Week 5 Midterm

Module 1 -- Significance of financial information

(main goal) reduce risks and maximize profits, cash flow management, investment decisions, long term goals of the organization

Module 1 -- Health care industry

(health care industry differs from other business organizations) dominance of not-for-profit hospitals, (main source of revenue) reimbursement from government and private insurers, contribution to social well being

Module 1 -- Health care industry : trends

rapid growth of health care industry (hospitals, long term care facilities, home health, ambulatory services), health care costs are increasing (healthcare is 17% of GDP), increasing importance of financial and cost information in decision making

Module 1 -- Uses of financial information

evaluating the financial condition, evaluating stewardship, assessing the efficiency, assessing the effectiveness, determining the compliance

Module 1 -- Financial condition

status of firm's asset, liability, and equity position

Module 1 -- Stewardship

management's responsibility to use the organization's resources properly (people, property, financial assets)

Module 1 -- Efficiency

getting the lowest possible cost of production (the ratio of outputs to inputs)

Module 1 -- Effectiveness

attainment of objectives through production of outputs

Module 1 -- Compliance

wether an organization's directives are followed

Module 1 -- Financial management functions

controllership (planning, reporting, evaluating) and treasurership (banking, collections, investment deals)

Module 2 -- Revenue Cycles

provide service, document service, establish charge, prepare claim, submit claim, receive payment

Module 2 -- Major Revenue Cycle Steps

registration, medical record/coding, charge entry/chargemaster, billing/claims preparation, claims editing

Module 2 -- Charge Master

(also known as the charge description master or CDM)
list of all items that the firm has established specific prices for
information from medical records and charge master flow into the actual claim

Module 1 -- NFP business oriented objective

maximize shareholders' value versus profit maximization
shareholders : community vs individuals
exempt from federal and most state taxes

Module 1 -- Investor owned entities objective

profit maximization for shareholders
shareholders : risk based equity investors
subject to double taxation (corporate and individual level)

Module 1 -- Government health care objective

public organizations owned by state or local government
not able to raise funds through equity investments
exempt from taxes like NFPs

Module 1 -- Nongovernmental NFP objective

perform voluntary services in communities
tax exempt
rely on public donations
(American Red Cross, American Cancer Society)

Module 2 -- HCPCS

healthcare common procedure coding system
physicians and clinical professionals use for reporting outpatient procedures and some physician inpatient procedures

Module 1 -- Examples of controllership

planning for control, reporting and interpreting, evaluating and consulting

Module 2 -- Registration

basic information collected on the patient
(insurance verification, copay/deductible payment, maybe financial counseling)

Module 2 -- Medical record/coding

hipaa requires diagnosis code and procedure code information that was put in medical records to be sent to payers

Module 2 -- Charge entry/chargemaster

charge capturing -- using an order entry system with a computer or barcodes to input charges

Module 2 -- Billing/claims preparation

using the CMS 1500 or UB 04 to submit claims
most submitted electronically

Module 2 -- Claims editing

software designed to find errors in claims
providers use it to maximize appropriate payment and to speed payment

Module 1 -- Examples of treasurership

providing capital, maintaining investor relations, providing short-term financing

Module 2 -- ICD

international classification of diseases
codes that provide information about diagnoses in both physician and clinical inpatient and outpatient settings

Module 1 -- Forms of business organizations (in healthcare)

not for profit business oriented, investor owned entities, government health care, nongovernmental not for profit
(differ in ownership structure)

Module 2 -- CMS-1500

used primarily for physician and professional claims submitted to medicare and many other payers

Module 2 -- UB-04

claim form used by most hospitals to report claims (to medicare and most other payers) for both inpatient and outpatient services
data used to determine DRGs and APCs (ambulatory payment classifications)

Module 3 -- Financial viability

In the long run, you cannot pay out more than you make
(the HCO must receive dollars payments from the community in an amount at least equal to the dollar payments it makes to its suppliers)

Module 3 -- Financial environment of healthcare organization (suppliers)

employees, equipment suppliers, service contractors, lenders

Module 3 -- Financial environment of healthcare organization (HCO)

hospital, nursing home, physician group, clinics

Module 3 -- Financial environment of healthcare organization (community)

patients (self payer and third party private/government insurers) and non patients (grants, contributions, tax support)

Module 3 -- Sources of funds

revenues (direct payment, private/government insurers, non operating revenues like parking tickets, gift shop purchases)
capital (taxable debt, tax-exempt debt, equity in stock and partnerships)
gifts

Capital

the assets or other financial resources available to a business

Equity

the value of the shares issued by a company

Module 3 -- Uses of funds

expenses (salaries, supplies, insurance)
capital (interest, debt principal, dividends)
investment (working capital, buildings/equipment, replacement reserves)

Module 3 -- Historical cost reimbursement

apportionment & reasonable cost

Module 3 -- Apportionment (historical cost reimbursement)

the manner in which costs are assigned/allocated to a specific payer (such as medicare)
related to billed charges
apportionment was necessary (if payer was historical cost reimbursement payer) to determine share of total cost
(medicare 3 million out of 15

Module 3 -- Reasonable cost (historical cost reimbursement)

qualification (introduced by the payer) to limit its total payment by placing limits/excluding costs that the payer deems reasonable
(examples include charity care, patient telephones, nursing education)

Module 3 -- Charge payment

payment for specific services (fee for service)
set at "list price" (charge description master)
(uninsured, out of network, HCO negotiators may pay this way)

Module 3 -- Capitation

a negotiated payment between payer (insurer) and provider (physician or hospital) to cover specific services for a defined population over a period of time regardless of the amount or type of care the person requires

Module 3 -- Bundle services

payment is grouped into a mutually exclusive set of service categories
payments to the provider are not necessarily related to the list of services provided and identified on the claim form
fixed fee specified per unit of service (per diem, per patient ra

Module 3 -- Units of payment

bundled service unit is a set of specific services that may be grouped into a bundled unit
service provided * cost per unit of services provided

Module 3 -- Units of payment (hospital inpatient)

medicare severity diagnosis related groups (MS-DRGs)

Module 3 -- Units of payment (hospital outpatient)

ambulatory patient classifications (APCs)

Module 3 -- Units of payment (physicians)

resource based relative value scale (RBRVS)

Module 3 -- Units of payment (skilled nursing facilities)

resource utilization groups (RUGs)

Module 3 -- Units of payment (home health agencies)

home health resource groups (HHRGs)

Module 3 -- Medicare benefits (part A)

hospital insurance
free to all beneficiaries if they have 10+ years of Medicare employment

Module 3 -- Medicare benefits (part B)

medical insurance
usually requires a monthly payment by the beneficiary

Module 3 -- Medicare benefits (part C)

medicare advantage plans
(additional beneficiary payments)

Module 3 -- Medicare benefits (part D)

prescription drug coverage
(additional beneficiary payments)

Module 3 -- Medicare benefits (categories of individuals)

65+
disabled individuals
end-stage renal disease

Module 3 -- Medicare payments (DRG operating payment)

hospital dollar rate * drg case weight
(hospital dollar rate determined by labor [should be multiplied by hospital's wage index] and non labor components)
(drg case weight determined by weight of drg)
(every hospital has a wage index value assigned to it)

Module 3 -- Medicare payments (capital payment)

drg weight
(standard amount
geographical adjustment factor)
national standardized federal payment rate for capital costs (similar to labor rates and non labor costs)
(could be disproportionate share adjustments, indirect medical education, or outlier adju

Module 3 -- Medicare payments (ambulatory patient classification)

current conversion factor * relative weight
can be more than one apc (unlike drgs)
(not all outpatient procedures have them.. some are fee-schedule and some aren't paid at all)

Module 3 -- Participating vs. non-participating physicians

participating physicians agree to accept medicare's assigned fee for service and only charge patient for copay
included in a directory of participants
have access to electronic claim transmission
receive payment at 100% prevailing charge , non-participati