HCA Holdings 2011 Annual Report Download - page 115

HCA HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
NOTE 1 — ACCOUNTING POLICIES (Continued)
Revenues (Continued)
Revenues consist primarily of net patient service revenues that are recorded based upon established billing
rates less allowances for contractual adjustments. Revenues are recorded during the period the health care
services are provided, based upon the estimated amounts due from the patients and third-party payers. Third-
party payers include federal and state agencies (under the Medicare and Medicaid programs), managed care
health plans, commercial insurance companies and employers. Estimates of contractual allowances under
managed care health plans are based upon the payment terms specified in the related contractual agreements.
Contractual payment terms in managed care agreements are generally based upon predetermined rates per
diagnosis, per diem rates or discounted fee-for-service rates. Revenues related to uninsured patients and
copayment and deductible amounts for patients who have health care coverage may have discounts applied
(uninsured discounts and contractual discounts). We also record a provision for doubtful accounts (based
primarily on historical collection experience) related to these uninsured accounts to record the net self pay
accounts receivable at the estimated amounts we expect to collect. Our revenues from third party payers and the
uninsured for the years ended December 31, are summarized in the following table (dollars in millions):
2011 Ratio 2010 Ratio 2009 Ratio
Medicare ................................. $ 7,653 25.8% $ 7,203 25.7% $ 6,866 25.6%
Managed Medicare ......................... 2,442 8.2 2,162 7.7 2,006 7.5
Medicaid ................................. 1,845 6.2 1,962 7.0 1,691 6.3
Managed Medicaid ......................... 1,265 4.3 1,165 4.2 1,113 4.2
Managed care and other insurers ............... 15,703 52.9 14,762 52.7 14,323 53.5
International (managed care and other insurers) . . . 938 3.2 784 2.8 702 2.6
29,846 100.6 28,038 100.1 26,701 99.7
Uninsured ................................ 1,846 6.2 1,732 6.2 2,350 8.8
Other .................................... 814 2.7 913 3.3 1,001 3.7
Revenues before provision for doubtful
accounts ................................ 32,506 109.5 30,683 109.6 30,052 112.2
Provision for doubtful accounts ............... (2,824) (9.5) (2,648) (9.6) (3,276) (12.2)
Revenues ............................... $29,682 100.0% $28,035 100.0% $26,776 100.0%
Laws and regulations governing the Medicare and Medicaid programs are complex and subject to
interpretation. As a result, there is at least a reasonable possibility recorded estimates will change by a material
amount. Estimated reimbursement amounts are adjusted in subsequent periods as cost reports are prepared and
filed and as final settlements are determined (in relation to certain government programs, primarily Medicare,
this is generally referred to as the “cost report” filing and settlement process). The adjustments to estimated
Medicare and Medicaid reimbursement amounts and disproportionate-share funds, which resulted in net
increases to revenues, related primarily to cost reports filed during the respective year were $40 million,
$52 million and $40 million in 2011, 2010 and 2009, respectively. The adjustments to estimated reimbursement
amounts, which resulted in net increases to revenues, related primarily to cost reports filed during previous years
were $30 million, $50 million and $60 million in 2011, 2010 and 2009, respectively.
The Emergency Medical Treatment and Labor Act (“EMTALA”) requires any hospital participating in the
Medicare program to conduct an appropriate medical screening examination of every person who presents to the
hospital’s emergency room for treatment and, if the individual is suffering from an emergency medical condition,
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