Financial Reporting Overview

Summary

This topic is to serve as a guideline for producing financial analysis reports using Net Health Employee Health and Occupational Medicine.

The Clinical and Billing programs capture and produce a substantial amount of information - both clinical and financial. The wide range of reports built into the software allows users to look at this information from different perspectives for different purposes. The difficulty of this approach is that the range of reports can create confusion as to which numbers are the "right" numbers, when reporting financial information.

This topic focuses on clarifying the types and sources of information for all of the reports that show financial information.

Overview of Reporting

There are a variety of reports contained in each of the individual modules in the program. These are briefly outlined below:

Clinical Module

The REPORTS tab in the Clinical program contains several operational reports for keeping track of employee/patient scheduling and visits. These reports are designed strictly for facilitating the clinic staff in managing daily operations, and are not intended to report money. The data source for the different reports are the clinical scheduling, visits, medical activity history and incident files. The reports in the Clinical module will not be discussed in this document.

Billing and Receivables Reports

There are four broad categories for billing and receivables reports:

Accounting Journals: Found on the A/R tab, Accounting Journals produce the audit transaction detail reflecting all types of transactions that affected the Accounts Receivable during a specific period of time.
Aging Reports: Found on the A/R tab, the aging reports are designed to produce reports against the open Accounts Receivable, using slightly different views of the same information.
Sales Reports: Found on the REPORTS tab, these reports are intended to report and analyze revenues. Some of these reports will tie to the journals, and some are intended to tie to billing charges that have not been invoiced.
Statements: Found on the A/R tab, these are used for creating customer statements and reprinting invoices.

Provider Practice Reporting Module

The reports in this program are divided into several groups:

The Employer Reports consist of a set of tools for reporting to your employer clients. These reports are primarily clinical in nature, but some of them provide monetary information. The important distinction of the revenue or cost related reports in this group is that the information is "fed" from clinical data sources, and not directly from the Accounts Receivable. Thus, they are not designed to "tie" perfectly to the accounting part of the Billing system.

The Clinic Reports contain a set of reports for purposes of internal analysis and tracking of various clinical functions, such as surveillance, outcomes and case management. In contrast to the employer reports, these reports are targeted as internal tools for the clinic operations staff.

The Management Reports, like the clinic reports, consist of reports that are intended to assist in tracking the results of activities in the clinics. These are divided into clinic and account management reports. The clinic management reports focus mainly on clinic activities while the account management reports main purpose is to give a management view from the client and revenue perspective. These account management reports show revenue from different data sources, and they will be discussed in further detail below.

It is very important to recognize that the revenue reporting in this module is not intended in most cases to tie directly to the financial accounting, in the strict sense of providing a perfect audit trail from an accounting perspective. It is more intended to provide a picture of where the money is coming from. This will be clarified on an individual report basis.

Employee Health Reporting Module

The Employee Health Reporting was designed to provide all of the detailed clinical reporting for hospital (or in some cases corporate) based clients. These reports are strictly clinical and operational in nature, encompassing surveillance, visits, scheduling and delinquency, incident analysis and case management, and OSHA reporting. These reports, like the reports from the Clinical program, will not be discussed in this document.

Billing and Receivables System Reports

Information does not enter the Billing and Receivables program until charges are "processed" from the clinical program data files. During charge processing, the clinical visits and their accompanying medical activities (i.e. services or procedures) are pulled into the Billing program in the form of billing "transactions" and "charges" . Because of the nature and complexities of occupational health medical billing, the software was designed to have a powerful amount of flexibility, so that the proper medical billing will be generated automatically, without the clinic staff having to make all kinds of billing decisions. Thus, the determination of payers and pricing takes place at the point where the clinical activities are translated into billing "charges" during charge processing. In charge processing, a single clinic visit can be split into more than one billing "transaction" if necessary, because different charges for a given visit can be billed to different payer accounts, or even different mailing addresses for the same account.

Once processed, the various transactions and charges are combined into invoice batches (i.e. groups of invoices) for the purpose of generating invoices to clients. In the invoice creation process, the program assigns unique, consecutive invoice numbers for each individual invoice. However, it is not until a printed invoice batch is posted to the Accounts Receivable that the software considers these charges to be official "revenue", from an accounting perspective.

Thus, there are fundamentally four ways of measuring "revenue" in the program:

Billing charges that have been grouped onto invoices and posted to the A/R. This is the "official" revenue, from a true, classical accounting perspective. It is this revenue which must be kept perfectly accurate and auditable, in order to conform to Generally Accepted Accounting Principles. In keeping with GAAP, the period into which this revenue falls is governed by the date of the invoice, which is initiated by the user via the invoice batch date. The official billing revenue can be reported in the Billing and Receivables program using the Sales and Voided Invoices Journals and the Sales Analysis reports.
Cash that has been collected and posted to the A/R. This is another way of looking at "official" revenue, if the client wishes to do a cash basis type of accounting, and the software treats the handling of cash with equally strict control methods, such as batches. The accounting period into which cash revenue falls is governed by the date of the deposit, which is initiated by the user via the cash batch date. Cash revenues can be reported using the Cash Receipts Journal and the Sales Analysis reports.
Billing charges that have entered the Billing and Receivables program, regardless of whether they have been posted to the A/R. This could be referred to as "raw" revenue. Not all of this revenue can be considered "official", because of the requirements of accounting principles. However, reporting all unbilled and billed charges can give a slightly fuller picture of revenue generated for a particular period of time, simply because in reality there is often a time gap between the time when charges are processed and the time some of them are invoiced. Because some charges have not been invoiced, the only way to report them as revenue is by looking at them with respect to the date of service, rather than an accounting period. Revenue measured by date of service will generally not be able to be tied precisely to accounting revenue, because it is not unusual for a billing department to invoice charges performed during one time period in a later accounting period.

It has been Net Health experience that most clients have been accustomed to measuring revenue in this manner, simply because of the inability to produce accurate invoices promptly enough with their previous systems. However, this is still often a preferred method of measuring and reporting revenue. This type of revenue is reported in the Billing and Receivables program using the Transactions and Billing Charge Analysis reports.
The last method of defining "revenue" expands on the previous "raw" charges to encompass all revenue for activities or services performed, whether processed into the Billing and Receivables program or not. It is possible that from time to time clinic users will enter charges belatedly, and that these charges might not be processed until much later. The Billing and Receivables program does not provide a method of reporting on charges that have not been processed, since it only reports charges that have been pulled into billing. However, billing department managers can establish procedures for ensuring that all belated charges are brought into the billing database on a timely basis. Also, certain Provider Practice Reporting module reports - the Employer Activities for Period report, and the Revenues by Visit Types and Revenues by Service Item reports in the Account Management section - are specifically designed to include all charges coming from clinic visits.

The Billing and Receivables reporting functions are described in more detail in the following sections.

The Journals Section.

The Journals section of the Billing and Receivables program are intended to provide an exact, transaction by transaction audit trail of all activities that affected the Accounts Receivable during a particular period of time. For this reason, they are designed to account precisely for changes in the A/R balance. As discussed at the beginning of this section, this is the proper way to measure revenue from an accounting perspective.

Read the Accounting Journals Overview for more information.

The Aging Reports.

The Aging reports provide several views of the open balances in the Accounts Receivable, broken down into aging categories. Three versions are available:

Aging by Account
Aging by Patient
Aging by Provider

For each, you can run a summary or detailed report.

Read the Aging Reports Overview for more information.

Sales Reports.

These reports are designed to report revenues from several perspectives.

The Sales Analysis Report (AKA Revenue Analysis Report) provides a master analysis report of all transactions that have been posted to the Accounts Receivable. This report is oriented toward the "official" measure of revenue or sales, as discussed above in the beginning section on types of revenue.

A common source of confusion comes when users expect this report to reconcile to the Visits Analysis Report, which can be set to include revenues, or the Service Revenue Analysis Report. Both of these reports look at visits based on date of service, and they include potential revenue. Some visits might never be billed. Visits with the same date of service might be invoiced on different dates or even in different accounting periods. These two reports do not consider the difference between gross and net prices.

The Transactions Analysis and Billing Charges Analysis reports are two specialized reports designed to report, by date of service, the billing status of all transactions and charges that have entered the Billing and Receivables system, regardless of whether they have yet been invoiced and posted to the Accounts Receivable. The purpose of these reports is twofold: (1) to provide a safeguard to ensure that all charges have been invoiced, before closing an accounting period, and (2) to provide a measure of revenue being generated by actions taken during a particular time period, regardless of which accounting period in which those services are eventually billed.

The difference between the two reports is that the transactions report is visit-oriented, whereas the charges report is charge, or activity/service oriented. Each report provides a few logical ways to sort and total the information.

It is very important to note that these two reports are never guaranteed to tie or balance directly to the journals and the Sales Analysis reports. This is because in accounting, the timing of invoicing is everything!

The Provider Practice Reporting Module

The Provider Practice Reporting module in the software contains a variety of different types of reports, pulling from both the clinical and the billing data tables. These reports are grouped according to the target audience - the employer, clinic operations staff, and management. In a number of cases, the same report will appear in more than one group. For example, the Case Cost Analysis report can be a useful report for employers, and it can also be useful for internal clinic staff.

While billing payers and revenues are not officially determined until the charges are processed into the Billing and Receivables program from the Clinical program, it is still necessary that revenue information be reportable from the Clinical database. This is because there can be a lag between the time that services are entered into Clinical visits and the time they are processed into the Billing program. Thus, most revenue related reports for employers and account management can include charge information for visits whose services have not yet been sent to billing. These types of reports are coming directly from the visit and medical activity history files, not the official billing system transaction or receivable files.

In addition to charge revenues, the clinical program also has the ability to capture other types of costs for workers comp cases. These "claim charges" or "case costs" reside in a separate file in the clinical program, accessible from the [Enter Incident] window. They consist of four types of costs: (1) indemnity, (2) internal medical costs, (3) external medical costs, and (4) other miscellaneous costs. The medical costs are automatically updated by the Billing and Receivable programs whenever a workers comp invoice is post to the A/R. However, users can record any additional costs on a case by case basis. The program is designed to allow our clients to report on all kinds of case costs, in addition to the medical charge revenue.

Employer Reports

The employer reports are designed to send information to our clients employers, in a variety of formats. There are three primary reports showing revenue or cost information in this group.

The Employer Activities for Period report is the primary reporting tool to employers for reporting costs directly incurred for all services performed during a particular period, regardless of the actual billing status of the charges. The sources of the information are the visits and medical activity history files. For services that have been sent to billing, the actual prices that were charged are used; for services awaiting billing, the prices are estimated according to the current fee schedules for to that employer. This report will include all charges that were incurred by that employer, regardless of whom the eventual payer will be.

The Incident Activities for Period report provides a different kind of report, based upon the case costs (claim charges) information recorded for incidents or cases during a time period. The source of the data on this report is the case costs file, which consists of actual medical billing charges that were posted to A/R during that time period, as well as any indemnity or other types of costs that may have been recorded for these cases.

The Case Cost Analysis and Comparisons reports provide summary breakdowns of case costs (claim charges) in a similar format to the Injury and Illness and Lost Time analysis and comparison reports. They are designed to give an employer a summary view of total case costs during or across time periods. Like the Incident Activities for Period report, they are intended to provide case related cost information, not a direct accounting of charges for services performed.

Management Reports

There are four Account Management reports that deal with revenue.

The Revenue Analysis report, is identical to the Sales Analysis report found in the Billing and Receivables module, discussed earlier. When run using its default settings, this report will tie to the Sales Journal and Voided Invoices Journal reports, and will give an analysis of actual, "official" accounting revenues. The report has been placed in both the Billing and the Provider Practice Reporting modules for client convenience.

The Revenues by Visit Type report is a special report designed to analyze revenues that have been generated in the Clinical program during a particular time period, as distinguished by type or nature of visits. Like the Employer Activities by Period report, its sources of information are the clinical visits and medical activity history files, not the billing files.

The Revenues by Service Item report is the same kind of report as the Revenues by Visit Type, except that it is focused on individual medical activities or services performed during a time period, rather than types of visits.

The Collections Ratios report is a management report whose purpose is to analyze the collection effectiveness of the organization. It directly analyzes the A/R files to determine percentage of invoices that have been collected, for invoices generated during a particular time period.

The RVU Analysis report is essentially the Revenue Analysis Report using Medicare Relative Value Units instead of dollars.

The allows you to create custom lists. These lists have a great deal of flexibility and can often put information together in a way that is not found on any of the standard reports.

No complex database system can possibly provide every report that someone might want. To deliver reporting power and flexibility beyond its many standard reports, Net Health Employee Health and Occupational Medicine reporting includes an A/R Revenue Wizard. This wizard provide the user with the ability to design and create customized lists which can be used for many purposes not covered by our standard reports. You can choose the exact columns of information you want, determine the selection criteria, as well as group and determine the sort order of items on the list. Once you create a report, you can save it for future use. There is no limit to the number of reports that can be stored.