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HIT218 CH18

What did Medicare do in the mid 1960's? It encouraged hospitals to provide services without regard to cost because most costs were reimbursed under the medicare reimbursement program.
HCFA Health Care Finance Administration
CMS Centers for Medicare and Medicaid Services
prospective payment system (PPS) attempted to balance the payments made for the same services rendered by different providers and pay the providers on the basis of the diagnosis at a fixed rate
DRG's diagnosis related groups
third party payer the insurance company - pays for services provided by health care organizations or practitioners to the "insured"
RBRVS resource based relative value scale
HMO health maintenance organizations
PPO preferred provider organizations
GAAP generally accepted accounting principles
HCPCS health care procedure coding system
participating proveder a provider that has come to terms with a payer an dis under an approved contractual agreement
NCQA national committee for quality assurance
CLIA clinical laboratory improvement amendment
CLIA mandates what? the completeion of a certification process before obtaining billing privileges
IRS internal revenue service
HIPAA health insurance portability and accountability act
NPI national provider identifier
master charge list, charge master, charge description master (CDM) or fee schedule this list reflects the charge for each item that may be used in the treatment of a patient and the charge for most services
the revenue cycle is composed of an interwoven system with multiple participants and systems
PHI personal health information
claim edits include correct patient or subscriber info, CCI edits, LMRP edits...
EDI electronic data interchange
ANSI American National Standards Institute
COB coordination of benefit
RA remittance advice
EOB explanation of benefits
ERA electronic remittance advice
payments are deposited by? hardcopy check or EFT
EFT electronic funds transfer
DRG's are an example of? a per case or fixed payment system
when a patient balance is referred to collection and written off as a bad debt what is it's status? it is no longer an active accounts receivable.
A/R days average time to receive payment
A/R aging distribution of accounts receivable by aging days
collection rate effectiveness of collecting
payer mix distribution of revenue by payers
denial rate number or dollars of denied clains
bad debt rate write-offs due to bad debt
charity rate write-offs due to charity
capitation used in HMO's
case mis index for the period = total value of service/total number of cases
total value of service = case mix value x number of cases in the period
PCAOB public company accounting oversight board
CMS centers for medicare and medicaid services
medicare fraud is defined as making false statement or representation sof material facts to obtain a benefit or payment for which no entitlement would otherwise exist. Fraud is committed knowingly
medicare abuse is defined as using practices that are insonsistent with accepted medical practice and directly or indirectly result in unnecessary costs to the medicare program. it is not required that the acts were committed knowingly
AHIMA American health information management association
HIM professionals responsibility refuse to participate in or conceal unethical practices or procedures
AICPA American institute of certified public accountants
ONCHIT office of the national coordinator for health information technology
managerial accounting provides economic informatiojn and an dinternal framework to enable health care leaders to make effective decisions concerning the activities and overall performance within an organization
mission a statement of the organizations purpose in broad terms
goal a statement of what the organization wants to do
objectives are more specific statments that define the expectations of outcomes given the goal direction
action steps define the dates when certain activities are to be completed, how much labor or funding will be required, how resources will be used, and the expected outcomes or results
budgets detailed numerical documents that translate the goals, objectives and actions steps into forecasts of volume and monetary resources needed
statistics budget the first of several budgets developed from the planning process
operating budgets predict the labor, supply and other expenses required to support the work volume predicted
fixed expenses those that are not related to the volume of business
variable expenses those that fluctuate as a result of changes in volume
master budget consolidation of all departments operating budgets, catergories of expenses and revenues
rolling budget method requires management to prepare a budget for a period of time and add to the end of tha period another month when a month is consumed
flexible budget predicated on volume, all supplies labor and other variable expenses are bugdgeted in proportion to the anticipated volume
zero based budget management must complete a program assessment and define consequences if specific programs are terminated or reduced
controlling activities that management typically pursues when what was planned does not occur financially
variance report reflects the budget that was prepared and approved and shows that actual results on at least a monthly basis
business plan a formal written document that evolves from the input of others, listing objectives that support the organizational goals
productive time the time a worker is present and working
the four m's manpower machinery materials money
cost allocation system determines the approximate costs to provide services
step down method a common method that is supported by Medicare in its cost reporting req's, the indirect department that receives the least amount of service from other indirect departments and provides the most service to other departments has its costs allocated first
double distribution method assumes that the allocation of costs cannot be linear and the at some indirect departments need to be allocated to less commonly dispersed departments before the costs of these departments are fully allocated
simultaneous equations method ( aka algebraic or multiple apportionment method) permits multiple allocation to occur through sophisticated mathematical software and teh use of simultaneous mathematical equations
financial accounting recording and reporting the financial transactions of the organization for both internal management and users outside of the organization
FASB financial standards accounting board
GASB government accounting standards board
entity the business unit or activity for which accountingrecords are maintained
going concern assumes that the owners of a business entity will continue operating indefinitely to fulfill the business plans of the organization
stable monetary unit in the US it is the US dollar
matching concept recognizes that any associated expenses such as labor, supplies, and travel would be recorded in the same accounting period and matched with the revenue for that accounting period
objectivity states that historical cost is a more objective measure than current value
disclosure an entity's financial statements provide a mechanism to communicate the economic activities of an organization
financial accountant, managerial accountant, and managerial finance officer all cover different aspects of financial management
cash basis accounting each transaction is recorded when cash is exchanged as with one's personal finances
accrual basis accounting uses the matching concept, enabling revenues to be matched with the actual expenses incurred to produce the revenue
profit the amount of money actually received from the payer less the actual cost to do the service
AHA American hospital association
balance sheet displays the organization's assets, liabilities, and fund balance or equity at a fixed point in time
assets - liabilities = fund balance (equity)
statement of revenues and expenses revenue - expense = net income
financial analysis or ratio analysis the management process of formulation judgements and decisions from the relation between the numbers represented on two reports: the balance sheet and the statment of revenues and expenses
current ratio current assets with current liabilities
turnover ratio divides patient accounts receivable by the average daily patient revenues
net days of revenue in patient accounts receivable = net patient accounts receivalbe / average daily net patient service revenue
average net daily patient service revenue = net patient service revenue for the period / days in the period
performance ratio evaluates that use of resources to achieve a goal
operating margin ratio displays the relation between the net revenues received and the expenses required to supply the revenues
net operating revenue the amount of revenue expected to be received or total charges less the deductions expected by third party payers resulting in revenues net of deductions or net operating revenue
long term debt / total assets ratio compares the amount of long term debt the organization has with the amount of assets it has to pay those debts
CFO chief financial officer
capital expenditure committee evaluates all capital requests so that cash resources are sued to purchase the high cost items that will yield the most benefit to the organization
opportunity costs benefits that would be received from the next best alternative use of the investment funds
time value of money a person who invests money should be entitled to a return or interest
depreciation calculated by dividing the capital cost by the years of life
payback method the payback period determines the number of years it will take for the cash inflows from each project to pay back the initial investment (cash outflow)
Created by: thompson_ks