Accounts receivable is money due to the organization from patients and third parties for services that the organization has already provided. Patients are sometimes not billed in a timely manner because the information they provide is inadequate or incorrect. There are also stages to developing a payment such as pre-care, care, and care completing phase.
2. Distinguish the accounts receivable from the revenue cycle.
Revenue cycle is a multidisciplinary approach to reducing the amount in accounts receivable by effectively managing the production payment cycles. The production cycle includes patient seeks care, pre-care, care, and care completed. Then the payment cycle occurs when the medical record is complete.
3. Describe what happens when an organization extends credit to patients.
When an organization extends credit to patients, the organization is giving them an option to purchase services that day and pay for it at a later date. The rule should be to
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collect as much money as possible to credit worthy patients. If payments are not being made then the organization as the option to turn the patients account to a collection agency or writing the account as bad debt. 4. What are the steps in managing accounts receivable? Explain each step. The first step in managing the revenue cycle is to have policies and procedures for the registration and admission of all patients. The second step in managing the revenue cycles is to have an accounting system that provide prompt and accurate recording of charges. The third step in managing the revenue cycle is to have a medical record system that allows for prompt and accurate recording of clinical information. The fourth step in managing the revenue cycle is to have a board-approved credit-and-collection policy that directs the organization’s management regarding extending credit and collecting accounts. 5. Discuss the methods used to collect accounts receivable. A couple methods used to collect accounts receivable is by sending out letters or phone calls to receive payment. If these do not work then the organization can submit the account to a collection agency. Another way is to write off the bill as bad debt . 6. How can an organization improve its revenue cycle management? There are five key areas that an organization can improve its revenue cycle management: • Denials management: all denials of payment resulted in administrative or clinical problems • Follow up on unpaid claims • Enhance patient payments such as copays and deductibles • Third party compliance: to make sure the payment received was the correct amount • Vendor contract coordination 7. What are the advantages and disadvantages of the two methods used to convert accounts receivable to cash? Factoring receivables and pledging receivables are two ways to convert accounts receivable to cash. The advantage of factoring is that the organization receives the cash at a discount. The disadvantage is that the organization can lose control of the collection process, and the collection methods used by the bank or agent may reflect poorly. The advantage of pledging receivable is that the organization maintains control of the collection process. The disadvantage is when securing a loan, the interest rate may be higher than others. 8.
Explain the four laws that govern accounts receivable?
a.) The Fair Debt Collection Practices Act- only apples to third-party collectors. As long as the healthcare organization collects its own debts, the act does not apply. If the organization contacts with a collection agency, or operates a collection agency under another name, the act does not apply. It deals with four key bill-collecting practices: skiptracing, collector communication, harassment, and deceptive or false representations.
b.) The Truth in Lending Act- establishes disclosure rules for sales involving consumer credit. It requires written agreement and four or more installments. The lending organization must disclose the following under Regulation Z: Annual percentage rate, amount of the finance charge, amount of the principal, amount of payments, number of payments, total of all payments, late charge arrangements, prepayment arrangements, and an opportunity for the debtor to receive an itemization of how the payments are to be
applied. c.) The Fair Credit Reporting Act- governs the permissible uses of credit reports. The act lists the ways credit reports can be obtained, including by court order, by permission of the consumer, and by legitimate business need. Information that must be removed from credit reports and the time at which that information must be removed follows: Bankruptcies after ten years; judgments after seven years or when the statue of limitations expires, which ever is longer; paid tax liens after seven years; collection accounts or those charged to profit and loss after seven years; arrests, indictments, or convictions; other adverse items after seven years. d.) The ACA- imposes new requirements on tax-exempt hospitals regarding billing and collections. Hospital financial assistance policy requirement must be adopted, implemented, and publicized, including: criteria for granting financial assistance to patient; the basis for calculating the amount charged to patients and limitation on charges to patients eligible for financial assistance, including charging no more than the lowest amount charged to insured patients; a method for applying for assistance; debt collection actions, including the avoidance of extraordinary collection efforts until eligibility for financial assistance is determined; availability of emergency care regardless of the patient’s ability to qualify for financial assistance. 9. What is the best way to evaluate revenue cycle management performance? When evaluating accounts receivable performance, average collection period is most often used. Average collection period is the average amount of time it takes for an organization to collect a bill; the term is formally defined as the number of days of operating revenue that an organization has due from its patient billings after deducting for contractual allowances, bad debt, and charity care.
Accounts receivable ending balance= Beginning balance +sales on Account - cash receipts -sales returns and allowances- charge of uncollectible account
On the basis of the clinic’s previous collections experience, Dough was able to convert billings for medical services into actual cash collections. On average, about 20% of the clinic’s patients pay immediately for services rendered. Third-party payers pay the remaining claims, with 20% of the payments made within 30 days and the 60% remainder (of total billings) paid within 60 days. For monthly budgeting purposes, 20% are assumed to be collected one month after the billing month, and 60% are assumed to be collected two months after the billing month.
As a paving company Jim Turin & Sons, Inc. purchases asphalt from its supplier. Jim has worked it out with the manufacturing company to deliver the material hours before the job since the properties of the asphalt may render it useless if delivered too soon. “Once a job is completed, [Jim Turin & Sons, Inc.] is generally paid within 10 to 30 days of billing” (Justia, 2000).
The second payment determination base is known as fee schedule. This payment method is neither based on provider’s cost nor prov...
Accounts Receivable has good separation of duties and strong internal controls such as control numbers and reconciliations to sales and bank statements. One weakness in the Accounts receivable system is the accounting supervisor approves summary entries and reconciles the general ledger account, which could indicate a weakness with segregation of duties. We recommend that the controller approves of summary entries to segregate these duties.
Conversely the OPPS (outpatient prospective payment system) is controlled for different service groups such as the APCs (ambulatory payment classifications). The outpatient services in the various APCs are the same in terms of the required resources and clinical aspects. The payment rate for APC for each group is adjusted to justify the geographic differences and is applied to all of the services in this group. The health care institutions adopt a fixed amount for all the outpatient service based on the classifications of the ambulatory services. Marcinko (2006) notes that Medicare uses it to reimburse the health care providers for the items and serves which are not part of the prospective payment systems. A MPFS (Medicare physician fee schedule) determines the rate of payments for therapy and physician services based on conversion factors, relative value units, as well as, the indices costs.
The chargemaster is an integral element of the revenue cycle. It is used in generating charges for services that are rendered to patients in real time, the absence of functioning chargemaster can result in potential collapse of the revenue cycle. Hence, the process to optimize revenue cycle must include optimizing the chargemaster and all services that is associated with it. The negative consequences of nonfunctioning chargemaster can include excessive payment/overcharging, inaccurate billing to patients; and can result in stiff penalties and fines (Bielby et al,
Medical billing transforms health care services into billing claims. The responsibility of the biller is to follow that claim to ensure the physicians, hospitals, third party billing companies, as well as federal and state governments receive reimbursement for the work that is provided. An experienced biller can boost revenue performance for the facility while keeping the business running smoothly.
The revenue cycle is a flowchart that explains where a patient goes after registration. Registration in charge of registering the patient, and making sure the patients have signed their in-patient consent forms. After all the information is recorded into EPIC, you will then move on to scanning. In scanning, the employee is responsible for scanning in the history and physical document, the informed consent form, monitoring strips, and EKG’s. After all the documents are scanned into OnBase, you will then move onto indexing. In indexing, the employee indexes all the documents that were scanned into the patient’s chart. Once all the documents are indexed into patients charts in EPIC, the coders will code the patients’ charts. Coding will check
The revenue cycle is known as the process by which healthcare providers receive reimbursement for care provided. Bringing in revenue is necessary for the efficient operation of any healthcare facility. The revenue cycle consist of all the steps involved in patient care starting from bringing in the patient, meeting their needs, and receiving payments for services provided (Gillikin).
When analyzing Apple’s Accounts Receivable Turnover Ratio, the ratio is lower than the average industry. The ratio shows 11.96 times in account receivable collections during the year and how efficiently Apple uses its assets (Miller-Nobles, Mattison and Matsumura 781-782). Account receivable collections will increase after the release of the iPhone 6 and iPhone 6Plus by mid-September. Therefore, increasing the ratios of account receivable turnover and inventory turnover.
Healthcare Reimbursement is the financial payment to the provider for meeting face to face with an patient at his/her facility. In order to determine the financial obligation due to the physician for seeing a patient is determined by a number of factors; all of which, should be documented on the patient's medical record. To achieve the maximum reimbursement it is crucial to chart efficiently, documenting completely, scheduling patients and procedures appropriately, utilization of ICD-10, CPT and E/M codes, claims filing and other important factors in receiving the maximum healthcare reimbursement for services provided.
During the past year Wells Fargo, a well-recognized bank of the United States, has been trying to clean its name and the mess it got itself into, when it was brought to the public that the bank was involved in generating fraudulent checking and savings accounts for its clients without their knowledge or their authorization. “The way it worked was that employees moved funds from customers' existing accounts into newly-created ones without their knowledge or consent”
A hospital billing process begins when an individual comes in for diagnosis and treatment for an injury and is admitted for more than 24hours. The admitting clerk first obtains a person’s demographic such as age, gender, address, symptoms, and insurance information which is entered into a computer system. Once everything is verified by insurance verifier, admitting clerk collects co-payment and assign a patient an account number, which is associated with all charges and payment related to the duties of care. Once a patient is admitted the attending physician dictates history, which includes admitting diagnosis. Then the nurse enters the patient’s medical records and inputs physician orders in a computer. After attending physician supply documentation
The overall purpose of cost accounting is to advise top administration and the management team on the most suitable and cost effective methods and actions to employ based on cost, capability and efficiencies of a given product or service. It can be defined as the method where all the expenditures used during execution of business activities are gathered, categorized, examined and noted down (Horngren & Srikant, 2000). Once these numbers are gathered and recorded the information is used to determine a selling price and/or to identify possible investment opportunities. Although the principal aim or function of cost accounting is to help the business administration with their decision making and business planning process, the cost accounting data