Since the establishment of electronic health records EHR the financial

Since the establishment of electronic health records

This preview shows page 4 - 7 out of 22 pages.

organizations and risk management to help need the financial goals. Since the establishment of electronic health records (EHR), the financial management has become more advanced with promoting accurate documentation while streamlining coding/billing. The Affordable Care Act 4
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Analysis and Management Report has greatly affected Medicare’s coding and bill systems which place more on the backs of the financial management team. Benson (1994) describes benchmarking as “the process of establishing a standard of excellence and comparing a business function or activity, a product, or an enterprise as a whole with that standard” This principle allows healthcare organizations continue to measure and compare their processes to other healthcare organizations. Understanding the payer mix in the organization will help financial management better understand were the source of income is coming from private insurance, government insurance and self-pay. This is very important to the revenue cycle because Medicare and Medicaid pay healthcare organizations less than what they charge for treatment. Utilization management (UM) represents an evidence-based, clinical support process to assist physicians, other providers and payers in evaluating the use of medical services based on medical necessity, appropriateness and efficiency. (Gruber, 2016) Accounts Receivable Accounts receivable plays a significant role in the organizations flow of income which involves almost every area within the organization whether is be a medical office or hospital. The accounts receivable team must have a full understanding of every department and how they influence the revenue cycle. Accounts receivable collections start to generate when a patient falls behind on their bill once insurance claims have been processed. Accounts receivable days (A/R days) is the total number of days that an invoice is considered outstanding before the invoice goes to the collections department. According to Bragg (2019), “the point of the measurement is to determine the effectiveness of a company's credit and collection efforts in allowing credit to reputable customers, as well as its ability to collect cash from them in a timely manner.” The longer the invoice stays in the accounts receivable department, the more income is tied up in the 5
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Analysis and Management Report form of credit. A low turnaround time can indicate that there are some concerns in the department. Many healthcare organizations have software programs to increase the efficiency of the department. The AR days effects account receivable in terms of reimbursement in many ways. Medicare typically pays claims within 14 days while private payers pay claims within 45 days. AR days effects an organization in many ways from reimbursement, cash flow and personnel. The more time that is spent on collections ties up account personnel from completely other tasks which in turns decreases productivity. The longer a claim stays in account receivable the more likely it is to be written off as a loss for the organization.
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