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Alaina Boone
5 years ago
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2 Physician s Computer Company PCC 2014 Users Conference Safeguarding Your Practice's Fiscal Health (from undetected fraud scheme) Burlington, Vermont Wednesday, July 16, 2014

Stephen Pedneault, CPA/CFF, CFE Founder of Forensic

experience Investigated embezzlements and fraud

Frequent speaker and writer Adjunct Professor of

Manchester Community College Member of AICPA, CSCPA,

of a Fraud Investigation; Preventing and Detecting

Accounting/Fraud Investigation for Non-Experts, 3rd.

3 Stephen Pedneault, CPA/CFF, CFE Founder of Forensic Accounting Services, LLC 26 years of fraud experience Investigated embezzlements and fraud ranging from a few thousand to over $6 million Frequent speaker and writer Adjunct Professor of Forensic Accounting, UConn MSA Program and Manchester Community College Member of AICPA, CSCPA, ACFE, NACVA Author of four books, Fraud 101; Anatomy of a Fraud Investigation; Preventing and Detecting Employee Theft and Embezzlement; and Forensic Accounting/Fraud Investigation for Non-Experts, 3rd. (Wiley) Startedfifth book - Employee Theft and Embezzlement Within A Medical Practice (MGMA)

4 Session Objective Medical practices continue to get victimized by someone working within the practice. Due to the volume and complexities of medical billing, schemes are frequently perpetrated within billing and collections, well concealed from detection within the volume of transactions.

5 Session Objective A scheme could go undetected for years, and amount to tens and hundreds of thousands. In this session we will focus the discussions on employee embezzlement schemes, and identify practical measures every practice can implement to minimize their risk of loss due to the dishonest actions of an employee.

6 Session Outline Headlines Outsider Threats Insider Threats Your Practice s Environment

9 How many cases of employee embezzlement ever appear in the media? 1 in 9cases and there is one in the media pretty much every day!

10 Session Outline Headlines Outsider Threats Insider Threats Your Practice s Environment

11 Outsider Threats Patient Identity Theft Insurance Fraud Patient Credit Card Theft Bank Account Theft Product Theft Vendor Schemes System Access

12 Vendors Thefts againstyour practices Returns? Credits? Overpayments?

13 Protecting Patient Information

14 See The Difference? Which one would you prefer to find in your practice?

15 Your Environment? What would I have access to in your office when no one was around?

16 Hopefully NotYour Environment

17 Even Your Shredding

18 Session Outline Headlines Outsider Threats Insider Threats Your Practice s Environment

19 Insider Threats Embezzlement Schemes Theft of Supplies Theft of Patient Information Billing Schemes System Access

20 What wasthe most common form of theft from a medical practice?

21 What has becomethe most common form of theft from a medical practice?

22 The Fraud Triangle Financial Pressure A Recipe for Embezzlement Opportunity Rationalization

23 Embezzlement Concerns Insurance Payments Patient Payments Patient Refunds Credit Card System Cash Disbursements Employee Reimbursements Payroll

24 3 Step Approach to Fraud: I. Prevent fraudfrom occurring II. Detect itas soon as possible III. Obtain adequateinsurance coverage - employee dishonesty or employee crime.

25 Session Outline Headlines Outsider Threats Insider Threats Your Practice s Environment

26 Effective Internal Controls Expectations Adherence Consequences

27 Embezzlement Theft Concealment Conversion

28 3 Step Approach to Fraud: I. Prevent fraudfrom occurring II. Detect itas soon as possible III. Obtain adequateinsurance coverage - employee dishonesty or employee crime.

29 Fraud Approach Triangle Prevention Detection Insurance

30 What can you do? Financial Pressure Opportunity Rationalization to the extent you can

31 Employees respect what you inspect and monitor.

32 Trust is notan internal control. Trust with verification.

33 Screen all new hires, especially individuals who will handle your money and finances Contact listed references Call all previous employers (would they re-hire the person?) Criminal check CREDIT CHECK (with their authorization)

34 Know Your Employees! What Else? What s going on in their lives? Where do they spend their nights and weekends? Living extravagantly? Never taking any vacation time? Facebook IT Manager

35 What To Look For To Determine If Someone Is Embezzling Funds Unusual Employee Behavior Unreconciled Accounts Missing Documents Unexplained Differences Unusual Behavior

36 In any medical practice where does the process start? Scheduling

37 Scheduling

38 Revenue Cycle Charges Collections Adjustments Aging

39 Revenue Cycle Charges Collections Adjustments Aging

40 Revenue Cycle Scheduling Arriving

41 Revenue Cycle Patient Seen Charting

42 Revenue Cycle Co-Payments Collected Billing Completed

43 Revenue Cycle Billing Submitted Payments Received

44 Revenue Cycle Payments/Adjustments Posted Bank Deposit

45 Revenue Cycle Patient Statements A/R Follow-up

46 Revenue Cycle Posting to Accounting System Reconciling Collections

47 Possible Scenarios Charges are captured completely and accurately in the billing system Posted as payment Adjusted Off Still on the Aging

48 Know Your Patients! What Else? Reconcile charges with schedules Account for No Shows, Missed Appointments and Walk-ins Gross Fee Schedule is Fixed Employees cannot override

49 Cash Receipts Who collects payments? Who makes the deposits? Who reconciles the receipts, deposits and postings?

50 Reconciling Payments $ Received $ Deposited $ Posted

51 Co-Pays and Patient Payments Collection Points Satellite Offices, Retail Products Any add-on charges?

52 Create Expectations $5.00 off your next visit if we fail to issue you a receipt

53 Every practice should have two prominently posted signs We expect your payment at the time of your visit

54 The sign we never see Expect a receipt for any payment you make today

59 Revenue Cycle Charges Collections Adjustments Aging

60 Co-Pays and Patient Payments Where are your collection points? Satellite offices? Retail sales? Non-billing receipts?

61 Processing Payments Lockbox? Who has access -payments and posting? Receipt books used? Pre-numbered, three-part?

62 Conversion of Checks

63 Remote Deposit Capture

64 Today s Deposit Method

66 High Tech Piecing Together Financial Puzzlestm

67 Credit Card Payments Who has accessto process credit card payments? Who reviews the credit card activity? How is your patient s credit card information protected?

68 Merchant Statement

69 Revenue Cycle Charges Collections Adjustments Aging

70 Posting Adjustments Who has access -payments and posting? Adjustments Tracked and monitored? By reason, and by month?

71 Revenue Cycle Charges Collections Adjustments Aging

72 How do you find fraud or embezzlement within the billing cycle? Reviewing and reconciling Random audits Monthly trending

73 Excel Monthly Roll Trends S a m p le M e d ic a l P ra c tic e A c c o u n ts R e c e iv a b le A n a l y s is J a n u a r y D e c e m b e r S a m p le P ra c tic e M on th ly A /R R oll A n alysis B e g i n n i n g A R B a la n c e C h a rg e s (% e n d i n g A R ) C o l le c ti o n s (% C h a rg e s) A d j u s tm e n ts (% C h a r g e s) E n d i n g A R B a la n c e J a n F e b , % 1, % 2, % 1 1 0,3 8 0 M a r , , % 1 4, % 1 6, % 2 0 8,0 8 2 A p r , , % 4 3, % 5 7, % 2 2 2,8 0 1 M a y , , % 4 3, % 4 9, % 2 2 0,1 5 6 J u n , , % 8 0, % 1 0 2, % 1 6 1,1 8 4 J u l , , % 2 9, % 4 5, % 1 9 2,8 1 8 A u g , , % 3 1, % 3 0, % 2 7 0,9 1 2 S e p , , % 6 1, % 1 3 0, % 1 8 5,7 9 0 O c t , , % 6 3, % 8 0, % 1 8 5,6 6 6 N o v , , % 2 9, % 3 8, % 2 3 8,6 4 3 D e c , , % 8 6, % 9 2, % 2 2 9,5 2 2 J a n -0 1 # D IV /0! 0 F e b -0 1 # D IV /0! 0 M a r -0 1 # D IV /0! 0 A p r -0 1 # D IV /0! 0 M a y -0 1 # D IV /0! 0 Y T D A v e r a g e 4 4, % 2 0 2, ,8 6 4 # D IV /0! 5 8, % N u m b e r o f M o n t h s R e p o r t e d ,0 0 0 C h a r g e s, C o l l e c t i o n s & A d j u s t m e n t s 1 5 0,0 0 0 C h a rg e s 1 0 0,0 0 0 A d j u s tm e n ts 5 0,0 0 0 C o l le c ti o n s 0 J a n -0 0 F e b -0 0 M a r-0 0 A p r-0 0 M a y -0 0 J u n -0 0 J u l-0 0 A u g -0 0 S e p -0 0 O c t-0 0 N o v -0 0 D e c -0 0 J a n -0 1 F e b -0 1 M a r-0 1 A p r-0 1 M a y -0 1

74 Excel Monthly Aging Trends Sam p le M ed ical P rac tice Acc o u n ts Re ce iva b le A na l ysis F o r t he Pe ri o d Ju l y, Ju l y, Sa m p le P ra c tice A ging Trend A nalysis O ve r 120 T o ta l C u rre n t Da ys Da ys Da ys Da ys A/ R J u l y 1,485, % 506, % 330,438 7 % 240,076 5 % 1,859, % 4,423,040 A u g us t 1,285, % 549, % 322,611 8 % 229,110 6 % 1,511, % 3,897,754 Se p te m be r 1,285, % 550, % 423, % 263,352 6 % 1,588, % 4,111,799 O c t obe r 1,555, % 565, % 418,187 9 % 239,625 5 % 1,665, % 4,444,653 N ove m be r 1,284, % 591, % 464, % 333,284 8 % 1,504, % 4,179,126 De ce m be r 1,150, % 502, % 421, % 446, % 1,653, % 4,173, Ja n u a ry 1,563, % 383,470 8 % 357,905 8 % 344,882 7 % 2,016, % 4,666,100 F e b rua ry 1,402, % 596, % 226,219 5 % 322,946 7 % 2,225, % 4,773,713 M a rc h 1,412, % 554, % 357,108 7 % 199,631 4 % 2,251, % 4,775,538 Ap ri l 1,399, % 421,674 9 % 309,634 7 % 262,745 6 % 2,298, % 4,692,315 M a y 1,370, % 441, % 233,778 5 % 240,806 5 % 2,275, % 4,561,406 J u ne 1,351, % 453, % 253,774 6 % 187,375 4 % 2,325, % 4,571,615 J u l y 1,441, % 619, % 276,644 6 % 200,190 4 % 2,251, % 4,790,288 YTD A v e r a g e 1, 38 3, ,154 1, 9 5 5, , , A g in g T r e n d A n a ly s is Cu r re n t O v e r Ju ly A u g u s t Se p te m b e r O c to b e r No v e m b e r De c e m b e r Ja n u a ry Fe b ru a r y M a rc h A p ril M a y Ju n e Ju ly

75 How is Medical Billing Like An EKG?

77 Entry Field Sample Medical Practice Billing Trend Analysis January November 2012 Monthly Charges, Collections and Adjustments Analysis Beginning Charges Collections Adjustments Ending AR Balance (% ending AR) (% Charges) (% Charges) AR Balance Jan , ,914 42% 296,488 58% Feb , ,186 42% 299,364 58% Mar , ,304 47% 291,578 53% Apr , ,034 44% 318,746 56% May , ,500 43% 280,166 57% Jun , ,192 41% 395,849 59% Jul , ,299 43% 341,085 57% Aug , ,181 43% 327,823 57% Sep , ,828 41% 347,236 59% Oct , ,809 44% 324,167 56% Nov , ,216 41% 254,313 59% Dec , ,597 40% 291,086 60% Jan , ,668 48% 240,000 52% Feb , ,217 51% 239,137 49% Mar , ,188 48% 296,887 52% Apr , ,409 46% 284,083 54% May ,695 88,824 42% 121,492 58% YTD Average 162,966 43% Jan-May To be entered manually 393, ,301 57% 700,000 Charges, Collections & Adjustments 650, ,000 Charges 550, , , , , , , , , ,000 50,000 0 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13

78 Entry Field Sample Medical Practice Billing Trend Analysis January November 2012 Monthly Charges, Collections and Adjustments Analysis Beginning Charges Collections Adjustments Ending AR Balance (% ending AR) (% Charges) (% Charges) AR Balance Jan , ,914 42% 296,488 58% Feb , ,186 42% 299,364 58% Mar , ,304 47% 291,578 53% Apr , ,034 44% 318,746 56% May , ,500 43% 280,166 57% Jun , ,192 41% 395,849 59% Jul , ,299 43% 341,085 57% Aug , ,181 43% 327,823 57% Sep , ,828 41% 347,236 59% Oct , ,809 44% 324,167 56% Nov , ,216 41% 254,313 59% Dec , ,597 40% 291,086 60% Jan , ,668 48% 240,000 52% Feb , ,217 51% 239,137 49% Mar , ,188 48% 296,887 52% Apr , ,409 46% 284,083 54% May ,695 88,824 42% 121,492 58% YTD Average 162,966 43% 393, ,301 57% Jan-May To be entered manually 700, , , , , , , , , ,000 Charges, Collections & Adjustments Charges Monthly charges are trending downward. Why? 200, , ,000 50,000 0 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13

79 Entry Field Sample Medical Practice Billing Trend Analysis January November 2012 Monthly Charges, Collections and Adjustments Analysis Beginning Charges Collections Adjustments Ending AR Balance (% ending AR) (% Charges) (% Charges) AR Balance Jan , ,914 42% 296,488 58% Feb , ,186 42% 299,364 58% Mar , ,304 47% 291,578 53% Apr , ,034 44% 318,746 56% May , ,500 43% 280,166 57% Jun , ,192 41% 395,849 59% Jul , ,299 43% 341,085 57% Aug , ,181 43% 327,823 57% Sep , ,828 41% 347,236 59% Oct , ,809 44% 324,167 56% Nov , ,216 41% 254,313 59% Dec , ,597 40% 291,086 60% Jan , ,668 48% 240,000 52% Feb , ,217 51% 239,137 49% Mar , ,188 48% 296,887 52% Apr , ,409 46% 284,083 54% May ,695 88,824 42% 121,492 58% YTD Average 162,966 43% 393, ,301 57% Jan-May To be entered manually 700, , , , , , , , , , , , ,000 Charges, Collections & Adjustments Charges Nice, direct relationship between Collections and Adjustments. 50,000 0 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13

80 Entry Field Sample Medical Practice Billing Trend Analysis January November 2012 Monthly Charges, Collections and Adjustments Analysis Beginning Charges Collections Adjustments Ending AR Balance (% ending AR) (% Charges) (% Charges) AR Balance Jan , ,914 42% 296,488 58% Feb , ,186 42% 299,364 58% Mar , ,304 47% 291,578 53% Apr , ,034 44% 318,746 56% May , ,500 43% 280,166 57% Jun , ,192 41% 395,849 59% Jul , ,299 43% 341,085 57% Aug , ,181 43% 327,823 57% Sep , ,828 41% 347,236 59% Oct , ,809 44% 324,167 56% Nov , ,216 41% 254,313 59% Dec , ,597 40% 291,086 60% Jan , ,668 48% 240,000 52% Feb , ,217 51% 239,137 49% Mar , ,188 48% 296,887 52% Apr , ,409 46% 284,083 54% May ,695 88,824 42% 121,492 58% YTD Average 162,966 43% 393, ,301 57% Jan-May To be entered manually 700, , , , , , , , , , , , ,000 Charges, Collections & Adjustments Charges Adjustments spiked in December, but not Collections. Why? 50,000 0 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13

81 Entry Field Sample Medical Practice Billing Trend Analysis January November 2012 Monthly Charges, Collections and Adjustments Analysis Beginning Charges Collections Adjustments Ending AR Balance (% ending AR) (% Charges) (% Charges) AR Balance Jan , ,914 42% 296,488 58% Feb , ,186 42% 299,364 58% Mar , ,304 47% 291,578 53% Apr , ,034 44% 318,746 56% May , ,500 43% 280,166 57% Jun , ,192 41% 395,849 59% Jul , ,299 43% 341,085 57% Aug , ,181 43% 327,823 57% Sep , ,828 41% 347,236 59% Oct , ,809 44% 324,167 56% Nov , ,216 41% 254,313 59% Dec , ,597 40% 291,086 60% Jan , ,668 48% 240,000 52% Feb , ,217 51% 239,137 49% Mar , ,188 48% 296,887 52% Apr , ,409 46% 284,083 54% May ,695 88,824 42% 121,492 58% YTD Average 162,966 43% 393, ,301 57% Jan-May To be entered manually 700, , , , , , , , , , , , ,000 Charges, Collections & Adjustments Charges Adjustments down, yet Collections going upward. Why? 50,000 0 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13

82 Samp le Medica l P rac tice Acc o u n ts Receivab le A na lysis Ja n ua ry Decembe r Samp le P rac tice Monthly A/R Roll Analysis Begin ning A R Ba la nce C ha rges (% ending AR) C o llectio ns (% C ha rges) Adjus tme n ts (% C ha rges) E nding A R Ba la nce Jan Feb , % 1,104 30% 2,541 70% 110,380 Mar , ,471 62% 14,651 48% 16,118 52% 208,082 Apr , ,906 52% 43,686 43% 57,500 57% 222,801 M ay ,801 90,688 41% 43,449 47% 49,884 53% 220,156 Jun , ,101 77% 80,802 44% 102,271 56% 161,184 Jul , ,044 56% 29,795 40% 45,615 60% 192,818 Aug , ,463 52% 31,619 51% 30,750 49% 270,912 Sep , ,351 57% 61,019 32% 130,454 68% 185,790 Oct , ,535 78% 63,861 44% 80,798 56% 185,666 Nov , ,304 51% 29,476 43% 38,851 57% 238,643 Dec , ,620 74% 86,350 48% 92,391 52% 229,522 Jan-01 #DIV/0! 0 Feb-01 #DIV/0! 0 Mar-01 #DIV/0! 0 Apr-01 #DIV/0! 0 M ay-01 #DIV/0! 0 YTD A v e ra g e 44,165 43% 202, ,864 #DIV/0! 58,834 57% N u m b e r o f M o n th s R e p o rte d ,000 C h a rg e s, C o lle c tio n s & A d ju s tm e n ts 150,000 C ha rges 100,000 Adjus tme n ts 50,000 C o llectio ns 0 Jan-00 Feb-00 M ar-00 A pr-00 May-00 Jun-00 Jul-00 A ug-00 Sep-00 Oct-00 Nov-00 Dec-00 Jan-01 Feb-01 M ar-01 Apr-01 M ay-01

83 Samp le Medica l P rac tice Acco u n ts Receivab le A na lysis Jan ua r y Decembe r Samp le P ractice Monthly A/R Roll Analysis Begin ning A R Ba la nce C ha rges (% ending AR) C o llec tio ns (% C ha rges) Adjus tme n ts (% C ha rges) E nding A R Ba la nce Jan Feb , % 1,104 30% 2,541 70% 110,380 Mar , ,471 62% 14,651 48% 16,118 52% 208,082 Apr , ,906 52% 43,686 43% 57,500 57% 222,801 May ,801 90,688 41% 43,449 47% 49,884 53% 220,156 Jun , ,101 77% 80,802 44% 102,271 56% 161,184 Jul , ,044 56% 29,795 40% 45,615 60% 192,818 Aug , ,463 52% 31,619 51% 30,750 49% 270,912 Sep , ,351 57% 61,019 32% 130,454 68% 185,790 Oct , ,535 78% 63,861 44% 80,798 56% 185,666 Nov , ,304 51% 29,476 43% 38,851 57% 238,643 Dec , ,620 74% 86,350 48% 92,391 52% 229,522 Jan-01 #DIV /0! 0 Feb-01 #DIV /0! 0 Mar-01 #DIV /0! 0 Apr-01 #DIV /0! 0 May-01 #DIV /0! 0 YTD A v e ra g e 44,165 43% 202, ,864 #DIV /0! 58,834 57% N u m b e r o f M o n th s R e p o r te d ,000 C h a rg e s, C o lle c tio n s & A d ju s tm e n ts 150, ,000 C ha rges Adjus tme n ts Why did Adjustments spike but not Collections? 50,000 C o llectio ns 0 Jan-00 Feb-00 Mar-00 A pr-00 M ay-00 Jun-00 Jul-00 A ug-00 S ep-00 Oct-00 Nov-00 Dec-00 Jan-01 Feb-01 M ar-01 Apr-01 M ay-01

84 Sample Medical Practice Billing Analysis September September 2010 Fields for entry Aging Trend Analysis Over 120 Total Current Days Days Days Days A/R Jul-12 1,484,209 42% 495,012 14% 385,571 11% 194,705 5% 1,006,263 28% 3,565,760 Aug-12 1,837,462 54% 603,254 18% 250,428 7% 338,230 10% 376,326 11% 3,405,700 Sep-12 1,489,441 41% 963,246 27% 311,945 9% 193,210 5% 650,313 18% 3,608,155 Oct-12 1,459,773 38% 538,716 14% 756,766 20% 245,845 6% 805,766 21% 3,806,866 Nov-12 1,404,324 34% 714,720 17% 390,927 10% 663,007 16% 932,664 23% 4,105,642 Dec-12 1,523,656 36% 613,620 14% 455,550 11% 243,791 6% 1,439,285 34% 4,275,902 Jan-13 1,551,543 37% 428,460 10% 355,634 8% 400,725 10% 1,458,885 35% 4,195,247 Feb-13 1,348,229 33% 544,551 13% 249,850 6% 296,801 7% 1,673,079 41% 4,112,510 Mar-13 1,981,272 42% 576,913 12% 343,493 7% 154,448 3% 1,658,040 35% 4,714,166 Apr-13 1,576,355 32% 1,123,422 23% 348,644 7% 276,204 6% 1,589,595 32% 4,914,220 May-13 1,742,115 34% 673,517 13% 800,677 16% 313,612 6% 1,625,254 32% 5,155,175 Jun-13 1,485,659 31% 785,963 17% 421,585 9% 419,863 9% 1,638,526 34% 4,751,596 Jul-13 1,685,742 36% 596,852 13% 489,653 10% 348,562 7% 1,574,886 34% 4,695,695 YTD Average 1,582,291 38% 427,748 10% 1,263,760 29% Number of Months in Analysis 13 To be entered manually 666,019 16% 314,539 7% 4,254,356 6,000,000 Accounts Receivable Aging Trend Analysis 5,000,000 4,000,000 Current 3,000, ,000, ,000,000 Over Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13

85 Sample Medical Practice Billing Analysis September September 2010 Fields for entry Aging Trend Analysis Over 120 Total Current Days Days Days Days A/R Jul-12 1,484,209 42% 495,012 14% 385,571 11% 194,705 5% 1,006,263 28% 3,565,760 Aug-12 1,837,462 54% 603,254 18% 250,428 7% 338,230 10% 376,326 11% 3,405,700 Sep-12 1,489,441 41% 963,246 27% 311,945 9% 193,210 5% 650,313 18% 3,608,155 Oct-12 1,459,773 38% 538,716 14% 756,766 20% 245,845 6% 805,766 21% 3,806,866 Nov-12 1,404,324 34% 714,720 17% 390,927 10% 663,007 16% 932,664 23% 4,105,642 Dec-12 1,523,656 36% 613,620 14% 455,550 11% 243,791 6% 1,439,285 34% 4,275,902 Jan-13 1,551,543 37% 428,460 10% 355,634 8% 400,725 10% 1,458,885 35% 4,195,247 Feb-13 1,348,229 33% 544,551 13% 249,850 6% 296,801 7% 1,673,079 41% 4,112,510 Mar-13 1,981,272 42% 576,913 12% 343,493 7% 154,448 3% 1,658,040 35% 4,714,166 Apr-13 1,576,355 32% 1,123,422 23% 348,644 7% 276,204 6% 1,589,595 32% 4,914,220 May-13 1,742,115 34% 673,517 13% 800,677 16% 313,612 6% 1,625,254 32% 5,155,175 Jun-13 1,485,659 31% 785,963 17% 421,585 9% 419,863 9% 1,638,526 34% 4,751,596 Jul-13 1,685,742 36% 596,852 13% 489,653 10% 348,562 7% 1,574,886 34% 4,695,695 YTD Average 1,582,291 38% 427,748 10% 1,263,760 29% Number of Months in Analysis 13 To be entered manually 666,019 16% 314,539 7% 4,254,356 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 Accounts Receivable Aging Trend Analysis Current Over 120 Aging is getting bigger and bigger over time. Why? 0 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13

86 Sample Medical Practice Billing Analysis September September 2010 Fields for entry Aging Trend Analysis Over 120 Total Current Days Days Days Days A/R Jul-12 1,484,209 42% 495,012 14% 385,571 11% 194,705 5% 1,006,263 28% 3,565,760 Aug-12 1,837,462 54% 603,254 18% 250,428 7% 338,230 10% 376,326 11% 3,405,700 Sep-12 1,489,441 41% 963,246 27% 311,945 9% 193,210 5% 650,313 18% 3,608,155 Oct-12 1,459,773 38% 538,716 14% 756,766 20% 245,845 6% 805,766 21% 3,806,866 Nov-12 1,404,324 34% 714,720 17% 390,927 10% 663,007 16% 932,664 23% 4,105,642 Dec-12 1,523,656 36% 613,620 14% 455,550 11% 243,791 6% 1,439,285 34% 4,275,902 Jan-13 1,551,543 37% 428,460 10% 355,634 8% 400,725 10% 1,458,885 35% 4,195,247 Feb-13 1,348,229 33% 544,551 13% 249,850 6% 296,801 7% 1,673,079 41% 4,112,510 Mar-13 1,981,272 42% 576,913 12% 343,493 7% 154,448 3% 1,658,040 35% 4,714,166 Apr-13 1,576,355 32% 1,123,422 23% 348,644 7% 276,204 6% 1,589,595 32% 4,914,220 May-13 1,742,115 34% 673,517 13% 800,677 16% 313,612 6% 1,625,254 32% 5,155,175 Jun-13 1,485,659 31% 785,963 17% 421,585 9% 419,863 9% 1,638,526 34% 4,751,596 Jul-13 1,685,742 36% 596,852 13% 489,653 10% 348,562 7% 1,574,886 34% 4,695,695 YTD Average 1,582,291 38% 427,748 10% 1,263,760 29% Number of Months in Analysis 13 To be entered manually 666,019 16% 314,539 7% 4,254,356 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 Accounts Receivable Aging Trend Analysis Current Nice monthly trend for the most recent (current) receivables. 1,000,000 Over Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13

87 Sample Medical Practice Billing Analysis September September 2010 Fields for entry Aging Trend Analysis Over 120 Total Current Days Days Days Days A/R Jul-12 1,484,209 42% 495,012 14% 385,571 11% 194,705 5% 1,006,263 28% 3,565,760 Aug-12 1,837,462 54% 603,254 18% 250,428 7% 338,230 10% 376,326 11% 3,405,700 Sep-12 1,489,441 41% 963,246 27% 311,945 9% 193,210 5% 650,313 18% 3,608,155 Oct-12 1,459,773 38% 538,716 14% 756,766 20% 245,845 6% 805,766 21% 3,806,866 Nov-12 1,404,324 34% 714,720 17% 390,927 10% 663,007 16% 932,664 23% 4,105,642 Dec-12 1,523,656 36% 613,620 14% 455,550 11% 243,791 6% 1,439,285 34% 4,275,902 Jan-13 1,551,543 37% 428,460 10% 355,634 8% 400,725 10% 1,458,885 35% 4,195,247 Feb-13 1,348,229 33% 544,551 13% 249,850 6% 296,801 7% 1,673,079 41% 4,112,510 Mar-13 1,981,272 42% 576,913 12% 343,493 7% 154,448 3% 1,658,040 35% 4,714,166 Apr-13 1,576,355 32% 1,123,422 23% 348,644 7% 276,204 6% 1,589,595 32% 4,914,220 May-13 1,742,115 34% 673,517 13% 800,677 16% 313,612 6% 1,625,254 32% 5,155,175 Jun-13 1,485,659 31% 785,963 17% 421,585 9% 419,863 9% 1,638,526 34% 4,751,596 Jul-13 1,685,742 36% 596,852 13% 489,653 10% 348,562 7% 1,574,886 34% 4,695,695 YTD Average 1,582,291 38% 427,748 10% 1,263,760 29% Number of Months in Analysis 13 To be entered manually 666,019 16% 314,539 7% 4,254,356 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 Accounts Receivable Aging Trend Analysis Current Over 120 Good distribution of the receivables, with the most recent the largest portion. 0 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13

88 Sample Medical Practice Billing Analysis September September 2010 Fields for entry Aging Trend Analysis Over 120 Total Current Days Days Days Days A/R Jul-12 1,484,209 42% 495,012 14% 385,571 11% 194,705 5% 1,006,263 28% 3,565,760 Aug-12 1,837,462 54% 603,254 18% 250,428 7% 338,230 10% 376,326 11% 3,405,700 Sep-12 1,489,441 41% 963,246 27% 311,945 9% 193,210 5% 650,313 18% 3,608,155 Oct-12 1,459,773 38% 538,716 14% 756,766 20% 245,845 6% 805,766 21% 3,806,866 Nov-12 1,404,324 34% 714,720 17% 390,927 10% 663,007 16% 932,664 23% 4,105,642 Dec-12 1,523,656 36% 613,620 14% 455,550 11% 243,791 6% 1,439,285 34% 4,275,902 Jan-13 1,551,543 37% 428,460 10% 355,634 8% 400,725 10% 1,458,885 35% 4,195,247 Feb-13 1,348,229 33% 544,551 13% 249,850 6% 296,801 7% 1,673,079 41% 4,112,510 Mar-13 1,981,272 42% 576,913 12% 343,493 7% 154,448 3% 1,658,040 35% 4,714,166 Apr-13 1,576,355 32% 1,123,422 23% 348,644 7% 276,204 6% 1,589,595 32% 4,914,220 May-13 1,742,115 34% 673,517 13% 800,677 16% 313,612 6% 1,625,254 32% 5,155,175 Jun-13 1,485,659 31% 785,963 17% 421,585 9% 419,863 9% 1,638,526 34% 4,751,596 Jul-13 1,685,742 36% 596,852 13% 489,653 10% 348,562 7% 1,574,886 34% 4,695,695 YTD Average 1,582,291 38% 427,748 10% 1,263,760 29% Number of Months in Analysis 13 To be entered manually 666,019 16% 314,539 7% 4,254,356 Accounts Receivable Aging Trend Analysis 6,000,000 5,000,000 4,000,000 Current 3,000, ,000, ,000,000 Over Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Oldest unpaid accounts are becoming large portion of the receivables. Why?

89 Weekly Summary Flash Reports Cash (Bank) Balances / Lines of Credit Balances Receivables: Insurance / Private / Credit Balances Charges, Collections, Adjustments Major Payables (Bills Due)

90 Management Reports Monthly Summary Cash Balances Line of credit balances Accounts Receivable Aging Charges, Collections, Adjustments Major Unpaid Payables (Bills Due) Accounts Receivable credit balances Upcoming Payroll Supporting reports from billing system

91 Key Financial Indicators Cash Balances & Lines of Credit Accounts Receivables / Aging Charges Collections

92 3 Step Approach to Fraud: I. Prevent fraudfrom occurring II. Detect itas soon as possible III. Obtain adequateinsurance coverage - employee dishonesty or employee crime.

93 Patient Refunds Who prepares the requests? What is required to support each refund request? Who reviews the refunds? What account are refunds paid?

94 Product Sales & Cosmetic Procedures (Dermatology, Veins, Hair Removal ) What controls can be implemented for these retail areas?

95 Supplies For patients use only? Tracked? Access restricted to those authorized How are these safeguarded?

96 On-Line Banking? What are the controls? Where will you find the evidence?

97 On-Line Banking? How about now?

98 On-Line Banking? How about now?

99 Cash Disbursements Who writes the checks? Who signs the checks? Who reviews the bank statement? How secure is your check information?

100 Employee Expense Reimbursements What are your policies? Do you require original supporting receipts? Who reviews it? How can you be fooled?

101 CompensationStructure How do your employees get paid? How do your physicians and other providers get paid?

102 Payroll Who handles your payroll processing? Who reviews it? Who is on your payroll? Net versus Gross

103 Time Tracking How are employees paid? How do you track their days and time worked? Where are the weaknesses?

104 Fixed Assets Business use only? Tracked and monitored? What s on the hard drives?

105 In Summary: Know your employees Evaluate vulnerabilities to outsiders Evaluate vulnerabilities to employees Consider having an outside review of your internal controls and procedures Remain vigilant!

106

107 Fraud-Related Writing: Coming Early 20?? Preventing/Detecting Employee Theft and Embezzlement within a Medical Practice MGMA

108 Piecing Together Financial Puzzles Stephen Pedneault, CPA/CFF, CFE Forensic Accounting Services, LLC 2389 Main Street Glastonbury, CT Piecing Together Financial Puzzlestm

109 Physician s Computer Company PCC 2014 Users Conference Safeguarding Your Practice's Fiscal Health (from undetected fraud scheme) Questions / Discussion forensic accounting services, LLC 2389 main street glastonbury, ct (860) steve@fasman.com stephen a. pedneault

Business & Financial Services December 2017

Business & Financial Services December 217 Completed Procurement Transactions by Month 2 4 175 15 125 1 75 5 2 1 Business Days to Complete 25 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 217 Procurement