St. Luke's Hospital d/b/a Sumner Regional Medical Center

St. Luke’s Hospital d/b/a Sumner Regional Medical Center
A Component Unit of the City of Wellington, Kansas
Notes to Financial Statements
December 31, 2011 and 2010
Subsequent Events
Subsequent events have been evaluated through the date of the Independent Accountants’ Report,
which is the date the financial statements were available to be issued.
Note 2:
Net Patient Service Revenue
The Hospital has agreements with third-party payers that provide for payments to the Hospital at
amounts different from its established rates. These payment arrangements include:
Medicare. Inpatient acute care services and substantially all outpatient services rendered to
Medicare program beneficiaries are paid at prospectively determined rates per discharge
or billable service unit. These rates vary according to a patient classification system that
is based on clinical, diagnostic and other factors. Inpatient skilled nursing services are
paid at prospectively determined per diem rates that are based on the patient’s acuity. The
Hospital is reimbursed for certain services at tentative rates with final settlement
determined after submission of annual cost reports by the Hospital and audits thereof by
the Medicare administrative contractor.
Medicaid. Inpatient and outpatient services rendered to Medicaid program beneficiaries are
reimbursed under a prospective reimbursement methodology.
Approximately 52% and 57% of net patient service revenues are from participation in the Medicare
and state-sponsored Medicaid programs for the years ended December 31, 2011 and 2010,
respectively. Laws and regulations governing Medicare and Medicaid programs are complex and
subject to interpretation and change. As a result, it is reasonably possible that recorded estimates
will change materially in the near term.
The Hospital has also entered into payment agreements with certain commercial insurance carriers
and preferred provider organizations. The basis for payment to the Hospital under these
agreements includes prospectively determined rates per discharge, discounts from established
charges and prospectively determined daily rates.
The 2011 net patient service revenue decreased approximately $118,000 due to final settlements in
excess of amounts previously estimated.
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