adjustment that it will not collect.d.

The third-party payor retained the $700 and will convey it to

the health care facility at the start of the next fiscal period.9. What is a contractual
adjustment?a. An increase in a patient’s charges caused by revisions in the billing process
utilized by a health care entity.b. A year-end journal entry to recognize all of a health care
entity’s remaining receivables.c. A reduction in patient service revenues caused by agreements
with third-party payors that allows them to pay a health care entity based on their determination
of reasonable costs.d. The results of a cost allocation system that allows a health care entity to
determine a patient’s cost by department.10. A private not-for-profit health care entity provides
its patients with services that would normally be charged at $1 million. However, it estimates a
$200,000 reduction because of contractual adjustments.It expects another $100,000 reduction
because of bad debts. Finally, the organization does not expect to collect $400,000 because
this amount is deemed to be charity care. Which of the following is correct?a. Patient service
revenues = $1 million; net patient service revenues = $300,000.b. Patient service revenues = $1
million; net patient service revenues = $400,000.c. Patient service revenues = $600,000; net
patient service revenues = $300,000.d. Patient service revenues = $600,000, net patient service
revenues = $400,000.View Solution: 1 The Jones family lost its home in a fire
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