acumen insight Physician Accounting & Finance 101 Best...
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acumen insight ideas attention reach expertise depth agility talent Physician Accounting & Finance 101 – Best Practices for Physicians & Clinics Presented by: Robbie M. Connell, CPA
Transcript of acumen insight Physician Accounting & Finance 101 Best...
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Physician Accounting &
Finance 101 – Best
Practices for Physicians &
Clinics
Presented by: Robbie M. Connell, CPA
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Agenda
▪ Standard Practice Management Reports
▪ Industry Benchmark Data
▪ Basic Financial Overview
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Practice Management Reports
▪ Accounts Receivable (A/R) Aging
❖ Summary
❖ By Payer
❖ By Provider
▪ Denials Report
▪ Activity by Provider & Location
▪ Top CPT Codes
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Sample A/R Aging Report
Amt 31-60 61-90 91-120 121-150 151-180
Totals For AETNA $55.00 $55.00 $0.00 $0.00 $0.00 $0.00
Totals For Aetna Life Co Mngd Choice Acces $55.00 $0.00 $55.00 $0.00 $0.00 $0.00
Totals For AETNA MEDICARE $115.00 $0.00 $0.00 $0.00 $0.00 $0.00
Totals For AETNA OPEN ACCESS $135.00 $95.00 $0.00 $0.00 $0.00 $0.00
Totals For AETNA POS $1,116.42 $0.00 $60.00 $651.42 $0.00 $0.00
Totals For AETNA PPO $60.00 $0.00 $0.00 $60.00 $0.00 $0.00
Totals For Aetna Student Health $1,279.72 $0.00 $1,279.72 $0.00 $0.00 $0.00
Totals For Assurant Health/ASA $600.77 $0.00 $0.00 $0.00 $0.00 $0.00
Totals For BCBS TEXAS PPO $14,933.69 $455.00 $900.00 $2,395.37 $0.00 $132.56
Totals For Caprock - PHCS $110.00 $0.00 $0.00 $0.00 $0.00 $0.00
Totals For CHRISTIAN BROTHERS SERVICE $210.00 $0.00 $0.00 $0.00 $0.00 $0.00
Totals For CIGNA $1,243.62 $0.00 $0.00 $50.00 $25.00 $0.00
Totals For Cigna HealthSpring Prospect $150.00 $0.00 $0.00 $0.00 $0.00 $0.00
Totals For Cofinity $430.00 $0.00 $0.00 $0.00 $0.00 $0.00
Totals For COMMUNITY FIRST $986.83 $0.00 $0.00 $66.83 $0.00 $0.00
Totals For COMMUNITY FIRST CHIP $420.00 $0.00 $0.00 $0.00 $0.00 $0.00
Totals For COMMUNITY FIRST MEDICAID CHIP $1,350.00 $225.00 $230.00 $0.00 $0.00 $0.00
Totals For FEDERATED INSURANCE $1,097.00 $0.00 $0.00 $0.00 $0.00 $1,097.00
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Sample Claims Rejections (i.e. Denials)
SHEET METAL WRKS NATL
Patient : Entity not eligible for benefits for submitted dates of service Acknowledgement/Rejected for
Invalid Information-The claim/encounter has invalid information as specified in the Status details and
has been rejected. 1 $235.00
SUPERIOR HEALTHPLAN CHECK MEMBER ID OR ELIGIBILITY. CONTACT PAYER FOR FURTHER INFORMATION. 1 $402.00
SUPERIOR HEALTHPLAN
Payer : Cannot provide further status electronically Acknowledgement/Returned as unprocessable
claim-The claim/encounter has been rejected and has not been entered into the adjudication system. 1 $402.00
UNITED HEALTHCARE Admission Date is required on inpatient medical visits. 2300.DTP*435 1 $2,850.00
CIGNA
Patient : Entity not eligible for benefits for submitted dates of service Acknowledgement/Rejected for
Invalid Information-The claim/encounter has invalid information as specified in the Status details and
has been rejected. 2 $600.00
MEDICARE Re- Submit the claim by appending the suffix to Other Payer Id's, when Other Payer Id's are same. 5 $1,087.00
MEDICARE
Adjudication Date required either at the claim level or on all service lines for COB and Tertiary claims.
2330 / 2430 DTP*573 1 $300.00
MEDICARE The COB information does not balance at the claim level. 1 $300.00
MEDICARE The COB information does not balance at the service level. 1 $300.00
MEDICARE The COB information does not balance. 1 $300.00
AARP- UNITED HEALTHCARE
Subscriber and subscriber id not found Acknowledgement/Returned as unprocessable claim-The
claim/encounter has been rejected and has not been entered into the adjudication system. 5 $1,439.92
AETNA
Investigating existence of other insurance coverage Pending/Patient Requested Information-The claim
or encounter is waiting for information that has already been requested from the patient. 2 $547.46
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Sample CPT Code Chart
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Sample CPT Code Chart
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Benchmarks
▪ Days in Accounts Receivable
▪ Entry Lag – Avg number of days from
encounter to charge entry – 0-48 hours
▪ Charge Entry to date of bill release to
Clearinghouse/Payer – 24-72 hours
▪ Denial Rate – Less than 5%
▪ Industry Overhead Comparison
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Distribution of A/R
Days In A/R Cardiology Family Med. OBGYN Orthopedic
0-30 Days 37.42% 58.73% 55.91% 54.74%
31-60 Days 10.78% 10.54% 11.29% 12.15%
61-90 Days 7.21% 6.90% 6.56% 8.82%
91-120 Days 4.68% 4.99% 4.84% 6.49%
121+ Days 36.81% 15.84% 14.95% 17.03%
Source: MGMA Report, Cost Survey: 2017 Report Based on 2016 Data
Median %s used
Southern Region Specific Data
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Overhead as a % of Total Medical Revenue
Category Cardiology Family Med. OBGYN Orthopedic
Total Support Staff 24.08% 27.87% 26.94% 22.69%
Drug Supply N/A 8.36% 5.35% 3.48%
Building & Occupancy 7.22% 9.40% 6.49% 6.32%
Prof Liability Ins 1.41% 1.61% 3.81% 2.63%
Info Technology 1.12% 1.48% 1.42% 1.85%
Medical Supplies .48% 1.12% 1.98% 1.54%
Total Operating Cost 58.69% 71.96% 61.47% 55.05%
Source: MGMA Report, Cost Survey: 2017 Report Based on 2016 Data
Southern Region Specific Data
Median %s Used
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Staffing per FTE Physician
Category Cardiology Family Med. OBGYN Orthopedic
Clinical Support
Staff
1.51 1.99 1.66 1.40
Front Ofc Support 2.09 2.00 1.53 1.87
Med Assistant,
Nurse Aides
.84 1.50 1.01 1.00
Total Support Staff 3.95 4.14 3.52 4.05
Source: MGMA Report, Cost Survey: 2017 Report Based on 2016 Data
Median FTEs Used
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Other Useful Benchmarks
▪ Percentage of insurance verified – 98%
▪ Number of patients cleared (demographic & insurance data necessary for
claims processing prior to visit) – 90%
▪ Error rates due to front-end billing – Less than 2%
▪ Time of Service Collections
❖ Copayments – 100%
❖ All other – 75%
▪ Follow-up notes documented on the account – < 30-45 days
▪ Identification and return of unidentified or overpayment refunds – < 60 days
▪ Date of charge entry to date of claim release – 0-72 hours
▪ Claims Submission – Daily
Source: “The Physician Billing Process: 12 Potholes to Avoid in the Road to Getting Paid” by Deborah Walker Keegan, PhD, FACMPE; Elizabeth W.
Woodcock, MBA, FACMPE, CPC; and Sara M. Larch, MSHA, FACMPE
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Purpose of Accounting
▪ Accounting helps you understand where
you have been, so you can decide where
you are going
▪ Information systems, which measure,
process and communicate information, are
useful for decision makers
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Definitions▪ Asset – Something you own
❖ Cash
❖ Accounts Receivable
✓ Charges vs. Net Adjusted Collectible Charges
❖ Property, plant & equipment
▪ Liability – Something you owe
❖ Accounts Payable
❖ Long-term equipment loans
▪ Equity – The difference between the two above.
❖ Assets – Liabilities = Equity
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Financial Statements – The Big 3
▪ Balance Sheet
▪ Income Statement
▪ Cash Flow Statement
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Visual summary – Financial Statements
Balance Sheet
Financial condition at a
point in time
Balance Sheet
Financial condition at a
point in time
Beginning of Year
January 1, 2017
End of Year
December 31, 2017
Income Statement
Summary of activity for a
period of time
Statement of Cash
Flows
Summary of activity for a
period of time
Reporting of
Business Activity
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Basis of Accounting
▪ Cash Basis
❖ Income is recognized when cash is collected
❖ Expense is recognized when cash is paid
▪ Accrual Basis
❖ Income is recognized as it is earned
❖ Expense is recognized as it is incurred
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Balance Sheet
The balance sheet will tell you what the company owns (its
assets) and what it owes (its liabilities) and what is left over
for the owners (equity)
Key Points
▪ Snapshot at a fixed point in time
▪ Not necessarily current market values
▪ Current financial health of the company
▪ Focus on the quality of the assets – e.g. is the company
sitting on a pile of cash - or is everything sitting in past due
receivables?
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Sample Balance Sheet
Current Assets Current Liabilities
Cash - Operating Account 285,421$ Accounts Payable 38,250$
Accounts Receivable 34,653 Credit Card Payable 9,500
Prepaid Expenses 67,990 Payroll Taxes Payable 3,675
Rent Deposit 8,143 Current Portion of Long Term Debt 50,000
Total Current Assets 396,207 Total Current Liabilities 101,425
Non-Current Assets Non-Current Liabilities
Property, Plant & Equipment 731,504 Notes Payable 155,000
Accumulated Depreciation (585,471) Capital Lease Payable 38,000
Total Non-Current Assets 146,033 Total Non-Current Liabilities 193,000
TOTAL ASSETS 542,240$ TOTAL LIABILITIES 294,425
Common Stock 10,000
Retained Earnings 237,815
Total Equity 247,815
Total Liabilities and Equity 542,240$
ABC Company, Inc.
Balance Sheet
As Of September 30, 2017
ASSETS
EQUITY
LIABILITIES & EQUITY
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Income Statement
Shows a company’s performance over a period of time –
i.e. how did a company earn its money last year?
Key Points
▪ Also referred to as a “Profit and Loss” or “Statement of
Operations”
▪ Useful for determining performance before or after an
event – e.g. after the addition of a new physician or the
opening of a new location
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Sample Income Statement
Revenue
Fees Collected 5,215,670$
Refunds (75,292)
Total Revenue 5,140,378
Expense
Salaries & Benefits 1,425,965
Occupany Costs 519,973
Clinical Supplies & Expenses 145,167
Professional Fees 56,998
Equipment Costs 153,215
Technology Costs 100,849
Practice Promotion 17,953
General & Administrative 112,544
Total Expense 2,532,664
Net Income before Provider Compensation 2,607,714
Provider Compensation 2,402,043
Net Income 205,671$
ABC Company, Inc.
Income Statement
For the Nine Months Ended September 30, 2017
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Cash Flow Statement
Shows a company’s sources and uses of cash during a
period of time
Key Points
▪ Quickly tells you how a company is using its cash or
funding its day-to-day operations
▪ Rarely does “net cash flow” equal “net income”
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Sample Cash Flow Statement
Bad Guys Corporation
Operating Activities: Period 1 Period 2
Net income 120,000$ 50,000$
Add back noncash expense––depreciation 8,000 8,000
Less: increase in accounts receivable (60,000) -
Decrease in accounts payable (28,000) 10,000
Net cash provided by operating activities 40,000 68,000
Investing Activities:
Purchase of property, plant and equipment (220,000) -
Net cash used by investing activities (220,000) -
Financing Activities:
Loan from shareholder (repayment) 100,000 (10,000)
Loan from bank (repayment) 100,000 (100,000)
Net cash provided by investing activities 200,000 (110,000)
Net increase (decrease) in cash 20,000 (42,000)
Beginning cash balance 22,100 42,100
Ending cash balance 42,100$ 100$
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Questions?
Robbie M. Connell, CPA
Manager / BKD, LLP
210-341-9400
