Physician Accounting & ideas Finance 101 Best attention reach - - PowerPoint PPT Presentation

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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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acumen insight ideas attention reach expertise depth agility talent

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

• r encounter is waiting for information that has already been requested from the patient.

2 $547.46

acumen insight ideas attention reach expertise depth agility talent Sample CPT Code Chart

acumen insight ideas attention reach expertise depth agility talent Sample CPT Code Chart

acumen insight ideas attention reach expertise depth agility talent

acumen insight ideas attention reach expertise depth agility talent

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

acumen insight ideas attention reach expertise depth agility talent 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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acumen insight ideas attention reach expertise depth agility talent

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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acumen insight ideas attention reach expertise depth agility talent

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

• pening 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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acumen insight ideas attention reach expertise depth agility talent

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 $

acumen insight ideas attention reach expertise depth agility talent

acumen insight ideas attention reach expertise depth agility talent

Questions?

Robbie M. Connell, CPA Manager / BKD, LLP 210-341-9400 rconnell@bkd.com