medicaid program $365,000 for services provided at its standard billing rate. The prospective payment system gives Medicaid a 38 percent discount from these rates.
2. The hospital has an arrangement with an HMO to provide hospital care to the HMO’s members at a specific rate per member, per month. In April the HMO paid the hospital $425,000 per agreement for patients treated in March. Based on pre-established billing rates, the hospital would have billed the HMO $487,500.
3. The hospital provided services to patients under ‘‘charity care’’ which amounted to $1,315,000 for the year.
4. At its standard billing rates Mt. Helen hospital provided services to Amity Inc., a third-party payer, for $2,380,000. The retrospective billing arrangement with Amity Inc. stipulates that the hospital would receive payment at an interim rate of 85 percent of its established rates, subject to retrospective adjustment based upon agreed-upon allowable costs. By end of the fiscal year, Amity Inc. had paid all the billings. Before issuing its financial statements, the hospital estimated that it would need to refund $192,000 to Amity Inc., based on allowable costs.



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  • CreatedAugust 13, 2014
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