insightsArticles

Read this if you are a board member or responsible for providing CECL information to your board.

We’ve heard so much about Current Expected Credit Losses (CECL) in the past few years leading up to its adoption by all remaining financial institutions in recent calendar year-end financial statements. The focus has been, rightfully so, on its actual adoption—making sure policies and procedures are adjusted to appropriately account for the new standard and that financial statement disclosures comply with the new requirements. With year-end 2023 largely concluded, and people having had the chance to catch their breath, the focus understandably shifts to how best to optimize CECL for the long haul. Although we like to think the hard part (i.e., adoption) is behind us, which is certainly a reason to celebrate, there are questions that may need answers. One of those is figuring out how much CECL information should you provide to your board and how often.

We often get inspiration in answering this question from Goldilocks: not wanting to provide too much information but also not providing too little—you want to provide just enough. This means providing enough information so board members can knowledgeably assess the adequacy of the allowance and provide robust challenge while not getting so much information that they could, in theory, reperform the calculation themselves. Some items to consider including in your board communications are:

Key inputs and assumptions

There are likely many inputs and assumptions that go into your CECL calculation, all of which bear some impact on your overall allowance. You likely identified those inputs and assumptions that are most important to your calculation when implementing the standard. Best practice is to have documented these key inputs, assumptions, and management’s rationale for them in a model document, and include a monitoring schedule in your ACL policy for the  frequency in which they will be reviewed and updated— and under whose authority review and approval is required.

Of course, each period, any changes requiring board approval will need to be disclosed to the board. But as part of your ongoing disclosure to the board, consider providing an overall summary of key inputs and assumptions and highlighting any that shifted in the prior period. This may include prepayment speeds, forecasting models, forecast length, reversion length, and probability of default and loss given default, aging buckets. This summary could be in narrative form, but it may be more effective to provide it in a list: showing the inputs and assumptions period-over-period and explaining any significant changes. This will allow your board to quickly assess what has changed and effectively challenge those changes.

Analytics and trends

Analytics can be an effective tool in assessing your allowance calculation. We recommend incorporating analytics into management’s own review of the allowance calculation, as a final check before approving the calculation for the period. Many of these analytics could likely be recycled and provided to boards as part of your reporting. Some analytics to consider using are:

1. Changes in the allowance period-over-period, possibly broken up by financial asset type
   For instance, for financial institutions, the financial asset type could be its various loan portfolio segments. For commercial entities, it could be the age of the receivables. Set a variance threshold for any changes period-over-period and investigate those changes that meet this threshold. The resulting explanations can then be incorporated into your board reporting.
2. Charge-off trends
   Examine historical charge-off activity, looking for any significant changes over recent periods. Although recent charge-off activity may not be in direct correlation to your allowance levels, given the CECL requirement related to reasonable and supportable forecasts and the use of forward-looking information, recent trends in charge-off activity could prove to be useful information for boards. If there are significant differences in recent charge-off levels vs. your current allowance, this may beg an explanation as to why. Consider presenting your charge-off activity in the form of an analytic, such as charge-offs as a percentage of credit loss expense.

3. Delinquency trends
   Consider providing the board information on the payment status of your outstanding receivables, likely the largest financial asset subject to CECL. Past due buckets, for instance, segregating your receivables by days past due can be useful information for the board. Again, providing a period-over-period comparison can make the analysis that much more powerful. The usefulness of this information may vary, as it is possible past due status is an input into your allowance calculation or qualitative adjustment methodology. Thus, the way in which this analytic is discussed with your board will likely vary depending on your allowance calculation.

Peer comparison

One of the more challenging aspects to CECL is finding good comparisons. Because there is so much leeway given to adopters under CECL for how to construct their methodology, we advise that peer comparisons be used with caution. However, peer comparisons should not simply be ignored for this reason. Peer comparisons can provide valuable insights into how like-kind companies are approaching their allowance calculations and reserve-level expectations. The emphasis now is on determining which peers are truly like-kind to you in the context of CECL and covered financial assets. Again, peer results may vary significantly from your own company’s results, but such differences may lead to you and your board to consider if those are really your peers, or to challenge your own model outputs, inputs, and assumptions.

CECL or Allowance for Credit Losses (ACL) policies

Maintaining a CECL or Allowance for Credit Losses (ACL) policy is an important part of overall governance. This policy should not go into as much detail as other model development, design, and calculation procedural documents. But it should address governance roles and responsibilities, authority, and required model risk management activities and standards, in addition to ongoing monitoring and reporting. Review this policy on an annual basis and present it to the board for approval. This policy will also help dictate how much CECL information is provided to the board and will allow you to revisit how much information and what types of information are provided at least annually.

Finding that “just right” mix of information takes time and will vary depending on your company’s specific circumstances. Those companies in which their CECL calculation is a significant estimate will likely require more information than those companies in which CECL is less significant. Frequently ask your board if they feel as if they’re getting the right mix of information. Don’t be afraid to experiment with different reports and different levels of reporting. As always, if you have any questions or want some additional direction, please don’t hesitate to reach out to your BerryDunn team.

Read this if you are involved in recruiting board members.

Board members serve as the backbone of companies and organizations across industries. They provide direction, oversight, and strategic guidance. Selecting the right people to serve on your board is important for the success of your organization. Here are some things to consider as you look for board members that fit your needs.

• Identify and understand your needs
  Before initiating the recruitment process, identify the specific skills, experiences, and perspectives your board lacks or skills that could enhance board and organizational effectiveness. This can vary depending on what your board needs, but often includes financial acumen, legal knowledge, extensive management experience, and industry connections.
• Outline the roles, responsibilities, time commitments, and expectations
  Be transparent about your mission, values, and the challenges you face. This clarity will attract candidates who match your goals and can fully understand what they're signing up for.
• Reach out to your existing network
  Personal recommendations often yield high-quality candidates who are already familiar with your work and business. You could also consider spreading the word through company communications like newsletters and bulletins, social media, and events.
• Actively seek out candidates from different age groups, ethnicities, genders, professions, and geographic locations
  Diversity in background, perspective, and experience enriches discussions, fosters innovation, and ultimately better serves your organization. 
• Screen candidates thoroughly
  Implement a rigorous selection process to assess candidates' qualifications, commitment, and alignment with your values. Conduct interviews to gauge their passion for the business, leadership style, and ability to collaborate effectively. Consider requesting references and conducting background checks if deemed necessary.
• Provide orientation and training
  Once selected, provide comprehensive orientation and continuous training to new board members. Familiarize them with your history, programs, governance structure, and strategic priorities. Offer opportunities for professional development to enhance their effectiveness in fulfilling their roles.
• Engage the board
  Cultivate a culture of active participation, open communication, and accountability among board members. Encourage them to contribute their unique perspectives, skills, and networks to advance your goals. Establish expectations, evaluation mechanisms, and term limits to ensure accountability and prevent stagnation.
• Nurture a supportive and inclusive board culture where members feel valued and empowered
  Celebrate achievements, recognize contributions, and cultivate camaraderie through team-building activities and meaningful interactions.
• Regularly evaluate the effectiveness of your board composition, dynamics, and processes
  Solicit feedback from board members, staff, and stakeholders to identify areas for improvement and adaptation. Be willing to make necessary adjustments to ensure the board remains agile, responsive, and aligned with your evolving needs and goals.

By following these steps and approaches, your team can assemble a dynamic and dedicated board of directors equipped to navigate challenges, seize opportunities, and drive meaningful impact for your company or organization.
 

Read this if you are responsible for your company’s income tax provision and disclosures.

In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. Although this ASU does not impact the accounting for income taxes, it does impact the disclosures of such and is applicable to all entities subject to income taxes. According to the FASB, “the Board is issuing the amendments…to enhance the transparency and decision usefulness of income tax disclosures. Investors, lenders, creditors, and other allocators of capital indicated that the existing income tax disclosures should be enhanced to provide information to better assess how an entity’s operations and related tax risks and tax planning and operational opportunities affect its tax rate and prospects for future cash flows.”

The main components of the FASB’s ASU can be broken down into three areas, as done so in the ASU itself:

1. Rate Reconciliation
2. Income Taxes Paid
3. Other Disclosures

Rate Reconciliation

This amendment is only for public business entities. Public business entities have always been required to provide a rate reconciliation, reconciling income tax expense at the statutory rate to the entity’s effective tax rate. This rate reconciliation could be displayed in amounts or percentages. ASU No. 2023-09 requires this rate reconciliation be displayed in both amounts and percentages and also identifies the following specific categories that must be disclosed:

1. State and local income tax, net of federal (national) income tax effect
2. Foreign tax effects
3. Effect of changes in tax laws or rates enacted in the current period
4. Effect of cross-border tax laws
5. Tax credits
6. Changes in valuation allowances
7. Nontaxable or nondeductible items
8. Changes in unrecognized tax benefits

There is also a requirement that any reconciling item greater than 5% of the statutory income tax expense be separately disclosed, even if not one of the specific categories identified in the ASU. Furthermore, this 5% threshold applies to the cross-border tax laws, tax credits, and nontaxable or nondeductible items categories, meaning that if the reconciling item is within these categories and is above the 5% threshold, the item must be disaggregated by its nature. The 5% threshold also applies to the foreign tax effects category in that this category is required to be disaggregated by jurisdiction (country) and by nature if meeting the 5% threshold.

For example, let’s say an entity has research and development tax credits as well as energy-related tax credits, both of which are in excess of the 5% threshold. These tax credits would be required to be separately disclosed. However, let’s say tax credits in total are below the 5% threshold. In this case, tax credits would still need to be separately disclosed, as they are one of the specific categories identified in the ASU but would not need to be further disaggregated.

For the state and local category, a public business entity is required to provide a qualitative description of the states and local jurisdictions that make up the majority (greater than 50%) of the effect of the state and local income tax category. So, for instance, if the entity’s state and local tax is primarily derived from taxes to the States of Maine and Massachusetts, this fact must be disclosed.

Entities other than public business entities are required to qualitatively disclose specific categories of reconciling items and individual jurisdictions that result in a significant difference between the statutory tax rate and the effective tax rate. Paragraphs 740-10-55-232 and 55-233 provide an illustration of these disclosures.

Income Taxes Paid

All entities now must disclose:

1. The amount of income taxes paid (net of refunds received) disaggregated by federal (national), state, and foreign taxes
2. The amount of income taxes paid (net of refunds received) disaggregated by individual jurisdictions in which income taxes paid (net of refunds received) is equal to or greater than 5% of total income taxes paid (net of refunds received).

Other Disclosures

All entities now must disclose on an annual basis:

1. Income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign
2. Income tax expense (or benefit) from continuing operations disaggregated by federal (national), state, and foreign.

The ASU does eliminate the requirement for all entities to (1) disclose the nature and estimate of the range of the reasonably possible change in the unrecognized tax benefits balance in the next 12 months or (2) make a statement that an estimate of the range cannot be made.

This ASU is effective for public business entities for annual periods beginning after December 15, 2024. For entities other than public business entities, the ASU is effective for annual periods beginning after December 15, 2025. Early adoption is permitted. The ASU should be applied on a prospective basis although retrospective application is permitted.

The BerryDunn perspective

On the surface, this ASU may not seem important, as it only impacts disclosure. But the level of disaggregation required could make this ASU a time-consuming one to implement, especially for those entities that operate in many states and foreign jurisdictions. As indicated above, all entities now must disclose income tax expense and income taxes paid by federal, state, and foreign. This may require modifications to existing tax provision procedures to ensure this information is readily available come time to populate the income tax disclosures in your entity’s financial statements.

Conversations with those responsible for preparing the income tax provision should start now so the best process to accumulate the information needed for these new disclosures can be identified proactively, reducing, or possibly eliminating the amount of rework needed when it comes time to adopt this accounting standard. As always, please don’t hesitate to reach out to your BerryDunn team should you have questions.

Read this if your organization receives federal grants.

Navigating the ever-evolving landscape of federal grant management just got more manageable, as the Office of Management and Budget (OMB) has issued the latest revision of the Uniform Grants Guidance for 2024. It introduces several significant changes aimed at enhancing clarity, efficiency, and compliance in grant administration. The effective date for these changes is October 1, 2024. Here's a closer look at the most noteworthy updates.

Fixed amount awards and subawards

• The threshold for fixed-amount subawards requiring prior written approval from federal agencies has been raised from $250,000 to $500,000, providing recipients with increased flexibility.

Equipment-related thresholds

• The acquisition value threshold for defining equipment has been raised from $5,000 to $10,000, reducing administrative burdens for recipients. Similarly, the threshold for unused supplies has been increased from $5,000 to $10,000.

De minimis indirect cost rates 

• The de minimis rate for indirect costs has been increased from 10% to 15% of modified total direct costs (MTDC), providing recipients and subrecipients with greater flexibility in cost allocation.
• Recipients and subrecipients can opt for a lower de minimis rate than 15%.
• OMB has adjusted the exclusion threshold of subawards from $25,000 to $50,000 for modified total direct costs.

Single audit

• The threshold for mandatory single audits has been raised from $750,000 to $1 million in federal expenditures, reducing the audit burden on smaller recipients.

Additional updates of note:

Streamlined Notices of Funding Opportunity (NOFO)
The revised guidance is putting more emphasis on streamlining Notices of Funding Opportunity (NOFO). Federal agencies are encouraged to make NOFOs more concise, accessible, and transparent, ensuring that essential information is effectively communicated to potential applicants. By simplifying NOFOs and adopting plain language, agencies aim to reduce administrative burdens and enhance the accessibility of grant opportunities, particularly for underserved communities and organizations with limited capacity.

Enhanced data-driven decision-making
Under the new provisions, federal grant recipients are permitted to allocate a portion of their funding toward data management infrastructure, including the acquisition of software, tools, and technologies for data collection, analysis, and reporting. This investment in data infrastructure enables organizations to establish robust data systems, streamline data collection processes, and enhance data quality, ultimately facilitating evidence-based decision-making and program evaluation.

Conclusion

The Uniform Guidance 2024 changes introduce significant updates aimed at improving accessibility, streamlining processes, and promoting data-driven decision-making in federal grant management. As organizations strive to implement these revisions effectively, partnering with experienced consultants can provide invaluable support. Reach out to BerryDunn today if you have any questions about the new updates of your specific situation. We’re here to help.

Amidst the cycle of public health underfunding, and in the shadows of the COVID-19 pandemic, agencies are trying to find financial stability in a space that has seen volatile and drastic changes in recent years. According to the National Association of County and City Health Officials, “The sustainability of the governmental public health system depends on the financial health of state and local public health agencies.” With this co-dependency of successful and sustainable public health services to financial stability, it is imperative to have a workforce that understands their obligations to effectively manage public funds.

A public health workforce in need of training

According to the 2021 Public Health Workforce Interests and Needs Survey (WINS), 54% of public health employees across the nation identified budget and financial management as a strategic skill that is highly important to their role but their proficiency in the area is low. This category outranked all other training needs assessed including change management, community engagement, and strategic thinking.

To help public health state agencies target budget and fiscal management training needs for their workforce, a comprehensive assessment can be utilized to examine four domains of administrative management activities with a focus on financial management. These four domains and topic areas include:

Reviewing these areas can help an agency assess its current decision-making and grant management processes to identify challenges that may lead to opportunities. Opportunities highlight what an agency can do with available resources to support equitable services. The opportunities are then used to inform a roadmap for process improvement and identify action items with a focus on training, policy development, monitoring, and communication. The roadmap defines an implementation strategy with measurable benchmarks and outcomes.

Overall, a comprehensive assessment can kickstart a strategic planning cycle developed to encourage fair and impartial administrative practices that adhere to federal regulations and offer opportunities to leverage additional funds in the future.

Using this framework, your public health agency can begin to manage administrative services wisely and fully leverage funding that can have the greatest impact on population health in the regions you serve. Ask “What are we doing to set up administrative routines for our agency that support equitable services?” and “How are we equipping our staff with the tools needed to effectively leverage resources that promote and improve population health?”

BerryDunn is experienced and poised to support cross-agency governance teams to undertake assessment and implementation activities. Through collaboration with agency leaders, BerryDunn’s team can facilitate discovery of opportunities for improvements in governmental budgeting and finance training, process improvement, development of finance tools and resources, and enhance communication and coordination between program and finance staff.

Learn more about how BerryDunn can support your agency in achieving these goals. If you have a specific question or if you'd like to set up an informational meeting with our team, please contact Julie Sullivan, Senior Manager and Practice Lead.

Read this if you are an administrator, compliance officer, or health information management/medical records professional at a Medicare skilled nursing facility.

The Office for Civil Rights (OCR) at the US Department of Health and Human Services is responsible for ensuring patients’ rights to timely access to health records. Since the start of 2024, the OCR has issued two settlements with skilled nursing facilities (SNFs) under the OCR Right of Access Initiative. Both settlements were related to potential violations under the Health Insurance Portability and Accountability Act (HIPAA) Right of Access provision, which requires that individuals or their personal representatives have timely access to their health information.

As a HIPAA-covered entity, a SNF must provide access to the individual’s protected health information within 30 days of receiving a request from the patient or the patient’s personal representative, such as a guardian. In both recent SNF right of access cases, the OCR noted that access was not provided to the patients’ personal representative in a timely manner (161 days and 323 days, respectively). 

Both settlements, which were published on the OCR’s website, led to the imposition of significant civil money penalties (CMPs) against the SNFs. In one case, the OCR imposed a CMP of $100,000, which was not contested by the SNF. In the second case, the SNF challenged the imposition of a $75,000 CMP and agreed to a $35,000 settlement.

Other non-financial outcomes of an OCR Right of Access Settlement

In addition to the financial and reputational implications of an OCR Right of Access Settlement, a SNF must also undertake the following actions:

• Revise and obtain the OCR’s approval of any noncompliant HIPAA policies and procedures (P&P) 
• Provide the OCR with copies of all training materials that the SNF must use to train its workforce about the revised HIPAA P&P
• Submit and obtain the OCR’s approval of the training plan outlining the topics to be covered, when the sessions will be held, and the names of the trainers
• Send a signed attestation to the OCR documenting when the trainings have been completed

Remember: 

• A patient or their personal representative may file a complaint directly with the Office for Civil Rights in writing, by email, by fax, or electronically via the OCR’s Complaint Portal. 
• Subject to certain exceptions, the Privacy Rule at 45 CFR 164.502(g) requires covered entities to treat an individual’s personal representative as the individual with respect to uses and disclosures of the individual’s protected health information, as well as the individual’s rights under the rule. The personal representative “stands in the shoes” of the individual and can act for the individual and exercise the individual’s rights.

Actionable items to help ensure compliance with the Privacy Rule

• Periodically (we suggest at least annually) check your SNF’s policies, procedures, and workflows that focus on access to medical records. We recommend you review:
  • Documentation of the turn-around times (TATs) for processing requests
  • The process for informing your patient or the patient’s representative, in writing and within the initial 30-day period if a request for records cannot be accommodated within 30 calendar days (only one extension may be made for an additional 30 days)
  • That the correspondence template provides a written statement of the reasons for the delay and the date when the SNF will complete its action on the request
• Confirm that your SNF’s access to medical records timelines complies with your state’s requirements, as they may be more restrictive than the federal regulations. For example, California requires a 15-calendar day turnaround time while Texas requires action within 15 business days. Be aware that the OCR issued a Notice of Public Rulemaking on December 10, 2020, proposing that its current 30-day rule be decreased to 15 days. This change in federal rules has not yet gone into effect, but it is still expected and your SNF should be prepared. 
• Maintain a log of medical records requests, including date received, person requesting, response due date, person responsible for completion of the request, and person assigned to review the record prior to release (such as Director of Nursing, Administrator) for completeness. 
• We also recommend reviewing BerryDunn’s resource, Best Practices for Responding to Medical Record Requests in Healthcare Compliance Insights.

Need help assessing your SNF’s HIPAA program? BerryDunn can help.

BerryDunn’s SNF operations, compliance, and HIPAA privacy experts can answer your questions and provide an external review of policies, procedures, workflows, and training tools. Please contact Trisha Lee, Robyn Hoffmann, or Olga Gross-Balzano. 

Resources

https://www.hhs.gov/hipaa/for-professionals/privacy/guidance/access/index.html 
https://www.hhs.gov/hipaa/for-professionals/privacy/guidance/access/index.html#newlyreleasedfaqs 
https://www.hhs.gov/hipaa/for-professionals/privacy/guidance/access/index.html#maximumflatfee 
https://www.hhs.gov/hipaa/for-professionals/privacy/guidance/personal-representatives/index.html
https://www.hhs.gov/hipaa/for-professionals/compliance-enforcement/agreements/hackensack-meridian-health-west-caldwell-care-center/index.html#nfd 
https://www.hhs.gov/hipaa/for-professionals/compliance-enforcement/agreements/phoenix-healthcare/index.html

At first glance, the healthcare patient check-in process seems straightforward. But when examined through the lens of your revenue cycle and patient experience, it’s one of the most important interactions for your team to get right.

Several key elements must be taken into consideration to create a smooth and simple patient check-in. Patient satisfaction is the tip of the iceberg. You want your patients to have a great experience that is efficient, easy-to-understand, and doesn’t create billing headaches for them later on. The good news is that the same techniques that give your patients a good experience also form the basis for an optimal revenue cycle. Developing this process starts with the undersurface elements that patients never see.

Scripting for patient access teams

Communicating clearly, consistently, and positively is important to put patients at ease, and to make sure that you collect the most accurate and up-to-date information from patients. Doing this correctly up front will save time and will prevent denials and associated workload and revenue loss. The best practice is to establish scripting for your patient access staff and provide training to make sure they are confident in the scripting provided. Here are some examples:

When confirming that patient information is up to date:

Say this: “To ensure your account is as accurate as possible, we require all patients to present a minimum amount of information.”

Not that: “Have there been any changes in your information since the last time you were here?”

Or when connecting a self-pay patient with a financial counselor:

Say this: “Before scheduling your appointment, I will connect with a financial counselor who can determine if you qualify for assistance and will help you understand your financial obligations.”

Not that: “We can’t schedule you until you speak with someone in Finance.”

Developing clear and efficient scripting will give your team the tools to communicate effectively and will help your patients feel like they are well taken care of.

Schegistration: What is it? 

What is “schegistration” anyway? Schegistration is the process of scheduling a patient appointment while also pre-registering the patient at the same time. By gathering and confirming information at the time of scheduling, the in-person check-in process will have fewer steps and will be quicker and easier for both the patient and your team.

Technology: Align your EHR with patient access workflows

Technology, specifically your Electronic Health Record (EHR), can either make your workflows more efficient, or can hinder your patient access staff. It’s important to align your technology platforms with your operational workflows, so it is seamless for your staff to enter and pull up information. It’s also important to have your staff trained regularly on your technology systems so they feel confident that they are using the system correctly and most efficiently.

Documentation: Write it down! 

When you develop new workflows to increase efficiency and the patient experience, it can be challenging for staff to make the change. In a busy office environment, it can also be difficult to train new staff effectively. To make it easy and to create consistency and continuity, it’s important to develop standard operating procedures and to document them thoroughly. Providing easy to understand instructions, including visuals of workflows, will reduce errors, promote standardization, and improve accountability.

Leadership: Reinforce best practice workflows

Keeping workflows optimized takes the whole team, beginning with leadership. The leaders of your patient access team should act as reinforcement when team members learn and complete best practice check-in workflows. Having documentation readily available and providing support and encouragement to team members will help keep your processes running smoothly.

Patient access team collaboration

Establish clear expectations to foster a supportive team environment and facilitate problem-solving and quick assistance. When scripting, workflows, and documentation are consistent, it’s easy for team members to help each other out and support each other when challenges arise.

The healthcare revenue cycle is an intricate system involving interdependent functions. Like an ecosystem, each component plays an important role in the system. The patient access process is just one piece of the puzzle. Optimizing your revenue cycle also includes looking at these areas: coding and compliance, billing, and denial management.

BerryDunn's audit, tax, clinical, and consulting professionals, focused on specific healthcare industry areas, understand the biggest challenges facing healthcare leaders, and are committed to helping you meet and exceed regulatory requirements, maximize your revenue, minimize your risk, improve your operations—and most importantly—facilitate positive outcomes. Learn more about our healthcare consulting team. 

Read this if your organization uses provider-based billing. 

Like an old car rusting in a field, provider-based billing is not something that gets much attention. Hospitals have set up departments to manage it, completed their attestations (or not), and then forgotten about it, leaving it to rust in the field. Provider-based billing is one of those things that is not a problem until it is. There are many reasons why hospitals may want to review their provider-based billing processes:

1. Facility updates are constant in healthcare and departments may have moved since their initial inceptions
2. Hospital acquisitions and mergers have changed ownership structures and may have removed grandfather status protections
3. When leadership changes, new leadership often assumes that everything was set up and is being billed correctly
4. Commercial payor guidance has and continues to change 
5. CMS provider-based rules have changed

Many hospitals move department locations and do not give much thought to the claim implications. Besides address, enrollment, and credentialing updates that may or may not be needed, the move may make the department ineligible to continue provider-based billing because it no longer meets the criteria under the updated regulations.

Attestations for smoother audits

Very few hospitals have a library where they can easily access all their attestations. Many providers don’t ever submit an attestation to Medicare as they are not required to do so. However, not having one opens the hospital to more risk if the department is ever deemed non-compliant with the regulations. If the hospital has a library of all attestations, an audit can be a quick and painless experience. The audit would involve:

• Confirming nothing has changed since the attestation in terms of location and structure
• Reviewing some claims to identify if charges are split and billed correctly
• Ascertaining if payor rules are being followed
• Checking that signage is correct in the lobby of provider-based locations.
• Reviewing the 855 form and confirming the required departments are listed

If an attestation is not available, the audit becomes more difficult. If the department is on the main campus and meets all the provider-based rules, the audit easily follows the above steps. If the department is not on the main campus, the audit becomes more challenging, as you would need to confirm:

• The department is located within 35 miles of the main campus
• If the department is or was grandfathered and doesn’t need to meet the requirements
• If an attestation should be completed
• How/when was the department created, and what other facts pertaining to its inception are relevant  

Difficulties arise when a hospital identifies that a department does not meet the current criteria and an attestation is not available. Simply stopping billing as provider-based billing is not sufficient as there are False-Claim Act and other compliance implications. Regardless of the remedy, identifying these issues on your own—as opposed to during an external audit—is certainly better. It will provide you time to fully research the situation and confirm if there is or is not really a concern. If it is confirmed that billing was incorrect, proactively self-disclosing the issues is certainly better than defending an audit. 

Proactive audits for peace of mind

You may be wondering why we are writing about provider-based billing now. The reality is that we are seeing more provider-based billing issues both with our clients and across the country. Hospitals are very busy and there is simply not enough time to worry about everything. This is an area where a quick audit can bring peace of mind and also force your teams to become reacquainted with the updated regulations and safeguard against future problems. 

BerryDunn has assisted several health systems with auditing and working through provider-based concerns. Our experts are available to support clients with questions or concerns about their provider-based departments. If you have questions about your specific situation, please don’t hesitate to contact us. We’re here to help.

Non-profit financial statements include a wealth of important knowledge and can often be overwhelming. When sharing your financial statements with your board of directors or other stakeholders, it can be useful to simplify your financial statements so the key information stands out and unimportant information doesn’t cause confusion. In our work with independent schools and other non-profit clients, we’ve seen many ways that financial statements can be simplified to paint a clearer picture of your organization’s health.

Engage with stakeholders to improve your financial statements 

Boards, donors, creditors, and other stakeholders gain key insights to a non-profit's financial status through reading the financial statements, allowing them to make informed strategic decisions. These reports also allow for improving communication between organizations and their stakeholders. Financial reporting additionally provides historical knowledge that can assist with strategic planning and forecasting.

As a first step in improving the ease with which your financial statements can be read, proactively engage with your stakeholders to gather feedback on the effectiveness and clarity of your current financial statements. To do this, consider conducting informational sessions or webinars to explain changes and address questions. Make sure to understand the needs of your stakeholders and what financial statement items they are most interested in and tailor disclosures to address their concerns and the items that matter most to them.

Simplify your financial statement disclosures 

For any financial statements that are to be issued in accordance with US generally accepted accounting principles (US GAAP), there are a certain number of required disclosures. Subject to materiality, for each financial statement line item, there is a related disclosure, and any item in your financial information that is material should be disclosed. As a general rule, if a trial balance account is less than 5% of total revenue, it could be grouped into an “other” category instead of being presented as a separate financial statement line item. This can also be done on the statement of financial position, but using 5% of total assets or total liabilities. Removing these smaller items can put more focus on the important items within your financial statements.

Another way to simplify your financial statements is to consider removing some small, fixed assets from your statements. For example, the purchase of an office printer could technically be considered a fixed asset to be capitalized, but it’s likely not worth the effort—and it makes the financial statement look more complex than necessary. Consider implementing a financial statement capitalization policy that determines a dollar limit threshold for capitalizing fixed assets and expensing items under that threshold.

Remove disclosures once they’re no longer needed  

Other common items that can increase the length of financial statements are disclosures related to the implementation of new accounting policies. In the year of adoption, footnotes are required to explain the impact of the adoption. In following years, not as many disclosures are necessary and can be removed. Ensure that information that is remaining after the year of adoption is either required under US GAAP or is necessary to stakeholders. If it’s not, remove it.

Take ownership of your financial statements 

Although your CPA firm might assist with the preparation of the financial statements, the ultimate responsibility rests on your organization’s management team to produce financial statements in accordance with US GAAP and satisfy the needs of your stakeholders. Ensuring your financial statements are optimized opens a great opportunity for you to sit down with your audit team and discuss your needs. Contact us at any time to set up a meeting and learn more.