Read Chapters 3, 4 and 5. Answer the questions below under the discussion board.
Chapter 3: The Rising Costs of Medical Services and Healthcare Reform
In your opinion, why is health care so expensive? List at least three factors that contribute to the cost of health care. After answering the question, submit one comment feedback to any classmate following the discussion board rules.
Chapter 4: Basic Accounting Concepts
In your opinion, why is important to incorporate Computerized Accounting Systems in Health Care? After answering the question, submit one comment feedback to any classmate following the discussion board rules.
Chapter 5: Accounting and the Financial Management Process
Chapter 5
Accounting and the Financial
Management Process
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website, in whole or in part.
11
Chapter Objectives
After completing this chapter, you should be able to:
Illustrate the differences in the levels of accounting expertise among various
sizes of healthcare facilities.
Differentiate between financial accounting and managerial accounting.
Explain the various stakeholders in the financing of health care.
Identify generally accepted accounting principles (GAAP).
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website, in whole or in part.
2
Introduction
Healthcare organization size correlates with sophistication of accounting and
financial management
? Small practices can get by with a bookkeeper and a part-time accountant
? Large, publicly held healthcare corporations need bookkeepers,
accountants, budget managers, outside auditors, and risk managers
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
Figure 5-1 Single Physician Practice Office
Structure
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website, in whole or in part.
4
Figure 5-2 Example of a Hospital Finance
Department
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website, in whole or in part.
5
Financial Accounting and Managerial
Accounting (1 of 2)
Financial accounting: Preparation of financial documents for external use
? Reports to governmental programs (e.g., Medicare and Medicaid)
? Reports to stockholders in publicly owned healthcare facilities
? Financial statements and budgets of governmental healthcare agencies that
provide information to taxpayers
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website, in whole or in part.
6
Financial Accounting and Managerial
Accounting (2 of 2)
Managerial accounting: preparation of financial documents for internal use
? Monthly budget-to-actual expense reports for each operating unit of the
facility
? Profitability forecasts
? Break-even analyses for adding new medical services
Dual-use reports
? Annual balance sheet and income statements
? Budget documents
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website, in whole or in part.
7
Knowledge Check Activity 5.1
The annual balance sheet and income statements are used in:
a. financial accounting.
b. managerial accounting.
c. Both of these choices are correct.
d. Neither of these choices is correct.
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website, in whole or in part.
8
Knowledge Check Activity 5.1: Answer
The annual balance sheet and income statements are used in:
a. financial accounting.
b. managerial accounting.
c.
Both of these choices are correct.
d. Neither of these choices is correct.
Answer: c. Both of these choices are correct.
The annual balance sheet and income statements provide valuable information to
stockholders and taxpayers (external users) on the financial status of the facility
and are also used by internal management staff to identify and address any
problem areas in financial performance.
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website, in whole or in part.
9
Stakeholders in Healthcare Finance
A stakeholder in the business of healthcare is any person or organization
directly impacted by the financial performance of individual healthcare facilities.
? Owners and partners
? Governing boards
? Stockholders
? Bondholders
? Investment bankers and rating agencies
? Employees
? Managers
? Customers
? Creditors
? Government
? Taxpayers
? Benefactors
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website, in whole or in part.
10
Generally Accepted Accounting Principles
(1 of 6)
GAAP: Basic standards and rules that accountants follow in recording financial
transactions and reporting results
? Broad guidelines of general application
? Detailed practices and procedures
? Codified by Financial Accounting Standards Board (FASB)
? Accepted by American Institute of Certified Public Accountants (AICPA)
? The Governmental Accounting Standards Board (GASB) is the primary
authority on the application of GAAP
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website, in whole or in part.
11
Generally Accepted Accounting Principles
(2 of 6)
Going concern concept
? Assumption is that medical facility will continue in business (is a going
concern)
? Asset and liability values are based on continued operation
? Assets typically valued at cost
? Liabilities assumed to be paid as they come due
? If a going concern fails, its value is likely to be far less than what is on the
books
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website, in whole or in part.
12
Generally Accepted Accounting Principles
(3 of 6)
Matching
? Cash accounting is used by most individuals
? Revenues recorded when cash payment is received
– Pay earned at the end of December is paid in January, with taxes
withheld and reported in January
? Expenses recorded when payment is made
– A donation pledged in December of year 1 is not paid until January
year 2
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website, in whole or in part.
13
Generally Accepted Accounting Principles
(4 of 6)
? Accrual accounting is the standard for business
? Revenues posted on date earned
– A medical service provided today gets posted as revenue today,
even when payment is not expected for weeks
? Expenses posted as resources are used
– When a pay period crosses an accounting, the expenses must be
split across the accounting periods
? Depreciation: Reducing stated value of an asset based on its age or number
of uses
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website, in whole or in part.
14
Generally Accepted Accounting Principles
(5 of 6)
Consistency
? Accounting methods (such as depreciation schedules) used consistently
over time
Materiality
? Errors that significantly affect the accuracy of financial statements must be
corrected
? Significance is determined by professional accountants and auditors
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website, in whole or in part.
15
Generally Accepted Accounting Principles
(6 of 6)
Full disclosure
? Anything that may affect the financial condition of the business must be
included in the annual financial report
? This includes events that occur between the end of the fiscal year and the
preparation of the annual report (subsequent events)
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website, in whole or in part.
16
Knowledge Check Activity 5.2
Which of the following GAAP concepts requires that any accounting error that will
have a significant impact on the financial statements of the business entity must
be corrected?
a. Going concern
b. Matching
c. Consistency
d. Materiality
e. Full disclosure
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website, in whole or in part.
17
Knowledge Check Activity 5.2: Answer
Which of the following GAAP concepts requires that any accounting error that will have a
significant impact on the financial statements of the business entity must be corrected?
a.
b.
c.
d.
e.
Going concern
Matching
Consistency
Materiality
Full disclosure
Answer: d. Materiality
Materiality is the accounting principle that requires any accounting error having a
significant impact on the financial statements of the business entity must be
corrected.
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website, in whole or in part.
18
Self-Assessment
For each of the following stakeholders, explain how they are impacted by the
financial performance of individual healthcare facilities.
Owners
Employees
Creditors
Taxpayers
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website, in whole or in part.
19
Chapter 4
Basic Accounting Concepts
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website, in whole or in part.
11
Chapter Objectives
After completing this chapter, you should be able to:
Define the terminology used in the language of accounting.
Explain the basics of double-entry accounting, with every entry into the financial
records requiring an equal and offsetting debit and credit.
Describe the major differences between manual and computerized accounting
systems.
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website, in whole or in part.
2
Introduction
(1 of 2)
Accounting is the language of business
? Codified by Luca Pacioli, the father of accounting, in his Summa (1494)
? Understanding language of accounting beneficial to healthcare professionals
Bookkeeper vs. accountant
? Bookkeepers record financial transactions
? Accountants review and approve bookkeeping entries, prepare financial
statements, present financial reports and analyses to top management, and
design and enforce financial internal control procedures to safeguard
financial resources.
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
Introduction
(2 of 2)
Accounting systems
? Manual: Businesses write transactions in bound ledgers or journals and
prepare reports manually
? Computerized: Businesses enter data into financial management programs
and use the softwares reporting features
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website, in whole or in part.
4
Figure 4-1 Double-Entry Accounting
(1 of 8)
Double entry accounting is based on the equation:
? Assets: Items owned by the business
? Liabilities: Items owed by the business
? Net worth: The difference between assets and liabilities
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website, in whole or in part.
5
Double-Entry Accounting
(2 of 8)
Every financial event is recorded with a two-part entry
? Each entry is self-balancing with a debit and a credit
Debit
Asset increase
Credit
X
Asset decrease
X
Liability increase
X
Liability decrease
X
Revenue (Net worth increase)
Expense (Net worth decrease)
X
X
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website, in whole or in part.
6
Double-Entry Accounting
(3 of 8)
A trial balance is a listing of all account balances as of the date of the trial
balance.
? When the debit and credit totals are equal, the financial system is in balance.
? When the totals do not balance, the accountant must find and correct any
errors.
Types of double-entry accounting transactions for a physicians practice
A revenue transaction is recorded when a patient makes a payment.
? The entry is recorded as debit to Cash and a credit to the appropriate net
worth account (e.g., Medical Services).
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website, in whole or in part.
7
Double-Entry Accounting
(4 of 8)
Accounts receivable transactions generally are made when services are
reimbursed by an insurance company and require two transactions:
? When services are billed, a debit is made to Accounts Receivable, and a
credit is made to the appropriate net worth account (e.g., Medical Services).
? When payment is received, a debit is made to Cash, a credit is made to
Accounts Receivable, and any difference between the two is debited to the
net worth account (e.g., Medical Services).
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website, in whole or in part.
8
Double-Entry Accounting
(5 of 8)
Accounts payable transactions generally are made when an expense on
account is incurred by the practice.
? When a purchase is made, a debit is made to the appropriate expense
account (e.g., Medical Supplies Expense), and a credit is made to Accounts
Payable.
? When payment is remitted, a debit is made to Accounts Payable, and a
credit is made to Cash.
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website, in whole or in part.
9
Double-Entry Accounting
(6 of 8)
Capital asset transactions involve items owned that have a long useful life and
cost more than a minimal amount.
? A capital asset purchase is recorded as debit to the appropriate asset
account (e.g., Land, Buildings, Furniture, Equipment) and a credit to Cash.
? Most capital assets lose value over time and are depreciated.
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website, in whole or in part.
10
Double-Entry Accounting
(7 of 8)
Banks loan transactions occur when a medical facility borrows money to meet
ongoing costs or to finance a major purchase.
? When the money is borrowed, a debit is made to Cash, and a credit is made
to a new liability account (e.g., Bank Loan).
? When the loan is repaid (usually in installments), the entry requires a debit to
the liability account, a debit to an expense account for the interest due, and a
credit to Cash for the total.
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website, in whole or in part.
11
Double-Entry Accounting
(8 of 8)
The four steps to properly account for any transaction:
Step 1: Identify the accounts to be used.
Step 2: Identify the amount(s).
Step 3: Assign debits and credits.
Step 4: Ensure that debits and credits balance.
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website, in whole or in part.
12
Knowledge Check Activity 4.1
Elderberry Dental Services buys a new piece of X-ray equipment for the office.
They pay $89,000 in cash to acquire this equipment. Based on the accounting
equation, what would be the effect of this transaction?
a. Cash +$89,000, Equipment +$89,000
b. Cash -$89,000, Equipment +$89,000
c. Cash +$89,000, Equipment -$89,000
d. Cash -$89,000, Equipment -$89,000
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website, in whole or in part.
13
Knowledge Check Activity 4.1: Answer
Elderberry Dental Services buys a new piece of X-ray equipment for the office.
They pay $89,000 in cash to acquire this equipment. Based on the accounting
equation, what would be the effect of this transaction?
Answer: b. Cash -$89,000, Equipment +$89,000
Cash would decrease by $89,000, and Equipment would increase by $89,000.
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website, in whole or in part.
14
The Role of the Accountant in the Financial
Process
Medium-sized and larger medical facilities need accountants who:
? Review and approve bookkeeping.
? Prepare financial statements and analyses for management.
? Establish and monitor controls to safeguard the assets.
Publicly held corporations and government facilities are audited annually.
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website, in whole or in part.
15
Computerized Accounting Systems in Healthcare
(1 of 5)
Practice Management System (PMS)
? Computer software programs designed for medical practices
? Supports a database function for all of the patient information
? Maintains schedules
? Files insurance claims
? Generates patient billings
? Automatically updates the accounting records
? Can buy off-the-shelf or customized system
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website, in whole or in part.
16
Computerized Accounting Systems in Healthcare
(2 of 5)
Procedure for manual accounting:
? Each transaction written into appropriate journal
? Journal totals calculated manually, and summary totals posted to general
ledger
? Trial balance prepared at end of accounting period
? Adjusting entries (e.g., depreciation) prepared and posted at end of
accounting period
? Worksheet prepared and used to generate the final trial balance
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website, in whole or in part.
17
Computerized Accounting Systems in Healthcare
(3 of 5)
? Final trial balance used to prepare financial statements for accounting period
? Journal entries prepared and posted to close revenue and expense accounts
and prepare for the next accounting period
? Post-closing trial balance prepared
? Revenue and expense accounts have zero balances
? Ending asset, liability, and expense account balances become beginning
balances for new period
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website, in whole or in part.
18
Computerized Accounting Systems in Healthcare
(4 of 5)
Procedure for computerized accounting:
? Each transaction keyed into appropriate journal
? Journal totals automatically posted to general ledger
? User can request a trial balance at any time
? Journal entries entered at end of accounting period
? Final trial balance generated
? Program prepares and posts closing entries to zero out revenue and
expense accounts
? Post-closing trial balance generated
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website, in whole or in part.
19
Computerized Accounting Systems in Healthcare
(5 of 5)
Computerized accounting system benefits:
? Automation of bookkeeping functions
? Accurate totals
? Error-avoidance by linking vendor codes to specific accounts
Computerized accounting system needs:
? Trained personnel who know what types of transactions go into each
account
? Oversight by an accountant
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website, in whole or in part.
20
Knowledge Check Activity 4.2
All of the following can be handled by a computerized accounting system except:
a. Handling basic patient information.
b. Preparing insurance claims.
c. Billing patients for balances due.
d. Reviewing transactions for accuracy.
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website, in whole or in part.
21
Knowledge Check Activity 4.2: Answer
All of the following can be handled by a computerized accounting system except:
a. Handling basic patient information.
b. Preparing insurance claims.
c. Billing patients for balances due.
d. Reviewing transactions for accuracy.
Answer: d. Reviewing transactions for accuracy.
What the computer is not able to do is tell the difference between a business
transaction posted to the appropriate account and one that is not.
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website, in whole or in part.
22
Self-Assessment
Compare and contrast the duties of a bookkeeper and an accountant.
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website, in whole or in part.
23
Chapter 3
The Rising Costs of Medical
Services and Healthcare Reform
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website, in whole or in part.
11
Chapter Objectives
After completing this chapter, you should be able to:
Identify and explain the major factors influencing the rising costs in health care.
Discuss the history of universal health care in the United States, culminating in
the Patient Protection and Affordable Care Act of 2010 (PPACA).
Identify the major components of PPACA and the specifics of its implementation
through 2022.
Explain the financial coverage that the Build Back Better Act will provide.
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website, in whole or in part.
2
The Rising Costs of Medical Services
Spending on healthcare in the United States since 1960:
? Increased more than the cost-of-living index
? Increased as a percentage of the gross national product (GNP)
? Increased as a percentage of household income
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website, in whole or in part.
3
Figure 3-1 Personal Healthcare Expenditures
as Percentage of GDP
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website, in whole or in part.
4
Baby Boomers and Life Expectancy
Baby boomers: Members of the generation born between 1946 and 1964, a
period with a greater than average birth rate
? Major force in society (25% of population)
? Starting to receive Social Security and Medicare benefits
? Longer life expectancies than previous generations
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website, in whole or in part.
5
Innovations in Treatment
New treatments and technologies directly add to healthcare costs
? Help increase lifespan, which increases healthcare spending
Financial incentives help patients become more effective consumers of health
care:
? High-deductible insurance plans encourage patients to question their physician on
the costs of their health care.
? The scale of copayments for generic drugs versus name-brand drugs encourages
patients to discuss the availability of generics with their physician.
? Health programs and discounts and healthy cafeteria food options offered by
employers help employees stay healthy.
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website, in whole or in part.
6
An Educated Workforce
Education and training of healthcare professionals is expensive
? Physician training takes many years
? Educational and training requirements increasing for other healthcare
workers
? Shortages drive up salaries
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website, in whole or in part.
7
Fraud and Abuse
Medicare and Medicaid lose billions of dollars annually from fraud and abuse
? Government efforts to reduce fraud and abuse were ineffective
? The Centers for Medicare and Medicaid Services (CMS) detect fraud
through the Recovery Audit Contractor (RAC) Program:
? Conduct provider audits to detect and correct billing errors
? Train providers in proper methods of claim submission to avoid future errors
? Lower the error rate in CMS programs
? Protect taxpayers and future program beneficiaries by ensuring that only
appropriate costs are reimbursed
? In 2016, RACs corrected $473.92 million in improper payments.
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website, in whole or in part.
8
The Costs of Medical Malpractice
Medical malpractice lawsuits can cost millions of dollars
? Healthcare providers need malpractice insurance
? Costs 10% of total healthcare costs in some areas
? Medical malpractice tort reform efforts seek to reduce costs
? Limits on non-economic and punitive damages
? Attorney fee limitations
? Amend joint and several liability
? Reduce the statute of limitations
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website, in whole or in part.
9
Knowledge Check Activity 3.1
Which of the following is a major factor in the rising costs of health care?
a. Medical malpractice lawsuits
b. New treatments and technologies
c. Medicare fraud and abuse
d. Education and training of healthcare professionals
e. All of these answers are correct.
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website, in whole or in part.
10
Knowledge Check Activity 3.1: Answer
Which of the following is a major factor in the rising costs of health care?
a.
b.
c.
d.
e.
Medical malpractice lawsuits
New treatments and technologies
Medicare fraud and abuse
Education and training of healthcare professionals
All of these answers are correct.
Answer: e. All of these answers are correct.
Medical malpractice lawsuits, new treatments and technologies, Medicare fraud and
abuse, the education and training of healthcare professionals, as well as the increased
life expectancy of Baby Boomers, are all factors in the rising costs of healthcare.
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website, in whole or in part.
11
Universal Healthcare
(1 of 13)
The idea of universal health care carries complex, contentious, and
controversial issues:
? Basic access to health care as an entitlement
? Rationing of health care
? The spread of government influence
? Impact on taxpayers
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website, in whole or in part.
12
Universal Healthcare
(2 of 13)
The Oregon Health Plan (1989)
? Required employers to provide healthcare insurance
? Was not implemented
? Expanded Medicaid program to cover all residents with earnings below
poverty line
? Unique rationing plan for medical services
? Treatments ranked based on costs and effectiveness
? Lowest-ranked treatments were not funded
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website, in whole or in part.
13
Universal Healthcare
(3 of 13)
The Clinton Health Care Plan of 1993 (was not enacted)
? Proposal to ensure that all persons have healthcare insurance
? Employers must offer healthcare insurance
? Regional healthcare alliances would sell insurance to uninsured
? Premiums subsidized by federal government for low-income individuals
and households
? Fee-for-service reimbursement for health care
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned,
copied or duplicated, or posted to a publicly accessible website, in whole or in part.
14
Universal Healthcare
(4 of 13)
Massachusetts Health Care Reform Law of 2006
? Employers with 11 or more workers must provide healthcare insurance or
pay a fine
? Individuals had to be insured by employer or a state-approved program or
pay a fine
? No cost if family income
Recent Comments