CLM 355 Final Exam PowerPoint Notes

# CLM 355 Final Exam PowerPoint Notes - CLM 355 Final Exam...

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CLM 355 Final Exam PowerPoint Notes Chapter 7 Service Line Costing One of the key elements of healthcare reform is cost reduction. But in order to contain costs, they must be measured at the individual service level. Here, we discuss 3 methods: 1) Cost to charge ratio (CCR) 2) Relative value unit (RVU) 3) Activity based costing (ABC) Additionally, we introduce time-driven activity-based costing (TDABC), a new approach that focuses on costing multiple services provided to individual patients across time Cost-to-Charge Ratio Method Based on 2 assumptions 1) Indirect costs allocated to individual services constitute a single cost that’s proportional across all provided services. In other words, each service consumes overhead costs in the same proportion as the department as a whole 2) Charges (or revenues) reflect the level of intensity of the service provided and hence the use of overhead services Formulas CCR = Indirect costs/total charges or revenues

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