How does Medicare affect the cash flow of a health care company?
The administrative burden of the varied and complex billing and collection requirements and voluminous patient data, combined with unstable operations, could dramatically impact the cash flow of a health care company in financial distress. Medicare. Services covered by Medicare are usually subject to the establishment of medical necessity.
What's wrong with the cash-flow cycle for health care companies?
Health care companies suffer from an often unpredictable and largely misunderstood cash-flow cycle—both of which are the result of the complicated governmental payment methodologies. (It almost makes preparing tax returns look simple).
What is the process of becoming a Medicare provider?
It is a fairly involved process that should be started as soon as practical to assure that it is completed in a timely manner. 1. Obtaining a National Provider Identifier The first step in Medicare certification is to obtain a National Provider Identifier (NPI) from the National Plan and Provider Enumeration System ( NPPES ).
What happens if you fail to establish medical necessity for Medicare?
Medicare. Services covered by Medicare are usually subject to the establishment of medical necessity. Failure by the providers to establish and document medical necessity for services rendered can result in denied claims, an extended billing and collections process or, in certain circumstances, allegations of fraud.
What is Medicare coverage?
Medicare coverage is limited to items and services that are reasonable and necessary for the diagnosis or treatment of an illness or injury (and within the scope of a Medicare benefit category).
When did the NCD change?
The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 amended several portions of the NCD development process with an effective date of January 1, 2004.
What is cash flow?
Cash flow is the blanket term for all of the money coming into and going out of your business. In financial terms, it’s the culmination of accounts receivable and accounts payable. Think of it this way: Cash flow refers to the flow, or movement, of money both in and out.
Why is cash flow important?
Even if you don’t consider yourself a “money person,” you will have to do some basic business accounting in your business. As an entrepreneur, you need to keep your eye on cash flow.
How to determine how much cash buffer you need?
To determine how much cash buffer your business needs, you’ll divide cash balances by cash outflows. This will tell you the number of days that your cash on hand will be able to make up for no incoming cash flow.
Why is there a delay in electronic payment processing?
Just because you’ve received a payment doesn’t mean you have access to that money. With electronic payment processing, there’s often a delay between the time the payment was made and the moment the cash is accessible in your account (s).
How to make passive income for a business?
Start by identifying your future business goals and determining your needs from there. Generate some forms of passive income to compensate for a reduced income stream, or even fund some of your other business growth. Only hire when you absolutely need to and do so one at a time (at least at first).
Did H&R Block acquire Wave?
On Tuesday, we announced that H&R Block signed an agreement to acquire Wave. A few of our customers have reached out to us with questions and we want to make sure you have all the answers.
When did Medicare require ASCs to comply with the Life Safety Code?
Complying with the Life Safety Code —As of July 5, 2016, Medicare requires ASCs to comply with the 2012 edition of the Life Safety Code (LSC), updated and published by the National Fire Protection Association. Prior to July 5, 2016, ASCs were subject to the 2000 edition of the LSC.
Do ASCs need to revalidate?
ASCs will be contacted by their states Medicare contractor and asked to revalidate. ASCs do not need to do anything until they are asked to revalidate. 3. Complying with Medicare’s Conditions for Coverage (CFCs) CMS establishes requirements, called Conditions for Coverage that ASCs must meet in order to be certified.
How long is a Medicare certification?
The length of the certification period is the duration of treatment, e.g. 2x/week for 8 weeks. In this example the end date of the certification period is 8 weeks, to the day, from the initial evaluation date. In 2008 Medicare changed the requirement for the maximum duration of each plan of care. The maximum length of time any certification period ...
What happens if you don't comply with Medicare?
If, in the course of the audit, they find you do not have the Certifications/Re-certifications, if appropriate, included in the chart they can deem your care for that patient as not meeting the medical necessity or the requirement to be under a physician’s care. In that case Medicare can decide that all the care for these patients should not have been carried out and can ask for all payments plus interest and a penalty to be returned to them. This can come to a significant amount of money, especially if it occurs in a number of patient’s charts.
How to get a POC?
A POC being sent for certification must contain ALL of the following elements to meet the requirements: 1 The date the plan of care being sent for certification becomes effective (the initial evaluation date is acceptable) 2 Diagnoses 3 Long term treatment goals 4 Type, amount, duration and frequency of therapy services 5 Signature, date and professional identity of the therapist who established the plan 6 Dated physician/NPP signature indicating either agreement with the plan or any desired changes.
What are the requirements for a POC?
A POC being sent for certification must contain ALL of the following elements to meet the requirements: The date the plan of care being sent for certification becomes effective (the initial evaluation date is acceptable) Diagnoses. Long term treatment goals. Type, amount, duration and frequency of therapy services.
How long can a Medicare plan of care be certified?
The maximum length of time any certification period used to be 30 days, however now it can run up to 90 days.
Can a physical therapist establish a POC?
CMS says either a physician/NPP or physical therapist can establish the POC but if the therapist does it then physician/NPP must approve of the plan. That’s where the signing off on the plan of care by the physician/NPP affirms that the patient is under their care and they agree with the plan.
Can you claim all your patients require the maximum time allowed?
Claiming all your patients require the maximum time allowed may trigger an audit of your documentation. CMS recommends you set the duration for your certifications at your best estimate of the length of time it will take your patient to achieve their goals.
Health Care Receivables
Cash-Flow Issues
- Medicare.Services covered by Medicare are usually subject to the establishment of medical necessity.Failure by the providers to establish and document medical necessity for services rendered can result indenied claims, an extended billing and collections process or, in certain circumstances, allegations of fraud. Medicare determines provider reimbu...
Bankruptcy Complications
- Recoupment and Set-offs.Retrospective reimbursement systems and estimated PIP volumes impose riskand financial exposure to both the provider and the Medicare program itself. In the event that a provider'sinterim rate was set too high, that provider faces the prospect of repaying potentially large sums of moneyto the Medicare program. Similarly, if estimated PIP service volu…
Conclusion
- The risk factors related to a health care company's cash-flow cycle can jeopardize its management'sability to fund operations and meet debt service. Therefore, it is imperative that health care companies areable to quickly determine the precise reason for any changes in the billing and collections cycle. Simplyrecognizing that cash flow from receivables has declined is i…
Late Or Partial Payments
Not Enough Cash Buffer on Hand
- A cash buffer is essentially a financial safety net for your business. To determine how much cash buffer your business needs, you’ll divide cash balances by cash outflows. This will tell you the number of days that your cash on hand will be able to make up for no incoming cash flow. According to one JPMorgan Chase study, the average SMB has just 27 days of cash buffer on h…
Delayed Payment Posting
- Just because you’ve received a payment doesn’t mean you have access to that money. With electronic payment processing, there’s often a delay between the time the payment was made and the moment the cash is accessible in your account(s). This payment posting time is pretty much unavoidable, as that’s how banks work. But there are some ways you can plan for it and ensure y…
Disorganization
- One study conducted by Staplesfound that three in four SMBs with struggling or failing businesses believe disorganization has led to a loss in productivity. And almost 40% aren’t “good with numbers.” These are real challenges when it comes to maintaining healthy cash flow. You could go broke without even knowing it. If you’re not tracking, budgeting, planning, and forecasti…
Rapid Growth
- If your business has grown quickly, congratulations! While that growth is great for your bottom line, you may also face some growing pains along the way, with cash flow being just one of them. As you make more money, you also have to spend more money to run your business. Your overhead could increase because you’re outsourcing more, you need to hire more employees, yo…
Sales Challenges
- Whether you overestimated your sales volumes or sales have inexplicably come to a complete halt, any time that incoming money slows down, your cash flow suffers. Sometimes this decline in sales is caused by external factors, like market fluctuations or even the weather for a brick-and-mortar business that relies on foot traffic. Other times, you can look internally. Is your marketing…
Varied Payment Terms
- When your incoming and outgoing cash flow doesn’t match up, this can lead to shortages (and major surpluses). For example, in my digital marketing business, I have one client account for which I outsource a lot of work to various contractors. I invoice my client at the beginning of each month after the work has been done. My contractors’ billing terms are all different. Some invoic…
Spending Too Much
- While sometimes you need to spend money to make money, there’s also the issue of spending too much money. If you find your overhead is getting out of hand, it’s time to dig into where your biggest expenses are and how you can reduce (or even eliminate) them. How to solve it: 1. Automate repetitive tasks that you previously hired people to do. 2. Map out a business plan an…
Too Much Inventory
- If you’re in retail or sell physical products, inventory is one of your biggest and most important assets. It’s how you generate moremoney. But the cost to produce each item is more than what you paid your supplier for it. There are holding costs associated with keeping stock on hand. Having safety stock is important to retail operations and avoiding costly stockouts, but if you ha…