Have you examined the health of your business operations lately? The need for good internal controls over billing and cash collections in a physician practice setting should not be understated. The reality is, good internal controls in these areas will directly translate into improved bottom lines in the financial statements of your physician practice.
It sounds simple, right? Charge for services, collect co-pays from patients, bill insurance companies, and deposit collections into the bank. The fact is, it is really not so simple. There are many facets to medical billing, collections and banking that need to be addressed in a physician practice setting to ensure all services have been appropriately billed for, collected, and monies deposited into your bank account.
Listed below are a number of analyses and areas that should be examined periodically to ensure there are proper internal controls in place:
- Coding and billing analysis
- Patient charge entry protocols
- Billing protocols
- Delinquent account strategies
- Evaluation of accounts receivable aging trends
- Payment posting protocols
- Disposition of credit balances
- Bank deposit protocols
- Lock box utilization
- Bank account reconciliation practices
Practices often outsource some or all of their billing and collection functions. However, outsourcing does not obviate the need to understand what controls are in place to ensure all your services are being billed and collected, and all monies are being deposited into your bank account. “Right to audit clauses” should be included in your vendor contracts so that you have the right to assess the internal controls over the billing and collection of your practice revenues. In addition to examining internal controls, benchmarking your practices’ financial operation data which similar practices, and making adjustments where necessary, is critical to maintaining an efficiently run practice.
In the end, knowledge, no matter what your profession, is power. Keeping your finger on the pulse of your financial operations is important to keeping your practice healthy financially and operationally.
By: Karen Graver-Toohey, CPA, CIA, CHC, CISA
The Graver Toohey Group
Flexible Sourcing Solutions for Internal Audit and Compliance