Practice Development 1 & 2

Question 1

What does the income statement report, what does the balance sheet report. How are the two connected?

Answer 1

Income and expense accounts are “closed” at the end of every period to the owner’s equity account. Any profit or loss as a result of operation will show up as an increase or decrease to the owners equity on the balance sheet.

Question 2

What are the three cash flow sources reported on in the statement of cash flows?

Answer 2

Cash flows from operating activities, cash flows from investing activities and Cash flows from financing activities.

Question 3

Name term
All partners are liable for the full extent of any liability, even if it resulted from actions of another partner.

Answer 3

Joint and Several Liability

Question 4

——: shareholders personal assets are protected from claims.

Answer 4

Corporate shield

Question 5

A ____ ___ ____ is an entity that uses managed care concepts or techniques to influence the accessibility, cost, and quality of health care.

Answer 5

A managed care organization is an entity that uses managed care concepts or techniques to influence the accessibility, cost, and quality of health care.

Question 6

Managed Care Cost Control Strategies

Answer 6

• Limit consumer choices of providers and services
• Payment methods designed to shift financial risk to patients and providers.
• Utilization management programs
• The use of performance outcome measures to evaluate providers.
• Provider participation limited by restrictions on service coverage and payment.

Question 7

Types of Fraud

Answer 7

• most common: billing for health care services that were never rendered.
• second most common: upcoding or billing for a more costly service or procedure than was actually performed.
• 3rd most common: deliberate provision of medically unnecessary services.

Question 8

What is the first step in developing a compliance program?

Answer 8

Auditing to determine the organization’s risk areas is the first step and development of a compliance program.

Question 9

Area of risk pertaining to compliance

Answer 9

• documentation
• billing
• gifts from suppliers
• rental agreements with other healthcare organizations
• referral arrangements

Question 10

What is Cash accounting?

Answer 10

• Revenue is recorded when cash is received
• Expenses are recorded when cash is paid
• Focuses on actual cash flow

EX: A patient is seen in January. Insurance pays in March.
* Cash Accounting: Revenue recorded in March

Question 11

What is accrual accounting?

Answer 11

• Revenue is recorded when it is earned (even if not yet paid)
• Expenses are recorded when they are incurred (even if not yet paid)
• Focuses on economic activity and financial performance

A patient is seen in January. Insurance pays in March.
* Accrual Accounting: Revenue recorded in January (when service was provided)

Question 12

The Income Statement shows __ and ___ for a specific time period, not just when cash moves.

Answer 12

The Income Statement shows revenues and expenses for a specific time period, not just when cash moves.

Question 13

The Balance Sheet includes accounts like Accounts Receivable and Notes/Loans, which only exist under ___ accounting.

Answer 13

The Balance Sheet includes accounts like Accounts Receivable and Notes/Loans, which only exist under accrual accounting.

Question 14

The ___ of ___ ___ exists specifically to reconcile accrual-based income with actual cash movement

Answer 14

The Statement of Cash Flows exists specifically to reconcile accrual-based income with actual cash movement

Question 15

Revenues ___ equity
Expenses ___ equity
Withdrawals ___ equity

Answer 15

Revenues increase equity
Expenses decrease equity
Withdrawals decrease equity

Question 16

The ___ ratio is an indicator of a company’s ability to pay its short term liabilities (debts).

Answer 16

The current ratio is an indicator of a company’s ability to pay its short term liabilities (debts).

Question 17

The larger the current ratio, the greater the what?

Answer 17

The larger the current ratio, the greater the company’s capacity to cover its short-term obligations.

Question 19

The ___ ratio allows only the most liquid of assets—cash and marketable securities—as offsetting assets against liabilities.

Answer 19

The cash ratio allows only the most liquid of assets—cash and marketable securities—as offsetting assets against liabilities.

Question 20

___ ratio = Cash/Current Liabilities

Answer 20

Cash ratio = Cash/Current Liabilities

Question 21

The larger the cash ratio, the greater the what?

Answer 21

The larger the cash ratio, the greater the company’s capacity to cover its short-term obligations with cash only

Question 22

The ___ ratio measures the ratio of a company’s total debt against the total asset.

Answer 22

The debt ratio measures the ratio of a company’s total debt against the total asset.

Question 23

__ ratio = Total liabilities / Total assets

Answer 23

Debt ratio = Total liabilities / Total assets

Question 24

The lower the debt ratio is, the what?

Answer 24

The lower the debt ratio is, the less leveraged the company is.
* lower debyt ration = less indebted and has a strong equity position. = Good

Question 25

The ___ ratio indicates how much debt you use to run your business.

Answer 25

The **debt to equity** ratio indicates how much debt you use to run your business.

Question 26

___ ratio = Total liabilities / Total equity

Answer 26

Debt to equity ratio = Total liabilities / Total equity

Question 27

The larger the debt to equity ratio is, the what?

Answer 27

The larger the debt to equity ratio is, the **higher the amount of debt that is used to finance the company.** * higher = More debt = more levered = bad

Question 28

___ Measures a companies ability to generate income relative to revenue.

Answer 28

**Net Profit Margin:** Measures a companies ability to generate income relative to revenue.

Question 29

____= Net profit / Revenue

Answer 29

Net profit margin = Net profit / Revenue

Question 30

Gross profit margin formulas

Answer 30

The dollar formula is: **Total Revenue – COGS = Gross Margin.** The percentage formula is: **Total Revenue – COGS / Net Sales x 100.**

Question 31

The larger the net profit margin the what?

Answer 31

The Larger the NPM the more profitability.

Question 32

A product's ___ margin is the difference between the selling price of the product and its variable costs.

Answer 32

A product's **contribution margin** is the difference between the selling price of the product and its variable costs.

Question 33

___ = Sales Price - Variable Cost Per Unit

Answer 33

**Contribution Margin** = Sales Price - Variable Cost Per Unit

Question 34

Breakeven point formula in units.

Answer 34

BEP Units = Total Fixed Cost/Selling Price - Variable Cost

Question 35

Break-Even Point in Dollars Formula

Answer 35

BEP Dollars = Total Fixed Costs/(Contribution Margin Per Unit / Item Price)

Question 36

What is the law most frequently used to pursue providers? 

Answer 36

**The civil, false claims act** It is a civil law that can result in fines NOT jail time and is about billing and reimbursement violations 

Question 37

Why does arrangements between clinicians of rental property need to be rented to based on affair market value?

Answer 37

Property must be rented based on a fair market value because if you rent a space from a Doctor Who can refer to you and if the rent is lower, then it cost you to own and I can be seen as incentive for you to refer. 

Question 38

Information that identifies an individual and describes his/her medical condition or treatment

Answer 38

Protected Health Information

Question 39

Protected health information definition

Answer 39

Information that identifies an individual and describes his/her medical condition or  treatment 

Question 40

What does protected health information include?

Answer 40

clinical information Information on payment Basic demographic information Name address and phone number 

Question 41

Anytime a healthcare professional treats a patient they have a ____. The level of care that is reasonable is defined by the ____ set by other practitioners in the field. This duty comes into play once you accept someone as a patient.

Answer 41

Anytime a healthcare professional treats a patient they have a **duty to use reasonable care.** The level of care that is reasonable is defined by the **standard of performance** set by other practitioners in the field. This duty comes into play once you accept someone as a patient.

Question 42

____: a healthcare provider did not measure up to the standard of care expected of reputable and careful healthcare providers under similar circumstances

Answer 42

Negligence 

Question 43

Professional liability presupposes the existence of an accepted __ __ __ when the practitioner possesses the degree of education, credentials, and skills, ordinarily possessed by a practitioners in the professional field. Although level of care need not be extraordinary and must be reasonable and diligent and must reflect the practitioners maintenance of current knowledge in the professional area practice 

Answer 43

Standard of care  Professional liability presupposes the existence of an accepted **standard of care** when the practitioner possesses the degree of education, credentials, and skills, ordinarily possessed by a practitioners in the professional field. Although level of care need not be extraordinary and must be reasonable and diligent and must reflect the practitioners maintenance of current knowledge in the professional area practice

Question 44

What is the most likely civil litigation to be brought against a SLP or Audiologist? 

Answer 44

**Unintentional torch of negligence** is the most likely civil litigation to be brought against a speech, language pathologist or Audiologist 

Question 45

In a case of action of negligence to be pursued, what for elements must be present? 

Answer 45

1. Legal duty must exist between practitioner and plaintiff. (Relationship established) 2. A breach of legal duty must exist. (injury, inadequate service, etc) 3. Approximate cause must exist between the breach of duty and the injury. (cause-and-effect) 4. An actual loss or damage must result from the injury. 

Question 46

When does informed consent occur?

Answer 46

Informed consent is consent that is voluntarily given **after** the patient has been informed of the possible benefits, risks, and complications of treatment.

Question 47

Name the four problems in quality

Answer 47

1. Under use. 2. Overuse. 3. Variation and use. 4. Mis use

Question 48

Name the three measures of quality 

Answer 48

1. Structural. 2. Process. 3. Outcomes. 

Question 49

Use and Disclosure

Answer 49

Information is used by members of our workforce for * Collection of information by clinical staff * Review of patient charts by clinical staff * Completion of billing forms by clerical staff * Accounting and bookkeeping entries Information is disclosed when it is shared with others * Transmission of information to a health plan * Transmission of information to a billing service * Transmission of prescriptions to a pharmacy * Consultation with an independent provider * Reporting to government agencies

Question 50

Notice and Acknowledgement:

Answer 50

Notice of Privacy Practices * A statement given to each patient **describing how the practice will use and disclose health** information and outlining the patient’s rights under HIPAA Acknowledgement * **Written documentation that the notice was provided** to a patient, either signed by the patient or completed by a staff member explaining why the patient did not sign it

Question 51

What is Authorization under HIPAA?

Answer 51

we are required to obtain a patient’s authorization to use or disclose their protected health information for a purpose ***other* than treatment, payment, or to support the health care operations of the practice**. * Signed by the patient or patient’s personal representative

Question 52

__ is a federal health insurance program that covers 60 million Americans. It serves eligible beneficiaries without regard to income or medical history.

Answer 52

**Medicare** is a federal health insurance program that covers 60 million Americans. It serves eligible beneficiaries without regard to income or medical history.

Question 53

Name the 4 main “Parts” of Medicare

Answer 53

* Part A, “Hospital insurance” (this is an entitlement: EVERYONE gets it) * Part B, Supplementary insurance (this is voluntary) * Part C, Medicare Advantage (You can opt for this instead of Part B) * Part D, Prescription drug benefit

Question 54

What is Part A of Medicare?

Answer 54

Hospital insurance” (this is an entitlement: EVERYONE gets it) --- Individuals ages 65 and over are automatically entitled to Part A * Inpatient hospital * Skilled Nursing Facilities * Home Healthcare Services * Hospice

Question 55

What is Part B of Medicare?

Answer 55

Part B, Supplementary insurance (this is voluntary) * Physician * Outpatient Services * Home Health * Preventative Services Part B, Supplementary Medical Insurance, is voluntary, but covers 95% of all Part A beneficiaries.

Question 56

What is Part C Medicare?

Answer 56

An alternative to Original Medicare** (Part A + Part B & more)** * Part C, Medicare Advantage (You can opt for this instead of Part B) * Includes Part A and Part B (not in addition to them) * Run by private insurance companies (Medicare-approved) * Plans include all the benefits of original Medicare and more like prescription drug coverage and annual physical exams. * Recipients pay premiums * 21% of Medicare spending.

Question 57

What is Part D medicare

Answer 57

Part D, Prescription drug benefit Two options available * Prescription drug coverage as part of a Medicare Advantage plan * A stand-alone Medicare prescription drug plan

Question 58

Know this

Answer 58

Question 59

The elements of a compliance program as prescribed by Medicare guidelines:

Answer 59

* Written **Policies and procedures** * A designated **compliance officer** * Conducting comprehensive **training** (There are plenty of free resources, it does not need to be expensive = Online Medicare Learning Network) * **Internal** monitoring and auditing (Monitoring activities are ongoing. Auditing is episodic) * Maintaining clear lines of **communication internally** (can your employees easily report their concerns to you) * Enforcing **disciplinary** standards (You must consistently enforce your human resources policies) * **Responding** to detected violations (this includes thing you discover or that you are notified about)