Medical Accounts Receivable Overview. Department of Navy Financial Improvement Program March 2010

Transcription

1 Medical Accounts Receivable Overview Department of Navy Financial Improvement Program March 2010

2 Purpose and Objectives Issue and Corrective Action Allowance Methodology Overview Allowance Methodology Calculating Net Realizable Value Accounting Process Tool Overview BUMED Financial Improvement Program 2

3 Corrective Action The accounting of Medical Claims does not comply with FMR and FASAB requiring the establishment of allowances for doubtful accounts and the recording of receivables upon services rendered This deficiency is reported by the Medical Services as a material weakness on the Certification Statement signed by Service Comptrollers To Be Process As Is Process 3. MTF Collects 3. MTF posts AR and Allowance BUMED Financial Improvement Program 3

4 Corrective Action Navy Medicine developed a process to account and report for Medical TPC Claims in accordance with DoD FMR and the Statement of Federal Financial Accounting Standards (SFFAS) The interim solution was developed to bridge the GAAP between long term Accounting and Billing system solutions and the current non compliant environment The process involved developing an Allowance for Doubtful Accounts methodology as well as a Tool that would assist in predicting collection rates for claims What it is An interim solution that improves the oversight, accountability, and auditibility of a material weakness What it is not A long term 100% solution designed to automate the process and address all system deficiencies BUMED Financial Improvement Program 4

5 Allowance Methodology Overview BUMED Financial Improvement Program 5

6 Allowance Methodology An Allowance for Doubtful Accounts Methodology was established to ensure receivables were reported at Net Realizable Value The methodology was in accordance with DoD FMR and SFFAS Number 1 Guidance The methodology uses three fiscal years of historical data to produce predicting Coefficients or Multipliers for factors deemed statistically significant Factors that assist in predicting collections include: Family Member Prefix (FMP) Bill Amount Insurance Company MEPRS Code (Type of care received ) BUMED Financial Improvement Program 6

7 Allowance Methodology MTF unique coefficients were produced for each factor based on the statistical analysis of the MTF s 3 years worth of data The process to apply the coefficients is as follows: 1. Extract Historical Data 2. Derive coefficients 3. Input coefficients into Tool Annual Process Monthly Process 4. Input billing info monthly 5. Apply coefficient to billing 6. Tool Reports NRV BUMED Financial Improvement Program 7

8 Applying coefficients to an example encounter (Control No A09-131) with the following factors: FMP: 30, Spouse Bill Value: $ MEPRS: FCCA, Special Programs Insurance Co: BCBS of Florida Allowance Methodology Calculating the Net Realizable Value (NRV) The Tool will apply the applicable coefficients using the formula: % Exp Payment = $ (FMP 30 + Large bill Multiplier + MEPRS F + BCBS of Florida + PC Multiplier + Constant Multiplier) BUMED Financial Improvement Program 8

9 Allowance Methodology Calculating the Net Realizable Value (NRV) The Outcome for Control No A is an expected payment Expected Payment is $ or 77% of original bill All transaction s expected payment will be summed to obtain Navy Medicine s Net Realizable Value Following collection efforts, estimates can be compared to actuals Actual Collection of sample encounter (A09-131): $ Sample encounter had a 96% Accuracy Rate BUMED Financial Improvement Program 9

10 Allowance Methodology Testing the Coefficients using In-Sample Testing Coefficients were tested to ensure accuracy for each MTF Actual NRV was compared to predicted NRV Average variance between actuals* and predictions was 3% NH Sample 1 NH Sample 2 NH Sample 3 56% 54% 52% 50% 48% 46% 44% 42% 60% 50% 40% 30% 20% 10% 59% 57% 55% 53% 51% 49% 47% 40% 0% 45% Actual NRV Predicted NRV Actual NRV Predicted NRV Actual NRV Predicted NRV *Data is represented by FY08 billings when compared with FY08 and FY09 collections BUMED Financial Improvement Program 10

11 Allowance Methodology Aging Categories and Additional Analysis based on Sample MTF Allowance % Collected % of Total Collected Current 59% 3% 7% 1 to 30 Days 62% 29% 71% 31 to 60 Days 88% 38% 93% 61 to 90 Days 97% 40% 97% 91 to180 Days 99% 41% 99% 181 to1 year 100% 41% 100% Between 1 to 2 Years 100% 41% Between 2 to 6 Years 100% 41% Between 6 to 10 Years 100% 41% Great than 10 Years 100% 41% BUMED Financial Improvement Program 11

12 Accounting Process Overview BUMED Financial Improvement Program 12

13 Accounting Process Overview BUMED has worked with DFAS to develop an accounting process that would enable MTFs to record receivables within the Accounting System Due to current system limitations, BUMED will enter receivables on a monthly basis at the Net Realizable Value DFAS has agreed to work with BUMED to design an Accounts Receivable Module specific to medical claims MTF Bills Insurance MTF posts AR to Accounting System MTF receives collections DFAS posts collections BUMED Financial Improvement Program 13

14 Accounting Process Overview BUMED is in the process of developing Instructions designed to deploy the process in a controlled, consistent manner throughout Navy Medicine BUMED Financial Improvement Program 14

15 Tool DEMO Signature UBO Manager 7/15/09 BUMED Financial Improvement Program 15

16 What Can I do to Prepare? Familiarize yourself with guidance to understand the new process Clean up aged receivables to ensure valid outstanding claims Establish lines of communications with Accounting Office Ensure collections are processed in a timely manner Assist BUMED with data calls Participate in process by providing feedback and input when requested BUMED Financial Improvement Program 16

17 END End of Presentation BUMED Financial Improvement Program 17

18 Tool Overview Screenshots Signature UBO Manager 7/15/09 BUMED Financial Improvement Program 18

19 Tool Main Screen BUMED Financial Improvement Program 19

20 Data Load Page BUMED Financial Improvement Program 20

21 Monthly Report Provides Monthly NRV for Accounting entry With management signatures required Signature UBO Manager 7/15/09 Signature Accounting Dept 7/15/09 Signature Comptroller 7/15/09 BUMED Financial Improvement Program 21

22 Aging Report (Note 5) Provides Aging Categories Designed to fulfill DoD/TMA Note 5 Requirements for the Aging of Accounts Receivable, Public BUMED Financial Improvement Program 22

23 Write-Off Analysis Provides Detail of Monthly Write-Off Categories Main Report Page Drill-Down Detail by write-off category BUMED Financial Improvement Program 23

24 NRV and Allowance Analysis The Summary Report provides Cumulative NRV and Allowance Values BUMED Financial Improvement Program 24

25 NRV and Allowance Analysis Detail Reports The Collection and Write-Off Detail reports above illustrate: Cumulative Collections approaching predicted NRV amounts Cumulative Write-Off amounts approaching predicted allowance amounts BUMED Financial Improvement Program 25