Financial Policies for Every Health Center OBJECTIVES

Transcription

1 Financial Policies for Every Health Center Michael Holton Manager Tele: (919) RSM McGladrey Inc. is a member firm of RSM International an affiliation of separate and independent legal entities. OBJECTIVES To provide an understanding of how important written policies and procedures are to establishing good operational practices, solid internal controls, protecting the health center s assets, having good outcomes from audits, and complying with federal and state laws and regulations. To determine what policies and procedures are needed to provide for comprehensive documentation of all aspects of health center operations. To understand how policies and procedures can provide infrastructure to influence good financial outcomes for the organization. 2 1

2 What Are Policies and Procedures? Policy A "Policy" is a predetermined course of action which is established to provide a guide toward accepted business strategies and objectives. It is a direct link between an organization's "Vision" and their day-today operations. Policies identify the key activities and provide a general strategy to decision-makers on how to handle issues as they arise. Provides the policy user with limits and a choice of alternatives that can be used to "guide" their decision making process as they attempt to overcome problems. 3 Procedures What Are Policies and Procedures? The ultimate goal of every procedure is to provide the reader with a clear and easily understood plan of action required to carry out or implement a policy. A well written procedure will also help eliminate common misunderstandings by identifying job responsibilities and establishing boundaries for the job holders. Good procedures actually allow managers to control events in advance and prevent the organization (and employees) from making costly mistakes. Think of a procedure as a road map where the trip details are highlighted in order to prevent a person from getting lost or "wandering" off an acceptable path identified by the management team. 4 2

3 What is the Difference Between Policies and Procedures? Policies: Are general lin nature Identify company rules Explain why they exist Tells when a rule applies Describes who it covers Shows how a rule is enforced Describes the consequences Are normally described using simple sentences & paragraphs 5 What is the Difference Between Policies and Procedures? Procedures: Identify specific actions Explain when to take actions Describes alternatives Shows emergency procedures Includes warning & cautions Gives examples Shows how to complete forms Are normally written using an outline format 6 3

4 Approval of Policies and Procedures Who should approve policies? Management Board of Directors Feds? Who needs to approve procedures? Management Board of Directors Line Managers 7 When are Policies and Procedures Required? Policies & procedures are required when there is a need for consistency in your day-to-day yoperational activities, internal controls and financial safeguarding of assets. Policies and procedures also provide clarity to the reader when dealing with accountability issues or activities that are of critical importance to the company, such as, health & safety, legal liabilities, regulatory requirements or issues that have serious consequences. When the Feds say they re required. 8 4

5 How Do You Know If Your Current P&P s are Adequate? If your organization already has established Policies & Procedures how can you determine if they are meeting your needs? Are you following them? Increase in the number of accidents higher failure rates or costly overruns. More staff questions on "normal operations a feeling of general confusion within a department or division. patients may provide additional clues in the form of increasing complaints. Federal or state audit uncovers problems or non-compliance issues 9 Why are Having Adequate Policies and Procedures Important? Employees are provided with information that allows them freedom to carry out their job and make decisions within defined boundaries. Employees understand the constraints of their job without using a "trail and error" approach. Policies & procedures enable the workforce to clearly understand individual & team responsibilities. Clearly written policies & procedures allow managers to exercise control by exception rather than "micro-manage" their staff. 10 5

6 Why are Having Adequate Policies and Procedures Important? Well-written policies & procedures benefit the company as well as the employee. From an employee perspective the guidelines provided in policies and procedures allow workers to perform their jobs with respect and dignity. Polices provide guidance on how to handle issues properly as well as clearly identifying their job constrains. The organization benefits by allowing managers the freedom to concentrate on strategic issues because policies and procedures are in place to guide the normal-day-to-day operations. 11 Why are Having Adequate Policies and Procedures Important? Some of the Benefits of written procedures: Having written procedures prevent mistakes Having written procedures frees your creativity Having written procedures saves time Having written procedures ensures consistency among work areas/sites and improves quality Having written procedures will free you from worry about your employee's decisions and establish infrastructure. Having clear written procedure will also help you in the case there is ever any disagreement. You simple point to the written procedure and make sure that it is consistently applied. If you allow exceptions to the policies write them down as well. 12 6

7 Health Centers Must Have Good Internal Controls Health centers must have accounting and internal control systems appropriate to the size and complexity of the organization. oga ato An accounting system based on Generally Accepted Accounting Principles (GAAP) must be in place and be designed to accurately reflect the financial performance of the organization. A separation of financial functions should be implemented to safeguard assets. A set of routine financial reports must be generated and reviewed by health center management and members of the board of directors on a regular basis. 13 Goals of a Financial System At a minimum, health centers must maintain financial systems which: provide for internal controls safeguard g assets ensure stewardship of federal funds maintain adequate cash flow to support operations assure access to care, and maximize revenue from non-federal sources. Financial systems should be routinely reviewed and updated to assure that the organization remains: financially sound competitive, and attuned to changes in the local, state and national health care environment. Source: BPHC Policy Information Notice

8 What Policies and Procedures Need Development? Administrative Policies and Procedures Operations Policies and Procedures Information Technology Policies and Procedures Governance P&Ps (Usually in the form of By-Laws) Financial Management Polices and Procedures 15 Typical Areas for Administrative P&Ps Personnel P&Ps including Employee Handbook Corporate Compliance Legal Governance Finance Information Technology Hours and Locations Access to Services (including after-hours coverage) Signage Policy (Appropriate Language) Contracts and Agreements 16 8

9 Typical Areas for Operations P&Ps Revenue Cycle Appointments Scheduling Patient Registration and Certification for Sliding Fee Scale Patient Reception Patient Clinical Visit -Service Delivery Charge Processing/Cashiering/Checkout Patient Statement and Claims Production Claims and Patient Payment Processing Denied Claims Management Accounts Receivable Management and Collections Clinical Protocols Quality Improvement/Quality Assurance Program 17 More About the Sliding Fee Scale Section 330 regulations require that the schedule of discounts conform with the following guidelines: Full discount to individuals and families with incomes at or below those set forth in the most recent Federal poverty income guidelines ( % of FPL) No discount to individuals and families with annual incomes greater than twice those set forth in the Guidelines (>200% of FPL) Except that nominal fees for services may be collected from individuals with incomes at or below such levels where imposition of such fee is consistent with project goals (<100% of FPL, accounts for over half of health center self-pay patients nationwide) Section 330 statute further requires that a health center has made and will continue to make every reasonable effort to secure from patients payment for services in accordance with such schedules. Health centers have different set-ups in terms of sliding fee arrangements. Some have set fee amounts per sliding fee category Some have different sliding scales for different types of services Others have different sliding scales for some types of procedures 18 9

10 Typical Areas for IT P&Ps General Data Collection P&Ps Organization of Data Data Storage Security P&Ps Data Protection P&Ps General Reporting Guidelines 19 Typical Areas for Governance P&Ps Mostly Through By-Laws Conflict of Interest Policy Board Composition Officers and Elections Orientation Program Recruitment General ldata Collection P&Ps Training Policy 20 10

11 Typical Areas for Financial Management P&Ps Financial Management Protection of Center Assets Cash Management and Controls Chart of Accounts Descriptive chart of accounts Assets Liabilities Net Assets Revenues Expenses Maintenance of Accounting Records Accounts Payable Register Cash Receipts Journal Payroll Register General Journal Record Retention 21 Typical Areas for Financial Management P&Ps Cash Disbursements Disbursement Policies (check signing, etc.) Petty Cash Cash hreceipts Receipt procedures Mail Receipt procedures Front Office Standard Journal Entries ( Note: Month-end Close) Accrued Payroll Payroll Entry Revenue Recognition Entry Allowance for Doubtful Accounts/Bad Debts Depreciation Expense Prepaid Expenses Accrued Liabilities 22 11

12 Typical Areas for Financial Management P&Ps Purchasing System Purchasing Policies and Procedures Competitive Bid Procedures Receiving i Procedures Check Requests System Policy on Using Check Requests Check Request Procedures Debit/Credit Card Policy Grants Management Policy Statement Grants Budgeting Procedures Federal Cash on-hand Policy Grant Drawdown Policy & Procedures Grant Revenue Recognition Policy ARRA Grants Policy and Procedures Annual Operation Budget Procedures 23 Typical Areas for Financial Management P&Ps Accounts Payable Policy and Internal Controls Maintenance of Support Documentation Processing of invoices Payment procedures and approvals Payroll Policy & Internal Controls Payroll Reports Maintained Fixed Assets Asset Classes Acquisition policies Maintenance of Property Records Disposal of Fixed Assets Calculation of Depreciation Fixed Assets Inventory 24 12

13 Typical Areas for Financial Management P&Ps Travel Policies and Procedures Out-of-Town Local Advances and Reimbursement Non-covered expenses Regulatory Reporting Policy DHHS Specific Reports Policy Other Regulatory Reporting Specific Reports Responsibility (s) for Reporting Function (s) Finance Department (and related functions) Organizational Chart 25 Development of Policies and Procedures Identify Need for New P&Ps or Changes to Existing P&Ps Review existing P&Ps Identify scope and stakeholders Research and analyze procedures What are current procedures (if any)? Interview affected staff Review job descriptions Flow mapping of processes Policies will come out of procedures (but could be the need for procedures) Draft policy and/or procedures Consult stakeholders Amend or revise based on feedback Submit for management approval Submit for Board approval if policies Distribute and train those affected 26 13

14 SUMMARY Hopefully you ve learned some things today: What are Policies and Procedures? When are P&Ps required? How do you know if Your P&Ps are adequate? Why are P&P s Important? What Types of P&Ps are Typically Developed? What is the Process for P&P Development? 27 14