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MEDICAL SERVICES POLICY MANUAL,SECTION O O-700 Income Determination for Medically Needy Program O 752 Private Health Insurance

For hospital care, private insurance makes reimbursement by means of per diem payments, percent of charge payments or a combination of the two. Under the per diem method, the insurance will apply a fixed amount for each day of hospitalization, regardless of the total charges for the hospitalization. EXAMPLE: A child is hospitalized for 4 days; daily charges are $1200, $1100, $900 and $650 for days 1-4, respectively. The child’s parents have insurance which pays a $600 per diem less any unmet deductible. The insurance payment and client’s liability are determined, as follows:

Days Charges Per Diem Payment Liability 7/1 $1200 - $600 = $600 7/2 $1100 - $600 = $500 7/3 $900 - $600 = $300 7/4 $650 - $600 = $50 Total 4 $3850 $2400 $1450 (Plus any unmet deductible)

Under the percent of charge method, the insurance will specify a fixed percent to be applied to the total charges for the hospitalization. EXAMPLE: Mr. Doe is hospitalized for 4 days, daily charges are $1200, $1100, $900 and $650 for days 1-4, respectively. Mr. Doe has insurance which pays 80 percent of total charges, less any unmet deductible. The insurance payment and Mr. Doe’s liability are determined as follows:

Days Charges Per Diem Payment Liability 7/1 $1200 - $960 = $240 7/2 $1100 - $880 = $220 7/3 $900 - $720 = $180 7/4 $650 - $520 = $130 Total 4 $3850 $3080 $770 (Plus any unmet deductible)

The following is an example of a combination of the per diem and percent of charge methods: