4. Guideline for debt management of pharmacy co-payments

Transcription

1 Guideline [Optional heading here. Change font size to suit] Debt Management of Pharmacy Co-payments 1. Purpose Document Number # QH-GDL-026:2013 This Guideline provides recommendations regarding best practice for managing and pursuing outstanding pharmacy co-payments whilst balancing efficiency and governance. 2. Scope This Guideline provides information for all employees, contractors and consultants within Hospital and Health Services and the Department of Health divisions and commercialised business units. 3. Related documents Authorising Policy and Standard/s: Financial Management Practice Manual Financial Delegations Procedures, Guidelines and Protocols: Queensland Health Pharmacy Information Management System (QHPIMS) Support Unit Pharmacy Procedure, Patient Payment and Invoicing Unit. 4. Guideline for debt management of pharmacy co-payments 4.1 Objectives The objective is to ensure pharmacy co-payments are: dealt with effectively and efficiently; and accounted for correctly. 4.2 Guideline Pharmacy co-payment debtors should receive one reminder notice in the month after they received their first invoice. If the account remains unpaid after a further month it should either be: 1) submitted for approval to be written off by an employee with the appropriate level of losses delegation; or 2) raised as a sundry debtor on the Financial Accounting and Materials Management Information System () for further follow up. The decision by the Director of Pharmacy (or nominated delegate), or where there is no Director of Pharmacy the Director of Nursing (or nominated delegate), on whether to continue to pursue an account or recommend it for write-off requires a balance between efficiency and governance. It should be determined whether it is cost effective or prudent from a debt management perspective to pursue collection. Version.: 1 ; Effective From: July 2013 Page 1 of 6 Version.: 1.0 Effective From: August 2013 Page 1 of 2

2 Department of Health: Debt Management of Pharmacy Co-payments Once the outstanding invoice has either been approved for write-off or recorded in the sundry debtor should be closed/written-off in subsidiary systems (eg. ipharmacy Invoicing Module or manual system). 4.3 Debt recovery process for pharmacy co-payments An invoice should be issued at time of supply. At the end of the following month, a follow-up letter should be issued for outstanding invoices. The responsibility for issuing this letter should be negotiated on a local basis between the Pharmacy and Revenue/Finance. After a further month the debts should be assessed by the Director of Pharmacy (or nominated delegate), or Director of Nursing (or nominated delegate) where there is no Director of Pharmacy, to determine whether to continue to pursue or to recommend for write-off Continue to Pursue If the debt will continue to be pursued a sundry debtor should be raised in and future follow-up will be performed by the local Finance/Revenue team Discontinue Pursuit If the debt will not be pursued a submission must be made to an Officer with the appropriate level of losses delegation for approval to write-off Closing of Subsidiary System Invoices Once approval has been received to write-off, or the account has been raised in, the subsidiary system invoice may be closed/written-off Audit Trail The review and losses approval should be retained as part of the audit trail to support the write-off of subsidiary system invoices (eg. ipharmacy Invoicing Module, manual system) Management of process in ipharmacy It is recommended that the debt management of ipharmacy in process invoices is performed on a month by month basis utilising ipharmacy functionality that allows in process invoices to be generated on date parameters. See Appendix 1: Pharmacy Co-payment Follow-up Flowchart 4.4 Accounting for Pharmacy Co-payments Accrue revenue Each month end an accrual for revenue should be performed for outstanding Pharmacy copayment invoices in subsidiary systems. Under the new debt recovery process there typically will be an accrual for two to three months of outstanding accounts. This is because at the end of the third month the outstanding invoices from month one, dependant on the decision on whether to continue to pursue, should either be submitted for write-off approval or entered into Sundry Debtors. Effective From: 10/09/2013 Page 2 of 6

3 4.4.2 Provision for doubtful debts Department of Health: Debt Management of Pharmacy Co-payments At the end of each month a provision for doubtful debts Cat B should be considered for accounts outstanding greater than one month Writing-off invoices When accounts have been approved for write-off the revenue and bad debt expense should be recognised in. See Appendix 2: Example of Accounting Treatment Pharmacy Co-payment. The example is based on $1,000 of co-payment invoices being raised each month, with no receipts. 5. Review This Guideline is due for review on: 10/09/2016 Date of Last Review: New Guideline Supersedes: Debt Management of Pharmacy Co-payment Policy 6. Business Area Contact Director, Financial Policy, Finance Branch 7. Definitions of terms used in the policy and supporting documents Term Definition / Explanation / Details Source Co-payment A contribution made by the consumer towards medical treatment, i.e. a medical service, a doctor's visit, medication prescriptions. Financial and Materials Management Information System Department of Health and Aging FMPM Subsidiary system Financial Management Practice Manual a legislative required document that provides overarching financial management requirements to ensure compliance with legislation, regulation, accounting standards, financial reporting requirements and whole of government policies, for use by all employees in the performance of their roles. Financial Management Practice Manual provides policy statements, practice statements and guidelines regarding significant accounting and financial management issues for use in financial management, which must comply with any Act or law applicable to the financial management of the department. Any system subordinate or secondary to in relation to debt management and accounting. This would include ipharmacy installations utilising the Invoicing Module, manual systems, etc. Department of Health FMPM Effective From: 10/09/2013 Page 3 of 6

4 Department of Health: Debt Management of Pharmacy Co-payments 8. Approval and Implementation Policy Custodian: Chief Finance Officer, Department of Health Responsible Executive Team Member: Deputy Director-General, System Support Services Division Approving Officer: Chief Finance Officer, Department of Health Approval date: 10 September 2013 Effective from: 10 September 2013 Version Control Version Date Prepared by Comments /09/2013 CFO New guideline to replace previous policy Effective From: 10/09/2013 Page 4 of 6

5 [Optional heading here. Change font size to suit] Appendix 1: Pharmacy Co-Payments Follow-Up Flowchart Appendix 1: Pharmacy Co-payment Follow-up Month 1 Month 2 Month 3 Raise Invoice for Co-payment Invoice paid Send reminder notice Invoice paid Continue to pursue Submission to Losses Delegate for write-off Pharmacy Pharmacy Invoice paid tify Finance of outstanding accounts tify Finance of outstanding accounts Close invoice on subsidiary system (eg. ipharmacy) Close invoice on subsidiary system (eg. ipharmacy) tify Finance of Accounts requiring further follow-up tify Finance of approved writeoffs Finance/Revenue Receipt in Accrue revenue Receipt in Accrue revenue Receipt in Record Sundry Debtor in and continue follow-up Recognise Loss in Losses Losses Delegate Delegate Approved for write-off Effective From: 10/09/2013 Page 5 of 2

6 [Optional heading here. Change font size to suit] Appendix 2 : Example of Accounting Treatment Pharmacy Co-payment Assets Revenue Expenses Jnl Dr Cr Sundry Accrued Prov for Outpatient Copayment Doubttful Debtors Revenue D/Debts Pharmacy Bad Debts Debts Month One 1 DR Accrued Revenue 1000 July Rev 1000 CR Outpatient Co-payment Pharmacy Taking up Month One invoices Month Two 2 DR Outpatient Co-payment Pharmacy CR Accrued Revenue Reversing Month One Jnl 1 above 3 DR Accrued Revenue 2000 July & Aug Rev 2000 CR Outpatient Co-payment Pharmacy Taking up Month Two cumulative journal 4 DR Doubtful Debts - Cat B CR Provision for Doubtful Debts 1000 July provn Taking up Provision for D/Debts for Month One (Assuming that nothing was paid for Month One or all outstanding invoices from Month One) Month Three 5 DR Outpatient Co-payment Pharmacy CR Accrued Revenue Reversing Month Two Jnl 3 above 6 DR Accrued Revenue 2000 Aug & Sept Rev 2000 CR Outpatient Co-payment Pharmacy Taking up Month Three cumulative journal Aug & Sept 7 DR Provision for Doubtful Debts CR Doubtful Debts - Cat B Reversing Jnl 4 above 8 DR Doubtful Debts - Cat B CR Provision for Doubtful Debts 1000 Aug provn Taking up Provision for D/Debts for Month 2 August (Assuming that nothing was paid so far) 9 DR Sundry Debtors 200 July o/s debt recovery 200 CR Outpatient Co-payment Pharmacy Transfer outstanding accounts from Month One July to Sundry Debtors te: (a) Transfer to Sundry Debtors to be more manageable 10 DR Bad Debt - Cat B 800 July debt w/o 800 CR Outpatient Co-payment Pharmacy (b) This must match with the ipharmacy system at month end Reversing revenue as debts gone bad from Month One July (Assuming that nothing was paid for Month One) (c) This provision relates to Month 2 0 (d) Total gross revenue YTD (e) Bad debts from Month (f) Doubtful debts relate to Month 2 (a) (b) (c) (d) (e) (f) Effective From: 10/09/2013 Page 6 of 2