Key Financial Concepts for FQHCs Ohio Association of Community Health Centers October 22, 2013

Transcription

1 Key Financial Concepts for FQHCs Ohio Association of Community Health Centers October 22, 2013 Curt Degenfelder

2 Key Metrics to Measure Health Center Financial Performance 1

3 Key Metrics: Days Cash On Hand Days in Cash on Hand = Cash and cash equivalents divided by average daily expenses ([Total expenses donated services, bad debt and depreciation] divided by # of days in period) Measures how much cash center has to continue its operations Should be compared against any increases in accounts payable, grant advances, or line of credit drawdowns 2

4 Key Metrics: Revenue Recognition Payor Charges Less: Contractual Allowance and Sliding Fee Discounts Net Revenue Less: Allowance for Bad Debt Net Revenue Less Bad Debt Medicaid Fee For Service $ 1,130,559 $ 248,050 $ 882,510 $ 79,426 $ 803,084 Medicaid MC $ 765,982 $ 441,324 $ 324,658 $ 29,219 $ 295,439 Medicare $ 534,083 $ 280,444 $ 253,639 $ 22,827 $ 230,811 Commercial/ Other $ 952,558 $ 548,820 $ 403,738 $ 36,336 $ 367,401 Self-Pay $ 1,686,866 $ 1,358,059 $ 328,807 $ 29,593 $ 299,215 Total $ 5,070,047 $ 2,876,696 $2,193,351 $ 197,402 $ 1,995,949 From this report can also calculate per visit figures, collection percentages, and bad debt Percentages. Note similarity to the income analysis worksheet 3

5 Key Metrics: Revenue Recognition % of Total Visits Less Allowance for Doubtful Accounts % of Total Revenue Net Revenue per Visit Less Net February-07 Visits Charges Adjustments Revenue Private Pay 1, % $46,860 -$13,313 $16,454 $43, % $28.30 Sliding Fee % $69,829 $51,866 -$54 $18, % $25.52 Private Insurance 1, % $139,073 $22,748 -$17 $116, % $ Workers Comp % $3,199 $470 $0 $2, % $97.45 Medicare FQHC % $64,444 -$21,773 $0 $86, % $ Medicare Hospital Billing % $45,459 $47,322 $0 -$1, % -$4.82 Medicaid FQHC 1, % $113,206 -$128,914 -$2 $242, % $ Medicaid Hospital Billing % $61,269 $11,349 $0 $49, % $1, Special Billing 6 0.1% $2,804 $388 $0 $2, % $ Total Clinic 5, % $546,142 -$29,858 $16,382 $559, % $ Dental 304 $22,624 $28,300 -$11,944 $6,267 $20.62 Pharmacy 3,406 $86,115 $21,683 -$1,373 $65,805 $19.32 Total Other $108,739 $49,983 -$13,316 $72,072 Grand Total 9,290 $654,881 $20,126 $3,065 $631,690 4

6 Key Metrics: Days in A/R Revenue Maximization Accounts Receivable Metrics Days in A/R Current Period Prior Period Change FAV/(UNFAV) % Weighted Total Days in Patient A/R (12.79) -19% Medicaid Fee For Service (5.90) -9% Medicaid Managed Care (0.90) -2% Medicare % Commercial/Other (6.40) -10% Self-Pay (37.00) -45% 5

7 Key Metrics: Payor Mix & Collection % Revenue Maximization Accounts Receivable Metrics Current Period Prior Period % Change Budget Strategic Plan Industry Norms Revenue Payor Mix Medicaid FFS 54.1% 54.8% -1% 54.3% 56.0% 38% Medicaid Managed Care 14.7% 14.0% 5% 14.5% 12.0% 21% Medicare 6.1% 6.2% -1.6% 6.3% 10.0% 12% Commercial/Other 4.9% 5.1% -3.9% 5.2% 5.0% 14% Self-Pay 20.2% 19.9% 2% 19.7% 17.0% 15% Collection Rate by Payor Medicaid FFS 98.7% 98.5% 0% 99.0% 99.0% 94% Medicaid Managed Care 86.0% 87.0% -1.1% 87.0% 90.0% 96% Medicare 88.5% 84.9% 4% 98.0% 99.0% 89% Commercial/Other 61.9% 68.0% -9.1% 68.0% 75.0% 88% Self-Pay 52.0% 50.0% 4% 50.0% 55.0% 77% Net Revenue (Total Revenue - Bad Debt) $334,816 $324,651 3% $362,420 $412,787 6

8 Key Metrics: Denial Percentages Total Denied Visits Reason # % of Total Charges covered under a capitated agreement % Claim not filed timely % Correct tooth info needed % Duplicate claim 5, % Incomplete or incorrect coding (CPT, Diag, HCPCS) % Lack of authorization/referral % Lacks other info needed for adjudication 1, % Paid current / conflicting claim % Patient ineligible % Patient ineligible (Another plan) 3, % Patient ineligible at time of service % Provider ineligible % Service not covered - Plan % Service part of more global procedure % Unknown / Other % TOTALS 13, % 7

9 Understanding Denials Front desk Patient not eligible Incorrect demographic information, or outdated insurance coverage Not MCO primary care provider Providers Incorrect code Service not supported by diagnosis/documentation Service not covered Provider not eligible/credentialed NEW EHR issue..provider hasn t completed Medical Record, thus claim won t show as active in PMS Billing staff Duplicate bill Missing information Can also look at individuals 8

10 Key Metrics: % of Patient Fees Collected (can also use % of sliding fee patients who pay at leat nominal fee) 100% 95% 90% 85% 80% 75% 70% 65% 60% 55% 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% $163, % $150,482 $160,081 $196,361 $169,725 $153,685 $168, % Co-Pay Collection % 51.1% 52.6% 51.0% $173,665 $198,167 $177,140 $170,431 $175,836 Jan10 Feb10 Mar10 Apr10 May10 Jun10 Actual Collections Non Collected Estimation * % of Collections Co-Pay Goal Initiative: 80% (*) Estimated through the Total Visits and the Actual AVG Collection per Visit Note: This new report reflects Actual Co-Pays Collected for the Day of Service, if required. This report no longer includes other payments collected for future or previous balance The goal for this initiative is 80%. Sites should continue to strive for the 5% monthly improvement as a goal utilizing the results of this first report for January 2010 as a baseline Source: Quality Improvement Department, Co-Pay Campaign

11 Audit Tool For Front Desk FRONT OFFICE DOCUMENTATION ASSESSMENT STAFF: DATE OF SERVICE: PATIENT NAME: PATIENT DOB: EVALUATOR: DATE: EPIC fields Appointment Scheduled Scheduled in parameter Notes Reason for visit and insurance information Correct Provider Correct visit type Correct length of time hone number PCP Patient Registration Demographics Name Demographics SSN Demographics in All Caps PCP Employer Emergency Contact Patient Message Caresource PCMH, NFP Sliding Scale Pending Consents listed HIPAA NFP, NFP General Guarantor Account Correct Account Type Guarantor Name Correct Relationship FPL Entered Correctly Circle YES if entered correctly, No if not entered correctly, N/A if not applicable, enter comments if necessary YES NO N/A 10 10

12 Key Metrics: Health Center Performance Against Budget Revenue Maximization Accounts Receivable Metrics Current Period Prior Period % Change Budget Strategic Plan Industry Norms (where available) Days in Patient A/R % Bad Debt (as % of Net Pt. Revenue) 9.0% 10.2% 12% 9.5% 8.0% 6.2% Per Visit Total Revenue $ $ % $ $ Patient Services Revenue $ $ % $ $ Total Billable Visits 21,000 18,000 17% 18,500 19,000 Provider FTE % 5 5 Visits Per Provider FTE 3,500 3,600-3% 3,700 3,800 3,800 11

13 Key Metrics: Correlating Revenue Generation With Expense MEDICAL PROVIDERS -- budgeted Westside Oldtown Eastside Hosp Based BK - SP TOTAL / AVERAGE Actual Medical Visits FY 13 33,574 21,331 16,399 11,957 38, ,809 FY 13 Actual Visits/Provider FTE 3,158 2,935 1,647 2,002 3,748 2,681 Budgeted Medical Visits FY 14 39,808 22,485 22,152 15,155 40, ,755 Budgeted Visits/Provider FTE 3,745 3,093 2,225 2,537 3,980 3,099 Average Salary Per FTE $ 148,812 $ 176,113 $ 131,406 $ 148,171 $ 150,576 $ 151,310 Budgeted Cost Per Visit FY 14 $ $ $ $ $ $ FY 13 Visits Per Back Office Staff FTE 2,904 4,524 3,257 1,795 2,606 2,807 FY 14 Visits Per Back Office Staff FTE 3,483 5,228 4,400 2,275 2,767 3,244 Average Salary Per FTE $ 36,669 $ 36,896 $ 34,929 $ 36,852 $ 34,890 $ 35,529 FY 14 Budgeted Cost Per Visit $ $ 7.06 $ 7.94 $ $ $ FY 13 Visits Per Front Office Staff FTE 7,194 6,045 4,920 7,843 7,033 5,494 FY 14 Visits Per Front Office Staff FTE 8,894 6,747 6,740 9,600 7,763 6,350 Average Salary Per FTE $ 35,808 $ 34,282 $ 37,020 $ 38,391 $ 34,286 $ 35,921 FY 14 Budgeted Cost Per Visit $ 4.03 $ 5.08 $ 5.49 $ 5.07 $ 5.27 $ 5.66 FY 13 Visits Per NP/PA Triage 8,743 6,357 7,454 6,574 #DIV/0! 11,525 FY 14 Visits Per NP/PA Triage 10,367 6,701 10,069 8,333 #DIV/0! 13,321 Avergage Salary Per FTE $ 81,800 $ 75,860 $ 64,221 $ 53,967 #DIV/0! $ 72,767 FY 14 Budgeted Cost Per Visit $ 7.89 $ $ 6.38 $ 6.48 $ - $

14 Key Metrics: FINANCIAL HRSA VIABILITY/COSTS Financial Performance Measures Total cost per patient Numerator: Total accrued cost before donations and after allocation of overhead Denominator: Total number of patients Medical cost per medical encounter Numerator: Total accrued medical staff and medical other cost after allocation of overhead (excludes lab and x-ray cost) Denominator: Non-nursing medical encounters (excludes nursing (RN) and psychiatrist encounters) 13

15 Key Metrics: HRSA Financial Performance Measures Performance Measure Measure Detail Change in Net Assets to Expense Ratio (Maintain a ratio > 0) Numerator: Ending Net Assets Beginning Net Assets Denominator: Total Expense Note: Net Assets = Total Assets Total Liabilities Working Capital to Monthly Expense Ratio (Maintain a ratio > 1 month of expenses) Long Term Debt to Equity Ratio (Maintain long term debt at < to ½ net assets (Ratio < 0.5)) Numerator: Current Assets Current Liabilities Denominator: Total Expense/Number of Months in Audit Numerator: Long Term Liabilities Denominator: Net Assets 14

16 Operational & Regulatory Considerations for Finance Staff 15

17 CHC Program Requirements #1 Needs Assessment #2 Required and Additional Services #3 Staffing Requirement #4 Accessible Hours/Locations #5 After Hours Coverage #6 Hospital Admitting Privileges and Continuum of Care #7 Sliding Fee Discount #8 Quality Assurance/Quality Improvement #9 Key Management Staff #10 Contractual/Affiliation Agreements 16

18 CHC Program Requirements #11 Collaborative/Affiliation Agreements #12 Financial Management & Control Policies #13 Billing and Collections #14 Budget #15 Program Data Reporting Systems (Health center has systems which accurately collect and organize data for program reporting and which support management decision making) #16 Scope of Project #17 Board Authority #18 Board Composition #19 Conflict of Interest Policy (+ 990 requirements) 17

19 Regulatory Reports The finance department needs to be aware of the filing due dates for all required reports. Some of the reports which need to be filed by a community health center are the following: The Uniform Data System (UDS) Financial Status Report Now Federal Financial Report PSC-272 Reports (FFR) Single Grant Applications Independent Audit (OMB Circular A-133) and Data Collection Form Medicare Cost Report, CMS Form 838 Medicaid Cost Report State wraparound reconciliation report State data/licensing reports IRS Form 990 IRS Form

20 Financial Management & Control Policies The health center has appropriate measures in place to protect its assets and adheres to Federal accounting requirements, including: - Accounting and internal control systems that are appropriate to the size and complexity of the organization and reflect Generally Accepted Accounting Principles (GAAP) or GASB, as applicable. - Policies and processes that safeguard the organization s assets. A complete audit submission which must include: - The auditor s report (including the auditor s opinion, financial statements, auditor s notes and required communications from the auditor). - Any management letter issued by the auditor, or a statement signed by an authorized representative of the health center that no management letter was issued. - If any material weaknesses are identified in the audit, these must be addressed by the health center. 19

21 Internal Controls Key Elements of Internal Controls: Control Environment Director and Management involvement Control objectives Organization structure and management controls Key policies and procedures Segregation of duties. This is the most frequently cited deficiency in internal controls for small businesses! Record-keeping and information system Financial reporting system Budgets Periodic review of the control system Cost-benefit analysis 20

22 Internal Controls Key Issues in CHC Internal Controls: Recording of 330 grant drawdown and spending Timely filing of reports Accurate data in reports Correct application of sliding fee Inadequate segregation of duties leads to theft Management of front desk cash Site designation/billing Personnel spending outside of budget 21

23 Sources of Patient Service Revenue Medicaid: Cost based rate from Prospective Payment System (PPS) or alternative methodology. Rate capped in Ohio with maximums for medical and mental health Medicaid managed care: Negotiated rate with PPS wraparound protection. May be paid on a capitated (fixed monthly $ amount per member) or fee-forservice SCHIP paid at the PPS rate beginning 10/1/09 Medicaid expansion paid at PPS rate Medicare: Cost based rate up to Upper Payment limit (UPL) Medicare managed care: Negotiated rate with wraparound protection Medicare/Medicaid dual eligible: Medicare payment plus crossover payment Medicare Advantage/Medicaid dual eligible: Negotiated rate plus PPS wraparound Commercial insurance: Negotiated rate Self pay: Based on charges and sliding fee 22

24 Billing for Patient Service Revenue Billing goes through practice management system Charts can be on paper or on electronic health record (EHR) With electronic billing, some health centers bill Medicaid every day to speed cash flow Often dental is billed on a separate system Can used outsourced billing Can use outsourced collections Revenue recognition is key!! are you going to collect what is recorded on your financial statements? 23

25 330 GRANT BUDGETING - TOTAL BUDGET CONCEPT Operating Budget (Sources of Funding) Note Clarifications From PIN Form 3 Income Analysis Line 6 Total Fee For Service + Line 7 Total Capitated Managed Care (net) = Total Program Income + Line 9 Applicant Funds + Line 10 State Funds + Line 11 Local Funds + Line 12 Other Support (other federal grants, contributions & fundraising, foundations, Other) = TOTAL NON-FEDERAL SHARE 24

26 Patient Revenue 330 GRANT BUDGETING - TOTAL BUDGET CONCEPT MULTIPLE BPHC GRANTEE Section 330(e) Operations Other Federal Grant Dollars Ryan White Title III b Operations Operating Budget (Scope of Project) Single Grant Application State and Local Contracts & Grants State and Local Contracts & Grants Other Federal Grant Dollars Patient Revenue State and Local Contracts & Grants Section 330(h) Operations Other Patient Revenue Federal Grant Dollars Note changes from PIN

27 Operational Budget - Budgeting Revenue Patient Services Revenue Projections By Site and Payor Site A - Medical Payor % # Visits Gross Charges Contractual/ Sliding Fee % Avg. Net Rate Coll. % Revenues MCD 40% 3, ,160 5% $100 95% $ 303,240 MCD# 10% ,790 *** 100% $ 41,040 MCR 20% 1, ,580 29% $75 100% $ 119,700 S/P* 20% 1, ,580 86% $15 50% $ 11,970 OTP** 10% ,790 52% $50 75% $ 29,925 Total 100% 7, ,900 $ 505,875 #Managed Care Capitation Revenue *Average collection $7.50 **Average collection $37.50 ***Based on projected member months and capitation rate 26

28 Budget Expenditures Budgeting of Expenditures: Projecting the expenditures for the following expense categories will be based on different variables: Salaries = Staffing Plan (FTEs) from the Salary List Fringe Benefits = Percent of Salaries and Wages Supplies = Based on Visits Ancillary Cost = Based on Visits by Site and Department Facility = Based on Current Leases Interest = Based on Current Loan Payments

29 Statement of Operations By Site Site A Site B Site C Total Visits 10,480 8,400 12,600 31,480 Revenue Total Patient Services Revenue 660, , ,175 1,807,969 Grants & Contracts 468, , ,546 1,308,060 Wraparound 39,670 62,636 93, ,260 Interest Income 1, ,250 2,750 Miscellaneous ,901 Total Revenues $ 1,170,519 $ 801,196 $ 1,345,225 $ 3,316,940 Expenses Salaries Direct 375, , , ,000 Fringe Benefit 90,000 55,200 88, ,520 Supplies 94,800 74, , ,310 Total Direct Expenses 726, , ,248 1,993,482 Total Indirect Expenses 454, , ,691 1,311,918 Total Expenses 1,180, ,585 1,333,939 3,305,400 Income (Loss) $ (10,357) $ 10,611 $ 11,286 $ 11,540

30 Budgeting Balance Sheet Must be done on a monthly basis Cash is king! Cash on balance sheet can be calculated at follows Cash = Prior Month Cash Change in All Other Assets + Change in Liabilities and Net Assets Make sure to include any impact of lag in getting PPS rate for a new site or new FQHC Calculate accounts receivable as days (percentage) of historical patient service revenue Calculate accounts payable as days (percentage) of cash OTPS items Include capital expenditures and depreciation in fixed assets 29

31 CHC Pitfalls in Budgeting Not budgeting at appropriate level of granularity Not including provider vacancies in budget Assuming provider productivity increases without justification Forgetting about physical constraints of facility Forgetting to project replacement of fixed assets over time Build it and they will come mentality. Also assuming no competitors Focus on precision leads to exactly the wrong answer Basing plans on grant funding opportunities Not monitoring actual results and variance from plans Not adequately planning for cash need 30

32 Program Requirement #7: Payment Schedules Program Requirement #7 Sliding Fee Discounts: Health center has a system in place to determine eligibility for patient discounts adjusted on the basis of the patient s ability to pay - This system must provide a full discount to individuals and families with annual incomes at or below 100% of the Federal poverty guidelines (only nominal fees may be charged) and for those with incomes between 100% and 200% of poverty, fees must be charged in accordance with a sliding discount policy based on family size and income - No discounts may be provided to patients with incomes over 200 % of the Federal poverty guidelines Legal Authority: Section 330(k)(3)(G) of the PHS Act; 42 CFR Part 51c.303(f) 31

33 Payment Schedules July 9, 2012 Policy Information Notice Clarification of Sliding Fee Discount Requirements Tips on meeting payment schedule requirement - Board-approved fee and discount schedules Appropriate for target population, type of services, community and organization Advertised and applied equally to all patients - Establish schedule of charges that Covers the reasonable costs of operation AND Is consistent with (but not necessarily equal to) locally prevailing (community) rates Look at cost from actual costs, actual CPT codes, and RBRVS RVUs - Establish corresponding schedule of discounts (sliding fee scale) Must comply with program requirement Must not include regular sliding fee discounts for persons or families with incomes above 200% of poverty 32

34 Open Questions on Sliding Fee - Do you have to establish a sliding fee scale and/or nominal fee for all services, including ancillary services? What about outside contracted lab where CHC is charged only for uninsured patients, at a discounted rate? -How do you determine nominal? need to balance between creating a barrier to care, and patients/front desk staff deciding that it s not worth it -Can you have different sliding fee scales and/or nominal fees for different services? How do you distinguish between services? What is incident to? Can you use a flat fee and if so, when? Discounts themselves are not required to be identical for all health center services categories (e.g., medical, dental, behavioral health - For services the health center provides via a formal written referral agreement within the federally approved scope of project, where the actual service is provided and paid for/billed by another entity, the health center is responsible for assuring the service is..offered on a SFDS 33

35 Open Questions on Sliding Fee - Can you offer different sliding fee scales and/or nominal fees for different patient populations (i.e. homeless, students, etc)? -Can you use other non-federal sources to support reduction of payments for patients with incomes above 200%? - may only partially cover fees for certain health center services these underinsured individuals may not pay more than uninsured patients in the same income category - HRSA recognizes that in many cases, an individual health center s ability to negotiate reimbursement rates for services may be limited -Can you offer cash discounts for patients who pay with cash or checks when they present for their appointments? YES PAGE 16 must be offered to ALL patients 34

36 Open Questions on Sliding Fee - Can you deny a patient access to the sliding fee scale If he/she qualifies for private or public insurance but refuses to apply? If he/she has private or public insurance but you do not participate in the specific plan? If he/she is not a resident of the service area? If he/she does not provide income verification or refuses to fill out necessary forms to qualify? -Can you terminate a patient who does not pay his or her sliding fee scale or nominal fee co-payment? Policies that define: What constitutes refusal to pay Individual circumstances to be considered What steps are followed only after reasonable efforts have been made to secure payments may health centers choose to implement policies where these patients are discharged from the regular practice 35