Month End Close. HomeCare Billing Solution (HBS) provides for accounts receivable (A/R) reconciliation through the use of its A/R Activity Report.

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1 Month End Close Below are steps for a suggested month end close using standard reports in the Home Care Accounting Solutions billing system. How you run these reports may vary depending on your specific accounting requirements. We will review the A/R Activity Report for Billed Revenue, the PPS Revenue Report for Accrued Revenue and the Payment Report for Cash Receipts and Adjustments. A/R Activity Report: HomeCare Billing Solution (HBS) provides for accounts receivable (A/R) reconciliation through the use of its A/R Activity Report. This report posts all billing and payment activity based on process date. Process date is the actual date entries are made. Example: A Biller posting RAPS may use a month end date of 9/30/14 as the bill date but may be running these specific RAPS on 10/5/14. The process date will be 10/5/14. This date will never change! This means that billing for prior periods will always be reflected in the current period and therefore represents what is known as a Hard Close in accounting. A/R Activity Reporting Options: Report Sequence: Select Insurance, Patient or Unit order Selection Type: Select All or Specific Patients/Insurances/Units

2 Transaction Type: Choose specific transactions or leave all checked Activity Date Selection: Refers to the process date range. Typically, this corresponds to your default accounting period or official hard close date. Bill Date Selection: Used to drill down into the report so the user may select only specific bill dates on which to report. Default is All Dates Report Detail: Used to drill down into the patient/invoices and transaction detail that make up the totals. A/R Activity Log: Check this option to see all claims billed for a specific period (Billing Log) A/R Activity Report Field Definitions: Beginning: Total A/R due amount for all process dates prior to the From-Date used for the report. Non-Period (not shown for this example): Sum of all charges, payments and adjustments created outside of the current period selected, but posted to bills within the period selected. Note: Used to allow us to balance to our standard A/R report. Example: A RAP run and posted in June for a Payment and a Final being reported on in July. Prior-Charges: Sum of all charges created within the current period but applied to bill dates outside of the current period. Example: Final claim run in July (reporting period) but posted using a June date. Billed-Charges: Sum of all billed revenue created within the current period and posted to bill dates within this period. Total-Charges: Total of Prior-Charges + Billed-Charges columns. Payments: Sum of all payments created within the current period. Adjustments: Sum of all adjustments created within the current period. Ending: Sum of (Beginning + Total-Charges - Payments Adjustments) columns. This will be the Beginning figure for the next period. End-Due: Sum of the (Ending - Beginning + Non-Period) columns. This is now the total A/R due amount as of the report To-Date. Sample Month End Close Using A/R Activity Report (Billed Revenue): For simplicity s sake we will use one patient and follow them from admit through discharge. Our patient was admitted on 7/17/14 and discharged on 9/10/14. Their 60 day episode is from 7/17/14 through 9/14/14.

3 July Reporting Period: Patient has just been admitted so beginning balance is zero. A RAP is run on 7/28/14 for $3, Total Charges amount is now $3, No other activity occurs, so the ending due is also $3, August Reporting Period: A RAP Payment is processed on 8/15/14 for $3, The beginning balance of $3, is forwarded from the previous period, a payment of $3, is applied, resulting in an ending due of -0.01(penny rounding adjustment needed).

4 September Reporting Period: The beginning balance of matches ending for previous period. No other activity occurs during this month, so ending is October Reporting Period: The patient was discharged 9/10/14 but the Final was not run until 10/9/14. It is at this time that the adjustments are made. The Final is posted for an amount of $1,467.13, so Total Charges for the period is $1, The beginning balance is -0.01, a charge amount of $ is posted, resulting in an ending balance of $1,

5 Note: Row one (below) is your ending balance. Row two is only used if you wish to balance back to the standard A/R Report. The standard A/R report is based on the Billing Audit post date and is generally a collections tool more than a month end reconciliation. Sample Month End Close Using PPS Revenue Report (Accrued Revenue): We will use the same patient and reporting period. Again, our patient was admitted on 7/17/14 and discharged on 9/10/14. Their 60 day episode is from 7/17/14 through 9/14/14. July Reporting: There are 15 days of accrued revenue (7/17/14 7/31/14). The Expected Episodic Payment (EEP) is $5, The rate per day is 1/60 th of the EEP, or $ The rate per day multiplied by 15 days gives us accrued revenue of $1, The EEP of $5, minus Accrued Revenue of $1, results in Deferred Revenue of $3, The Revenue Summary shows an Initial Billed amount of $3, This matches the Billed Charge amount from the A/R Activity Report.

6 The Total Not Billed shows the EEP minus Initial Billed (assuming no adjustments will be made). In this example, $5, $3, = $2, August Reporting: There are 31 days of accrued revenue. The rate per day times 31 days gives us accrued revenue of $2, Deferred Revenue is $1, (EEP Accrued). Accrued from this period + Accrued from last period + Deferred = EEP. Initial Billed for this period is The Revenue Summary for Prior Period (July), shows $3, for the RAP from the July A/R Activity Report. Total Not Billed is still $2, because no Final was posted during this reporting period.

7 September Reporting: There are 14 days of accrued revenue (9/1/2014 9/14/2014). Note: The (episode) End date on the report is 9/10/14 due to a Discharge, but the episode s original end date (60 th day) was 9/14/2014. The earned Days will include the days remaining in the cert period after the discharge date. The rate per day times 14 days gives us accrued revenue of $1, This matches Deferred Revenue from the August report. Deferred Revenue for September is $0, as the episode was completed during the reporting period. The Revenue Summary shows Prior Period Initial Billed of $3, which is from the RAP billed in August. Total Not Billed = EEP Initial Billed (if no final adjustments are made).

8 October Reporting: The episode ended on 9/10/14 but the Final was not run until 10/9/14 at which time an adjustment was made due to a therapy downgrade. There is no accrued or deferred revenue in the period as the episode was completed prior to the reporting period. The Adjusted Final Payment (AFP) is due to therapy downgrade. The final billed out at 1, rather than the original expected amount of 2,051.26; a difference of (AFP) (EEP) (AFP) (Initial Billed) = (Final Billed) In this example we can tie the Final Billed back to the billed revenue on the A/R Activity report. It s important to note that when running an entire patient census though this report it would be difficult to reconcile the accrued and billed revenue figures due to the fact that there are many patients/episodes in different stages but looking at it like this you can see they do eventually tie out after the Final is posted. Note: Review the PPS Revenue Report FAQ for detailed information regarding the report options and output.

9 Sample Month End Close Using Payment Report: Payments and Adjustments are posted using a Payment Posting Date. This is usually the date the payment is deposited to the bank. The Payment Report can be run by Process date so that it can be reconciled to the A/R Activity and PPS Revenue Reports. This payment has a posting date of 8/15/14 but was actually processed on 8/13/14 per the A/R Activity report run for August. The PPS Revenue report shows it for informational purposes starting on the August report also.