Texas Association of Community Health Centers 23rd Annual Conference

1
Texas Association of Community Health Centers
23rd Annual Conference

• Optimizing Reimbursement Revenue Streams
• October 16, 2006

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Todays Agenda

• Overview of CHC reimbursement
• Essential functions required to
• Accurately record revenue
• Manage accounts receivable
• Provide management reports for oversight
  optimization of cash flow
• Final thoughts strategies

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Overview of CHC Reimbursement
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Types of Reimbursement

• Community health center grant
• Patient service revenue
• Medicare
• Texas Medicaid
• Insurance
• Private pay
• Contributions other grants
• Other

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Community Health Center Grant

• CHC grant generally represents the primary
  external funding source
• It is important to understand applicable rules
  regulations (PIN 98-23, etc)
• It is important to understand the Notice of Grant
  Award
• It is important to understand the Financial
  Status Report (FSR)

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Patient Service Revenue

• Medicare
• Growing revenue stream for most CHCs
• Medicare billing cost reporting is vital to
  optimizing Medicare revenues
• It is important to understand Medicare Part C D
  opportunities
• Medicare Administrative Contractor (MAC)
  transition is on the horizon

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Patient Service Revenue

• Texas Medicaid
• Texas Medicaid FQHC rules regulations are
  included in the Texas Administrative Code
• Understand your change of scope options
• New CHCs should be filing a Texas Medicaid cost
  report for at least the first full year of CHC
  operations as a Texas Medicaid CHC provider
• Work with your sliding fee patients to qualify
  for Medicaid

8
Patient Service Revenue

• Insurance
• Make sure your insurance contracts are
  advantageous to your CHC
• Follow-up, follow-up, follow-up (claim denials
  seem to be the rule not the exception)
• Private Pay
• Do not ignore this revenue stream
• Collect at time of service

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Contributions Other Grants

• Contributions
• Designate an individual to seek out contributors
  (foundations, corporations, individuals, etc.)
• Should I start a CHC foundation?
• Is financial health a detriment to fundraising?
• Other grants
• Understand all aspects of any new grants to make
  sure it makes sense for your CHC
• Stay true to your mission

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Other Reimbursement

• Investment interest income
• Rental income
• Medical records income
• Other sources are always available, but consider
  Unrelated Trade or Business Income (UBIT) issues

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Essential Functions Required to Accurately Record
Revenue
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Accurately Recording Revenue

• It is critical that you trust your practice
  management software
• Dont net your recording of transactions it is
  important to record
• Gross charges
• Contractual adjustments
• Bad debts
• Adequate internal control requires reconciliation
  processes to be present (revenue, A/R, etc)

13
Essential Functions Required to Manage Accounts
Receivable
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Managing Accounts Receivable

• Patient accounts receivable generally represents
  the most significant current asset of a CHC
• Problems in this area can have a catastrophic
  effect on your financial health stability of
  your CHC
• Adequate monitoring of your patient accounts
  receivable is a must

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What Are Common Patient Accounts Receivable
Problems?

• Not having or following collection policies
• Not posting charges or billing in a timely manner
• Not following up on accounts
• Not monitoring the monthly accounts receivable
  subsidiary aging detail
• Not collecting co-pays/deductibles at time of
  service
• Registration errors

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What Are Common Patient Accounts Receivable
Problems?

• Not using or tracking written payment agreements
• Not having sufficient personnel to allow for
  collection activities
• Not following up on denials in timely fashion
• Not maintaining proper self-pay balances
• Not posting cash receipts

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Aging is a Key Component

• A patient accounts receivable aging by financial
  class, by date of service, should be run at least
  monthly
• It should be reconciled to the general ledger
• Each payer class should be analyzed for lagging
  claims or any irregularities
• Days revenue in accounts receivable should be
  calculated tracked for performance

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Calculating the Allowance

• The allowance for uncollectible accounts should
  be calculated based on the payer mix aging of
  the accounts receivable balances
• Each aging bucket, by payer class, should be
  assigned an estimate on the collectibility of
  that bucket of receivables
• Do not be overly optimistic
• Avoid short-cut methods (i.e., everything gt 90
  days)

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Essential Functions Required to Provide
Management Reports for Oversight Optimization
of Cash Flow
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Management Reports

• Your practice management system is critical to
  success in this area
• Key elements to analyze on an ongoing basis are
• Revenue by payer type versus encounters
• Adjustments by payer type
• A/R aging by payer type
• Reconciliation to the general ledger

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Final Thoughts Strategies
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Final Thoughts Strategies

• Access your situation consider whether
  appropriate revenue cycle processes procedures
  are in place
• For budget purposes, always start with the
  revenue side of the equation
• Is it easier to cut expenses or grow revenues?
• Never plug revenue to balance budget

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Common Myths of Health Center Finance

• Our passion is our mission the money does not
  matter
• A not-for-profit organization cant make money
• We cannot accumulate cash (financial reserves)
  without negative consequences
• We spent all of our grant - there are no
  unobligated federal funds
• If we can make it to the end of the current
  (start of the next) grant period, everything will
  be fine
• Bigger is always better a top line vs. bottom
  line focus

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Thank you

• BKD, LLP
• P.O. Box 1190
• Springfield, MO 65801-1190
• 417 865-8701
• mschnake_at_bkd.com
• jeallen_at_bkd.com