Financial Management Flashcards
This document provides information about the organization’s cash position, borrowing and repayment capabilities, and capital acquisition.
Its goal is to provide stakeholders and leaders with knowledge needed to assess the organization’s performance and make decisions based on pertinent, accurate information.
Financial statements
Focuses on the flow of cash into and out of the organization. Revenues are recognized when cash is received, and expenses are recognized when cash is paid out.
More intuitive and used by physician practices and smaller businesses
Cash basis of accounting
Focuses on the organization’s overall value. Recognizes revenues when they are earned and expenses when they are incurred, regardless of when cash actually flows in or out. Allows an organization to better track the resources used in generating revenues.
Used by most organizations.
Accrual basis accounting
A snapshot of the orgs financial position, usually on the last day of an accounting period. Provides info about the liquidity as well as the net value of its assets.
Balance sheet
These components make up a balance sheet:
Assets, liabilities, and net assets (or owner’s equity)
Resources the organization owns, recorded at original cost, not current value.
Assets
These assets will be consumed and used in less than one year.
Cash and cash equivalents
Patient accounts receivable
Short-term investments
Supplies used to provide services
Current Assets
The organization’s financial obligation.
Liabilities
These liabilities must be paid in less than one year.
Accounts payable and accrued expenses.
Current portion of long-term debt.
Estimated third-party payer settlements.
Deferred revenue.
Current liabilities
These expenses are the cost of resources used to provide healthcare services. The major category used in healthcare orgs are salaries and benefits, supplies, depreciation and amortization, interest, bad debt, and other expenses.
Operating expenses
Operating Revenues - Operating Expenses
Operating Income = Operating Revenue - Operating Expense
OI = OR - OE
The orgs financial condition is assessed by comparing two data elements from its financial statements. Used in healthcare internally to analyze performance and develop action plans, as well as by external entities, such as bond raters, to assess the org’s performance on a quarterly or annual basis.
Financial Ratio
Operating Income / Operating Revenue
Operating Margin Ratio =
Operating Income/Operating Rev
or
Operating Rev-Operating Expense /
Operating Rev
Calculate the Operation margin given that an organization’s total operating revenue is $5000 and the total operating expense is $4000.
operating revenue is $5000 and the total operating expense is $4000.
$5000-$4000
_____________ = 0.2 or 20%
$5000
Indicates the financial productivity of a company’s equity financing by measuring the dollars of earnings for each dollar of equity investment.
Return on Equity Ratio (ROE)
ROE = Net income / total equity
Indicates the percentage of net patient service revenue that the organization will not collect. A lower number indicates successful collection of patient service revenue.
Bad Debt Ratio
= Provision for Bad debt/ net patient service revenue
A ratio that measures the efficiency of the organization’s collection function. A lower number is better, as it indicates more income and less money tied up in accounts receivable.
Account Receivable (days)
Formula for days in AR
Days in AR =
Net Pt Receivables x 365
__________________
Net Pt Rev
A ratio that assess how well the org manages short-term obligations and working capital. Explains how well the organization can meet its current obligations
Liquidity Ratio
Used to assess an organization’s ability to meet its short-term obligations. Measures the number of dollars of current assets available to pay each dollar of current liabilities.
Current Ratio
Current Ratio = Current Assets / Current Liabilities
CR = CA / CL
The proportion of cash, net accounts receivable, and marketable securities to current liabilities.
Quick Ratio
Shows how many days of expenses an organization can cover with cash. A higher-than-average ratio indicates better ability to cover expenses. A very high ratio indicates poor asset management.
Days Cash on Hand Ratio
This ratio measures the average time it takes an organization to pay its obligations.
Days in Accounts Payable Ratio
This analysis can be useful to see how an organization is performing relative to the performance of the industry as a whole.
Comparative Analysis
Looks at the trend of a single ratio over time.
Trend Analysis
Medicare designated the International Classification of Disease, 9th revision, Clinical Modification (ICD-9-CM) as the official system for reporting diagnoses, signs, or symptoms to payors in:
A. 1980
B. 1988
C. 1998
D. 2005
B. 1988
Historical information describing the evolution of payment systems may be found in current and previous copies of the _____ _____.
Federal Register.
In general, Diagnostic testing, including diagnostic X-ray imaging, is covered by Medicare only when there is medical necessity and when it is ordered by treating physician. The one exception to this guideline relates to ____ & ____.
Mammography services & Hospital diagnostic studies
(Hospital diagnostic studies are governed by two separate provisions, and in those regulations there is no statement restricting ordering authority to the treating physician. Hospital OP diagnostic studies are governed by 42 CFR 410.28, and rules for hospital inpatient testing are found in 42 CFR 409.16.)
Provide guidelines for ordering imaging services & states that services must be provided only on the order of practitioners with clinical privileges, consistent with state law, and of other practitioners who are authorized by the medical staff and governing body to order services.
Medicare Conditions of Participation (COP).
This act indicated that the ordering physician must include the reason for the diagnostic test on written order at the time the item or service is ordered by the physician or practitioner.
Balanced Budget Act of 1997
A radiologist may cancel, without notifying the treating physician or practitioner, an order because the beneficiary’s physical condition at the time of diagnostic testing will not permit performance of the test.
A. True
B. False
A. True
barium enema cannot be performed because of residual stool in the colon detected during scout X-Ray of the kidneys, ureters, bladder.
“Medically Necessary” services mus be:
- Consistent with symptoms or diagnosis of disease or injury.
- Necessary and consistent with generally accepted professional medical standards
- Furnished at the most appropriate level that can be provided safely and effectively.
Two common situations in which ABN is appropriate are
- Exams for medical indications that are not included in the payer’s local coverage determinations
- Screening mammograms performed more frequently than allowed by Medicare.
This modifier is appended to any charge lines for which the patient has signed an ABN to indicate that the beneficiary knows of his/her liability with respect to this charge:
A. GA
B. GX
C. GY
D. GZ
A. GA
This modifier is used to report that a voluntary ABN was issued:
A. GA
B. GX
C. GY
D. GZ
B. GX
This modifier is used to report that ABN was not issues and was not required according to policy.
A. GA
B. GX
C. GY
D. GZ
C. GY
This modifier is used to report that an ABN was not used although the service is expected to be denied as not reasonable and necessary.
A. GA
B. GX
C. GY
D. GZ
D. GZ
___ refers to intentional or unintentional billing of multiple procedure codes for a group of procedures that are covered by a single comprehensive code.
Unbundling
This initiative began on January 1, 1996, with a goal of controlling improper coding practices that lead to inappropriate increased payment for service submitted for reimbursement. It is the ensure that physicians and healthcare facilities follow Medicare’s resource-based value relative value scale.
Correct Coding Initiative (CCI)
These are placed at the end of a CPT or HCPCS code to identify a modification to the service or procedure performed. Consist of 2 numbers, 2 letters, or one number and one letter and can be attached to a level I or level II code.
Modifiers
These codes were created in 1983 by an amendment to the Social Security Act to bring under control the rising cost to Medicare of hospital inpatient care. The rationale was that diseases with the same use of hospital resources could be grouped together and billed under the same payment group.
DRG
This is a type of workload unit factors associated with the CDM, can be used as a means to capture labor and statistical information.
RVU
This type of code has been developed to allow facilities to report separately paid drugs used during imaging procedures.
Level II HCPCS.
Hospitals usually submit the following claim/bill:
A. 1500
B. CMS-1450/UB-04
B. CMS-1450/UB-04
Hospitals can submit a 1500 claim form only when they are billing on behalf of the Radiologist.
A. True
B. False
A. True
Inpatient claims for Medicare Part A do not require the reporting of CPT or HCPCS codes. However, charges should be entered consistently regardless of the patient status.
A. True
B. False
A. True
In 2001, HCFA became ____, who administers teh national Medicare program and works with states to administer Medicaid.
Center for Medicare and Medicaid Services, CMS
Part ___ of Medicare is free to those who qualify and helps cover expenses involved in hospital stays and, occasionally, in hospice care.
A. A
B. B
C. C
D. D
A. A
Part ___ of Medicare includes physician visits and outpatient care, requires payment of a monthly fee. This part is also called Supplementary Medical Insurance, and provides benefits for non-institutional healthcare providers.
A. A
B. B
C. C
D. D
B. B
This term means that the provider knows in advance the payment or allowable rate for each procedure or product.
Prospective
Contractors who manage the physician fee schedule are called ____, who under the MMA have become Medicare Administrative Contractors (MACs).
Fiscal Intermediaries
_____ has required the DHHS to adopt standards for electronic transactions and national identifiers for providers, health plans, and employers.
HIPAA
Name the two pathways in which Medicare makes decisions or determinations:
NCD - National Coverage Determination
LCD - Local Coverage Determination (focus on Reasonable and Necessary information).
Of note, LCDs were formerly LMRP (local medical review policies, which ended 11/11/2003).
To ensure that Medicare payments have been made appropriately, the ____ was established. This program set up auditors to review Medicare payments and determine if they are appropriate.
Recovery Audit Contractor Program (RAC)
Physicians are paid based on this prospective payment system, based on the RBRVS.
Medicare Physician Fee Schedule (MPFS)
IDTFs are specially designated testing facilities that are independent of an attending or consulting physician’s office and independent of a hospital. They furnish diagnostic testing, but not to use the test results to treat a patient. The facilities are paid under the ____
Medicare Physician Fee Schedule (MPFS)
In 2011, HOPPS final rule for OP supervision required that diagnostic and therapeutic services meet a specific level of supervision. They are:
- General supervision
- Direct supervision
- Personal supervision
The procedure is furnished under the physician’s overall direction and control, but the physician is not required during the performance of the procedure. The physician is responsible for the training of the nonphysician personnel who actually perform the procedure.
A. General supervision
B. Direct supervision
C. Personal supervision
D. Limited supervision
A. General supervision
The physician must be present in the office suite and immediately available to provide assistance and direction throughout the performance of the procedure.
A. General supervision
B. Direct supervision
C. Personal supervision
D. Limited supervision
B. Direct supervision
The physician must be in the room during the performance of the procedure.
A. General supervision
B. Direct supervision
C. Personal supervision
D. Limited supervision
C. Personal supervision
For diagnostic services furnished in a hospital or an on-campus department of the hospital that requires _____, the physician must be immediately available to provide assistance and direction during the procedure.
A. General supervision
B. Direct supervision
C. Personal supervision
D. Limited supervision
B. Direct supervision
This legislation was responsible for ensuring that high-cost drugs, radio-pharmaceuticals and biologicals would be paid separately and in addition to the procedure payment so that Medicare beneficiaries would continue to have access to these products.
Balance Budget Refinement Act of 1999
This system was introduced by CMS, reducing the technical reimbursement for multiple procedures during the same session to 100% for the first procedure and 50% for the second procedure.
Multiple Procedure Payment Reduction (MPPR)
Covered under CMS, _____ went into effect in 1965 and is the largest source of funding for medical and health-related services for the poorest people in the United States.
Medicaid
For people who may have too much income to qualify under the mandatory or optional categorically needy groups, and option to _____ to Medicaid eligibility is done by incurring medical or remedial care expenses by offsetting their excess income.
spend-down
The goal of financial statements is to allow stakeholders and leaders to
assess the organization’s performance and make decisions based on
pertinent, accurate information.
a. True
b. False
a. True
Financial statements provide information about an organization’s:
a. Cash position
b. Borrowing and repayment
c. Capital acquisitions
d. All of the above
d. All of the above
The 3 basic financial statements of an organization are:
a. Balance sheet, income statement, and cash flow statement
b. Balance sheet, accrual log, and cash flow statement
c. Income statement, capital budget, and balance sheet
d. Balance sheet, operating budget, and cash flow statement
a. Balance sheet, income statement, and cash flow statement
The accrual concept of accounting states that:
a. All transaction records must demonstrate both a change in assets
and a change in liabilities
b. All financial transactions must be included in the records
c. Income and expenses must be recorded in the time period in which
they are realized
d. None of the above
c. Income and expenses must be recorded in the time period in which
they are realized
The balance sheet is:
a. The assets that will be used in less than 1 year
b. A snapshot of the organization’s financial position
c. A summary of the revenues and expenses incurred over a specified
time period
d. A statement of how the organization acquired and used its cash
b. A snapshot of the organization’s financial position
The balance sheet provides information
about the liquidity of an organization, as well as the net value of its assets,
which can help decision makers assess the organization’s operational capacity
Generally accepted accounting principles (GAAP):
a. Never change
b. Are the accepted set of conventions, rules, and procedures of
accounting
c. Are established by The Joint Commission
d. All of the above
b. Are the accepted set of conventions, rules, and procedures of
accounting
On the balance sheet, current assets are assets that:
a. Will be consumed in less than 1 year
b. Assets that will not be consumed in less than 1 year
c. The organization’s land, buildings, and equipment
d. The organization’s investments
a. Will be consumed in less than 1 year
Noncurrent assets: Assets that will not be used or consumed in less than one
year, such as major equipment and buildings.
The statement of operations is the same as the organization’s:
a. Balance sheet
b. Cash flow
c. Income statement
d. Total assets and liabilities
c. Income statement
Items included on the balance sheet are:
a. Current assets, non-current assets, current liabilities, and equity
b. Current assets, non-current assets, equity, and cash flow
c. Current assets, current liabilities, equity, and capital
d. Non-current assets, current liabilities, long term liabilities, and
accounts payable
a. Current assets, non-current assets, current liabilities, and equity
Items included on the income statement are:
a. Operating revenues, cash flow, total assets, and total liabilities
b. Operating revenues, operating expenses, contractual allowances,
and charity care
c. Cash flow, total assets, capital, and non-current assets
d. Cash flow, capital expenditures, total assets, and total liabilities
b. Operating revenues, operating expenses, contractual allowances,
and charity care
GAAP requires that an unaudited statement include:
a. A financial ratio analysis
b. Notes to the financial statements
c. An annual report
d. None of the above
b. Notes to the financial statements
GAAP - Generally Accepted Accounting Principles
GAAP requires that an unaudited statement include:
a. A financial ratio analysis
b. Notes to the financial statements
c. An annual report
d. None of the above
x
Current ratio is:
a. Current assets divided by current liabilities
b. Current liabilities divided by current assets
c. Total current liabilities divided by total operating expenses
d. Net receivables divided by net patient revenue
a. Current assets divided by current liabilities
The current ratio is used to assess an organization’s ability to meet its short-term
obligations. It measures the number of dollars of current assets available to pay each
dollar of current liabilities
For-profit organizations often use a financial ratio known as :
a. OBID
b. QID
c. EBITDA
d. GAAP
c. EBITDA
EBIDA stands for earnings before deductions for interest, depreciation, and amortization.
For-profit organizations often use EBITDA, or earnings before deductions
for interest, taxes, depreciation, and amortization.
The statement of cash flows provides information about:
a. The organization’s operating revenues
b. The organization’s operating expenses
c. The organization’s capital expenditures
d. How the organization acquired and used its cash resources
d. How the organization acquired and used its cash resources
The objective of financial reporting is to:
a. Allow the organization’s stakeholders to assess the financial
performance
b. Allow the organization’s leaders to make operational decisions
based on pertinent, accurate information
c. Both A and B
d. None of the above
c. Both A and B
To aid in accurate and efficient diagnosis coding as well as provide
supporting information in the event of a payor audit, each final report from
the ordering physician must include a:
a. Alternative diagnosis
b. Reason for exam or signs and symptoms
c. Date the order was written
d. Signature of ordering physician
b. Reason for exam or signs and symptoms
The key to success in the function of coding and billing for imaging
procedures is:
a. Physician involvement
b. Monitoring of physician orders
c. Education of staff and ongoing monitoring of authoritative guidance
d. The written report
c. Education of staff and ongoing monitoring of authoritative guidance
The International Classification of Diseases (ICD), which is utilized to
report diagnoses, signs, and/or symptoms to payors is officially owned by
what organization?
a. American Health Information Management Association (AHIMA)
b. Food and Drug Administration(FDA)
c. World Health Organization (WHO)
d. American Medical Association (AMA)
c. World Health Organization (WHO)
During the exam, who is responsible for reviewing the requisition or order
to determine whether the correct exam has been ordered and the clinical
information is appropriate for the scheduled exam?
a. Clerk
b. Scheduler
c. Technologist
d. Transporter
c. Technologist
The procedural and billing coding process begins when a procedure is
scheduled and ends when what is sent to the payor?
a. Charges
b. Claim form
c. Bill
d. Radiology report
b. Claim form
A chart audit is considered useless without:
a. Trending
b. Monitoring
c. Action taken on the findings
d. Data to support the findings
c. Action taken on the findings
A written notice provided to a Medicare beneficiary before services are
furnished stating the service may not be covered by Medicare is an:
a. Informed consent
b. Advance beneficiary notice (ABN)
c. Physician order
d. Outpatient code editor
b. Advance beneficiary notice (ABN)
Many radiology departments can fall short on reimbursements because of
which missed codes associated with the procedure?
a. Imaging
b. Surgical
c. Physician
d. RVU
b. Surgical
Hospital billing departments will process electronic claims through
software programs to review for billing errors prior to submitting claims to
payors.
a. True
b. False
a. True
HCPCS codes are used in radiology to code:
a. Radiology interventional procedures
b. Radiopharmaceuticals
c. Surgical procedures associated with radiology procedures
d. Modifiers
b. Radiopharmaceuticals
The facility’s financial billing system, administrative organization, reporting
structures, and which of the following all contribute to the existing charge
capture process?
a. RIS and/or CDM
b. Patients
c. Quality department
d. Safety committee
a. RIS and/or CDM
Outpatient hospital bills or forms require the following information except:
a. Revenue code
b. Attending physician’s name
c. Primary and secondary diagnosis and condition codes
d. Number of views or images taken
d. Number of views or images taken
■■ Patient demographics
■■ Responsible party payor information, including identification numbers
■■ Line item date of service per revenue code line item
■■ Revenue code
■■ HCPCS/CPT codes (such as imaging procedure revenue code lines)
■■ Modifiers (for Medicare or Medicaid claims)
■■ Primary and secondary diagnosis and condition codes
■■ Attending physician’s name
■■ Provider number and address
The following coding system is utilized to report services, procedures, and supplies not listed in level 1 codes: a. ICD b. AMA c. HCPCS d. CPT
c. HCPCS
The section of the CPT manual specifying radiology procedures includes the: a. 19000 – 39999 b. 80000 – 89999 c. 70010 – 79999 d. 30100 – 38999
c. 70010 – 79999
Modifiers may be used to indicate the following except when:
a. A service or procedure has both a professional and a technical
component
b. A bilateral procedure was performed
c. Only part of a service was performed
d. A contrast study was performed
d. A contrast study was performed
A classification system that groups patients according to diagnosis, type
of treatment, age, and other relevant criteria is known as:
a. CPT
b. DRG
c. ICD
d. HCPCS
b. DRG
The chargemaster has the following components:
a. Revenue code
b. Department identification number(s)
c. Chargemaster description
d. All of the above
d. All of the above
Radiology administrators may use the chargemaster as a tool for
capturing RVUs for purposes of productivity measurement.
a. True
b. False
a. True
For most facilities, all CPT and HCPCS procedures and supply codes are \_\_\_\_\_\_\_\_ into the chargemaster. a. Loaded b. Hard-coded c. Captured d. Selected
b. Hard-coded
Which of the following supplies are billable?
a. Alcohol wipes
b. Gauze sponges
c. Bedpan
d. Stents
d. Stents
HCPCS was developed in:
a. 1983
b. 1984
c. 1985
d. 1986
1978
Healthcare Common Procedure Coding System (HCPCS)
When billing for supplies, whether an HCPCS code is assigned or not,
which appropriate code for the supply type must be assigned?
a. Revenue
b. APC
c. DRG
d. CPT
a. Revenue
Dictated by the interpreting radiologist, what serves to support the radiology exam performed? a. Procedure b. Findings c. Radiology report d. Diagnosis
c. Radiology report
The imaging report, dictated by the performing or
interpreting radiologist, serves to support the examination performed and the
clinical findings of the examination for both the technical (hospital/facility) and
professional (physician) components.
In the hospital setting, when the physician bills for the professional
component of CPT, the radiology department will bill for the:
a. Technical component
b. Modifier component
c. ABN component
d. Global component
a. Technical component
Authoritative coding guidance is provided by:
a. American Medical Association
b. American Hospital Association
c. Centers for Medicare & Medicaid Services
d. All of the above
a. American Medical Association
When conducting a coding and documentation review, all of the following should be reviewed except: a. Radiology reports b. Physician orders c. Claims forms/detailed bills d. PACS images
d. PACS images
the number and type of
encounters for review must be selected. Once this information has been determined,
the imaging reports, the physician’s order, copies of the detailed bills, and
any internal charge documents should be gathered.
Key components in the imaging coding process are the CPT and modifiers, HCPCS, DRGs, APCs, and: a. ICD b. ABN c. CMS d. CCI
a. ICD
The federal government is the authoritative source on:
a. American Medical Association (AMA)
b. Medicare (CMS)
c. American College of Radiology (ACR)
d. Private payors
b. Medicare (CMS)
Revenue codes consist of 4 numeric digits and are used to note types of
services submitted by hospitals on the hospital provider uniform billing
electronic claim forms.
a. True
b. False
a. True
also known as a CMS-1450 or UB-04 claim form
The absence of accurate diagnosis information creates a concern for both
the radiologist and the hospital and could result in the performance of an
incorrect radiology exam, thus delaying patient:
a. Exams and preparations
b. Billing and payment
c. Scheduling and consent
d. Diagnosis and treatment
d. Diagnosis and treatment
How often does the DHHS Secretary provide an estimate of the SGR and CF to MedPAC? a. Annually b. Bi-annually c. Monthly d. Quarterly
a. Annually
The
use of SGR began in 1997 as part of the BBA and is intended to control the growth
in aggregate Medicare expenditures for physicians’ services
How do IDTFs differ from physician offices and hospital outpatient
departments?
a. They are restricted to the technical component
b. They have lighter rules and requirements
c. They are subject to unannounced inspections
d. None of the above
c. They are subject to unannounced inspections
The Medicare Modernization Act makes clear that radiopharmaceuticals
are not considered covered outpatient drugs.
a. True
b. False
b. False
The MMA mandated that the MPFS increase payments by at least 1.5% in 2004
and again in 2005. The MMA makes clear that radiopharmaceuticals are considered
covered outpatient drugs. CMS determined that reimbursement for drugs that
cost less than $50 could be bundled into the cost of the procedure or service, and
that only drugs costing more than $50 would be considered separately payable.
The portion of the Medicaid program that is paid by the federal
government is known as the:
a. Federal Health Insurance Percentage (FHIP)
b. Medicaid Assistance Percentage Protocol (MAPP)
c. National Medicaid Assistance Protocol (NMAP)
d. Federal Medical Assistance Percentage (FMAP)
d. Federal Medical Assistance Percentage (FMAP)
The FMAP is
determined annually for each state by a formula that compares the state’s average
per capita income level with the national average. Wealthier states have a smaller
share of their costs reimbursed.
A commonly covered optional service under the Medicaid program is:
a. Prescribed drugs
b. Diagnostic services
c. Prosthetic devices
d. All of the above
d. All of the above
