CNML Test Questions with Correct Answers
DRGs
Diagnostic-Related Groups: payment rate based on specific diagnoses
Prospective Payment System
Used by Medicare-participating hospitals: pretreatment diagnosis billings based on DRGs;
rate decided ahead of time between insurance companies and hospitals
Exclusive Provider
Used by HMO's: insurance coverage for contracted providers or institutions
HMOs
Health maintenance organizations: comprehensive healthcare to people who pay a fee for a
fixed period of time
Capitation
Fixed rate paid to provider per member per month for healthcare services; set fee paid by
insurance company per month for all the patient needs
PPOs
Preferred provider organizations: special reduced rate for services when customers use
certain providers approved by the insurance company; usually fee-for-service
IPAs
Individual provider arrangements: provide care in their offices for prepaid plans; coalition of
physicians who serve HMO patients and third-party patients
Fulltime FTE Hours
,2080 hours (1.0 @ 40 hours per week)
Capital Expenses
Long-term equipment or physical purchases: usually over $500-$1000 that will last years and
depreciate over time and be used multiple times
Zero-Based Budget
With each new budget (i.e. fiscal year), it is determined which programs/areas get money; no
historical context is used; may rank packages and then only fund top-ranked ones; can be
time-consuming way to create a budget
Variance Calculation & Reminders
Variance $ /Budgeted $ X 100 = % difference; contract staff on separate line of budget; many
staff sick costs more than a few staff on LOA
Cost of Nursing Services Calculation
Nurse Time X (Avg. RN Hourly Rate + Benefits + Indirects) = Total Nursing Cost per DRG
General Nurse Staffing Calculation
# of RNs needed X days open / # days worked per RN
FTE Definition & Calculation
Full-time equivalent = full-time employee paid for 1 year
FTE = (Hours per shift X # of days worked) / 40 hours
Fixed Costs
Stay the same no matter the census: manager salaries, keeping phones on, rent, etc.
, Variable Costs
Change with census and how much staffing is used
Net Revenue Calculation
Gross Revenue - Deductions from Revenue (DRGs and the Contractual allowances paid by
insurance companies)
UAP
Unlicensed assistive personnel (CNA's)
ADC
Average daily census (patients in a bed at midnight)
Total Patient Days Calculation
ADC X Days open per year (for SCH - ADC X 365)
Nurse Hours Per Patient Day (HPPD) Calculation
Total Direct Care Hours / Total Patient Days = # of RN hours needed to provide care for a pt.
for 24 hours.
For example - for 12 hour staff and 12 workers each shift you multiply 12 staff X 2 shifts =
24 staff X 12 hours each = 288 divided by midnight census of 31 = NHPPD
VBP
Value-based purchasing: how CMS determines how much to reimburse a hospital for care
(benchmarked standards and how they are meeting it); quality of care & following best
practice & patient experience
DRGs
Diagnostic-Related Groups: payment rate based on specific diagnoses
Prospective Payment System
Used by Medicare-participating hospitals: pretreatment diagnosis billings based on DRGs;
rate decided ahead of time between insurance companies and hospitals
Exclusive Provider
Used by HMO's: insurance coverage for contracted providers or institutions
HMOs
Health maintenance organizations: comprehensive healthcare to people who pay a fee for a
fixed period of time
Capitation
Fixed rate paid to provider per member per month for healthcare services; set fee paid by
insurance company per month for all the patient needs
PPOs
Preferred provider organizations: special reduced rate for services when customers use
certain providers approved by the insurance company; usually fee-for-service
IPAs
Individual provider arrangements: provide care in their offices for prepaid plans; coalition of
physicians who serve HMO patients and third-party patients
Fulltime FTE Hours
,2080 hours (1.0 @ 40 hours per week)
Capital Expenses
Long-term equipment or physical purchases: usually over $500-$1000 that will last years and
depreciate over time and be used multiple times
Zero-Based Budget
With each new budget (i.e. fiscal year), it is determined which programs/areas get money; no
historical context is used; may rank packages and then only fund top-ranked ones; can be
time-consuming way to create a budget
Variance Calculation & Reminders
Variance $ /Budgeted $ X 100 = % difference; contract staff on separate line of budget; many
staff sick costs more than a few staff on LOA
Cost of Nursing Services Calculation
Nurse Time X (Avg. RN Hourly Rate + Benefits + Indirects) = Total Nursing Cost per DRG
General Nurse Staffing Calculation
# of RNs needed X days open / # days worked per RN
FTE Definition & Calculation
Full-time equivalent = full-time employee paid for 1 year
FTE = (Hours per shift X # of days worked) / 40 hours
Fixed Costs
Stay the same no matter the census: manager salaries, keeping phones on, rent, etc.
, Variable Costs
Change with census and how much staffing is used
Net Revenue Calculation
Gross Revenue - Deductions from Revenue (DRGs and the Contractual allowances paid by
insurance companies)
UAP
Unlicensed assistive personnel (CNA's)
ADC
Average daily census (patients in a bed at midnight)
Total Patient Days Calculation
ADC X Days open per year (for SCH - ADC X 365)
Nurse Hours Per Patient Day (HPPD) Calculation
Total Direct Care Hours / Total Patient Days = # of RN hours needed to provide care for a pt.
for 24 hours.
For example - for 12 hour staff and 12 workers each shift you multiply 12 staff X 2 shifts =
24 staff X 12 hours each = 288 divided by midnight census of 31 = NHPPD
VBP
Value-based purchasing: how CMS determines how much to reimburse a hospital for care
(benchmarked standards and how they are meeting it); quality of care & following best
practice & patient experience
