2015 saw a wave of mergers and acquisitions between healthcare payers and providers. CFOs of these organizations face challenges in managing multiple claims platforms and payment models during mergers. When selecting reimbursement technology, CFOs should be actively involved to choose solutions that can accurately predict reimbursement spending, reimburse claims, and analyze payment trends. The CFO should assess technology's financial impact rather than just operational benefits, and seek a long-term partner rather than just a vendor. Active involvement of CFOs in technology selection is critical to effectively manage cash flows during healthcare payment reforms.
Like the rest of the financial services industry, insurers are subject to increasingly complex and prescriptive regulations and standards. In the year ahead, insurers will need to focus on the new U.S.Department of Labor fiduciary standard, which is likely to have a significant effect on how insurance products are sold. Moreover, global developments, especially those related to the developing International Capital Standard, will require insurers to closely monitor – and ideally contribute to – official discussions about how globally active insurers should manage capital
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The consolidation framework
Variable interest entities (VIEs)
Voting interest entities (VOEs)
Equity method investments
Joint ventures (JVs)
Intercompany transactions
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As they reshape the financial services industry in light of the 2007-2008 financial crisis, global regulators have introduced a series of structural reform regulations to help build resilience. Global Structural Reform (GSR) is creating a new financial services ecosystem for institutions.
Accenture’s 2015 Global Structural Reform Study finds senior management working to thrive in what amounts to an all-new financial services landscape. They are investing effort and funds in their response to GSR, but their focus is on meeting regulatory demands. While that represents a good starting point, our study finds institutions might be missing out when it comes to meeting the strategic implications of reform and using reform as an opportunity to reposition the organization for sustainable growth
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On June 16, 2016, the FASB issued Accounting Standards Update 2016-13, Financial Instruments – Credit Losses (Topic 326) (the “ASU”). The ASU introduces a new model for recognizing credit losses on financial instruments based on an estimate of current expected credit losses. The new model will apply to: (1) loans, accounts receivable, trade receivables, and other financial assets measured at amortized cost, (2) loan commitments and certain other off-balance sheet credit exposures, (3) debt securities and other financial assets measured at fair value through other comprehensive income, and (4) beneficial interests in securitized financial assets.
Like the rest of the financial services industry, insurers are subject to increasingly complex and prescriptive regulations and standards. In the year ahead, insurers will need to focus on the new U.S.Department of Labor fiduciary standard, which is likely to have a significant effect on how insurance products are sold. Moreover, global developments, especially those related to the developing International Capital Standard, will require insurers to closely monitor – and ideally contribute to – official discussions about how globally active insurers should manage capital
Automation and Analytics: Two Levers to Revitalize Retail Debt RecoveryCognizant
As retail banks strive to revive, they can deploy predictive analytics and other process automation tools to add efficiency and effectiveness to the debt recovery process, thereby increasing recovery rates, reducing costs and enhancing debt salability.
The inaugural edition of our accounting and financial reporting guide, Consolidation and equity method of accounting, addresses the accounting for consolidation matters under U.S. GAAP reflecting the latest standards. The guide discusses the consolidation framework and equity method of accounting, providing specific guidance and examples related to various topics such as:
The consolidation framework
Variable interest entities (VIEs)
Voting interest entities (VOEs)
Equity method investments
Joint ventures (JVs)
Intercompany transactions
Accenture 2015 Global Structural Reform Study: Unlocking the Potential of Glo...Accenture Insurance
As they reshape the financial services industry in light of the 2007-2008 financial crisis, global regulators have introduced a series of structural reform regulations to help build resilience. Global Structural Reform (GSR) is creating a new financial services ecosystem for institutions.
Accenture’s 2015 Global Structural Reform Study finds senior management working to thrive in what amounts to an all-new financial services landscape. They are investing effort and funds in their response to GSR, but their focus is on meeting regulatory demands. While that represents a good starting point, our study finds institutions might be missing out when it comes to meeting the strategic implications of reform and using reform as an opportunity to reposition the organization for sustainable growth
Taking the road to advanced approaches and heightened standards in risk manag...Grant Thornton LLP
Develop and execute a roadmap to meet rising regulatory and stakeholder expectations. Banks of all sizes are required to build sophisticated analytical risk management capabilities in compliance with Dodd-Frank and other legislation making a priority of optimizing the deployment of capital and infusing objectivity into its allocation.
In depth: New financial instruments impairment modelPwC
On June 16, 2016, the FASB issued Accounting Standards Update 2016-13, Financial Instruments – Credit Losses (Topic 326) (the “ASU”). The ASU introduces a new model for recognizing credit losses on financial instruments based on an estimate of current expected credit losses. The new model will apply to: (1) loans, accounts receivable, trade receivables, and other financial assets measured at amortized cost, (2) loan commitments and certain other off-balance sheet credit exposures, (3) debt securities and other financial assets measured at fair value through other comprehensive income, and (4) beneficial interests in securitized financial assets.
Insurers are upgrading their technology to support more complex
products, lower operating costs, and get closer to their customers.
But they can do more harm than good when they make changes
that alienate their independent agents. We’ve identified five steps
that can help insurers engage agents early and create a
transition plan that meets agents’ needs—converting these
important stakeholders into enthusiastic advocates.
Compliance implications of crossing the $10 billion asset thresholdGrant Thornton LLP
Since the passage of the Dodd-Frank Act, small regional banks have been forced to rethink their growth strategies as they inch closer to the $10 billion assets threshold. Here’s guidance on navigating the new regulatory field.
Jazzit Score is a financial reporting tool that automatically creates a comprehensive 32 page financial report analyzing the health of your clients' business. Drawing on the trial balance info already entered in CaseWare Working Papers, it includes ratio analysis, trend analysis, comparative industry and custom defined benchmarks with insightful commentary.
Founded in 2000, Jazzit is Canada's leading supplier of premium CaseWare templates for accountants. Our products include Jazzit Fundamentals, Jazzit Checklists and Jazzit Score, creating a powerful suite of automated solutions for SME practioners. Jazzit Fundamentals, the flagship product, is an integrated suite of over 100 templates and letters that assist public accountants in completing year-end engagements with their corporate clients. With offices in Calgary, Alberta, and Kelowna, B.C., Jazzit's software serves over 5,000 accounting professionals across Canada.
Provides an overview of the current revenue cycle management and its processes and offers a point-of-view on today’s RCM trends and areas of transformation.
A change to the FHA claim filing rule is coming. Learn how you can prepare for it with this joint point of view from PwC's Consumer Finance Group and Financial Services Regulatory Practice.
A robust risk assessment process is central to maintaining a strong Anti-Money Laundering (AML) compliance program. In this new Accenture presentation we explore how financial services firms can set-up an effective process. Visit our fraud and financial crime blog post for more on AML risk assessment program: http://bit.ly/2aPlQQ7
What every tech company needs to know to prepare for the new revenue accounting standards. The new revenue recognition standard ASC 606 represents the most widespread change to revenue recognition rules in recent years. The transition from a rules-based approach for rev rec to a principle-based approach has significant implications for the entire organization. Software and other high tech companies must ready themselves for numerous impacts across systems, processes and policies as they work toward compliance.
Learn how to identify and track indicators of your company's financial health. Dave Justus, Kareo's Chief Financial Officer, and Ted Stack, founder of Falcon Capital Partners, will discuss the key performance benchmarks and insights you should pay attention to when working to optimize your billing company business.
Compliance: The Digital Imperative in Financial ServicesAppian
If you think financial services compliance is already too costly, brace yourself. It’s going to get worse…much worse. Regulatory compliance, the demands of KYC (Know Your Customer) and EDD (Enhanced Due Diligence) all continue to be top of mind for every financial service executive, and for good reason.
Learn more about how to meet these challenges while advancing your digital transformation efforts in this Executive Perspective: http://ap.pn/2ekWDnO
Insurers are upgrading their technology to support more complex
products, lower operating costs, and get closer to their customers.
But they can do more harm than good when they make changes
that alienate their independent agents. We’ve identified five steps
that can help insurers engage agents early and create a
transition plan that meets agents’ needs—converting these
important stakeholders into enthusiastic advocates.
Compliance implications of crossing the $10 billion asset thresholdGrant Thornton LLP
Since the passage of the Dodd-Frank Act, small regional banks have been forced to rethink their growth strategies as they inch closer to the $10 billion assets threshold. Here’s guidance on navigating the new regulatory field.
Jazzit Score is a financial reporting tool that automatically creates a comprehensive 32 page financial report analyzing the health of your clients' business. Drawing on the trial balance info already entered in CaseWare Working Papers, it includes ratio analysis, trend analysis, comparative industry and custom defined benchmarks with insightful commentary.
Founded in 2000, Jazzit is Canada's leading supplier of premium CaseWare templates for accountants. Our products include Jazzit Fundamentals, Jazzit Checklists and Jazzit Score, creating a powerful suite of automated solutions for SME practioners. Jazzit Fundamentals, the flagship product, is an integrated suite of over 100 templates and letters that assist public accountants in completing year-end engagements with their corporate clients. With offices in Calgary, Alberta, and Kelowna, B.C., Jazzit's software serves over 5,000 accounting professionals across Canada.
Provides an overview of the current revenue cycle management and its processes and offers a point-of-view on today’s RCM trends and areas of transformation.
A change to the FHA claim filing rule is coming. Learn how you can prepare for it with this joint point of view from PwC's Consumer Finance Group and Financial Services Regulatory Practice.
A robust risk assessment process is central to maintaining a strong Anti-Money Laundering (AML) compliance program. In this new Accenture presentation we explore how financial services firms can set-up an effective process. Visit our fraud and financial crime blog post for more on AML risk assessment program: http://bit.ly/2aPlQQ7
What every tech company needs to know to prepare for the new revenue accounting standards. The new revenue recognition standard ASC 606 represents the most widespread change to revenue recognition rules in recent years. The transition from a rules-based approach for rev rec to a principle-based approach has significant implications for the entire organization. Software and other high tech companies must ready themselves for numerous impacts across systems, processes and policies as they work toward compliance.
Learn how to identify and track indicators of your company's financial health. Dave Justus, Kareo's Chief Financial Officer, and Ted Stack, founder of Falcon Capital Partners, will discuss the key performance benchmarks and insights you should pay attention to when working to optimize your billing company business.
Compliance: The Digital Imperative in Financial ServicesAppian
If you think financial services compliance is already too costly, brace yourself. It’s going to get worse…much worse. Regulatory compliance, the demands of KYC (Know Your Customer) and EDD (Enhanced Due Diligence) all continue to be top of mind for every financial service executive, and for good reason.
Learn more about how to meet these challenges while advancing your digital transformation efforts in this Executive Perspective: http://ap.pn/2ekWDnO
Partnering With An RCM Management Company.docxtevixMD
Efficiency and accuracy in healthcare revenue cycle management are achievable with a specialized company. Maximize revenue and streamline processes by partnering with a trusted healthcare revenue cycle management partner.
Best Practices For Implementing Revenue Cycle Management System In Healthcare...Matthew Clark
Implementing a revenue cycle management (RCM) system can significantly improve the efficiency and effectiveness of your healthcare organization's financial operations. However, to ensure a successful implementation, it is crucial to follow best practices that optimize the utilization of these systems. In this article, we will explore the key steps and strategies involved in implementing RCM systems effectively.
Low-interest rates mean that P&C leadership teams are facing increasing pressure to generate heftier margins from their underwriting operations. More at http://gt-us.co/1japuAu
Medical Billing Software: 5 Ways to Improve Your Revenue Cycle In 2024OmniMD Healthcare
An optimized revenue cycle management or RCM is the key to success for any successful medical practice. Having said that, it is advisable to update your practice management or medical billing software to help solve problems and improve revenue cycle management. For more information kindly visit our website.
ScenarioBranson Ltd. is a public listed tour company that is bas.docxjeffsrosalyn
Scenario
Branson Ltd. is a public listed tour company that is based in Melbourne. One of its main operating businesses is to provide tourists with hot-air balloon flights over the city. As their current balloons are due to be retired, they must decide whether to replace them with a large or small model. New balloons have an expected life of 8 years, after which salvage values are $70,000 for the large balloons and $45,000 for the small balloons. Market research has estimated that there is a 60% probability that demand will be high throughout the useful life of the balloons, and a 40% probability that demand will be low throughout the useful life of the balloons.
The large model is expected to cost $900,000, with an extra installation and shipping cost of $80,000. The small model is expected to cost $650,000, with an additional installation and shipping cost of $45,000. The company's accounting policy is to depreciate using the reducing balance approach of 20% per annum.1 There is also an initial increase in net working capital of $70,000 for the large model, and $40,000 for the small model. The net working capital is recoverable at the end of their useful life.
In the event of high demand, the company expects a yearly operating revenue of $800,000 for the large model, and a yearly operating revenue of $330,000 for the small model. If the demand is low, yearly operating revenue is forecasted to be $700,000 for the large model and $280,000 for the small model. Annual variable and fixed costs associated with operating these balloons are expected to be $400,000 for the large model and $150,000 for the small model. In addition, if the large model is preferred over the small model, the company needs to rent an additional warehouse to store the large balloons. A new warehouse’s rental cost is expected to be $150,000 per year. At the end of year four, there is also an option to cease operation and thus sell the large balloons for $500,000 and the small balloons for $400,000 if the business is not profitable.
The company requires you to calculate an appropriate discount rate using the company’s weighted average cost of capital. The company’s capital structure has remained fairly stable, with a debt-to-equity ratio of 1.2. The company has no plan to adjust its capital structure in the future. Given that the company is listed on the stock exchange, you are able to obtain the historical returns over the last 20 years for the company, the market portfolio and the risk-free asset as tabulated in Table 1. The company debentures have a face value of $1000 and a coupon rate of 10%. They mature in 10 years' time. Similar debentures are currently yielding 12%. The company tax rate is 30%.
1 As discussed in Week 5, ignore residual value in the calculation of yearly depreciation.
Table 1
Year
Branson
Market
Risk-free
1999
23.13%
13.81%
6.01%
2000
19.55%
12.77%
6.31%
2001
10.08%
7.65%
5.62%
2002
-19.35%
-10.64%
5.84%
2003
25.01%
14.61%
5.37%
2004
29.21%
29.
Making Analytics Actionable for Financial Institutions (Part I of III)Cognizant
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The pivot to digital is fraught with numerous obstacles but with proper planning and execution, legacy carriers can update their core systems and keep pace with the competition, while proactively addressing customer needs.
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Running a successful healthcare organization requires seamless management of the revenue cycle. From patient registration and billing to claims submission and payment processing, the revenue cycle is a complex and time-consuming process. In today's competitive landscape, healthcare providers are turning to outsourcing revenue cycle management (RCM) to unlock efficiencies and boost profits.
Outsourcing RCM offers numerous benefits. Firstly, it allows healthcare organizations to focus on their core competencies and patient care, while leaving the intricate details of billing and payment processing to experts. This not only improves operational efficiency but also enhances patient satisfaction.
1. 2015 saw a wave of unprecedented Mergers &
Acquisitions (M&A) between large and community payers
and providers. The reasons vary, but operationally
and financially these organizations require system
interoperability and technology consolidation to reduce
redundancy and gain economies of scale.
Also, as health insurers and healthcare organizations
transform into value-based reimbursement environments
and respond to other Affordable Care Act (ACA)
mandates, brand new technologies are required to
predict and maximize cash flows for reinvestment and
protection against unforeseen challenges.
The CFO Challenge
During M&As, the CFO’s office could be faced with the
following challenges:
TheCF0
Solution
Simplify
the business
of healthcare.
Involving Healthcare Finance in Choosing
Reimbursement Technology
2. 1Payment of claims and rework from multiple claims
administrative platforms
2Financial performance for multiple distinct government
and commercial products
3Multiple medical economics and finance departments
attempting to merge and scale
Many organizations
transforming into value-
based reimbursement
environments could be
faced with the following:
1. First-time need to manage claims reimbursement
(Note: Upwards of 120 providers operate their own
health plans today, according to Valence Health,
and experts forecast that figure to increase.)1
2. Claims administrative platform unable to handle new
reimbursement models
3. Insufficient analytics to assess and operationalize
value-based payment models
Without the proper reimbursement analytics, Finance
departments run the risk of unexpectedly tapping into
their cash flow reserves to pay higher than anticipated
reimbursement amounts. In addition, the CFO has to be
concerned about overpayments and the related stress
on cash, since a recent American Medical Association
(AMA) study estimates that 7.1% of claims have a
payment error.2
The industry should examine best practices for
managing reimbursement between payers and providers,
or healthcare organizations, especially since the ACA
is mandating CMS to require new reimbursement
methodologies, like the Comprehensive Care for Joint
Replacement (CCJR) model3
, which requires payers to
move away from insufficient and antiquated technology
from vendors and internal departments.
The net result is a challenge for CFOs to predict and
successfully manage the organization’s cash flow.
The CFO Solution: Involving Healthcare Finance in Choosing Reimbursement Technology
2
Simplify
the business
of healthcare.
3. The CFO must be a
change agent for leverag-
ing new technologies
for reimbursement
management.
Let’s examine three ways the CFO’s office should
become engaged.
Leverage The
Delivery Model
Software as a service (SaaS) technology, a delivery
model centrally hosted in a secure data center and
managed completely by the service provider, is licensed
on a subscription basis. It enables a single accessible
and consistent claims reimbursement pipe for one or
more of an organization’s information systems.
Selecting services with different types of analytic
reporting and modeling features enables CFO offices
to better track reimbursement activity and forecast
the impact of government regulatory changes for
the coming year.
Simplify
the business
of healthcare.
The CFO Solution: Involving Healthcare Finance in Choosing Reimbursement Technology
3
4. Make F&A Reimbusement
Stakeholders
Often, software and its value to the business are
assessed by Operations and IT stakeholders. It is true
that SaaS solutions offer many operational benefits
like a lower total cost of ownership (TCO), or the direct
and indirect costs of owning software, and efficiencies
through automation of business processes and reduction
in human errors. However, these benefits only tell half
the story, and often result in the wrong technology
partners for the organization.
This is where the CFO needs to become active in the
organization’s technology plans. The CFO should
consider an assessment of the technology’s impact
on medical costs and cash flow. Many reimbursement
software solutions can be delivered as SaaS, but that
doesn’t mean all can keep up with the fee schedule
and payment policy changes made available daily by
CMS. It also doesn’t mean that the reimbursement
software leverages the correct technology to provide
the necessary reporting and analysis on reimbursement.
Quite simply, the CFO
should weigh in on which
reimbursement solutions
have the platform and
process to:
1Predict reimbursement spend for each line of business
2Accurately reimburse claims
3Analyze reimbursement trends throughout the year
The return on investment (ROI) for each software
solution will then change, and often a different vendor
solution will be chosen for the organization.
Find a Partner,
Not a Vendor
It is natural to look to what other organizations are
doing to alleviate financial concerns during this time of
payment reform. Often, references, assessing trends
and your budget are reasonable ways to choose vendor
solutions. The problem is, looking for vendors based on
Simplify
the business
of healthcare.
The CFO Solution: Involving Healthcare Finance in Choosing Reimbursement Technology
4
5. these variables tends to result in a more generic
solution that does not take the unique aspects of your
business into account.
Instead, examine a partner willing to live by the following:
1. Mutually take on risk and gain based on success
2. Commit to establishing key performance indicators
for success
3. Introduce their own strategic partners and innovative
ideas that contribute to your strategy, even if it is
outside of their core competency
4. Commit to product enhancements based on your
business need
It’s not about software off the shelf; it’s about
building a long-term relationship.
Should you find yourself
in a chronically leaking
boat, energy devoted to
changing vessels is likely
to be more
productive
than energy
devoted to
patching
leaks.4
Conclusion
Cash flow management in the face of ACA mandates
and claims payment reform remains a challenge. CFOs
must prepare for changes in their cash management
strategy, including by becoming major stakeholders in
claims reimbursement management. It is critical that
they assess the right technology, shift ROI assessment
to be financial and operational (instead of just
operational) and adopt business partners who do
more than vend software. Only then can we say, with
confidence, we are on the road to removing this type of
daily cash flow distress.
Jared Lorinsky serves as the Senior Vice President of Business
Development for Burgess. On a daily basis he engages with clients
on a variety of next generation solutions for the healthcare industry,
including new payment models, government informatics and
transparency systems.
References:
1. “CEOs and CFOs: 10 things demanding your
attention this year”:
http://www.beckershospitalreview.com/finance/
ceos-and-cfos-10-things-demanding-your-attention-
this-year.html
2. “AMA: Insurers process claims faster, more accurately”:
http://www.healthcarepayernews.com/content/ama-
insurers-process-claims-faster-more-accurately#.
VqZQmfkrK71
3. “Comprehensive Care for Joint Replacement Model”:
https://innovation.cms.gov/initiatives/cjr
4. Warren Buffett
The CFO Solution: Involving Healthcare Finance in Choosing Reimbursement Technology
5
If you would like more information on how we
simplfy the business of healthcare while increasing payment
integrity, please contact us:
info@burgessgroup.com
800.637.2004
burgessgroup.com