- Coding and Billing Cycle Processes
The medical billing and coding process does the improve the effectiveness of the healthcare revenue cycle. Through coding and billing processes, the health care system manages to collect the appropriate information and documentation of a patient, allocates applicable codes as well as creates an allegation of getting paid either by the patient, CMS or a commercial payer. The medical coding and billing process does improve the effectiveness of the revenue cycle through various ways. To start with, through updating and setting patients medical files, it eases patient check-in and makes it more efficient. Additionally, it also eliminates the possible registration hiccups as well as errors. Only, through the coding and billing process, it enhances confirmation of financial responsibility (Marcinko & Hetico, 2014). The coding and billing process does enable understanding how the patient will have the medical bills paid. This information enables the health care system to understand what is covered by the insurance as well as what kind of plan the individual has. Likewise, the coding and billing processes improve effectiveness of the revenue cycle since it ensures that the bills sent to a payer are officially certified. Additionally, it enhances health care system have a vivid update on bills cleared and bills that have not been cleared.
- Operating Revenue
Operating Revenue entails derived revenue from essential activities in providing health care services that have a direct relationship with the patients. It also includes revenues from any nonpatient care, sales as well as activities to individuals other than the patients. The operating revenue determines the amount of cash flow that will be in the revenue cycle. Therefore, the operating revenue is a significant determinant of how successful or effectual a revenue cycle will be. Studies show that 91% of operating revenue is collected from patients while the rest of the cash collected from other activities (Marcinko & Hetico, 2014). Therefore, the more the number of opportunities a medical organization seizes, the higher the number amount of operating revenue earned hence increasing the amount of cash flow or expands the budget of the health care’s revenue cycle.
- Financial Condition
The financial condition of the health care system could be assessed various ways. To start with, it could be assessed with respect to the expenses and revenues of a health care institution. Professional requires that there exist a balance between the expenses and revenues in health care system to sustain financial health. The standard assessment of profitability is referred to as margin which is achieved by subtracting expenses from revenues and dividing the product by the total revenue from all sources. A second measure includes the operating margin. The operating margin process only considers the revenue is attained from operational activities and the expenses related to non-operational revenues are deduce6ed from the expenses (Marcinko & Hetico, 2014). Additionally, the third assessment also used is the patient care margin. This assessment process only uses revenue from the patient care unit which is compared with the operating cost for the patients care services. Additionally, financial indicators also assess the present financial performance which includes the ability to make payments for operation as well as the current capital. Institutions that show a high margin as well as a free cash flow show a firm financial position and indicates a greater potential of financial expansion.
C1. Profitability and Risk
Financial statement analysis is the process through which health care organization make use of financial statements and reports to assess risk and profitability of an institution. This analysis tool is used by healthcare management to evaluate the performance of the organization. It is also used by the creditors who have interest in understanding the financial health of an institution as it seeks loans and support. Additionally, it is used by the government to understand the performance of the health care sector hence aiding in the development of policies.
There are two major techniques of statement analysis: the vertical and horizontal analysis. The Horizontal analysis entails making a comparison of institutions financial information using historical information of the institutions. On the other hand, the vertical analysis is the done on financial statements only once per years. Each thing in the statement is exhibited as a base figure of o different item in the financial statement for the particular period. Some of the vital financial statements that are analyzed include the operating margin, the ratio of debt to capitalization, the coverage ratio of cash flow, as well as the healthcare stocks (Harrington, 2016). Moreover, the operating and business review could also be used as financial statements. Other information in the financial statement includes: financial statements notes, change statements by shareholders.
C2. Financial Viability
Financial viability in health care is the 7potentila to create sufficient income which meets the operating costs as well as debt commitments as well as enhance the growth of an organization as it maintains its services levels. A major factor influencing healthcare organizations financial viability is the community. The community could be categorized as patients and nonpatients. The patients’ category is made up of: the self-payer, third-party payers like Medicaid, Medicare, Commercial insurance or Blue Shield (Fallon & McConnell, 2007). None patients include tax supports, contributions, as well as tax support. A great proportion of revenue is generated from patients who get direct services. However, the vast percentage of payments is derived from third parties like Medicaid as well as managed care institutions. On the hand, another factor influencing the financial viability is the suppliers. Suppliers entail equipment suppliers, lenders, vendors, and employees. Employee payments are considered the largest expenditure in health care. It makes up about 605 of the expenditures. Additionally, lenders and physicians payments also make the suppliers (Fallon & McConnell, 2007). These factors do influence the financial viability of an institution since they have they have to have a relationship that ensures the expenditure caused by suppliers is less than the revenue from the community.
- Fraud & Abuse Regulations
The Stark Law aimed at hindering physicians from making referrals to Medicare patients to institutions in which the physician or a relative to the physician maintained a financial relationship. This law changed the manner in which the physicians made their decision as they treated their patients. It enhanced making decisions that are aimed to improve the health condition of the patient. The law reduced the chances of having the decision made with respect to financial gains.
With respect to the Anti-Kickback law, physicians are discouraged from making any financial decisions. The law aims at regulating the association physicians and finance. To stay away from lawsuits by patients, healthcare institutions have to ensure that physicians have no means of obtaining referral payments from patients.
On the other hand, the false claims act also improves the effectiveness of making of financial decisions to avoid being penalized or punished. This act does hinder individual’s practitioners from presenting false approval or payments, use of false statements or records as well as knowingly using false statement in a role of paying or transmitting property or money to governments.
D1. Importance of Stark Law
The importance of the Stark law is that it protects the patients from being manipulated by physicians during referrals. Additionally, it ensures there aids in implementation professional ethics hence making the healthy or the patient the priority rather than the .financial gains from patients.
D2. Importance of the Anti Kick Back Law
Likewise, the Anti Kick Back law also aids at protecting patients from being manipulated by physicians during referrals. The law ensures that the is no relationship between the physician and the payments hence ‘enhancing focus on the patient welfare rather than the patient money. It also enhances implementation of professional ethics among the healthcare workforce.
D3. Importance of the False Claim Act
This act aims at minimizing and discouraging cases of fraud and forgery in the health care system. The act ensures that physicians follow the required guidelines during approval of payments to minimize cases of theft. The penalties related to violation of this act limit physicians and other healthcare employees from indulging in fraud cases. This enables having a strong and vivid revenue cycles as well as aids in maintaining an organization's financial viability.
- Healthcare Pricing
There is various factor that impacts the pricing of healthcare services. To start with, cost of the operation cost is a major factor in determining the cost of medical services. Services that are expensive, risk and time consuming like surgery tend to be more expensive compared to simple services. A part from that, competition in the healthcare organization setting is also another major factor in price setting. Competitions in the offering of healthcare services lead to slight price differences that ensure to ensure that each organization lures various patients due to its terms.
- Financial and Strategic Planning
Financial planning entails the management of finances over a duration in a manner that meets the organization's needs. On the contrary, strategic planning is a process that determines the direction an organization will adopt or take. The primary objective of strategic planning is providing an organization with a map or blueprint for expansion. Therefore, through proper financial planning, an organization shall manage to have enough money to execute expansion plans
F1. Economic Plan Development
There are various steps that healthcare organizations should take to create a successful financial plan. To start with is the definition of the organization's goals and objectives. The second step entail collecting the significant financial as well as organizational information. After that, one needs to develop an analysis of the organizational and financial information hence understanding the major strengths and weakness. The fourth step is creating and presenting a financial plan. The last step includes implementing and reviewing the business plan.
F1a. HIM interaction
While working with accountants, HIM managers have various roles that could aid in the successful implementation of the financial program. With respect to the factor that they are in charge of medical billing and coding, HIM should be honest and clear on what economic objectives an organization can achieve (Harrington, 2016). Additionally, a HIM manager should ensure that every data is appropriately added into the systems to avoid errors which could adversely affect the financial statements. The HIM manager should also point out lucrative sectors within the health departments to ensure that there is more cash concentrated in resource in that section to enhance more profit.
- Financial Management Control Process
It is an internal control comprehensive system developed under the role of the management through the management of risks gives reasonable assurance that the budget, as well as other sources, will be utilized effectively and efficiently in attaining an organization’s objective. It is defined system directing and controlling financial effects of an organizations’ operations in a manner ensure they are supportive of the organizations’ objective achievement. In a financial management control process, there is the budget and financial plan (Harrington, 2016). A financial plan is the evaluation of an organization's present revenue as well as the future financial state through the use of current variables vial prediction on future income, withdrawal plans, and asset values. On the other hand, budgeting is the process through which organizations make a pan or blueprint on how to spend its money.