Chapter 5 Financing RiskFinancing Risk• Risk ex.docx

Chapter 5:
Financing Risk
Financing Risk
• Risk exists for a healthcare organization is
there is an event or action that can have
impact on its financial or operational
performance.
• Healthcare organizations work to balance this
by covering the financial risk or transferring it.
– Financing risk means to ensure that adequate
funds are available to cover costs related to
unexpected events
– Transferring risk is accomplished by purchasing
insurance.
To Finance or Transfer Risk
• Management of risk is paramount to the
healthcare organization and should be tailored
to the specific needs and structure.
• The healthcare organization must determine
what risk can and should be internally financed

versus what risk should be transferred
• The goal of risk management is to add value to
the organization by appropriately and wisely
managing risk
Costs of Adverse Risk
• Defense Costs
• Settlement or Judgment
• Loss Reduction
• Employee Morale
• Opportunity Costs
Identifying Risk
• Risk managers work to identify areas of risk
exposures in order to minimize the likelihood of
adverse events as well as how to cover costs if
they should occur by monitoring:
– Adverse incident reports
– Patient safety data
– Quality indicators
– Insurance company claims
– Employee satisfaction/complaints
– Patient satisfaction/complaints
– Accreditation survey results
– Financial reports

– Professional literature
Financing the Risk
• The fiscal well-being of the organization is the
determinant of how best to managing the
financing of risk.
• Internal financing is not prudent if the
organization does not have available funding
to cover risk.
• External financing of risk is less costly yet still
is a financial expense to the organization and
must be weighed as to how much coverage is
needed.
Analyzing How to Finance Risk
• Healthcare organizations evaluate cost-
effectiveness of available risk financing
alternatives through:
– Quantitative analysis measures an event’s risk
variables
– Qualitative analysis measures the event’s impact
on the organization
Insurance Options

• Traditional Insurance Companies
– Fairly common
– Standard coverage
– Cost is relative predictable
– Events not covered by insurance remain the
responsibility of the healthcare organization
• Self-Insurance or Self-Funding
– Requires a significant amount of capital and
financial reserves
Choosing an Insurance Plan
• Make sure the plan meets your needs in
terms of:
– Portability
– Flexibility
– Services provided
• Choose a company based on:
– Experience -- Staffing

– Technology -- Procedures
– Costs -- Protection
Total Cost of Risk
• In order to balance the need for risk financing
with the cost, healthcare organizations need
to estimate the total cost of risk by analyzing:
– Cost of risk transfer
– Cost of risk retention
– Administrative costs associated with managing
both the exposure to risk and claims if adverse
events occur
Areas of Exposure
• Automobile Liability
• Aircraft Liability
• Business Interruption and Income
• Crime
• Cyber Liability
• Directors/Officers Liability

• Emergency Evacuation
• Employment (injury/illness, benefits,
practices)
Areas of Exposure
• Fiduciary Liability
• General Liability
• Licensing Board Discipline
• Media
• Medical Equipment Breakdown
• Patient Confidentiality
• Professional Liability
• Property
Insuring Agreements
• Insurance company will pay sums that the
insured becomes legally obligated to pay.
• Occurrence Policies cover all injuries that
occurred during the policy period, regardless

of when they were reported.
• Claims Made policies cover injuries reported
during the policy period that occurred after
the policy retroactive date.
Summary
• Financing of Risk is a major component of
Management.
• Determining the method of financing risk
as well as selecting the appropriate liability
insurance company and plan is essential
Chapter 4:
Communications to Reduce Risk
Communication is a risk?
• Lack of communication between
physicians and their patients can be a
critical factor leading to malpractice

lawsuits
– Lack of communication can lead to patient
dissatisfaction
– Dissatisfied patients are more likely to pursue
malpractice litigation
Barriers to Communication
• Lack of or poor listening skills
• Physical barriers
• Personal distractions
Communication depends on…
• Personality
• Age
• Environmental factors
– Income
– Education
– Social situation
• Intelligence

– Fluid intelligence
– Crystallized intelligence
Communication and Risk Management
• Understanding patients within their societal
environment and culture is important to
managing risk
– This will assist with communicating to the patient
at their level of understanding
– Misunderstandings due to cultural or societal
differences may be avoided with attention to
proper communication
Why do Patients Sue?
Patients tend to sue when the Provider has
caused them harm but also when they feel the
Provider has:
• Deserted them
• Didn’t listen or devalued their view
• Didn’t give them necessary information or
didn’t explain it
• Didn’t understand or acknowledge their
perspective

Why is this important?
• Patients do not have the skills to
accurately identify ‘quality’ healthcare,
therefore they tend to view how they are
treated (customer service) as an indicator
of quality of care
Poor customer service = Poor quality
What are Patients looking
for with litigation?
• Altruism
• Rationalization
• Recompense
• Accountability
Do unto others…
• Respect and civility can play a major role in
risk management. Providers need to civil and

respectful of their patients’ concerns by
offering:
– Empathy
– Compassion
– Care
Cultural Awareness
• Providers need to have an understanding
(sensitivity) of their patients’ backgrounds as
cultural differences can lead to misunderstandings
or non-compliance if not properly attended to.
– Cultural destructiveness
– Cultural incapacity
– Cultural blindness
Patient Empowerment
• Studies show that much patient dissatisfaction
comes from deficient communication
• Empowering the patient to be an active
participant in the provision of healthcare may
lead to improved communication
• Programs are available to assist the patient in

learning their role in provision of health
– TJC: Speak Up program
– AHA: Patient’s Bill of Rights
– Facility specific: Complaint/Grievance Process
Health Literacy
• Degree to which individuals have the capacity
to obtain, process and understand basic
health information.
– Approximately 1/3 of adults have basic or below
basic skills for dealing with health material
• Health facilities must follow federal regulation
to provide language services for those
patients with limited English proficiency (LEP)
Informed Consent
• Informed Consent implies that the patient
understands the service to be rendered,
the risks involved and potential outcomes.
• Valid consent is given when the patient:
– Has been informed

– Is competent
– Has not been coerced
Why do risk managers care
about informed consent?
• Courts have decided that patients have a
right to control their own body and decide
about medical treatment
• An informed and educated patient is more
likely to have realistic expectations about
his condition/treatment
Patient Education
• Poor communication can increase patient
non-compliance which can lead to harm
• Adherence to physician instructions can be
improved with communication:
– Agree upon diagnosis through discussion
– Simplify regimen
– Written instructions in understandable language

– Motivate the patient to adhere to instructions
– Discuss potential risks, side effects and costs
Barriers to Patient Education
• Lack of time
• Health literacy of the patient
• Fear of materials being used against the
provider
• Skepticism of patient’s ability to follow
instructions
• Lack of adequate reimbursement
• Effects on the provider’s personal life
Difference of Opinion
• Due to their level of health literacy, patients
and providers may see potential side effects or
adverse reactions quite differently
– Provider sees an anticipated outcome
– Patient sees an error
• Physicians also have a different take on errors

and tend to define them more narrowly
Disclosure
• Disclosure can show that the provider is not
hiding anything and may serve to
– Lessen the tendency to litigate
– Increase the tendency to settle
• Patients desire full disclosure of harmful errors
– An acknowledgement that the error occurred
– What happened
– Why it happened
– Implication to patient’s health
– How it will be avoided in future
– An apology
Apologize
• If something has gone wrong, the patient has the
right to an apology.
– Unfortunately, many providers are cautious to do so
due to concern an apology would be an admission of
guilt or wrong doing

– Some states have enacted Apology laws which make
physician apology inadmissible in court
• Disclosure, explanation and apology should come
within a reasonable timeframe of the incident.
Key Issue – Patient Satisfaction
• Patients who are satisfied are less likely to
sue
• It has been found that anger, not injury is
the trigger for most malpractice claims.
• Studies suggest that empathy and good
interpersonal skills may decrease the
likelihood of malpractice claims
Consumer Information
• With advent of the Internet and Social Media,
healthcare consumers have access to multitudes
of information not only on healthcare topics, but
on their healthcare providers as well
• CMS website offers comparison of healthcare
facilities based on reported quality indicators

• Accreditation also gives consumers information
regarding their health facility providers
Issues with Web-based Information
• Consumer self-rating information is also
available on the web though it is not vetted
• Social Media opens issues with confidentiality
• Courts have yet to set precedents regarding
use of Social Media
Summary
• Appropriate and Positive Communication
is a valuable Risk Management Tool as it
can have an impact on patient satisfaction
– Dissatisfied patients are more likely to sue
even if there is no injury
– Satisfied patients with an adverse event are
less likely to sue

CHAPTER
© 2012 The McGraw-Hill Companies, Inc. All rights
reserved.McGraw-Hill
4
Scheduling
© 2012 The McGraw-Hill Companies, Inc. All rights reserved.
Learning Outcomes
When you finish this chapter, you will be able to:
4.1 Describe the two methods used to schedule
appointments.
4.2 Explain the method used to classify patients as new
or established.
4.3 List the three categories of information new patients
provide during telephone preregistration.
4.4 Identify the information that needs to be verified for
established patients when making an appointment.
4.5 Describe covered and noncovered services under
medical insurance policies.

4-2
Learning Outcomes (Continued)
4.6 List the three main points to verify with the payer
regarding a patient’s benefits prior to a visit.
4.7 Explain when a preauthorization number or referral
document is required for a patient’s encounter.
4.8 List the four main areas of Medisoft Network
Professional’s Office Hours window.
4.9 Demonstrate how to enter an appointment.
4.10 Demonstrate how to book follow-up and repeating
appointments.
4.11 Demonstrate how to reschedule an appointment.
4-3

4.12 Demonstrate how to create a recall list.
4.13 Demonstrate how to enter provider breaks in the
schedule.
4.14 Demonstrate how to print a provider’s schedule.
4-4
Key Terms
• benefits
• capitation
• coinsurance
• copayment (copay)
• covered services
• deductible
• established patient (EP)
• fee-for-service

• health plan
• indemnity plan
• managed care
4-5
• medical insurance
• new patient (NP)
• noncovered services
• nonparticipating
(nonPAR) provider
• Office Hours break
• Office Hours calendar
• Office Hours patient
information
• out-of-network
• out-of-pocket
Key Terms (Continued)

• participating (PAR)
provider
• patient portal
• payer
• policyholder
• preauthorization
• preexisting condition
• premium
• preregistration
• preventive medical
services
4-6
• provider
• provider’s daily schedule
• provider selection box
• referral
• referral number
• schedule of benefits

4.1 Scheduling Methods 4-7
• Patient appointments may be scheduled via
telephone or online.
• Patient portal—secure website that enables
communication between patients and health
care providers for tasks such as scheduling,
completing registration forms, and making
payments
4.1 Scheduling Methods (Continued) 4-8
• Scheduling systems include these methods:
– Open hours
– Stream scheduling
– Double-booking
– Wave scheduling

4.2 New Versus Established Patients 4-9
• New patient (NP)—patient who has not
received professional services from a provider
(or another provider with the same specialty in
the practice) within the past three years
• Established patient (EP)—patient who has
received professional services from a provider
(or another provider with the same specialty in
the practice) within the past three years
• Preregistration—process of gathering basic
contact, insurance, and reason for visit
information before a new patient comes into the
office for an encounter
4.3 Preregistration for New Patients 4-10

• During preregistration, new patients usually
provide three types of information:
– Demographic information
– Basic insurance information
– Reason for the visit (also known as the chief
complaint)
4.3 Preregistration for New Patients
(Continued)
4-11
• Participating (PAR) provider—provider who
agrees to provide medical services to a payer’s
policyholders according to the terms of the
plan’s contract
• Nonparticipating (nonPAR) provider—
provider who chooses not to join a particular
government or other health plan

4.4 Appointments for Established
Patients
4-12
• Medical offices verify established patients’
information prior to an appointment; such
information includes:
– changes to a patient’s address,
– changes to a patient’s health plan or employment.
• The reason for the visit should also be
established to schedule the correct amount of
time for the encounter.
• Patients’ account balances are checked as well.
4.5 Insurance Basics 4-13
• Medical insurance—financial plan that covers
the cost of hospital and medical care

• Policyholder—person who buys an insurance
plan; the insured, subscriber, or guarantor
• Health plan—individual or group plan that either
provides or pays for the cost of medical care
• Payer—health plan or program
• Premium—money the insured pays to a health
plan for a health care policy; usually paid
monthly
4.5 Insurance Basics (Continued) 4-14
• Benefits—amount of money a health plan pays
for services covered in an insurance policy
• Schedule of benefits—list of the medical
expenses that a health plan covers
• Provider—person or entity that supplies medical
or health services and bills for or is paid for the
services in the normal course of business

• Covered services—medical procedures and
treatments that are included as benefits under
an insured’s health plan
– These may include primary care, emergency care,
medical specialists’ services, and surgery.
• Preventive medical services—care that is
provided to keep patients healthy or to prevent
illness, such as routine checkups and screening
tests
• Noncovered services—medical procedures
that are not included in a plan’s benefits; these
things may include:

– Dental services, eye care, treatment for employment-
related injuries, cosmetic procedures, infertility
services, or experimental procedures
– Specific items such as vocational rehabilitation or
surgical treatment of obesity
– Prescription drug benefits
– Treatment for preexisting conditions—illnesses or
disorders of a beneficiary that existed before the
effective date of insurance coverage
• Indemnity plan—type of medical insurance that
reimburses a policyholder for medical services
under the terms of its schedule of benefits
• Deductible—amount that an insured person
must pay, usually on an annual basis, for health
care services before a health plan’s payment

begins
• Coinsurance—portion of charges that an
insured person must pay for health care services
after payment of the deductible amount; usually
stated as a percentage
• Out-of-pocket—expenses the insured must pay
before benefits begin
• Fee-for-service—health plan that repays the
policyholder for covered medical expenses
• Capitation—prepayment covering provider’s
services for a plan member for a specified
period

• Managed care—system that combines the
financing and delivery of appropriate, cost-
effective health care services to its members;
basic types include:
– Health maintenance organizations (HMOs)
– Point-of-service (POS) plans
– Preferred provider organizations (PPOs)
– Consumer-driven health plans (CDHPs)
• Out-of-network—provider that does not have a
participation agreement with a plan
• Preauthorization—prior authorization from a
payer for services to be provided
• Copayment (copay)—amount that a health plan
requires a beneficiary to pay at the time of
service for each health care encounter

• Referral—transfer of patient care from one
physician to another
4.6 Eligibility and Benefits Verification 4-21
• Except in a medical emergency, the following
information should be obtained/verified from a
patient’s health plan before an encounter:
– Patient’s general eligibility for benefits
– Amount of the copayment for the visit, if one is
required
– Whether the planned encounter is for a covered
service that is medically necessary under the payer’s
rules
• Patients should be informed if their policy does
not cover a planned service.

4.7 Preauthorization, Referrals, and
Outside Procedures
4-22
• Managed care payers often require
preauthorization before a patient:
– sees a specialist,
– is admitted to the hospital, or
– has a particular procedure.
• If the payer approves the service, it issues a
preauthorization number that must be entered in
the PM and included on the claim.
• Referral number—authorization number given
by a referring physician to the referred physician
4.8 Using Office Hours—Medisoft Network
Professional’s Appointment Scheduler
4-23
The Office Hours window contains four main

areas:
– Provider selection box—selection box that
determines which provider’s schedule is displayed in
the provider’s daily schedule
– Provider’s daily schedule—listing of time slots for a
particular day for a specific provider that corresponds
to the date selected in the calendar
– Office Hours calendar—interactive calendar that is
used to select or change dates in Office Hours
– Office Hours patient information—area that
displays information about the patient who is selected
in the provider’s daily schedule
4.9 Entering Appointments 4-24
To enter an appointment in Medisoft Clinical:
– Select the appropriate provider from within the Office
Hours program.

– Choose an appointment time slot.
– Complete the fields in the New Appointment Entry
dialog box.
– Click the Save button to enter the information on the
schedule.
4.10 Booking Follow-up and Repeating
Appointments
4-25
• To create follow-up appointments in Office
Hours:
– Click the Go to a Date shortcut button on the toolbar;
the Go To Date dialog box will be displayed to allow a
choice of date.
– After a future date option is selected, click the Go
button to close the dialog box and begin the search.
– The future date will be located and displayed in the
calendar schedule accordingly.

4.10 Booking Follow-up and Repeating
Appointments (Continued)
4-26
• To create repeating appointments in Office
Hours:
– Open the New Appointment Entry dialog box.
– Click the Change button; the Repeat Change dialog
box is displayed.
– Make selections and enter information in the Repeat
Change dialog box.
– When done, click the OK button, and then the Save
button, to enter the repeating appointments on the
schedule.
4.11 Rescheduling and Canceling

Appointments
4-27
To locate an appointment that needs to be
rescheduled:
– Click the Appointment List option on the Office Hours
Lists menu; the Appointment List dialog box appears.
– Use the Cut and Paste commands to move an
appointment.
– Use the Cut command to cancel an appointment.
4.12 Creating a Patient Recall List 4-28
To create or maintain a recall list in MNP:
– Click Patient Recall on the Lists menu; the Patient
Recall List dialog box is displayed.
– Patients are added to the recall list by clicking the
New button in the Patient Recall List dialog box or by
clicking the Patient Recall Entry shortcut button; the
Patient Recall dialog box is displayed.

– After the information has been entered in the dialog
box, click the Save button.
4.13 Creating Provider Breaks 4-29
• Office Hours break—block of time when a
physician is unavailable for appointments with
patients
• To set up a break for a current provider:
– Click the Break Entry shortcut button; the New Break
Entry dialog box will appear.
– Enter the information in the dialog box, and click the
Save button to enter the break(s).
4.14 Printing Schedules 4-30
• To print a provider’s schedule within Office
Hours:

– Use the Appointment List option on the Office Hours
Reports menu to view a list of all appointments for a
provider for a given day.
– The report can be previewed on the screen or sent
directly to the printer.
• Alternatively, click the Print Appointment List
shortcut button.
CHAPTER
© 2012 The McGraw-Hill Companies, Inc. All rights
reserved.McGraw-Hill
3
Introduction to
Medisoft Clinical
Learning Outcomes

3.1 List the practice management and electronic health
record applications in Medisoft Clinical.
3.2 Discuss three security features in Medisoft Clinical
that protect patients’ health information.
3.3 List the menus in Medisoft Clinical Patient Records.
3.4 List the menus in Medisoft Network Professional.
3.5 Describe how pre-encounter tasks are completed in
Medisoft Clinical.
3.6 Describe how encounter tasks are completed in
Medisoft Clinical.
3-2
3.7 Describe how post-encounter tasks are completed in
Medisoft Clinical.
3.8 Explain how to create and restore backup files in

Medisoft Clinical.
3.9 Discuss the types of help available in Medisoft
Clinical.
3-3
Key Terms
• access levels
• Auto Log Off
• backing up
• chart
• chief complaint
• dashboard
• database
• disaster recovery plan
• knowledge base
• Medisoft Clinical
3-4

• Medisoft Clinical Patient
Records (MCPR)
• Medisoft Network
Professional (MNP)
• park
• password
• restoring
• user name
3.1 Medisoft Clinical: A Practice
Management/Electronic Health Record Program
3-5
• Medisoft Clinical—integrated practice
management (PM) and electronic health record
(EHR) program
• Medisoft Network Professional (MNP)—
practice management application within Medisoft
Clinical

• Medisoft Clinical Patient Records (MPCR)—
electronic health record application within
Medisoft Clinical
3.2 Security Features in Medisoft Clinical 3-6
Medisoft Clinical has a number of built-in security
features
• User name—name that an individual uses for
identification purposes when logging onto a
computer or an application
• Password—confidential authentication
information
• Access levels—security option that determines
the areas of the program a user can access, and
whether the user has rights to enter or edit data

3.2 Security Features in Medisoft Clinical
(Continued)
3-7
• Park—privacy and security feature in MPCR that
allows a user to leave a workstation for a brief
time without having to exit the program
• Auto Log Off—feature of MNP that
automatically logs a user out of the program
after a period of inactivity
3.3 Medisoft Clinical Patient Records 3-8
• Standard menu items in MCPR include:
– File
– View
– Task
– Maintenance
– Reports

– Window
– Help
3.3 Medisoft Clinical Patient Records
(Continued)
3-9
• Database—collection of related bits of
information
• Chart—folder that contains all records
pertaining to a patient
• Dashboard—panel in MCPR that offers
providers a convenient view of important
information
3.4 Medisoft Network Professional 3-10
• Names of the menus in MNP are listed on the
menu bar, and include:

– File
– Edit
– Activities
– Lists
– Reports
– Tools
– Window
– Help
3.5 Using Medisoft Clinical to Complete
Pre-Encounter Tasks
3-11
• Pre-encounter steps include preregistration and
appointment scheduling.
– To enter preregistration information about a new
patient, click the New Patient button, and complete
the Patient/Guarantor dialog box.

– To enter an appointment in Office Hours, select a
provider, select a date and time slot, and save.
• Chief complaint—patient’s description of the
symptoms or reasons for seeking medical care
Encounter Tasks
3-12
• Encounter steps include all activities that take
place from the patient’s arrival until the patient’s
departure from the office, such as:
– Establishing financial responsibility—real-time
insurance eligibility can be checked
• Insurance information is entered in one or more of the Policy
tabs in the Case folder in MNP.
– Check-in—reviewing account balance, updating
patient information, recording documentation and
examination findings

• The Patient/Guarantor dialog box is updated as needed.
• SOAP notes are recorded.
Encounter Tasks (Continued)
3-13
• Encounter steps (continued):
– Coding—assigning codes based on the services
provided and the provider’s determination
• In MPCR, codes are selected from lists provided on an
electronic encounter form.
– Checkout—payments are calculated and posted,
follow-up appointments and tests are scheduled,
materials are dispensed, and referrals are provided
• The Unprocessed Charges dialog box in MCPR is used to
post and review charges.
• Scheduling is performed in Office Hours.

• Referral and prescriptions are created within MCPR.
Post-Encounter Tasks
3-14
• After the patient visit is complete, activities focus
on payment for services, including:
– Preparing and transmitting claims
• In MNP, claim functions are located on the Activities menu.
• The Claim Management dialog box is used for current claims
and to create new claims.
• Claims are transmitted through MNP’s Revenue
Management feature.
– Monitoring payer adjudication
• Payer adjudication is tracked using the Deposit List window.
• Charges are applied in the Apply Payment/Adjustment to
Charges dialog box.

Post-Encounter Tasks (Continued)
3-15
• Activities focused on payment for services
(continued):
– Generating patient statements
• In MNP, the Statement Management option on the Activities
menu contains options for creating and printing patient
statements.
• Selections in the Create Statements dialog box determine
which statements will be created.
– Following up on payments and collections
• In MNP, collection functions are located on the Activities
menu and on the Reports Menu.
• The Collection List feature on the Activities menu is used to
place an account in collections.

3.8 Backing Up and Restoring Files 3-16
• Disaster recovery plan—plan for resuming
normal operations after a disaster such as a fire
or a computer malfunction
• Backing up—making a copy of data files at a
specific point in time that can be used to restore
data
– In MNP, the Backup Data option on the File menu can
be used to make a backup copy of the database.
• Restoring—process of retrieving data from a
backup storage device
– Files are restored using the Restore Data feature on
the File menu.
3.9 The Medisoft Clinical Help Feature 3-17
• MNP and MCPR offer built-in and online help

files.
– Built-in help feature is accessed via the Help menu.
– Help menu also provides access to help available
online at the MNP website.
• Knowledge base—collection of up-to-date
technical information

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