ABSTRACT
Three Doors of a Hospital’s Revenue Cycle .................................................................................. 131 Front Door ................................................................................................................................. 131 Middle Door .............................................................................................................................. 131 Back Door ................................................................................................................................. 131
Revenue Accounting Recognition for Hospitals ............................................................................ 132 For-Pro›t Hospitals ................................................................................................................... 132 Not-for-Pro›t Hospitals ............................................................................................................ 132 Governmental Hospitals ............................................................................................................ 132 All Hospital’s Revenue Sources ................................................................................................ 133
Revenue Recognition for Medical Practices .................................................................................. 133 Revenue Cycle Management Issues ............................................................................................... 133
Medicare Revenue Augmentation ............................................................................................. 133 Avoiding the Medicare Revenue Flow Conundrum ....................................................................... 134
Optimum Organizational Structure ........................................................................................... 134 Financial Benchmarking ........................................................................................................... 134 Revenue Cycle Technology Adoption ....................................................................................... 135 Revenue Cycle Performance Evaluation and Review ............................................................... 136 Health Claims Denial Management .......................................................................................... 138 Unpaid Bills and Debt Levels ................................................................................................... 139 Health Care Reform and Political Fiat ...................................................................................... 139 Problem of IBNR Health Care Claims ...................................................................................... 139
IBNR Problems for Health Care Organizations ............................................................................. 140 IBNR Claims-Management Volume and Revenue Consequences ................................................. 141
Inadequate Cash Flows.............................................................................................................. 141 Reserve Shortfalls and Fiscal Instability ................................................................................... 141 Inaccurate Pricing...................................................................................................................... 141 Administrative Cost Increases ................................................................................................... 142 Regulatory Sanctions ................................................................................................................ 142 Potential Solutions to the IBNR Challenge ............................................................................... 142 IBNR Calculations and Methodology ....................................................................................... 142 Internal Controls and Fraud Reduction ..................................................................................... 143
The foundation of solid ›nancial health for any medical entity lies in the effective management of the organization’s incurred but not reported (IBNR) health care claims and revenue cycles (Figure 5.1). In practical terms, effective management means understanding the process and targeting the core of the revenue cycle in order to ›ne-tune and support ›scal health and business growth.
