Certified Revenue Cycle Representative (CRCR) Practice Exam

Which statement describes the new methodology for the determination of net patient service revenue?

1. Net patient service revenue is defined as the average payment amount for the payer but not recorded until the end of the month processing is completed.

2. Gross patient service revenue is recorded as net patient service revenue until such time as all payments are received.

3. Net patient service revenue is defined as the total incurred charges, less the explicit price concession, less any applicable implicit price concession(s) as applied to the specific portfolio of accounts.

4. Net patient service revenue is gross revenue minus any contractual adjustments applicable to the account. Any additional adjustments are not recorded until the account reaches a zero balance.

The correct answer is: Net patient service revenue is defined as the total incurred charges, less the explicit price concession, less any applicable implicit price concession(s) as applied to the specific portfolio of accounts.

The correct definition of net patient service revenue aligns with the methodology that incorporates both explicit and implicit price concessions as part of the calculation. This means that net patient service revenue is determined by taking the total incurred charges and then subtracting both explicit price concessions, such as discounts or allowances provided according to contracts with payers, and any applicable implicit price concessions that reflect adjustments based on historical data or expected collectibility for specific groups of accounts. This approach acknowledges the real economic value of services rendered and allows for a clearer, more accurate representation of what is actually expected to be collected by the healthcare provider. By factoring in both explicit and implicit adjustments, this method reflects the nuanced financial realities of various payer agreements and patient payment capabilities, ensuring that the reported revenue closely aligns with anticipated revenue. In contrast, other options either oversimplify the process or misstate the timing and nature of when and how adjustments are recorded, failing to capture the comprehensive approach outlined in the correct answer. Hence, option C provides the most accurate and detailed description of the current methodology for determining net patient service revenue.