Coding and Billing Cycle and Evaluation of Financial Condition in Healthcare

Examining Financial Resource Management
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Examining Financial Resource Management
Question A
Medical coding processes involve extracting information billed from clinical documentation and other medical records. The billing process uses the codes to create insurance claims and patient bills. Both billing and coding processes can be considered crucial to receiving payment for healthcare services despite being separate. The two-cycle processes impact healthcare in various ways. Healthcare facilities must implement coding and billing activities regularly. If there is a backlog, the revenue cycle will halt, and as such, the billing cycle will also stop (Tseng et al., 2018). It implies that processing and submitting claims for patients in the healthcare organization will halt until coding resumes. Lateness in the billing process can lead to inaccurate payments or, in some cases, no payments at all. Overall, the healthcare organization will lose significant revenue, equating to substantial operating revenue losses.
In the coding process, integrating various facets and a wide range of knowledge is necessary for the appropriate appending of codes meant for diagnosis and procedures and, in turn, to execute claims for proper payment. It implies that for such success to be attained in the healthcare revenue cycle of the organization, a coder should analyze the entire encounter, whether inpatient or outpatient, to help identify the pertinent diagnosis codes (ICD 10-CM) (Tseng et al., 2018). Since the coding process might take minutes or hours depending on the complexity of the encounter, healthcare organizations prefer handling coding and billing activities concurrently. Running them together saves healthcare organizations from recording losses from the revenue cycle. The revenue cycle is the most important process that earns them operating revenues and profits.
The execution of the coding and billing cycles side by side is a way of sustaining timely submission and processing of claims for coders who spend the least time recording and reviewing encounters. In turn, the billing cycle becomes faster, making the editing and processing of payments quicker. In this way, the effectiveness in every step of the coding and billing processes offers an opportunity for quicker payments (Tseng et al., 2018). The observation herein is that if one link fails to work as expected, then the whole revenue cycle will be in jeopardy because it will come to a standstill. The healthcare organization will lose revenue eventually.
Question B
The evaluation of the financial condition of a healthcare organization demands that financial statements should undergo scrutiny. The statements will provide the logical journey the organization has traveled financially. Primarily, balance sheets, statements of changes in net assets, statements of operations, and cash flows are subject to evaluation (Otay et al., 2017). The four statements provide financial ratios, which are analyzed to link the organization's performance and financial position. The financial ratios are significant in identifying clues about each aspect of the organization's financial condition in question.
Balance sheets are broken down in correspondence with the date and the accounting period, while the elements examined include assets, liabilities, and the net assets of the healthcare organization. In the analysis of statements of operations, the ratios evaluated include revenues and operating expenses (Otay et al., 2017). The management will use the statement of changes in net assets to demonstrate changes in equity for every organization's fiscal year. Therefore, it will consider the equity investments that have been sold for profit. The statement of cash flows shows the source of funds and how they are spent on sustaining operational, investment, and financial activities.
Question B1
The acquisition of knowledge about the risk and profitability factors for a particular healthcare organization is significant in determining sustainability. The best way to accomplish this is by evaluating two specific financial reports, namely the Payer Mix report and the Allowable Fee Schedule Matched and Managed Contracts. Primarily, the Payer Mix Report is bound to provide the sources using percentages of use by providing a breakdown of Medicaid, Medicare, and Third-party payors and Private Pay Accounts (Moses & Jones, 2018). In determining the risk profitability and the mix of payor sources, the auditors in the healthcare organization should examine how each payor compensates the facility. The Allowable Fee Schedule Matched to Managed Care Contracts is usually ranked from the highest paying to the lowest, helping the facility management consider renegotiation.
Having acquired such information would help carry out a profitability and risk analysis. The knowledge would help apply horizontal and vertical analysis to determine the risk achievable by comparing the financial information over time. The analysis would help unearth trends likely to expose the healthcare organization to risks. In applying horizontal and vertical analysis, the organization will compare its financial statements with those of other healthcare organizations to identify whether the business can sustain its operations and compete effectively or risks going out of business (Moses & Jones, 2018). The acquisition of information about financial reports allows the organization to determine the risk...