Health Care Finance? For this week’s discussion questions, I would like if we discuss the following questions listed below from Chapter 3 as well as questions from Chapter 4. Please r
Health Care Finance
For this week's discussion questions, I would like if we discuss the following questions listed below from Chapter 3 as well as questions from Chapter 4. Please review and answer the following questions for both chapters.
Discussion Questions:
Chapter 3 Discussion Forum:
1. Why is accounting considered the language of business?
2. Why is self-balancing important in accounting?
3. Why is the role of a bookkeeper and accountant important in accounting?
Chapter 4 Discussion Forum:
1. Explain what Medicaid, SNAP and Medicare Part Bis and how it affects Health Care Finance?
2. Why is health care so expensive? List at least three factors that contribute to the cost of health care?
3. Who are the baby boomers and why are they so important in considering the cost of health care?
An initial post of 275 words, APA Format
Text Book: Cengage 2nd edition Introduction to Health Care Finance and Accounting. by Carlene Harrison and William P. Harrison
Chapter 4
Basic Accounting Concepts
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Chapter Objectives
After completing this chapter, you should be able to:
Define the terminology used in the language of accounting.
Explain the basics of double-entry accounting, with every entry into the financial records requiring an equal and offsetting debit and credit.
Describe the major differences between manual and computerized accounting systems.
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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©2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Introduction (1 of 2)
Accounting is the language of business
Codified by Luca Pacioli, “the father of accounting,” in his Summa (1494)
Understanding language of accounting beneficial to healthcare professionals
Bookkeeper vs. accountant
Bookkeepers record financial transactions
Accountants review and approve bookkeeping entries, prepare financial statements, present financial reports and analyses to top management, and design and enforce financial internal control procedures to safeguard financial resources.
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Introduction (2 of 2)
Accounting systems
Manual: Businesses write transactions in bound ledgers or journals and prepare reports manually
Computerized: Businesses enter data into financial management programs and use the software’s reporting features
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Figure 4-1 Double-Entry Accounting (1 of 8)
Double entry accounting is based on the equation:
Assets: Items owned by the business
Liabilities: Items owed by the business
Net worth: The difference between assets and liabilities
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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© Cengage Learning 2013
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©2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Double-Entry Accounting (2 of 8)
Every financial event is recorded with a two-part entry
Each entry is self-balancing with a debit and a credit
Debit | Credit | |
Asset increase | X | |
Asset decrease | X | |
Liability increase | X | |
Liability decrease | X | |
Revenue (Net worth increase) | X | |
Expense (Net worth decrease) | X |
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Double-Entry Accounting (3 of 8)
A trial balance is a listing of all account balances as of the date of the trial balance.
When the debit and credit totals are equal, the financial system is in balance.
When the totals do not balance, the accountant must find and correct any errors.
Types of double-entry accounting transactions for a physician’s practice
A revenue transaction is recorded when a patient makes a payment.
The entry is recorded as debit to Cash and a credit to the appropriate net worth account (e.g., Medical Services).
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Double-Entry Accounting (4 of 8)
Accounts receivable transactions generally are made when services are reimbursed by an insurance company and require two transactions:
When services are billed, a debit is made to Accounts Receivable, and a credit is made to the appropriate net worth account (e.g., Medical Services).
When payment is received, a debit is made to Cash, a credit is made to Accounts Receivable, and any difference between the two is debited to the net worth account (e.g., Medical Services).
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Double-Entry Accounting (5 of 8)
Accounts payable transactions generally are made when an expense on account is incurred by the practice.
When a purchase is made, a debit is made to the appropriate expense account (e.g., Medical Supplies Expense), and a credit is made to Accounts Payable.
When payment is remitted, a debit is made to Accounts Payable, and a credit is made to Cash.
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Double-Entry Accounting (6 of 8)
Capital asset transactions involve items owned that have a long useful life and cost more than a minimal amount.
A capital asset purchase is recorded as debit to the appropriate asset account (e.g., Land, Buildings, Furniture, Equipment) and a credit to Cash.
Most capital assets lose value over time and are depreciated.
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Double-Entry Accounting (7 of 8)
Banks loan transactions occur when a medical facility borrows money to meet ongoing costs or to finance a major purchase.
When the money is borrowed, a debit is made to Cash, and a credit is made to a new liability account (e.g., Bank Loan).
When the loan is repaid (usually in installments), the entry requires a debit to the liability account, a debit to an expense account for the interest due, and a credit to Cash for the total.
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Double-Entry Accounting (8 of 8)
The four steps to properly account for any transaction:
Step 1: Identify the accounts to be used.
Step 2: Identify the amount(s).
Step 3: Assign debits and credits.
Step 4: Ensure that debits and credits balance.
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Knowledge Check Activity 4.1
Elderberry Dental Services buys a new piece of X-ray equipment for the office. They pay $89,000 in cash to acquire this equipment. Based on the accounting equation, what would be the effect of this transaction?
Cash +$89,000, Equipment +$89,000
Cash -$89,000, Equipment +$89,000
Cash +$89,000, Equipment -$89,000
Cash -$89,000, Equipment -$89,000
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
‹#›
Instructions:
Use the Knowledge Check questions to periodically pose a question to students during class to gauge how well they can recall the material that was presented.
13
©2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Knowledge Check Activity 4.1: Answer
Elderberry Dental Services buys a new piece of X-ray equipment for the office. They pay $89,000 in cash to acquire this equipment. Based on the accounting equation, what would be the effect of this transaction?
Answer: b. Cash -$89,000, Equipment +$89,000
Cash would decrease by $89,000, and Equipment would increase by $89,000.
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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©2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
The Role of the Accountant in the Financial Process
Medium-sized and larger medical facilities need accountants who:
Review and approve bookkeeping.
Prepare financial statements and analyses for management.
Establish and monitor controls to safeguard the assets.
Publicly held corporations and government facilities are audited annually.
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Computerized Accounting Systems in Healthcare (1 of 5)
Practice Management System (PMS)
Computer software programs designed for medical practices
Supports a database function for all of the patient information
Maintains schedules
Files insurance claims
Generates patient billings
Automatically updates the accounting records
Can buy “off-the-shelf” or customized system
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
‹#›
Computerized Accounting Systems in Healthcare (2 of 5)
Procedure for manual accounting:
Each transaction written into appropriate journal
Journal totals calculated manually, and summary totals posted to general ledger
Trial balance prepared at end of accounting period
Adjusting entries (e.g., depreciation) prepared and posted at end of accounting period
Worksheet prepared and used to generate the final trial balance
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Computerized Accounting Systems in Healthcare (3 of 5)
Final trial balance used to prepare financial statements for accounting period
Journal entries prepared and posted to close revenue and expense accounts and prepare for the next accounting period
Post-closing trial balance prepared
Revenue and expense accounts have zero balances
Ending asset, liability, and expense account balances become beginning balances for new period
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Computerized Accounting Systems in Healthcare (4 of 5)
Procedure for computerized accounting:
Each transaction keyed into appropriate journal
Journal totals automatically posted to general ledger
User can request a trial balance at any time
Journal entries entered at end of accounting period
Final trial balance generated
Program prepares and posts closing entries to zero out revenue and expense accounts
Post-closing trial balance generated
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Computerized Accounting Systems in Healthcare (5 of 5)
Computerized accounting system benefits:
Automation of bookkeeping functions
Accurate totals
Error-avoidance by linking vendor codes to specific accounts
Computerized accounting system needs:
Trained personnel who know what types of transactions go into each account
Oversight by an accountant
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Knowledge Check Activity 4.2
All of the following can be handled by a computerized accounting system except:
Handling basic patient information.
Preparing insurance claims.
Billing patients for balances due.
Reviewing transactions for accuracy.
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
‹#›
Instructions:
Use the Knowledge Check questions to periodically pose a question to students during class to gauge how well they can recall the material that was presented.
21
©2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Knowledge Check Activity 4.2: Answer
All of the following can be handled by a computerized accounting system except:
Handling basic patient information.
Preparing insurance claims.
Billing patients for balances due.
Reviewing transactions for accuracy.
Answer: d. Reviewing transactions for accuracy.
What the computer is not able to do is tell the difference between a business transaction posted to the appropriate account and one that is not.
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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22
©2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Self-Assessment
Compare and contrast the duties of a bookkeeper and an accountant.
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Instructions:
Use the Self-Assessment question to encourage students to evaluate their progress or goals in the course, as well as determine how they might apply their learning or grow as an individual.
23
©2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Chapter 3
The Rising Costs of Medical Services and Healthcare Reform
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
‹#›
Chapter Objectives
After completing this chapter, you should be able to:
Identify and explain the major factors influencing the rising costs in health care.
Discuss the history of universal health care in the United States, culminating in the Patient Protection and Affordable Care Act of 2010 (PPACA).
Identify the major components of PPACA and the specifics of its implementation through 2022.
Explain the financial coverage that the Build Back Better Act will provide.
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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2
©2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
The Rising Costs of Medical Services
Spending on healthcare in the United States since 1960:
Increased more than the cost-of-living index
Increased as a percentage of the gross national product (GNP)
Increased as a percentage of household income
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Figure 3-1 Personal Healthcare Expenditures as Percentage of GDP
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Source: Data from Centers for Medicare & Medicaid Services; www.cms.gov/NationalHealthExpend-
Data/25_NHE_Fact_Sheet.asp
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©2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Baby Boomers and Life Expectancy
Baby boomers: Members of the generation born between 1946 and 1964, a period with a greater than average birth rate
Major force in society (25% of population)
Starting to receive Social Security and Medicare benefits
Longer life expectancies than previous generations
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Innovations in Treatment
New treatments and technologies directly add to healthcare costs
Help increase lifespan, which increases healthcare spending
Financial incentives help patients become more effective consumers of health care:
High-deductible insurance plans encourage patients to question their physician on the costs of their health care.
The scale of copayments for generic drugs versus name-brand drugs encourages patients to discuss the availability of generics with their physician.
Health programs and discounts and healthy cafeteria food options offered by employers help employees stay healthy.
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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An Educated Workforce
Education and training of healthcare professionals is expensive
Physician training takes many years
Educational and training requirements increasing for other healthcare workers
Shortages drive up salaries
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Fraud and Abuse
Medicare and Medicaid lose billions of dollars annually from fraud and abuse
Government efforts to reduce fraud and abuse were ineffective
The Centers for Medicare and Medicaid Services (CMS) detect fraud through the Recovery Audit Contractor (RAC) Program:
Conduct provider audits to detect and correct billing errors
Train providers in proper methods of claim submission to avoid future errors
Lower the error rate in CMS programs
Protect taxpayers and future program beneficiaries by ensuring that only appropriate costs are reimbursed
In 2016, RACs corrected $473.92 million in improper payments.
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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The Costs of Medical Malpractice
Medical malpractice lawsuits can cost millions of dollars
Healthcare providers need malpractice insurance
Costs 10% of total healthcare costs in some areas
Medical malpractice tort reform efforts seek to reduce costs
Limits on non-economic and punitive damages
Attorney fee limitations
Amend joint and several liability
Reduce the statute of limitations
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
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Knowledge Check Activity 3.1
Which of the following is a major factor in the rising costs of health care?
Medical malpractice lawsuits
New treatments and technologies
Medicare fraud and abuse
Education and training of healthcare professionals
All of these answers are correct.
Harrison, Introduction to Health Care Finance and Accounting, 2nd Edition. © 2024 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
‹#›
Instructions:
Use the Knowledge Check questions to periodically pose a question to students during class to gauge how well they can recall the material that was presented.
10
©2019 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
Knowledge Check Activity 3.1: Answer
Which of the following is a major factor in the rising costs of health care?
Medical malpractice lawsuits
New treatments and technologies
Medicare fraud and abuse
Education and training of healthcare professionals
All of these answers are correct.
Answer: e. All of these answers are correct.
Medical malpractice lawsuits, new treatments and technologies, Medicare fraud and abuse, the education and training of healthcare professionals, as well as the increased life expectancy of Baby Boomers, are all factors in the rising c
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