6210 Final

For fixed budget (1) what period of time does this cover? (2) how often is it put together

Cover 12 mo. Put together once a year

What is an MS-DRG essentially? How is the weight assigned?

Indicator of cost; it is assigned based on the avg cost of resources used to treat Medicare pts in that MS-DRG

Give the time value of money variable :N

Period of time

Only evaluate payor mix with (blank)

Only evaluate payor mix with gross revenues

Time and attendance module feeds into which subledger?

Payroll

What is the best practice for closing books (what time period) - what it is usually

10 days Usually 5-40 days

What is net 10?

10 days after invoice is cut

How do critical access hospital get paid?

101% of their costs

How many days are given typically for vacation/sick leave

15 days

When were base rates established?

1983

The ICD-10-CM added what new feature?

"CC" and "MCC" (complications and comorbidities)

Key takeaways from article "Two Midnight Rule" in terms of 1. Dr. (2 pts) 2. Observation status (1 pt) 3. Coverage differences (2 pts)

"Two Midnight Rule article" 1. Dr.: - must document "admissions note" for why pt requires more than two midnights - care must be on the inpatient only list 2. Observation status: - determine if pt is sick enough to be admitted or if anticipated stay is less than two midnights 3. Coverage differences: - inpatient- Part A- $250 copay plus eligible for post-discharge SNF coverage - outpatient- Part B where they have to pay 20% coinsu and no SNF coverage

Example Question OR spends $1M in supplies each year On-hand inventory is $125K What is inventory turnover rate? Good or bad and why

$1M/$125K = 8x per year Good because increased cash and cuts warehouse/storage space

Example Question OR spends $1M in supplies each year On-hand inventory is $250K What is inventory turnover rate?

$1M/$250K = 4x per year replacing inventory every 3 mo.

What were the program savings of Medicaid Integrity Contractor?

$36.4 million in MA overpayments

What were the program savings of Recovery Audit Contractor?

$392.5 million in collections

Which CMS Audit program had program savings of: $392.5 million in collections $5.0 Million in improper payments prevented $36.4 million in MA overpayments $859.6 million in prevention & post-payment recovery

$392.5 million in collections= Recovery Audit Contractor $5.0 Million in improper payments prevented= Medicare Administrative Contractor $36.4 million in MA overpayments= Medicaid Integrity Contractor $859.6 million in prevention & post-payment recovery= Zone Program Integrity Contractor

What were the program savings of Medicare Administrative Contractor?

$5.0 Million in improper payments prevented

What were the program savings of Zone Program Integrity Contractor?

$859.6 million in prevention & post-payment recovery

How to calculate cost for a given service from cost to charge ratio

(% of cost to charge ratio = annual exp/annual charges)* charge for a given service= cost of a given service

Challenges with FTEs and personnel expenses due to the nature of being a hospital (2)

(1) 24/7 business model (2) unpredictable customer demand (because you don't know how many patients will come in)

Article: "making informed capital investment decisions" highlights (3)

(1) Collect data on usage of existing and new equipment- usage data (pull info from procedure codes) and public data (from manufacturer) (2) Ex. provena convenant analyzed equipment in 3 cardiac cath lab and the analysis showed all equipment was at end of life and needed to be replaced (3) bon secours replacement plan (4) purchased industry data

For rolling budget: (1) what period of time does this cover? (2) how often is it put together

(1) Covers 12 mo (2) Updated monthly or quarterly

For a given lab: **2019** # of tests: 110,000 Total gross rev: 2,750,000 Total c/a rev: 1,650,000 Total net rev: 1,100,000 **2020** # of tests: 121,000 Total gross rev: 3,025,000 Total c/a rev: 1,815,000 Total net rev: 1,210,000 (1) calculate the variance $ for 2019 to 2020 for # of tests, gross rev, c/a, and net rev (2) calculate the variance% for 2019 to 2020 for # of tests, gross rev, c/a, and net rev

(1)Take the difference of each category # of tests: 121,000-110,000 = 11,000 Total gross rev: 3,025,000-2,750,000= 275,000 Total c/a rev: 1,815,000-1,650,000= 165,000 Total net rev: 1,210,000-1,100,000= 110,000 (2) For variance % you do old #/new # # of tests: 110,000/121,000 = 10% Total gross rev: 2,750,000/3,025,000= 10% Total c/a rev: 1,650,000/1,815,000= 10% Total net rev: 1,100,000/1,210,000= 10%

Example question Facts: 1. For sore throat visit (99211) has an $80 charge Allowable per HMO is $30 2. For strep test (87650) has an $20 charge Allowable per HMO is $10 3. No deductible 4. Insurance pays $30 for visit How does this go on the financial statement of the provider (a) What is the gross rev (b) What is the c/a (c) What is the net rev (d) What is the c/a % (e) What is the collection rate %

(a) gross rev is add up charges so $80 charge + $20 charge = $100 gross rev (b) c/a is the two c/a added up Visit: 80-30 = $50 is the contractual adjustment Strep test 20-10= $10 is the contractual adjustment $50 + $10 = $60 total c/a (c) net rev is gross rev-c/a so $100 - $60 = $40 net revenue (d) c/a % is the c/a DIVIDED BY gross rev so $60/$100 = 60% (e) collection rate % is the net rev DIVIDED BY gross rev $40/$100 = 40%

Example Question Facts: 1. Charge for procedure is $120 2. 1,000 visits per month (a) what is the monthly gross rev? (b) what is the monthly c/a? (the % is 60 for single procedure) (c) what is the net rev?

(a) monthly gross rev = charge for proc * number of procedures so $120 x 1,000 = $120,000 monthly gross rev (b) monthly c/a = monthly gross rev * c/a % so $120,000 x 60% = $72,000 monthly c/a (c) gross rev - c/a = net rev so $120,000- $72,000 = $48,000 net rev

Example question In a pediatric office, the annual charges are $18M and the annual expenses are $8.1M. (a) What is the cost-to-charge ratio? (b) What is the cost of a well visit if the charge is $450?

(a)the cost-to-charge ratio is calculated by annual expenses DIVIDED BY annual charges so $8.1M DIVIDED BY $18M = 45% (b)the cost would be calculated by cost-to-charge ratio MULTIPLIED BY charge = cost so 450*0.45= $203

What is inventory rate range for a hospital

2 to 8 times per year avg of 5x per year

How many quality metrics for BCPI advanced

2-7 depending on the bundle

What is the COVID-19 adjustment for MS-DRG?

20% bump on operational portion only

What is activity based costing?

breaking down by time unit and cost unit for a procedure (CPT or DRG)

How many days are typically given for CPE

1

What does employee have to do in terms of employer-sponsored health insurance (3)?

1 Pays employee portion of premium to health plan via payroll deduction 2. May contribute pre-tax to HSA or FSA 3. Pays OOP costs at time of service

Example Question Calculate the cost 1&2 for the following visit 1. 0.5 hrs with the doctor (pay rate $300/hr) 2. 0.25 hrs with RN (pay rate $80/hr) 3. Immunization $15 4. 0.5 Overhead= $5 And Total Cost

1. 0.5 hrs with the doctor (pay rate $300/hr)= $150 2. 0.25 hrs with RN (pay rate $80/hr)= $20 3. Immunization $15 4. Overhead $5 Total cost is $190

When did CMS expand the list of services that qualify for facility payment in ASC?

2008

Years of SGR Fix

2012-2014

When did the next gen model of ACO start

2016

Example Question **note: you're turning away 15% of patients because they can't get appointment in timely manner** Notes: - The projected volume is 34,264 for a year - The net rev is $255/exam - 1.1 FTE ($55k per year + 20% benefits) - business cost per year 30,000 - renovations will be needed at 50k - ultrasound exam table will be 5k 1. what is the actual volume (not projected)? 2. what is the net rev per year? 3. What is the FTE cost per year? is this is fixed or variable? 4. Supply cost ($20/exam)? is this fixed or variable 5. Front desk cost? 6. Cost per year of machine (1,200,000, 5 year useful life) 7. give depreciation expense for year ? Is this variable or fixed? 8. Give total expenses for one year 9. Give reimbursement per exam 10. 11. what is the contribution margin 12. What is the breakeven point? is it good or bad

1. 34264*0.15= 5140 2. 255 net rev*5140 volume= 1,310,700 3. 55k*1.1*1.2 = $72,600 (FIXED) 4. $20*5140 exams = $102,800 (VARIABLE) 5. N/a because they don't control the machine 6. cost per year = 1.2M/5 = 240k 7. deprec = 240k cost per year + 10k renovation (50k/5) + 1k table (5k/5) = 251k (FIXED) 8. total = 72,600 + 102,800 + 251k = $456,400 9. 1,310/5140 = $255 10. Fixed costs are the depreciation (251k) + FTE cost (72,600) + business allocation of $30k = $353,600 11. reimbursement per exam = $1,310,700 net rev divided by 5140 = $255 12. CM = reimb- cost = $255-$20 (see #4) = $235 13. BE = fixed cost/cm = 353,600/235 = 1,505 . This is good because the current volume of 5,140 is greater than breakeven, to the right on the graph profit yay!

Four requirements to be a critical access hospital

1. <25 beds 2. 24/7 ER services 3. ALOS of <96 hours for acute care patients 4. more than 35 miles away from nearest hospital or 15 miles in the mountains

name categories (2) under operating indicator

1. ALOS 2. Occupancy rate

Three sources of equity

1. Accumulated profits from operations 2. Philanthropy (ex. sell naming rights) 3. Issue equity- in for-profit sell stock in nfp partnership shares in fp join venture

What year: 1. BCPI optional program expires 2. BCPI advanced program starts

1. BCPI optional program expires- sept 30, 2018 2. BCPI advanced program starts- jan 2018

What five financial reports come out the general ledger?

1. Balance sheet 2. Income statement 3. Cash flow statement 4. Statement of Change in Net Assets 5. Other reports

Requirement for acquiring new capital (2) and give examples

1. Be in line with strategic plan Ex. want have excellent cancer care so purchase related surgical equipt 2. Meet financial criteria ex. payback of less than 3 years

Four common analysis of new capital equipment

1. Breakeven 2. Payback period 3. Net present value 4. Internal rate of return

Accountable care organizations must have which five documents in application

1. By-laws 2. Articles of incorporation 3. Governance structure 4. Membership 5. Documents/certifications

What are three cash accounts on the balance sheet?

1. Cash on hand 2. Investments 3. Patient AR, minus allowances

Two parts to provider and payer contract negotiation

1. Contracted (allowable) amounts aka fee schedule 2.

What are some things that are included under nonoperating gains (losses)

1. Contributions, gifts 2. Net assets released for research 3. Research, education (loss) 4. Investment income

What are the two cost methodologies?

1. Cost to charge ratio 2. Activity based costing

Steps to success in creating a staffing plan (2)

1. Create master staffing plan 2. Develop staffing plan for each dept using data from the master staffing plan

When were bundled payments for comprehensive joint replacement (CMS) delayed and by whom

2016 by DHHS Tom Price

In what year were bundled payments mandated for comprehensive joint replacement? for how long

2016= 5 years

For the reasonable cost of medicare, what three things are you reimbursed for?

1. Direct medical education (salary of residents/interns) 2. Organ acquisition 3. MC Bad Debt (paid at 70%)

Three adjustments to MS-DRG payments

1. Disproportionate share hospital 2. Medical education 3. Outlier payment

Two main sources of capital for purchasing

1. Equity (cash) 2. Debt

First few lines on statement of operations (3)

1. Gross rev 2. Contractual adjustments 3. Net revenues

For article "monitoring and managing payor performance article" what are five key points

1. Have a contracting system with all contract provision loaded/ready to go 2. Have a denial tracking system 3. Create payor report 4. Track administrative costs

APM receive 5% lump sum bonus for which years; they get a higher fee schedule for which years

2019-2024; 2026 onward get higher fee schedule

Article UPMC goes paperless Summarize (2) Best practices (2)

1. Hired chief supply chain officer to oversee operations 2. Started value analysis team, led by a nurse Best practices: (a) use existing technology to connect to suppliers (b) convert electronic invoices to faxes or emails and send directly to suppliers

Steps in building budget (2)

1. Identify and gather key statistics that drive revenues and expenses 2. Develop revenues and expenses budget line items and account level

What are the four different types of contractual adjustments

1. Insurance C/A 2. Bad debt 3. Charity care 4. Administrative errors

Steps in receiving an order (3)

1. Match occurs between purchase order, packing slip, and invoice 2. Payment occurs 3. Payment created from AP account

Example question Facts for a given hospital the following insurance policies contribute these: 1. Medicare = $576K 2. Medicaid= $144K 3. Blue Cross Blue Shield = $288K 4. Other = $432K (Total = $1.44M) What is the payor mix for each?

1. Medicare = $576K (net rev for medicare for one year) DIVIDED BY 1.44M (gross rev for one year) = 40% Payor Mix 2. Medicaid = $144K (net rev for medicaid for one year) DIVIDED BY 1.44M (gross rev for one year) = 10% Payor Mix 3.BCBS = $288K (net rev for BCBS for one year) DIVIDED BY 1.44M (gross rev for one year) = 20% Payor Mix 4. Other = $576K (net rev for other for one year) DIVIDED BY 1.44M (gross rev for one year) = 30% Payor Mix

How do you get total operating expenses?

Add up all the expenses (depreciation, salaries and wages, etc.) and that gives you total operating expenses

Three categories that fall under revenues

1. Net patient service revenues 2. (Less) Provision for doubtful accounts 3. Net pt services revenue minus doubtful accts 4. Other operating revenue 5. Total operating revenue

Steps for private payer in working with employers (4)

1. Offer different health plans 2. Use actuaries to calculate the medical loss ratio 3. Add administrative and claims processing costs 4. Negotiates this rate with the employer

Give four examples of adminstrative errors

1. Outside lab needed 2. No prior-auth 3. No referral 4. Uncovered procedure 5. Past timely filing or appeal

How to calculate total non-op gains/losses

Add up all the non-op revenues (gifts, contribution, investment income etc.) MINUS expenses such as research expenses

Two best practices for pharmaceutical sales reps

1. Register upon arrival, wear badge 2. Be engaged in educational meetings/presentations with dept

Ten key features of a contract (Cleverly page 164)

1. Remove contract ambiguity 2. Eliminate retroactive denials 3. Establish an appeals process 4. Define clean claims 5. Remove most favored nation clauses 6. Prohibit silent PPO arrangements 7. Include terms for outliers or technology-driven cost increases 8. Establish ability to recover payment after termination 9. Preserve the ability to be paid for services 10. Minimize health plan rate differentials

Four roles of the manager

1. Revenue cycle workflow 2. Revenue integrity- you want to make sure you're getting paid! 3. Automation and data analysis 4. Patient experience

Name a few things that could be listed under operating expenses

1. Salaries and wages 2. Employee benefits 3. Depreciation 4. Rent 5. Total operating expenses

What happens at end of year for bundled payments for comprehensive joint replacement?

CMS compares actual claims expenses to target claims expenses

Two ways to use debt as a source of capital

1. Tax-exempt bonds 2. Other types of loans- bank

(see session #12, 23:20) Example question Machine A has an age of 3 years. The average # of scans per machine per year is 34,624. The manufacturer gives an avg maximum of 120k scans. 1. What is the avg # test performed over life so far? 2. When should it be replaced?

1. The avg # test is 102,792 over life (avg # per month x 3 years) 2. Should be replaced next year (because the 102+34= 126k) because it will be past the manufacturer number at that point

(see session #12, 23:20) Example question Machine A has an age of 5 years. The average # of scans per machine per year is 34,624. The manufacturer gives an avg maximum of 120k scans. 1. What is the avg # test performed over life so far? 2. When should it be replaced?

1. The avg # test is 171,320 over life (avg # per month x 5 years) 2. Should be replaced now, because it's over the manufacturer data by almost 20k- put in replacement capital equipment

Five main calculations on statement of operations IN ORDER

1. Total operating revenue 2. Total operating expenses 3. Excess rev or exp 4. Total non-operating gains/loss 5. Excess of revenues AND gains over expenses

What five subledgers feed into the general ledger?

1. Treasury 2. Payroll 3. Patient Management System 4. Accounts Payable 5. Fixed Assets

Examples of non-productive time (7)

1. Vacation/sick 2. Holidays 3. Personal leave days 4. CPE 5. Maternity/STD as needed 6. Jury duty 7. Bereavement V: Vermeer H: Had P: Painted with C: and Created M: Many J: Juxtaposed B: Brushstrokes

Three types of value based adjustments

1. Value based purchasing 2. Hospital readmissions reduction program 3. Hospital acquired conditions

Name seven the steps in contracting with an employer/private payor

1. Work with an insurance broker to help with this process to sign contract 2. Create contract with a private payer(s) to provide services for their employee 3. Chooses plan with this payer (HMP, PPO, or HDHP) 4. Choose coverage for each plan (not all employers choose different plans many have different coverages ex. adding IVF treatment) 5. Based on coverage and employee risk pool demographics/prior year spending, negotiates contract pricing on a per-member-per-month premium basis 6. May offer HSA or FSA 7. Pays employer portion of premium to health plan (part of benefits expense on statement of ops)

name four categories under asset efficiency

1. age of plant 2. total asset turnover 3. fixed asset ratio 4. inventory turnover

name four categories under liquidity

1. current ratio 2. days in AR 3. days cash-on-hand 4. days in average payment

five common problems with poor staffing practices

1. exceeding budgeted personnel expenses 2. increased staff turnover 3. Increased patient length of stay (care not efficient- they end up staying longer because people) 4. Increased OT costs and temp agency costs 5. Chronic recruitment and retention issues (not a positive attitude at work)

Three exemptions from MIPS

1. first yrs of medicare participation 2. Participants in APMs 3. Below low volume threshold

For article "effective negotiation to maximize rate increases article" what are four key points

1.Benchmark quality (such as readmit rates, complication rates) 2. Quantify your cost (show low cost/high quality) 3. Identify reimbursement rate in the market 4. Define how your services are different from the rest of those in the community

name three categories under profitability

1. operating margin % 2. total margin % 3. return on net assets %

bundled payments for comprehensive joint replacement (CMS) reduced each of these by how much? 1. spending per case ($ amt) 2. Post-acute rehab (%) 3. SNF expenses/case ($ amt) 4. # pts discharged home (more or less)

1. spending per case decreased by $977/case 2. Post-acute rehab decreased by 27% 3. SNF expenses decreased by $508/case 4. more # pts discharged home

"Using business intelligence to improve performance" article takeaways (4)

1. started simple dashboard of KPIs 2. Now have many subledgers linked to performance management system 3. CEO sets strategic directives 4. Internal benchmarking

How many working hours in a year

2080

How many IP or OP episodes are there for BPCI-A

29 IP 3 OP

How often are there settlements for BCPI advanced

2x per year

What is net 30?

30 days after invoice was cut

How long is the collection cycle ideally for input and output?

30 days for input 50 days for output

What is best practice for # of days in AR?

35 days

They are how many MS-DRGs currently?

749 MS-DRGs

How many days are given typically for holidays

8 days

How calculate an %-age FTE for one person for one week

8 hrs per day DIVIDED by 40 hrs = 0.2

How many hospitals were included in the bundled payments mandate for comprehensive joint replacement? How many metropolitan areas How was this changed?

800 hospitals in 67 metropolitan areas Changed to just 34 metropolitan areas

Which system of payment rewards for low volume, low cost, high wellness

Capitation

Example Question Facts: 1. For sore throat visit (99211) has an $80 charge Allowable per HMO is $30 2. For strep test (87650) has an $20 charge Allowable per HMO is $10 3. No deductible 4. Insurance pays $30 for visit A. What is the contractual adjustment for each B. Total Allowable C. Total C/A D. Patient Pay total

A. charges-allowable= c/a so Visit: 80-30 = $50 is the contractual adjustment Strep test 20-10= $10 is the contractual adjustment B. Total allowable 30 (for visit) + 10 (strep test) = $40 total allowable C. Total C/A add up c/a for each part s $50+$10 = $60 total c/a D. Consider three parts of pt pay (Deductible, Copay, Coinsurance). Has no deductible, pay $30 so $40-$30= $10 Pt Pay

Example Question Facts: 1. For sore throat visit (99211) has an $80 charge Allowable per HMO is $30 2. For strep test (87650) has an $20 charge Allowable per HMO is $10 3. PATIENT HAS NOT MET DEDUCTIBLE 4. Insurance pays $30 for visit A. What is the contractual adjustment for each B. Total Allowable C. Total C/A D. Patient Pay total

A. charges-allowable= c/a so Visit: 80-30 = $50 is the contractual adjustment Strep test 20-10= $10 is the contractual adjustment B. Total allowable 30 (for visit) + 10 (strep test) = $40 total allowable C. Total C/A add up c/a for each part s $50+$10 = $60 total c/a D. Consider three parts of pt pay (Deductible, Copay, Coinsurance). PATIENT HAS NOT MET DEDUCTIBLE so they have to pay the total allowable so $40 is patient total

Example Question Facts: 1. For sore throat visit (99211) has an $80 charge Allowable per HMO is $30 2. For strep test (87650) has an $20 charge Allowable per HMO is $10 3. PATIENT HAS $10 COPAY PLUS 20% COINSURANCE (no deduct) 4. Insurance pays $30 for visit A. What is the contractual adjustment for each B. Total Allowable C. Total C/A D. Patient Pay total E. What does the insurance pay

A. charges-allowable= c/a so Visit: 80-30 = $50 is the contractual adjustment Strep test 20-10= $10 is the contractual adjustment B. Total allowable 30 (for visit) + 10 (strep test) = $40 total allowable C. Total C/A add up c/a for each part s $50+$10 = $60 total c/a D. Consider three parts of pt pay (Deductible, Copay, Coinsurance). Patient has $10 copay PLUS coinsurance Coinsurance is 20% of the remaining ($40-$10 copay) 20% of 30 = $6 $10 + $6 = $16 Patient Pay E. Insurance pays the $40(allowable)-$16 (pt pay)= Insurance pays $24

What is the payment methodology for medicare part B - hospital outpatient? (session #5 1:31)

APC

Example question Given: It's an ASC APC weight of 6.872 OPPS Conversion Factor of 44.18 Wage index of 1.25 What is the base rate/OPPS payment amt? What are the labor and nonlabor amounts? What is the base rate?

APC weight x OPPS conversion factor = Base rate for APC so 6.872*44.18 = base rate of $303 Part B Multiply base rate x 50%= nonlabor amt = 303*0.50 = $152 labor amt Multiply base rate x 50%= labor amt = 303*0.50= $152 non labor amt Base rate = (labor amt x wage index) + nonlabor amount so (152*1.25) + 152 = $342 base rate

Example question Given: It's an APC APC weight of 6.872 OPPS Conversion Factor of 73.63 Wage index of 1.25 What is the base rate/OPPS payment amt? What are the labor and nonlabor amounts? What is the base rate?

APC weight x OPPS conversion factor = Base rate for APC so 6.872*73.63 = base rate of $506 Part B Multiply base rate x 40%= nonlabor amt = 506*0.40 = $304 labor amt Multiply base rate x 60%= labor amt = 506*0.60= $202 non labor amt Base rate = (labor amt x wage index) + nonlabor amount so (304*1.25) + 202 = $582 base rate

The purchasing module feeds into which subledger?

Accounts payable and fixed assets

What falls under current liabilities? (3)

Accounts payable, accrued expenses payable, and current portion of long-term debt

What is accrual based accounting? (when does it recognize earnings)

Accrual accounting recognizes expenses as they are earned

What are adjusting entries?

Accruals for rev/exp/asset/liab not yet on the books, incurred but not recorded yet

Example Given VBP of -0.02 HRRP of -0.0095 HAC of -0.01 How does this affect their total given operating payment of $180,636

Adjustment payment = operating payment x (value based adjst 1 +value based adjst 2, etc.) so $180,363 (1 +(-0.02) + -0.0095 + -0.01) = $180,363*(-0.9605)= $173,501 adjusted operating payment

What are value based adjustments?

Adjustments to hospital payments based on quality scores that the hospitals have to submit

What is capitation under MACRA

Advanced payment model

Define accounts payable

Amount owed by an entity to its vendors/suppliers for the goods and services received

What is net revenue?

Amount to be expected to be paid on gross revenues

What is net revenue?

Amount you expect to be paid (gross rev MINUS adjustments)

what did the MSSP (Medicare Shared Savings Program) establish? (which types of laws) (2)

Anti-trust guidance and fraud/abuse laws

When was Medicare Access and CHIP Reauth Act signed into law (month year)?

April 2015

What categories fall under "Assets"? (4)

Assets: 1. Cash & cash equiv 2. Assets limited as to use 3. Accts receivable (and patients less doubtful accts and other) 4. Supplies

Example Question From the accounts payable subledger, what would be the coding for medical supplies for patient unit 2 in ACME General Hospital Chart of Accounts Facillity ACME Health Foundation A ACME General Hospital B Road Runner Urgent Care Center C Bugs Bunny Long Term Care D Department Patient Unit 1 11 Patient Unit 2 12 Patient Unit 3 13 Cafeteria 62 Purcahsing 71 Executive Office 72 Product Line Direct Patient Care 111 Supportive Patient Care 222 Overhead 333 Accounts ASSETS Lockbox Account 1020 Patient Care Receivables 1100 Allowance - Contractual Discou 1200 Allowance - Other Adjustments 1210 Allowance - Denials 1215 Accum Depreciation - Office Equipment 1675 Accum Depreciationr - Furn and Fixtures 1677 Accum Depreciation - Medical Equipment 1680 Accum Depreciationr - Radiation Equip 1682 Accum Depreciation - Computer Equipment 1685 Accum Depreciation - Computer Software 1690 LIABILITIES A/P - Accrued 2000 Withheld - 401K Plan 2230 Withheld - 125 Cafeteria Plan 2240 Withheld - Health Insurance 2250 Accrued Payroll - Employees 2310 REVENUE: Inpatient Care 3110 Outpatient Care 3111 PERSONNEL EXPENSE ADMIN SALARIES 4210 ADMIN BENEFITS 4211 ADMIN OVERTIME 4212 ADMIN CONTRACT/TEMP STAFF 4213 REGIONAL ACCOUNTING ALLOCATION 4214 BUSINESS OFFICE ALLOCATION 4215 ADMIN PERSONNEL EXPENSE DRUGS & SUPPLY EXPENSE: INFUSION DRUGS 4310 DRUG REBATES 4311 LAB FEES AND SUPPLIES 4312 RADIATION SUPPLIES 4313 DIAGNOSTIC SUPPLIES 4314 PHARMACY SUPPLIES 4315 MEDICAL SUPPLIES 4316

B-12-111-4316 (B: ACME General hospital) 12: It's for patient unit 2 111- the medical supplies are used for direct patient care/contact with the patient 4136:

Name the term: Payment you are expecting from the patients but you do not get paid (could be OOP or entire amount for self-pay)

Bad debt

Contractual adjustments are based on what? Are they positive (+) or neg (-) on statement of ops

Based on contracting agreements with each payor, negative coming off of the gross rev

How is the target calculated by CMS for bundled payments for comprehensive joint replacement?

Based on prior three years data, hosp/regional blend. Will calculate target less then prior year

What are gross revenues equivalent to?

Charges

How is payment set for Parts C & D of medicare?

Contracted fee schedule between provider and payer. Fee schedules are specific to the provider, so flat fee

Give the term: Margin you can contribute to the fixed cost

Contribution margin

How do providers choose whether to go in MIPS or APM?

Data analysis, determine quality scores, determine if APM participation will work better and make them a QP

If due to CMS reimbursement you gain $50,000 (5% bonus) but your revenue went down 1,000,000 did expenses increase or decrease

Decrease ideally more than 950,000 to make up for the loss

Which two accounts are affected when payment occurs when receiving an invoice

Decrease in liabilities Decrease in cash

The three patient payments in order

Deductible Copay Coinsurance

Second step in building a budget

Develop revenues and expenses budget line items and account level

ICD-10-CM is used for what

Diagnosis inpatient

For direct expenses, who creates the budget? For indirect expenses, who creates the budget?

Direct: the dept manager creates the budget Indirect: allocated and given to accounting dept

What module feeds into patient management system?

EHR and/or other clinical systems

What procedures are not eligible for insurance coverage?

Elective procedures

What is the chart of accounts? What is the function?

Electronic filing system to keep all the data well organized and manageable

Which physicians are purely hospital based (4)

Emergency Medicine Anesthesia Radiology Pathology They are shift-based

What is productive time

Employees hours on duty when performing functions

When was the MSSP (Medicare Shared Savings Program) established? (month/year)

Establish october 2011

What is medical loss ratio?

Expected costs for clinical services and quality

Three main categories on statement of operations IN ORDER

Expenses Revenues Nonoperating gains (losses)

There are charges for diagnosis codes true/false

False

Contracts with public payors can be negotiated True/False

False. Contracts are set by the government and cannot be negotiated

You can have bad debts for insurance true/false

False: you can only have bad debts for patients

Lab tests (medicare part B) are paid via which payment methodology

Fee schedule

Which type of accounting has the following features: - externally focused. - It's usually annual or quarterly. - two examples are BOT or SEC filing

Financial Accounting

Financial accounting: - Is it internally or externally focused? - what period of time does it usually cover? - Give two examples

Financial accounting is externally focused. It's usually annual or quarterly. Two examples are BOT or SEC filing

What are the two types of accounting?

Financial and managerial

Example question Facts: 1. Right knee replacement, 75 year old male 2. Day 1- Hospital admission 7/1/17 Procedures: Inpatient surgery/stay/rehab= $12,000 SNF 10 days $1000 per day= $10,000 Home Healthcare physical therapy 10 visits $320 ea.= $3,200 MD Visit- ortho folloup = $275 Output physical therapy 3x/week, 4 weeks, 12 visits $150ea= $1,800 MD Visit- ortho folloup = $275 Total charges = $37,550 Reimbursements= $28,500 Given:End of year, hospital performed 1,000 knee replacements MS-DRG 469 Given: The year 1 CMS target is $28,500/episode Given: the actual claims paid for yr is $27.5M What is the reconciliation payment What is the bonus Are you guaranteed this yes/no/why

First, know that CMS target is $28,500/episode*1000= $28.5M Actual claims paid is $28.5M Target-actual= reconciliation payment so $28.5M-$27.5M= $1M so you get 5% bonus of $50K Not guaranteed, you have to score on quality

Example Question (session 8, 29:00) FIXED BUDGET In 2019, 110,000 lab tests are given and the gross rev is $25/test and c/a is 60% Net rev of $10/test **for 2020, the lab volume will increase by 10%** For 2019 (1) Calculate total gross revenue (2) total C/A $$ (3) Net rev For 2020 (1) Calculate the TOTAL (for all of 2020) gross revenue (2) Calculate the c/a $$ (3) Calculate the net rev for 2020 (4) Split this into the four quarters of the year

For 2019 (1) Calculate total gross revenue volume*charges so 110,000*$25 = $2.75M (2) total C/A gross rev*c/a so $2.75M*60%= $1.65M (3) Net rev Gross-c/a so $2.75M-$1.65M = $1.1M For 2020 (1) Total gross rev (volume from 2019*1.10%)*charges so = (110,000*10%= 121,000)*$25 = $3,025,000 (2) total C/A gross rev*c/a so $3,025,000*60% = $1,815,000 (3) Net rev Gross-c/a so $3,025,000-$1,815,000= $1,210,000 (4) Four quarters!! You divide the year long numbers by 4 So for gross revenue: $3,025,000/4 = 30,250 (For Q1, 2, 3, & 4) Total c/a: $1,815,000/4 = 756,250 (For Q1, 2, 3, & 4) Net rev: $1,210,000/4 = 302,500 (For Q1, 2, 3, & 4)

Example Question (session 8, 29:00) ROLLING BUDGET/FORECAST In 2019, 110,000 lab tests are given and the gross rev is $25/test and c/a is 60% Net rev of $10/test **for 2020, the lab volume will increase by 10%** For 2019 (1) Calculate total gross revenue (2) total C/A $$ (3) Net rev For 2020- Given the actual quarter 1 # tests done was 27,500 (1) Calculate the gross revenue for Q1 (2) Calculate the c/a $$ for Q1 (3) Calculate the net rev for Q1 *note: a surgeon you were expecting to be for Q2 is not going to* (4) Calculate the gross revenue for Q2 (5) Calculate the c/a $$ for Q2 (6) Calculate the net rev for Q2 *new surgeon is starting in Q3 (7) Calculate the gross revenue for Q3 (8) Calculate the c/a $$ for Q3 (9) Calculate the net rev for Q3 (10) Calculate the gross revenue for Q4 (11) Calculate the c/a $$ for Q4 (12) Calculate the net rev for Q4 (13) Calculate the totals for 2020: total tests gross c/a net

For 2019 (1) Calculate total gross revenue volume*charges so 110,000*$25 = $2.75M (2) total C/A gross rev*c/a so $2.75M*60%= $1.65M (3) Net rev Gross-c/a so $2.75M-$1.65M = $1.1M For 2020 (1) Total gross rev Q1 volume*charges so = (27,500 given)*$25 = $687,500 (2) total C/A Q1 gross rev*c/a so $687,500*60% = $412,500 (3) Net rev Q1 Gross-c/a so $687,500-$412,500= $275,000 *since they are not starting yet, the budget stays the same) (4) Total gross rev Q2 volume*charges so = (27,500)*$25 = $687,500 (5) total C/A Q2 gross rev*c/a so $687,500*60% = $412,500 (6) Net rev Q2 Gross-c/a so $687,500-$412,500= $275,000 *since they are starting, you increase the budget to volume predicted* (7) Total gross rev Q3 ((volume from 2019*1.10%)/4)*charges so = ((110,000*10%= 121,000)/4= 30,250)*$25 = $756,250 (8) total C/A Q3 gross rev*c/a so $756,250*60% = $453,750 (9) Net rev Q3 Gross-c/a so $756,250-$453,750= $302,500 (10) Total gross rev Q4 ((volume from 2019*1.10%)/4)*charges so = ((110,000*10%= 121,000)/4= 30,250)*$25 = $756,250 (11) total C/A Q4 gross rev*c/a so $756,250*60% = $453,750 (12) Net rev Q4 Gross-c/a so $756,250-$453,750= $302,500 (13) Total for 2020 Add up the tests/gross rev/c/a/net for each quarter Tests: 27,500+27,500+30,250+30,250= 115,500 Gross rev = $687,500+$687,500+756,250+756,250= $2,887,500 C/A = $412,500+$412,500+$453,750+$453,750= $1,732,500 Net rev = $275,000+$275,000+$302,500+$302,500 = $1,155,000

For contracts with private payors: 1. How long are the contracts usually? 2. How many are negotiated every year for a large health system? 3. Which department(s) handle this?

For contracts with private payors: 1. Contracts are usually multi-year 2. 5-10 contracts every year 3. Contracting dept and legal dept

What is the function of time and attendance? Where does that system go to?

For tracking hourly workers (time that they worked). That system feeds the hours into the payroll system to calculate the hours that need to be paid

Give the time value of money variable : If you invest money today, how much will be worth in the future

Future value

What is the following: charges billed, but not yet collected or adjusted

Gross AR

What is Gross AR? What is net AR?

Gross AR= charges billed, but not yet collected or adjusted Net AR= Amount that you expect to collect from what is outstanding

Gross rev MINUS adjustments = ?

Gross rev MINUS adjustments = net revenue

What are Disproportionate Share hospitals? How does CMS help?

Hospital with high numbers of low-income patients. The payments get bumped up by CMS to help them out

Three types of care centers that fall under ACO

Hospital, Post Acute Care, Physician groups

What is payback period?

How long does it take cash coming to equal cash investment

I48.91- what type of code is this?

ICD-10-CM

What is the code for diagnosis inpatient? What would it look like?

ICD-10-CM. Starts with a letter and its three digits then a period then more digits (Ex. I48.91)

Should purchase orders increase or decrease when everything is electronic

Increase, because it means there is less off-contract purchasing

First step in building budget and give examples

Identify and gather key statistics that drive revenues and expenses - ex. pt days, lab test, pounds of laundry

If claims are "under target" for bundled payments for comprehensive joint replacement (CMS), what happens for the hospital? What if they are "over target"?

If claims are under target: hospital receives a rebate over target: hospital repays CMS

"Three steps infographic" takeaways (3)

In ACO or Bundled Payment 1. Look at high cost patients, rising risk, at-risk, and healthy pts 2. Use data given to you by CMS then decide which patients are the "big spenders" lol 3. Best practice= assign care manager to big-spending patients. These people do follow-ups with these patients

For contracted (allowable) amount for provider/payer contract negotiation what happens for in-network? In terms of insurance/patient

In-network: The insurance negotiates an allowable amount and the patient is responsible for deductibles, copays, etc.

What does the MSSP (Medicare Shared Savings Program) offer?

Incentives for provider entities to reduce healthcare spending for a defined patient population - % back of any net savings

Inventory Tracking interfaces with revenue cycle under which conditions? When it interfaces with revenue cycle-- what two steps occur

Interfaces with the revenue cycle if items are chargeable- the CDM (1) picks up charge and (2) puts into patient management system to add it to claim

Give the time value of money variable : calculates the return on an investment (percentage)

Internal rate of return

For bundled payments for comprehensive joint replacement when does the episode of care begin and end? And, which parts of medicare does it include?

It begins with inpatient admission and ends 90 days after discharge. Includes Part A (hospital) and Part B (physician, rehab)

On a graph, where would be the breakeven point if the lines are fixed costs, total costs, and revenue where can you see loss and profit

It would be where the total cost and revenue intersect loss is LEFT of BE point gain is RIGHT of BE point

What is pyxis? What does it do?

It is drug storage cabinet. Automated- patient information put in Keeps a perpetual order of whats taken out and whats needed. Makes orders

What does it mean that health plans have to pay for clean claims?

It means that they can't just deny because of a missing address or extraneous detail. The claim is submitted on standard forms

What is an outlier payment?

It's an adjustment. Can get a bump up due to a person using a lot of resources; they have to provide evidence why they need it

article "how kaiser is reaching out to super utilizers" key takeaway

Key to success under risk models - must reduce claims paid by CMS and must reduce cost of care providers

ACO must be able to do what three things

Legal entity able to receive and distrib shared savings Must be able to repay shared losses Report quality performance data

What does MIPS do in terms of quality

MIPS score (combines three existing quality programs) and you get $$

How does the bundled payment differ from MSSP (Medicare Shared Savings Program)?

MSSP is for a defined payment population Bundled payment is for episode of care

What is the goal with cash?

Manage accounts receivable for the maximum reimbursement in the shortest time

Which person has the following responsibilities: 1. Revenue cycle workflow 2. Revenue integrity- you want to make sure you're getting paid! 3. Automation and data analysis 4. Patient experience

Manager

What type of accounting has these features: - Internal - Daily, weekly, monthly - Two examples: payroll reports, OT reports, # beds full

Managerial Accounting

For managerial accounting: - Is it internally or externally focused? - what period of time does it usually cover? - Give two examples

Managerial Accounting: - Internal - Daily, weekly, monthly - Two examples: payroll reports, OT reports, # beds full

What do private payers offer to employers?

Many different health plans such as HMO, PPO, POS, HDHP

What are administrative errors and where are they on the statement of operations?

Mistakes are made by provider: example provider saw patient without the referral Falls under contractual adjustments

What is the contribution margin? Definition

Margin you can contribute to the fixed cost

Name the CMS Audit Program: Reviews Medicaid claims, on post-payment basis varies by state

Medicaid Integrity Contractor

Name the CMS Audit Program: Reviews Medicare Part A & B and DME claims on pre-payment basis.

Medicare Administrative Contractor

How do you calculate monthly total net rev for capitation

Monthly total net rev = # of members x $ rate per member

Example question An ACO gets $500/member/month to manage preventative care MD, specialist MD, urgent etc. They have 15,000 pts enrolled What is their monthly net rev? What would enable them to get a bonus?

Monthly total net rev = # of members x $ rate per member so 15,000*500= $7.5M They get a bonus if they meet quality and referral criteria

what must be submitted for bundled care payments for comprehensive joint replacement to be eligible for shared savings plan

Must submit quality data on two measures

Examples of positions where you need to replace if they go on vacation (3) Examples of positions where you DO NOT need to replace if they go on vacation (3)

Need to replace: nurses, registration ED, housing keeping Do NOT need to replace: CEO (execs), accountants, legal

What is the following: Amount that you expect to collect from what is outstanding

Net AR

Name the term: Amount you expect to be paid (gross rev MINUS adjustments)

Net revenue

Name the term: Amount to be expected to be paid on gross revenues

Net revenues

How do capital equipment and strategic plan align?

New capital equipment should be in line with strategic plan. The strategic plan is there as a guide for these decisions

If in YEAR 1 for CMS bundled care reimbursement, you are over target by $2.5M, what is the payback? The actual is $31M The target is $28.5M

None, because during year 1 you don't have to payback

For RVU, what is the setting?

Office or facility setting

What is a silent PPO arrangement?

One health insurance plan leases its network to another plan for a sum of money

What module feeds into the treasury?

Online banking system

Give the term: Tracks planned and actual revenues and expenses

Operating budget

Do value based adjustments affect operational payment or capital payment or both?

Operational payment only

Vendor examples for for general ledger (three)

Oracle Great Plains Quickbooks

For contracted (allowable) amount for provider/payer contract negotiation what happens for out-of-network? Is there a contract Will insurance pay What must patient pay

Out-of-Network: No contract between payer and provider. No discount from charges. Insurance may pay some amount up, but patient must pay ded, copay, etc. for charge amount (not allowable)

Three parts of the three way match of accounts payable

PO, packing slip, and invoice

Example question Part A MS-DRG 001 WITH MCC (heart transplant) in DC Metro region Facts: 1. Case weight is given 24.8458 2. Labor amount is given $3,500 3. Non-labor amount is given $1,600 4. Wage index is given 1.25 5. Capital amt = 500 Calculate the operating payment and the base rate Part B Given a DSH Adjustment = 0.1413 and an IME payment = 0.0744 How does that change the operating payment? Part C Calculated the capital payment with and without the adjustments Part D What is the total prospective payment with adjustments

Part A With MCC Operating payment = case weight * base rate so 24.8458*base rate (see below) so 24.8458*5,978 = $148,586 operating payment base rate = (labor amt*wage) + non-labor so base rate = (3500*1.25) + 1,600 = $5,978 base rate Part B Do Operating payment x (1 + adjust 1 + adjust 2, etc) $148,586*(1 + 0.1413 + 0.0744) = $180,636 operating payment Part C Capital payment = DRG Case Weight x (capital amount x geog. adjustment factor) so 24.8458*(500*1.2)= $14,910 Do capital x (1 + adjust 1 + adjust 2, etc) so $14,910*(1 + 0.1413 + 0.0744) = $18,126 capital payment Part D operating payment + capital payment = total payment so $180,636 + $18,126 = $198,762 total

This part of medicare uses contracted fee schedule between provider and payer. Fee schedules are specific to the provider, so flat fee

Parts C & D of medicare

Name the following: It tracks patient movement- track appointments, each patients DOS coding for visits, admissions, procedures

Patient Management System

EHR and/or other clinical systems module feed into which subledger?

Patient management system

What is charity care and where is it on the statement of operations?

Patient meets criteria that the provider has for that organization. Every hospital has a policy for this; if patient meets that policy/written guideline then they do not have OOP costs Falls under contractual adjustments

What is balance billing?

Patient must pay the entire balance between insurance payment and charges (out-of-network)

Give the term: How long does it take cash coming to equal cash investment

Payback period

What does it mean that there is a contracted (allowable) amount for provider/payer contract negotiation ?

Payer contracts contain the negotiated payment amount for every procedure. Prices from CDM don't really matter

What is bad debt

Payment you are expecting from the patients but you do not get paid

Give the time value of money variable : use this for loan payments or annual investment

Payments

Name the term: The split of all the different types of insurance companies that you're seeing in your practice in your hospital and what percentage they hold

Payor Mix

What is payor mix?

Payor mix is the split of all the different types of insurance companies that you're seeing in your practice in your hospital and what percentage they hold

What is a periodic inventory check What can it result in if done too quickly

Physical count at a point in time to determine what is needed can result in stockouts

Give the time value of money variable : if you know need a certain amount in the future, how much do you have to invest to get that amount

Present value

The article on Knee Replacement showed what?

Prices for things can range dramatically depending on the provider

For the MSSP (Medicare Shared Savings Program) what must you have (2) to participate?

Primary care physician and 5,000 lives

What is the role of the accounts payable dept (for purchasing)

Process payments to vendors

Example Question Note: MS-DRG 001- Heart transplant (total volume 60) Avg charges $180,000 Given cost-to-charge ratio of 30% So the avg cost $180K*30% = $54,000 (avg cost) CIGNA Do the payment schedule calculation: Given: Cigna is proposing a fee of $65,000 with 15% market share What is the profit for each heart transplant What is the profit total AETNA Do the payment schedule calculation: Given: Cigna is proposing a fee of $70,000 with 10% market share What is the profit for each heart transplant What is the profit total

Profit per heart transplant CIGNA $65,000 (what cigna is offering to pay) MINUS $54,000 (avg cost) = $11,000 profit per transplant They have 15% market share so take 15% of 60 patients = 9 patients*profit per transplant = $99,000 profit total AETNA $70,000 (what cigna is offering to pay) MINUS $54,000 (avg cost) = $16,000 profit per transplant They have 10% market share so take 10% of 60 patients = 6 patients*profit per transplant = $96,000 profit total

Two parts of medicare payment

Prospective portion and Reasonable cost

What are the two types of payors? Give examples of each

Public: Medicare, Medicaid, VA, SCHIP, Bureau of Indian Affairs Private: Aetna, Cigna, Humana

What module feeds into accounts payable?

Purchasing

What module feeds into fixed assets?

Purchasing

Purpose of Recovery Audit Contractor What is the look back period? What happens

Purpose: Reviews Medicare Parts A-B claims on post-payment basis to look for improper payments. Look back period: prior 3 years of claims. What does it do: Automated review (no med record) AND Complex review (med record) Employs RNs, therapists, certified coders, and physicians.

Physicians are paid via which methodology?

RBRVS paid on each CPT/HCPCS code

Which is lower: RVU in hospital setting or RVU in an office setting Why

RVU is lower in a facility setting because MC ?

Name the CMS Audit Program: Reviews Medicare Parts A-B claims on post-payment basis to look for improper payments

Recovery Audit Contractor

Reimbursement for MS-DRG is adjusted year by blank for blank

Reimbursement for MS-DRG is adjusted year by Congress for Market Basket Update

Give examples of revenues and expenses for a lab that would be part of building a budget

Revenues: # of lab tests done, allowable amount, and charge amount Expenses: biohazard waste, personnel expenses

Purpose of Medicaid Integrity Contractor What is the look back period? What happens

Reviews Medicaid claims Look back period: varies by state Review MICs: analyze MA claims data to identify high-risk areas and provides leads to Audit MICs.

Purpose of Medicare Administrative Contractor What is the look back period? What happens

Reviews Medicare Part A & B and DME claims Look back period: n/a. Reviews claims prior to payment. Network of MACs serve as primary contact between MC FFS program and healthcare providers, they process claims, appeals and audits.

Purpose of Zone Program Integrity Contractor? What is the look back period? What happens

Reviews Medicare Parts A-D, home health, skilled nursing, and DME supplies claims on post-payment basis to look for improper payments. Look back period: prior 10 years of claims Database mined for improper claims to identify problem areas and uncover fraud across providers, creates profile of claim history.

Purpose of inventory tracking method of scanning

Scanning tracks inventory for purchased for automated count and reordering to PAR level

Example Question Hospital Radiology Outpatient Center - open M-F 7A - 7:30PM (1/2 hours lunch) - 2 machines, full staff Sat 7A - 3:30PM (1/2 hour lunch) - 1 machine + front desk only Annual salaries: Tech $75K; Front Desk 19.25.hr; Billing $50K; Manager $100K Budget OT on it's own line item at 3% for NPT employee only NPT is 10%! Calculate 1. FTEs for Mon-Fri for the following positions and in total Machine 1 Tech Machine 2 Tech Front Desk Billing Manager and the total 2. FTEs for Saturday for the following positions and in total Machine 1 Tech Machine 2 Tech Front Desk Billing Manager and the total 3. Not non-productive time for each position and in total 4. Total FTEs for each position and in total 5. Annual salary 6. Total salary for each position and in total 7. Benefits at 25% 8. Total salary with benefits 9. OT salary 10. OT benefits 11. Total OT 12. Total sal&ben + OT salary See session #8 1:07

See picture for answers Calculate the number of FTEs for being open 12 hrs per day for each position by dividing hrs open by full working hrs: Ex. for machine 1 tech for mon-fri = (12hrs*5 days)/40 = 1.5 FTEs For saturday, you do 8/40 because it's only open for 8 hrs per day on that day. Note than machine 2 is zero because only one machine is in use and billing and manager are also zero because they do not work those days Take note non-productive time for people that need to be replaced which is 10% then multiply it by the subtotal (FTEs for mon-fri + saturday) for each position To get total FTEs add up the subtotal (FTEs for mon-fri + saturday) + the non-productive time For annual salary, annual salary is given for the techs, billing, and manager and then for the hourly people (front desk) you do their hourly rate*2080 For total salary, you do annual salary*total FTEs For benefits, you take total salary*0.25 For salary and benefits, you add up total salary plus benefits For OT salary at 3%, you have to multiply total salary*0.3 for non-salaried people!! For OT benefits, you multiply OT salary*25% for non-salaried ppl Then for total OT you add up OT salary + ot benefits For #12 you do (total sal & ben) PLUS (OT sal & OT ben)

Is the cash cycle longer or shorter than the revenue cycle? Why or why not?

Shorter because it includes purchase of supplies, etc.

Fill in missing steps in accounting cycle: a. open period (sep 1) b. transactions recorded in subledgers c. ??? d. trial balance created and checked for balance e. Adjusting entries f. ??? g. close period **no more transactions for the period h. Release final financial statement

Steps in the accounting cycle: a. open period (sep 1) b. transactions recorded in subledgers c. journal entries interface to general ledger d. trial balance created and checked for balance e. Adjusting entries f. prepare and review financial statements g. close period **no more transactions for the period h. Release final financial statement

Fill in missing steps in the accounting cycle: a. open period (sep 1) b. ??? c. journal entries interface to general ledger d. trial balance created and checked for balance e. ??? f. prepare and review financial statements g. close period **no more transactions for the period h. ???

Steps in the accounting cycle: a. open period (sep 1) b. transactions recorded in subledgers c. journal entries interface to general ledger d. trial balance created and checked for balance e. Adjusting entries f. prepare and review financial statements g. close period **no more transactions for the period h. Release final financial statement

What are the eight steps of the accounting cycle?

Steps in the accounting cycle: a. open period (sep 1) b. transactions recorded in subledgers c. journal entries interface to general ledger d. trial balance created and checked for balance e. Adjusting entries f. prepare and review financial statements g. close period **no more transactions for the period h. Release final financial statement

What does MIPS do?

Streamlines multiple quality programs under merit based incentive payment system

When an electronic invoice comes in with an order number, what automatically occurs?

System will pull up purchase order and check if anything has been received in system. If they match, it will pay

Example question For technical Facts: 1. Out-of-network hospital but insurance pays allowable amount 2. Deduct of $500 3. 20% co-insurance 4. The charge is $5,000 5. The allowable is $3,000 6. No copay (just ded/coins) For professional 7. charge is $2,500 8. allowable is $1,500 For technical part: What is the patient deductible What is the patient coinsurance What does the patient pay total For professional part: What is the patient deductible What is the patient coinsurance What does the patient pay

TECHNICAL The patient deductible is $500 (given) The patient coinsurance is 3000 (allowable) MINUS 500 (deduct) = $2,500*20% = $500 coinsurance Billed for balance of charges $5,000-$3,000= $2,000 So patient pays $3,000 PROFESSIONAL The patient deductible is $0 (paid above) The patient coinsurance is $1,500 (allowable) MINUS $0 (deduct) = $1,500*20% = $300 coinsurance Patient has to pay balance of charge ($2,500-$1,500) = $1000 Patient pays $1,300 Total for the patient is $4,300

Example question For technical Facts: 1. In-network hospital 2. Deduct of $500 3. 20% co-insurance 4. The charge is $5,000 5. The allowable is $3,000 6. No copay (just ded/coins) For professional 7. charge is $2,500 8. allowable is $1,500 For technical part: What is the patient deductible What is the patient coinsurance What does the insurance pay For professional part: What is the patient deductible What is the patient coinsurance What does the insurance pay

TECHNICAL The patient deductible is $500 (given) The patient coinsurance is 3000 (allowable) MINUS 500 (deduct) = $2,500*20% = $500 coinsurance Insurance pays $2000 (3000-500-500) PROFESSIONAL The patient deductible is $0 (paid above) The patient coinsurance is $1,500 (allowable) MINUS $0 (deduct) = $1,500*20% = $300 coinsurance Insurance pays $1200 (1,500-0-300) Total for the patient is $1,300

How do you get total operating revenues?

Take the revenues (net patient service revenue) MINUS provision for doubtful accounts = net patient services rev less provision for doubtful accts PLUS other operating rev = total operating rev

Example question Given percentage of A/R for the following time periods: 0-30 days: 30% 31-60 days: 30% 61-90 days: 30% over 90 days: 10% Is this good or bad? Which are good/bad?

The 30% in the 61-90 days is concerning; not good that this hasn't been collected yet

How is the base rate adjusted for Part B APC?

The base rate is split into two portion: 60% labor and 40% non-labor

The bottom 50% of MIPS practices have blank and then that money goes to blank

The bottom 50% of MIPS practices have penalty and then that money goes to the top 50% as bonus

What would the new covid-19 adjustment be if the given MS-DRG operational payment was $180,636

The covid adjustment is a 20% bump $180,636*1.2= $216,763 Gain of $36,127

What is the purpose of an operating budget?

Tracks planned and actual revenues and expenses

What is the general ledger? - What is it in general - What does it keep at detail level - What is the output?

The main IT system for all the financial records in an organization - Keep credits and debits at detail level - the output is all the reports (external and general)

Example question Given percentage of A/R for the following time periods: 0-30 days: 60% 31-60 days: 17% 61-90 days: 9% over 90 days: 14% Is this good or bad? Which are good/bad?

The presence of 60% and 17% in the 0-30 and 31-60 is "okay" its not good and not too bad The 14% in 90 days is concerning because that's a lot $$ to not be collected yet

Are based rates for MS-DRG specific or non-specific? How is broken up?

The rates are hospital specific. There are rates for labor and non-labor

best practice in capital budgeting (2) What is the goal

When you purchase the equipment, consider: 1. What is the useful life of that equipment 2. when do you need to include funds in the capital budget for replacement Goal: compare manufacturer usage data to actual usage data

The cost of a machine is $60k with a three year life and need 1 FTE to run the machine ($30k per year) the cost to run a test is $15 per test. The reimbursement s $40/test a. what is the depreciation cost per year? b. what is the contribution margin? c. calculate the breakeven

a. depreciation is $20k/year (60k/3 years) b. cm = $40-$15 = $25 c. breakeven = $50,000/$25 = 2,000 tests/year the 20k + 30k FTE

Example question Given percentage of A/R for the following time periods: 0-30 days: 75% 31-60 days: 10% 61-90 days: 10% over 90 days: 5% Is this good or bad? Which are good/bad?

These are good numbers. The 75% in less than 30 days is good; it hasn't been sitting in AR for that long.

How are indirect medical education institutions helped by CMS? (be specific) Why?

They are helped: payment are increased by a percentage based on ratio of interns and residents Because interns/residents tend to order more tests and scans

What was the COVID impact on chart of accounts?

They had to create new lines for COVID

if the payback period for a given product is 1.14 years. The useful life is 5 years Is this good or bad?

This is good because it's pays for itself in a short time

Example CMS attributes 7,000 lives and target of $8,000, $56M target CMS has a final list of 7,400 lives (retroactively) and actual claims paid of $58.5M (avg $7,900 ea.) Is this over or under target? By how much If 60% is given to ACO, how much is this

This is under target because dividing $58.5M by 7,400 results in $7,900 ea. under the target: $8,000*7,400 (more lives)= $59.2M $59.2M - $58.5M actual = $700K under target $700k*60%= $420k

What is a MFN clause?

This is where the provider cannot contract with any other health plan at lower rates than those defined in the current contract

What module is the following: For tracking hourly workers (time that they worked). That system feeds the hours into the payroll system to calculate the hours that need to be paid

Time and attendance

What are the five variables for time value of money? Explain ea. For one, it's just a variable letter

Time value of money: 1. Present value= if you know need a certain amount in the future, how much do you have to invest to get that amount 2. Future value= if you invest money today, how much will be worth in the future 3. Internal rate of return= calculates the return on an investment (percentage) 4. Payments= use this for loan payments or annual investment 5. Period of time= N

What is the goal of the cash cycle

To minimize time between cash outflow and cash inflow

What is the managers job in terms of chart of accounts

To monitor and approve expenses that are being incurred by their department

Why did hospitals have to create new lines for COVID-19 in chart of accounts?

To report to FEMA and get grant money from the CARES act

Equation: ? + ? = total liabilities and net assets

Total liabilities + Total net assets = total liabilities and net assets

Capitation falls under which MSSP Track

Track 3

Function of the treasury ?

Tracks all cash into and out of bank accounts

Functions of accounts payable (2)

Tracks all invoices Pays bills for organization

Function of the Patient Management System

Tracks patient movement- track appointments, each patients DOS coding for visits, admissions, procedures

The online banking system module feeds into which subledger?

Treasury

Where is "excess revenue over expenses" listed on Statement of Operations? How do you get this number?

Under expenses which is listed underneath the revenues (it goes revenues all listed then expenses all listed then excess revenues over expenses) Total operating revenues MINUS total operating expenses

Why are Disproportionate Share hospitals concerned about revenue? (hint: what law/year/%)

Under healthcare reform, payments were decreased by 75% in 2014!!

ADP & Paychex are vendors for what?

Vendors for tracking time and attendance

At what point have you earned back the initial investment for a new project (concept not a term)

When costs= revenues

What do APMs provide

bonus payments for participation in eligible alternative payment models

With what coding system were "CC" and "MCC" (complications and comorbidities) added?

With ICD-10-CM

Example question MS-DRG 001 WITH MCC (heart transplant) in DC Metro region Facts: 1. Case weight is given 24.8458 2. Labor amount is given $3,500 3. Non-labor amount is given $1,600 4. Wage index is given 1.25 Calculate the operating payment and the base rate MS-DRG 002 WITHOUT MCC (heart transplant) in DC Metro region Facts: 1. Case weight is given 11.754 2. Labor amount is given $3,500 3. Non-labor amount is given $1,600 4. Wage index is given 1.25 Calculate the operating payment and the base rate

With MCC Operating payment = case weight * base rate so 24.8458*base rate (see below) so 24.8458*5,978 = $148,586 operating payment base rate = (labor amt*wage) + non-labor so base rate = (3500*1.25) + 1,600 = $5,978 base rate Without MCC Operating payment = case weight * base rate so 11.754*base rate (see below) so 11.754*5,978 = $11,267 operating payment base rate = (labor amt*wage) + non-labor so base rate = (3500*1.25) + 1,600 = $5,978 base rate

With MS-DRGs all diagnosis codes are sent to blank and assigned to blank based on blank

With MS-DRGs all diagnosis codes are sent to CMS algorithm and assigned to one of 25 major diagnostic categories based on body system and disease type

What are the three different components of RVU?

Work + practice exp + malpractice exp

If in YEAR 2 for CMS bundled care reimbursement, you are over target by $2.5M, what is the payback? The actual is $31M The target is $28.5M Hospital pays what portion

Year 2 there is a 5% penalty Target-actual= reconciliation payment so $31M-$28.5M= $2.5M and 5% of that is $125,000 Hospital can contract with other provides to share payments/penalties, but hospital must pay at least 50%

What are gain/loss limits for rebates/repayments for the hospital for bundled payments for comprehensive joint replacement (CMS) for years 2 3 4&5

Year 2= 5% Year 3= 10% Years 4&5= 20%

Example Question Facts: Monthly gross rev = $120K Monthly c/a = $72K Monthly net rev= $48K What is the YEARLY numbers for ea.?

Yearly just multiply * 12 months so for Monthly gross rev = $120K*12 = $1.44M yearly Monthly c/a = $72K*12 = $864K yearly Monthly net rev= $48K*12 = $576K yearly

Example Question A surgical scope has a useful life of three years. Complete the depreciation table if the given starting value is $12,000 Year Monthly Dep. Annual Dep. Remaining Balance 1 ? ? ? 2 ? ? ? 3 ? ? ?

You have to divide $12,000 by 36 (# of months in 3 years to get the monthly depreciation) and divide it by 3 to get annual depreciation. For each year, subtract the annual depreciation Year Monthly Dep. Annual Dep. Remaining Balance 1 333 4,000 8,000 2 333 4,000 4,000 3 333 4,000 0

Name the CMS Audit Program: Reviews Medicare Parts A-D, home health, skilled nursing, and DME supplies claims on post-payment basis to look for improper payments.

Zone Program Integrity Contractor

Example Question A MS-DRG code 222 has a charge of $20,000 and a given hospital does ten of these a month. Contractual adjustment percentage is 40% a. What is the monthly gross rev? b. What is the monthly c/a? c. What is monthly net revenue? d. What do these numbers look like on an income statement for the year?

a. Monthly gross rev = charge for procedure*number of procedures so $20,000 x 10 procedure= $200,000 monthly gross rev b. Contractual adjustment = gross rev * c/a % so 200,000*40% = $80,000 contractual adjustment c. Net rev = monthly gross rev MINUS monthly c/a so $200,000 MINUS $80,000 = $120,000 monthly net rev d. monthly gross rev of $200K *12 months = $2.4M annual gross rev monthly c/a of $80,000*12 months = $960K annual c/a monthly net rev of $120K*12 months = $1.4M annual net rev

Example Question Facts: 1. Senior (with medicare) having cardiac defibrillator implant surgery w/ $250 deductible for input 2. The codes are I48.91 and 0JH609Z Charges are: 3. Total OR charge = $11,000 4. Recover room charge = $2,500 5. 3 nights in room = $1000*3 nights = $3,000 6. Misc drugs, chargeable supplies = $800 7. Lab tests = $700 8. Defibrillator charge = $2,000 (at cost) *note that total charges are $20,000 *Note that I48.91 is a ICD-10-CM code for diagnosis and 0JH609Z is a inpatient code ICD-10-PCS and note that this is for inpatient 9. it goes through a CMS grouper giving an MS-DRG of 222 10. Per CMS allowable is $10,000 Questions: a. What are the allowable charges? b. What is the contractual adjustment? c. What is the contractual adjustment percentage? d. What is the insurance paying? What does the patient pay? e. What is the collection rate%?

a. The total allowable is the $10,000 charge + $2,000 charge = $12,000 total allowable b. The contractual adjustment is $20,000 total charges (under #8 in question) - $12,000 allowable = $8,000 c/a c. Contractual adjustment percentage = c/a divided by total charges = 40% c/a percentage d. The insurance pays $11,750 (allowable MINUS patient pay) and the patient pays $250 (their deduct) e. Collection rate % = 100-c/a% OR allowable DIVIDED BY gross rev so $12,000 DIVIDED BY $20,000= 40% collection rate

Give the term Amount owed by an entity to its vendors/suppliers for the goods and services received

accounts payable

When a payment occurs when receiving an order, where is the payment created from

accounts payable

Name the term: breaking down by time unit and cost unit for a procedure (CPT or DRG)

activity based costing

Name the term: Patient must pay the entire balance between insurance payment and charges (out-of-network)

balance billing

Example question Given gross AR of $12M 1. For Medicare, the gross AR is 6M and the given c/a is 50% 2. For medicaid, the gross AR is 2M and the given c/a is 70% 3. For BCBS, the gross AR is 2.85M and the given c/a is 40% 4. For Other, the gross AR is 1.15M and the given c/a is 40% What is the c/a$ for each and the Net AR for each What is the Net AR TOTAL What is the number of days in AR? *given avg of $130,000 How much is moved from Net AR to cash to reduce days in AR

c/a $ = Gross AR x c/a% Net AR = Gross AR - C/A$ For 1. For medicare C/A$ is $3M (Gross AR of $6M x c/a% of 50%) Net AR is $3M (Gross AR of $6M - C/A$ of $3M) 2. For medicaid C/A$ is $1.4M (Gross AR of $2M x c/a% of 70%) Net AR is $0.6M (Gross AR of $2M - C/A$ of $1.4M) 3. For BCBS C/A$ is $1.14M (Gross AR of $2.85M x c/a% of 40%) Net AR is $1.71M (Gross AR of $2.85M - C/A$ of $1.14M) 4. For Other C/A$ is $460K (Gross AR of $1.15M x c/a% of 40%) Net AR is $690K (Gross AR of $1.15M - C/A$ of $460K) 5. Total C/A$ is 6M (added up from each) and Net AR is 6M (added up from each) 6. Number of days in AR is calculated by Net AR/Avg Daily Cash so 6M/130,000 = 46 days 7. To calculate this you do # days - # days benchmark (35 days) = 46-35= 11 days then do difference in days*avg daily cash = 11*130K = 1.43M

c/a % + collection rate % = ?

c/a % + collection rate % = 100%

ACO employs what payment methodology

capitation

Name the term: Patient meets criteria that the provider has for that organization. Every hospital has a policy for this; if patient meets that policy/written guideline then they do not have OOP costs

charity care

What is the purpose of a trial balance? When is it run?

checks to make sure that the entries in the general ledger are in-balance, no errors. It can be run anytime during the month, but towards the end of the month you want to run it pretty much every day

blank have the following features: 1. <25 beds 2. 24/7 ER services 3. ALOS of <96 hours for acute care patients 4. more than 35 miles away from nearest hospital or 15 miles in the mountains

critical access hospital

name category under solvency

debt service ratio

What are fringe benefits (and the %age)

employer expenses (employee portions are withheld from their salary) usually 15%-25%

How to calculate excess of revenue and gains over expenses

excess rev over expenses PLUS total non-op gains/losses

HFMA "Key Hospital Stats" - internal or external benchmarking

external benchmarking

For 24/7 staffing, how many FTEs are needed PER WEEK and per day in that week

first calculate # hrs per year = 7 days*24 hrs per day*52 weeks = 8736 hrs per year then divide 8736 by 2080 hrs (hrs work per year for 1.0 FTE) = 4.2 FTEs divided by 7 = 0.6 FTEs

If an office that's open 9-5 mon-sun, how many FTEs are needed PER WEEK

first calculate # hrs per year = 7 days*8 hrs per day*52 weeks = 2912 hrs per year then divide 2912 by 2080 hrs (hrs work per year for 1.0 FTE) = 1.4 FTEs

high inventory = (increased or decreased?) cash

high inventory = decreased cash

Which is good: low inventory turnover high inventory turnover

high inventory- its not sitting shelves

For asset efficiency in ratio analysis what is the goal? (higher of lower)

higher

For capital structure in ratio analysis what is the goal? (higher of lower)

higher

For cash on hand in ratio analysis what is the goal? (higher of lower)

higher

For current assets in ratio analysis what is the goal? (higher of lower)

higher

For occupancy rate in ratio analysis what is the goal? (higher of lower)

higher

Why must inventory levels not be too high (2 points)

inventory is a non-productive asset when it's sitting on the shelf and it doesn't produce cash. And you want more cash because that means more flexibility

Give the term rate at which a company purchases and resells its products to customers and consumers

inventory turnover

What is listed in the master staffing plan? (3) and then from there what must be specified (4) 25:55 session

list 1. every unit/dept from chart of accounts by... 2. setting ip/op and 3. patient care services they are providing there (icu, med ip unit, etc.) Once you have the list, you must specify 1. # bed or exam rooms available 2. average daily census/how many beds/rooms are full (for IP) or volumes (for OP) 3. Nurse/clinician to patient ratio (semi-fixed expense) 4. Required admin support staff (semi-fixed expense)

Capitation has which incentives (3)

low volume, low cost, high wellness

For ALOS in ratio analysis what is the goal? (higher of lower)

lower

Three examples of perpetual inventory items

medical devices supplies drugs

Name the term: Expected costs for clinical services and quality

medical loss ratio

What is an FTE (basic definition) and # of hrs

one full time equivalent (a position NOT a person) 40 hrs/week

Do COVID-19 adjustments affect operational payment or capital payment or both?

operational payment only

Give the term: Employees hours on duty when performing functions

productive time

Name the useful tool It is drug storage cabinet. Automated- patient information put in Keeps a perpetual order of whats taken out and whats needed. Makes orders

pyxis

What is inventory turnover?

rate at which a company purchases and resells its products to customers and consumers

What are two examples of things that could be in adjusting entries

reimbursements and salaries

What type of expense is "nurse/clinician to patient ratio" fixed or semi-fixed

semi-fixed

What type of expense is "required administrative support staff needed for a dept" fixed or semi-fixed

semi-fixed

When needing to reduce expenses, what type of expenses can be changed? What type of expenses CANNOT be changed/or it's much harder to

semi-fixed and variable NOT fixed

What is inventory

stocks of goods used in production, or for sale, with expected useful life of 12 months

What are "patients, less allowance for doubtful accounts" ?(3) (lecture 1 - 1:29)

this is the contractual adjustments, bad debt, and charity care

What module feeds into payroll?

time and attendance

How is inventory turnover calculated?

total supply spending divided by on-hand inventory

Function of fixed assets

tracks assets for inventory purposes

Function of payroll?

tracks salary and benefits expenses for all employees

Give the term: Adjustments to hospital payments based on quality scores that the hospitals have to submit

value based adjustments

these are examples of blank 1. Value based purchasing 2. Hospital readmissions reduction program 3. Hospital acquired conditions

value based adjustments