The CEO has asked you to create a PowerPoint presentation (using speaker notes for each slide or voiceover narration) outlining the revenue cycle management process. Your presentation should
1. include a discussion on value-based care models as introduced by the Centers for Medicare and Medicaid Services (CMS), such as ACOs and the Medicare Shared Savings Program. In addition, based on the research you’ve done, you will need to
2. include a recommendation for a possible strategy to strengthen the organization’s financial operations in preparation for the transition to value-based care.
3. Includes Comprehensive speaker notes or narration
Module 5: Reimbursements and Revenues
Video: Generally Accepted Accounting Principles (GAAP)
Financial accounting is guided by a set of concepts and rules. GAAP are a set of accounting standards that promote uniformed recording and reporting of financial information. GAAP is used by: Organize financial information, summarize accounting records into financial statements, Provide disclosure of certain supporting information.
GAAP is authorized by the U.S. Securities and Exchange Commission (SEC) and managed by the Financial Accounting Standards Board (FASB). GAAP establishes measurements and classification criteria for the financial reporting. The main goal of GAAP is to create financial statements that are relevant, reliable, and comparable.
The four principles from which GAAP is based are: Revenue Recognition, Measurement, Presentation, and disclosure.
Four key assumptions -going concern, monetary unit, time period, business entity assumptions that are applicable to GAAP.
The International Financial Reporting Standards (IFRS) is the international accounting framework that applies to the financial reporting of organizations outside of the U.S. IFRS is more of a principles-based accounting standard, whereas GAAP is more rules-based. IFRS process represents and captures the economics of transactions better than GAAP. The provisions of GAAP establish a framework for which checks and balances and accountability exists within the financial reporting process. The financial reporting standards of GAAP are fundamental to the efficient operations of the capital markets in the U.S. GAAP promotes transparency, trustworthiness, and relevancy of information, which is used to make decisions for how health organizations operate.
Healthcare Payment Systems
How has healthcare reimbursement evolved?
Reimbursement methods have evolved in recent years. There has been a significant movement away from the retrospective reimbursement model toward a more prospective model of reimbursement. In the retrospective model, which is based on the traditional fee-for-service approach to reimbursement, providers assumed little or no financial risks. The provider treated the patient and billed for the services rendered. The payer remunerated based on the provider’s billing. Rapidly rising costs and increased demand for accountability fueled efforts to implement a more fiscally responsible approach to reimbursement. This effort led to the intensified economic restructuring of the healthcare reimbursement process. Prospective payment systems were introduced as a means of addressing concerns relative to costs and accountability.
Under the fee-for-service reimbursement method, providers are reimbursed for each unit of service provided. Units included visits, tests, and various types of procedures. Providers commonly prefer the variability of the fee-for-service method because the provider controls the type and volume of care. Payment is made based on billed charges taking into account negotiated rates, discounted charges, and usual, customary, and reasonable (UCR) fees aligned with geographic location. The fee-for-service method focuses on the supply side of healthcare financing.
With the goal of improving patient outcomes, which are intrinsically linked to the enhancement of quality and the reduction of costs, promoting alternative payment models (APMs) have become a common goal for insurers. APMs shift compensation models from care volume to care value. The four categories of APMs include pay-for-performance (P4P), shared savings arrangements, episodic payments, and global budgets.
Transitioning from volume-based payment to value-based payment is necessary to reduce the costs associated with expensive and often unnecessary tests and treatment. The value-based approach is considered more efficient and alternative payment methods have shown significant promise in the efforts to reverse recent trends toward the economically unsustainable costs facing the U.S. healthcare system.
Sharfestein, J., Gerovich, S., Moriarty, E., & Chin, D. (2017). An Emerging Approach to Payment Reform: All-Payer Global Budgets for Large Safety-Net Hospital Systems. The Commonwealth Fund. Retrieved from https://www.commonwealthfund.org/publications/fund-reports/2017/
Managing the Revenue Cycle
What is the Healthcare Revenue Cycle?
Healthcare revenue cycle management (RCM) is the financial process used to manage the administrative and clinical functions associated with claims processing, payment, and revenue generation. The process encompasses the identification, management, and collection of patient service revenue. Without this key financial process, healthcare organizations cannot maintain viability (LaPointe, 2018). The RCM process includes creating, submitting, analyzing, and ultimately obtaining payment for the services rendered.
Managing the Revenue Cycle
Managing the revenue cycle involves a series of steps that begins with patient scheduling and pre-registration, point of service registration, counseling collections, encounter utilization review and case management, charge capture and coding, claim submissions, third-party follow-up, remittance processing and rejections, payment posting, and appeals and collections.
With declining cash flows, tightening margins, and increasing bad debt, today’s health organizations must be more diligent than ever in ensuring the efficient management of the revenue cycle. However, there are often obstacles health organizations face to achieving the most efficient revenue cycle management process. Among the major challenges facing the health organizations are the inability to adequately leverage costs of collections, challenges with price transparency, and increasing claim denial rates.
The revenue cycle management process is an on-going process. It encompasses the entire customer experience from beginning to end. Each step in the process has significant importance for the RCM process. Healthcare revenue cycle management is continuing to evolve. Keeping pace with rapid changes in the healthcare ecosystem, such as value-based reimbursement methodologies, can aid in breaking down potential barriers to successful RCM.
LaPointe, J. (2018). What is Healthcare Revenue Cycle Management? Cycle Intelligence. Retrieved from https://revcycleintelligence.com/features/what-is-healthcare-revenue-cycle-management
Woughter, A. (2017). What is Cost to Collect? Nthrive. Retrieved from https://www.nthrive.com/blog/what-is-cost-to-collect
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