What it is
Net patient service revenue is an estimate: gross charges less what the payor will not pay and what the patient will not pay. The audit question is whether the percentages are supported and whether last year’s estimate turned out right.
This workbook moves from gross charges to net revenue by payor class, applies a reserve to the receivable aging by payor, and compares the prior year-end estimate with what was collected since.
When to use it
- At year end, to support net revenue and the allowance for contractual adjustments and price concessions.
- When payor mix or contract rates change during the year.
- To run the retrospective test of last year’s estimate required for a significant estimate.
What’s inside
- Net revenue tab with five seeded payor classes and 10 rows
- AR reserve tab with reserve percentage by aging bucket and a required reserve by payor
- True-up tab comparing prior estimate with collections and a variance flag
- Tie-outs of net revenue, receivable and allowance to the ledger
Standard cited
This template follows ASC 606 / ASC 954. It is written in our own words, except for phrases the standard requires the document to contain, with [bracketed placeholders] for client details, amounts in USD and dates as MM/DD/YYYY. Check it against the current standard and your firm’s methodology before use.
Questions
What is an implicit price concession?
A reduction from the amount billed that the provider expects to accept even though the contract does not state it, mainly for self-pay and patient-responsibility balances. It reduces the transaction price.
Where do the percentages come from?
From fee schedules, contract terms, remittance data and collection history. The workbook has no default percentages.
How are cost report settlements handled?
They are estimated separately as variable consideration and recorded only to the extent a significant reversal is not probable.
Related templates
- Audit Program: Hospital and Health System
- Audit Program: Medical Practice
- Accounts Receivable Aging and Allowance Workpaper
- Disclosure Checklist: Revenue (ASC 606)
Last updated 11/05/2026. All free templates.