General Accounting



General Accounting



Chapter objectives


Upon completion of this chapter, the learner will be able to:


1. Define the key terms that relate to the chapter.


2. Identify key terms within a word problem and record information with 100% accuracy.


3. Manipulate word problem information with 100% accuracy.


4. Calculate insurance deductibles and copayments with 100% accuracy.


5. Analyze and balance day sheet information with 100% accuracy.


6. Calculate and record petty cash transactions with 100% accuracy.


7. Manipulate tax information to determine gross and net pay with 100% accuracy.


8. Complete purchase order forms with 100% accuracy.



Key Terms



Objective 1


Coinsurance


The patient assumes a percentage of the fee for covered services; also known as cost-sharing. This amount is usually collected at the end of a visit.


Copayment


Predetermined amount that usually must be paid before the patient sees the physician. Copayments are used primarily in managed care plans.


Day Sheet


A register for recording daily business transactions (charges, payments, or adjustments); also known as a daybook, daily log, or daily record sheet.


Deductible


Specific amount of money for health care that must be paid by the patient each year before insurance policy benefits begin. This amount is usually collected at the end of a visit.


Encounter Form


An all-encompassing billing form used by physicians to communicate to the billing department what services were performed during the patient’s visit; also known as a fee schedule, fee slip, or superbill.


Gross Income


The amount of pay received before taxes and withholding are deducted.


Ledger Card


An individual record indicating charges, payments, adjustments, and balances owed for services rendered; also known as a ledger.


Net Income


The amount of pay received after taxes and withholding have been deducted; also referred to as take home pay.


Net Loss


Less than the amount needed to maintain a solvent business.


Net Profit


Actual profits after all deductions have been paid.


Purchase Order


Form used to order equipment, medications, and supplies from outside vendors.


Solvent


Maintaining enough money to meet one’s liabilities.





Objectives 1, 2


Insurance


The number one source of income in health care is insurance reimbursement. Insurance can come in the form of private coverage, health maintenance plans, Medicare, Medicaid, military insurance, or disability plans. There are many types of insurance plans, and even if two companies receive insurance from the same provider, their plans could be very different. When it comes to insurance, there is noone-size-fits-all plan. This is why the following careers are in such demand:



Think about the last time you visited a physician’s office, an urgent care facility, or an emergency room. How much did you have to pay for the visit? Your payment was based on whether your insurance policy had a deductible, coinsurance, or copayment. If you were not covered by an insurance plan, you might have had to pay the balance in full that day. Was your payment collected before you saw the physician? If so, that may mean that your insurance requires a copayment. If you paid for services after being seen by the physician, you probably have a deductible or coinsurance. If that is not confusing enough, insurance companies have benefits for hospitalization that may be different from the benefits for outpatient services.


There are many pieces to the insurance puzzle. Although management of a patient’s insurance data is part of the growing field of health information management, it is important that all members of the health care team have basic insurance knowledge.



imageMATH IN THE REAL WORLD 6-2


What mathematical tools are used when dealing with money? Addition, subtraction, multiplication, division, and percentages. This chapter will strengthen your skills by using these concepts in multistep problems.


In general, managed care policies (HMO, PPO, and EPO) require that a copayment be paid at the time of service. The copayment amount may vary based on the location and type of service. Copayments are paid each time the person sees the physician or therapist or receives any other service that falls under the insurance plan’s copayment requirement. This amount is usually collected before the patient sees the physician and is notdeducted from the total amount of the bill. Traditional insurance plans and Medicare typically have both a deductible that must be met before insurance coverage begins and coinsurance. Coinsurance amounts are determined by the insurance company. If the insurance policy is 70/30, this means the insurance will pay 70% of the usual and customary charges and the patient is responsible for 30%. Coinsurance varies from policy to policy; however, the insurer’s responsibility and the patient’s responsibility always add up to 100%. Payments toward deductibles and coinsurance are subtracted from the total bill for the visit.


You may encounter patients who have coverage from more than one insurance company. Many people carry secondary insurance to reduce their out-of-pocket expenses. Should you collect the deductible, and if so, how much? Should you collect the copayment from both insurance policies? Or only from the primary insurance policy? Or should you collect the highest copayment amount? Each facility has its own policy for handling primary and secondary insurance payments. The information to remember is that claims are submitted to the secondary insurance company to cover the cost of the visit not covered by primary insurance.


Example:



Mr. Ford has insurance from his employer (primary), and he is also covered under his wife’s policy (secondary). When Mr. Ford is seen by the physician, the primary insurance company will pay 90% for the usual and customary services. Then, instead of Mr. Ford paying the remaining 10%, it is submitted to his wife’s insurance company for payment.



imageMATH ETIQUETTE 6-1


When you are determining coinsurance responsibility, the total amount must always add up to 100%.


Accurate documentation regarding the collection of copayment, deductibles, and coinsurance amounts must be communicated to the insurance specialist. These amounts must be reported to the insurance company for accurate determination of benefits. This information directly affects the reimbursement amount to the physician. If the health care facility does not collect copayment, deductibles, and coinsurance, the result is a decrease in cash flow to the facility. A significant decrease or a failure to be fiscally sound may affect the services offered, which could affect your job.



imagePRACTICE THE SKILL 6-1


Identify whether coinsurance, copayment, or a deductible would be collected based on the question




1. Mrs. Smith’s insurance policy requires her to pay $25.00 every time she visits the physician’s office. Mrs. Smith has a ____________________________.


2. Mr. Stone has an appointment on January 5, 20XX. He has Medicare Part B insurance, which requires him to pay a specified amount at the beginning of each year before the insurance coverage begins. This is an example of a _________________________.


3. Mr. Auburn has private insurance through Blue Cross/Blue Shield. He is required to pay 20% of all services performed when he sees the physician. This is an example of _________________________.


4. Mrs. Candle is required to pay $110.00 at the beginning of each year before her insurance coverage begins. After the $110.00 is collected, she is required to pay 10% of all services performed. Mrs. Candle does nothave to pay a ________________________ ________________________.


5. A ______________________, if required, is usually collected before the patient sees the physician.


6. _____________________ is commonly collected at the end of the visit.


7. Medicare Part B states that a patient will pay 80% of the usual and customary charges after the ________________________ has been met.


8. Mary Smith has an appointment to see Dr. Drake. She must pay her ____________________ before her insurance coverage will become effective.


9. Private insurance traditionally requires both a _________________ and a ________________________.


10. Managed care plans require a _________________to be paid at the time of each visit.



Objectives 3, 4


Collecting Copayment, Deductibles, and Coinsurance


Depending on your job description, you may be required to collect copayments, deductibles, or coinsurance at the beginning or end of a visit. When working with copayments or coinsurance, you might easily find the collectable amount by looking at the insurance card or accessing the account through a secure website. It may be necessary, however, to contact the insurance company to determine what amount of the deductible has been satisfied. Correctly documenting the type of payment is important so that claims personnel can report this information to the insurance company when a claim has been filed.



imageSTRATEGY 6-1
Determining Copayment Amounts






imagePRACTICE THE SKILL 6-2


Refer to Figure 6-1 and answer the following questions





imageSTRATEGY 6-2
Determining Deductible Amounts




Example:



Mr. Ryan’s insurance policy has a $250.00 per year deductible. On January 13, 20XX, Mr. Ryan is seen in the physician’s office. His bill totals $185.00. This is the first time he has used his health insurance this year. Answer the following questions based on this scenario.


1. What is the total amount of Mr. Ryan’s yearly deductible? ___________________


2. How much has been met this year toward the deductible? ____________________


3. How much should you collect from Mr. Ryan toward his deductible? __________________


4. Has Mr. Ryan met his deductible for the year? ________________________


If not, how much will he need to pay before his insurance becomes active? ________________________________



imageSTRATEGY 6-3
Determining Coinsurance Amounts




1. Contact the insurance company, either by phone or on a secure website, to determine if the patient has coinsurance.


2. Find out whether there is a deductible and how much has been met. (Remember: the deductible must be met before insurance coverage begins.)


3. Verify the insurance company’s responsibility for the bill and the patient’s responsibility for the bill. (The total amount cannot equal more than 100%.)


4. Once the total bill has been established, determine the patient’s responsibility. (If you have forgotten how to determine percentage, refer to Chapter 4.)


5. Collect the amount for which the patient is responsible at the end of the visit.


6. Subtract the amount of the coinsurance from the total bill to determine the billable amount.


7. Record collection of fees as described later in the chapter.



imagePRACTICE THE SKILL 6-3


Determine the patient’s responsibility in each of the following problems





imageSTRATEGY 6-4
Determining Deductibles and Coinsurance




1. Contact the insurance company either by phone or on a secure website to determine if the patient has coinsurance.


2. Find out whether there is a deductible and how much has been met.


    $150.00 outstanding balance


3. Verify the insurance company’s responsibility for the bill and the patient’s responsibility for the bill.


    80/20   80% Insurance/20% Patient


4. Determine the total amount of the bill.


    $425.00


5. First, subtract the outstanding deductible from the total bill to determine the billable amount.


    $425.00 – $150.00 = $275.00 billable amount


6. Next, determine what percentage of the billable amount is the patient’s responsibility.


    $275.00× 20% = $55.00 is the patient’s responsibility


7. Determine the total amount that will be collected from the patient.


    $150.00 + $55.00 = $ 205.00 will be collected from the patient


8. Record collection of fees as described later in this chapter.



imageSTRATEGY 6-5
Copayment and Coinsurance Combination


Some insurance plans require a copayment, which is applied toward the office visit and coinsurance for such services as radiology, laboratory, and durable medical equipment (crutches, cast, sling, etc.)



1. Check the insurance card to determine whether there is a copayment and the amount. Contact the insurance company either by phone or on a secure website to find out whether the patient has coinsurance for radiology, laboratory, or durable medical equipment (DME).


    Copayment: $35.00


    Coinsurance: 25%


2. Depending on the policy of the facility, collect the copayment before the patient sees the physician. If x-rays, laboratory work, or DME is a possibility, your facility might have you collect the total amount at the end of the visit.


3. At the end of the visit, determine whether the coinsurance would apply toward any procedures.


    Lab fee: $15.00; x-ray fee: $92.00 Total coinsurance amount: $107.00


4. Determine the patient’s coinsurance responsibility.


    $107.00× 25% = $26.75


5. Subtract the coinsurance amount from the total bill to determine the billable amount.


    Total bill $230.00– $26.75 = $203.25


6. Determine the total amount that will be collected from the patient.


    Copayment + Coinsurance = Total amount that will be collected from the patient $35.00 + $26.75 = $61.75


7. Record collection of fees as described later in this chapter.



imageMATH IN THE REAL WORLD 6-3


You may encounter patients who have two or more insurance policies. The first step is to determine which insurance is primary. The patient must satisfy the conditions of the primary insurance before the secondary insurer pays its portion of the bill. Many facilities apply only the conditions of the primary insurance (collect copayment, coinsurance, or deductible) and submit this information to the primary insurer. Once coordination of benefits has been established, they submit the remaining balance to the secondary insurer. The patient may still be responsible for some part of the bill, which may be collected later.



imagePRACTICE THE SKILL 6-4


Answer the following questions based on the information provided in the word problems




1. Mr. Smith has Medicare Part B insurance. Medicare has a $134.00 yearly deductible. Once the deductible has been met, the coinsurance coverage is 80/20. This is the first visit of the year for Mr. Smith. His total bill is $95.00.



a. What is the total amount of the yearly deductible? ________________


b. How much should you collect from Mr. Smith? __________________


c. Has Mr. Smith met his yearly deductible? If not, what is the remaining balance? ______________________________________


    Mr. Smith returns 2 weeks later to see the doctor for a follow-up visit. The total bill for this visit is $95.00. Mr. Smith has not seen any other physician since his last visit. Based on the answers to the previous questions, determine the answers to the following questions.


d. Mr. Smith has not met his yearly deductible. How much will you collect? ______________________________________


e. Will Mr. Smith have to pay coinsurance? If so, how much? ______________________________________


f. What is the total amount you will collect from Mr. Smith? ________________________


g. What is the total billable amount for this visit? ___________________


2. Shawn has scheduled an appointment for a complete physical. He has the following insurance:



















MetLife PPO Deductible: $0.00
Copayment: $25.00
Coinsurance: 10% for radiology, laboratory, and DME
Shawn’s physical includes: Office visit: $350.00
X-ray: $95.00
Blood test: $15.00


image


    He is to return in 10 days for the test results.




imageBUILDING CONFIDENCE WITH THE SKILL 6-1




1. Terri comes into the physician’s office for a follow-up visit regarding her asthma. Her insurance has a $25.00 copayment. The total charge for Terri’s visit today is $65.00. How much will you collect from Terri? _______________________________________________


2. Tom falls off his ladder at home. He is seen in the emergency room for a fractured tibia. He has 85/15 coinsurance. The total emergency room expenses are $1015.00. How much will you collect from Tom? ______________________________________


3. Mary Elizabeth has Medicare Part B. Medicare requires a yearly deductible of $124.00. After the deductible has been met, Medicare’s coinsurance is 80/20. Mary Elizabeth has paid $72.50 toward her deductible. Today’s bill is $135.00.



4. Martin’s HMO plan has a $20.00 copayment for office visits. The insurance covers 80% of all x-rays and laboratory procedures. Martin is seen for a dislocated shoulder. He is charged the following fees: office visit $115.00 and x-ray $92.00.



5. Mr. Stephen has both Medicare and MetLife insurance. Medicare has a $124.00 yearly deductible of which he has paid $98.80. After the deductible has been paid, Medicare will pay 80%. MetLife will not pay for any expenses until the Medicare deductible has been met; they will then pay up to 20% of any fees not covered by Medicare. Mr. Stephen is being seen by a cardiologist and incurs the following charges:













Office visit $95.00
EKG $45.00
Laboratory test $35.00


6. Your physical therapy visit cost $150.00. The insurance will cover 75% of the bill. How much will you need to pay? ________________________


7. Fred was hospitalized for 6 days. His insurance has a $150.00 deductible for days 1 to 3 and then will pay 80% of the usual and customary charges.



8. Your employer requires you to get a physical. This is not a benefit covered by your insurance carrier. The physical costs $65.00. According to your insurance card, you have a $30.00 copayment for all office visits. How much would you expect to pay for the physical? _____________________


9. Mary Jane’s primary insurer is a PPO, and her secondary insurer is MetLife. The insurance companies have established that the PPO will pay 70% of all medical expenses. Mary Jane has a $20.00 office visit copayment.



10. Your insurance will pay 60% of all DME. Because of an accident, you must buy a knee immobilizer for $55.00 and a set of crutches for $27.50.




Human Error 6-1


imageLook over your answers. Do they make sense? Most errors occur because of inaccurate math computations.



Objectives 5, 6


Cash drawer, day sheets, ledger cards, and petty cash


Have you ever held a job in which you were responsible for the exchange of money? If so, you are ahead of the game. Just like grocery stores, medical offices exchange money with each transaction. Accurate documentation of the amount of charges, cash received, and other transactions is necessary to balance your cash drawer at the end of the day. Even in the hospital setting, money is exchanged for services rendered. This may be done at registration, upon discharge, or by individuals making payments on their accounts.


In this section, you will learn how to balance the cash drawer and day sheets. In addition, we will discuss the use of petty cash and the recording of transactions on ledger cards. Depending on the size of your facility, these tasks will be accomplished either electronically or by hand.



Cash Drawer


Many facilities use a cash drawer worksheet similar to the one on p. 131. The purpose of this worksheet is to accurately document all currencytransactions involving the cash drawer throughout the day. It is essential to have documentation of the beginning balance of your cash drawer at the start of each day.


In addition to cash, transactions can occur in other formats. To establish the total daily revenue, you must take into account payments made by check, credit and debit cards, and in some cases gift cards or promotional discounts.



imageSTRATEGY 6-6
Balancing a Cash Drawer





Example:



At the start of business, your cash drawer has a total of $375.00. At 3:30 p.m., your shift is ending and you must balance the cash drawer. Based on the following information, complete the form below and determine the total net profit for your shift.


At the end of your shift, the following is in your cash drawer:


Denomination


Number of bills and coins


$50.00 bills 2


$20.00 bills 17


$10.00 bills 4


$5.00 bills 25


$1.00 bills 40


$1.00 coins 0


Half dollars 0


Quarters 13


Dimes 17


Nickels 5


Pennies 13


In addition, you have:










Credit cards: $135.00
Checks: $1030.62

Finally, the office manager authorized the following refunds to be paid from your drawer:



















Mrs. Snow $45.00
Mr. Mass $25.00
Ms. Bird $25.00
Mr. Hines $85.00
Now, use this information to complete the form.image


image


Does this activity remind you of anything? Balancing your checkbook, or making the monthly family budget? If so, you are right. The business end of health care is very similar to activities we perform in our daily lives.



imagePRACTICE THE SKILL 6-5


Use the following worksheet to answer the questions.


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Apr 17, 2017 | Posted by in NURSING | Comments Off on General Accounting

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