Cash Reconciliation and Management - MaineHFMA...reconciliation process • Transition also shed light on the scale of compliance and audit risk under that manual process • Due to

Creating clarity in the cash posting processColburn Hill Group

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Cash Reconciliation and Management

Agenda

• Introduction• Cash Reconciliation Predicament• Reconciliation Project Case Study• 5 Keys to Cash Reconciliation

Proprietary & Confidential 2

Introduction – Tyler Kurasek

• Principal Colburn Hill Group• Creator of cash reconciliation management applications• Creator of AR work flow application


Agenda



State of the Industry

• Balance the bank statement to the GL, but do not reconcile individual deposits

• Patient account system transitions, leading to mixed remittance• Provider based billing, leading to mixed remittance• Not one person owns the full process – generally falls between

Finance and Revenue Cycle• Tools in use are extremely rudimentary – complex and voluminous

excel spreadsheets are the most common solution

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Traditional Posting Process

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Deposit

4/1/2016 5,000.00

Payments

3/26/2016 2,500.00

4/1/2016 2,500.00

Batches

4/8/2016 G/L Acct $2,500.00

4/8/2016 Athena $2,000.00

4/8/2016 Medipac $500.00

Deposit Posting

Bank Deposit Distribution of deposits Posting of cash ReconciliationPayment

Current Problems

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01 Manual WorkTouching deposits

Issu e

• Excel based tracking, at best

• Communication based on email

• Finance and cash posting touching each deposit multiple times

02 No ReportingLack of visibility into work in process and outcomesIs

su e

• Track deposits by day and month, typically 32 sheets in Excel

• No ability to apply simple or complex query to understand unposted cash

03 No ReconciliationNever truly reconcileIs

su e

• Balancing to the bank is not reconciliation

• No data relationships between bank deposit and posting transactions

Agenda



Reconciliation Project: Situation• At a $500m community hospital in the Midwest, Revenue Cycle and Finance

teams historically had difficulty reconciling bank account deposits within the various patient account and general ledger systems

• Under the legacy process, staff attempted to maintain 23 different spreadsheets covering 5 facilities and 3 Medical Groups with 9 different bank accounts

• The recent transition to Athena for pro fee billing added to the complexity of the reconciliation process

• Transition also shed light on the scale of compliance and audit risk under that manual process

• Due to the Athena transition and provider based billing, payments and remittances are more likely to contain payments from a variety of patient accounting systems, adding complexity to reconciliation of the deposit, in addition to a significant amount of time lag between the date of deposit and cash posting to relieve the account receivable (A/R)


Reconciliation Project: Goals

• Colburn Hill Group (CHG) was engaged to reconcile cash back to Athena implementation (12 months earlier) as well as ongoing reconciliation

• Project scope included documenting current processes, as well as making process improvements and implementing technology solution

• The project led to a number of process changes and implementation of CHG’s Cash Application Management Solution (CAMS)


Process MappingPayment Paths

Bank Deposits Hard Copy Checks Insurance Credit Cards Patient Credit Cards Point of Service Cash and Checks Checkless BCBS Cashier payments Incentive and program payments Meaningful Use

Athena Work Unpostables Confirming Deposits Correspondence Adjustment Requests Associating Deposits

Legacy Work Credit balances


The project started by mapping each process involved with collecting and posting payments

Barriers to Reconciliation


1. Historic Bank Transactions• PNC bank transactions were not easily accessible• US bank transactions only go back 45 days in web portal• US bank transactions in Athena do not tie to bank statements

2. Reconciliation Excel Files• Only concerned with professional deposits, no one responsible for all bank transactions• Missing professional deposits in excel tracking• Unstructured data and missing verification of posting in patient accounting systems

3. Time of Service Payments• Cash and Checks combined in Athena to create deposit amount• Main site cashiers separate cash and checks for individual deposits breaking the matching

deposit amount in Athena, leaving staff without the ability to reconcile

The project identified 3 significant barriers to reconciliation

Barrier 1. Historic Reconciliation Work Plan

1. Define bank account scope - What accounts will be reconciled?2. Define historic look back - Where is the “line in the sand”?3. Identify and assign staffing/resource needs4. Document processes and cash paths5. Selection of non-excel reconciliation tool (CAMS)6. Bank Transactions

• Load historic banks transactions back to line in the sand date• Define go forward daily bank transaction load

7. Reconciliation• Auto Reconciliation• Manual – identification of process break downs


Barrier 2. Time of Service (TOS) Payments

• Early in the process mapping sessions we identified that Athena “deposits” for time of service payments from patients do not have a 1 to 1 match in the bank, with no path for reconciliation

• Shadowing multiple clinics and meeting with the main site cashiers, we developed a plan to solve reconciliation break downs going forward

• The main change impacted the cashiers, as the new TOS process only added bank deposit slips to the existing policy


Barrier 3. Excel File Data Structure


Process mapping also highlighted the enormous task of reconciling by excel sheet

US Bank – 3 Bank Accounts

3 excel files per month X 14 months = 42 excel files

42 excel files X 32 sheets = 1,344 sheets

Old PNC – 6 Bank Accounts

6 excel files per month X 14 months = 84 excel files


New PNC – 6 Bank Accounts

20 payer files per month X 6 bank accounts X 14 months = 1680 excel files


Reconciliation Solutions


1. Historic Bank Transactions• PNC bank transactions were not easily accessible• US bank transactions only go back 45 days in web portal• US bank transactions in Athena do not tie to bank statements

Solution: updated PNC access and defined a US bank statement-to-transaction comparison

2. Reconciliation Excel Files• Only concerned with professional deposits, no one responsible for all bank transactions• Missing professional deposits in excel tracking• Unstructured data and missing verification of posting in patient accounting systems

Solution: historic data load in CAMS for source of truth and ability to search data

3. Time of Service Payments• Cash and Checks combined in Athena to create deposit amount• Main site cashiers separate cash and checks for individual deposits breaking the matching

deposit amount in Athena, leaving staff without the ability to reconcile

Solution: completion of deposit slips at each department with cashiers logging data in CAMS

Results

• Reconciled backlog of more than 200,000 individual deposits dating back to early 2015• Daily go forward reconciliation• Achieved repeatable process leveraging automation

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0%

10%

20%

30%

40%

50%

60%

70%

80%

10/11/16 11/11/16 12/11/16 1/11/17 2/11/17 3/11/17 4/11/17 5/11/17 6/11/17 7/11/17 8/11/17 9/11/17 10/11/17 11/11/17

Unreconciled

Unreconciled%

Agenda



Tip #1 – Track by Deposit

1. Track individual deposit transactions and force accountability at the transaction level not by day or month.

2. Match deposits with batch and transaction files from your Patient Accounting System.

3. This reduces the many-to-many relationships that result from the complex posting world in which most providers operate.

Maintaining a routine allows a more consistent application of the posting data.

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Tip #2 – Stop using Excel

1. Data spread over multiple pages of an Excel workbook doesn’t present the real picture.

2. Using Excel involves a significant amount of data entry, and entails all the risks associated with manual keystrokes.

3. Avoid writing complex Excel formulas which break with simple data entry mistakes.

Consider automation options to support your operation.

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Tip #3 – Document the Process1. Map each payment path to the bank, capturing all points of

payments submitted for deposits.2. Identify the source of every deposit and if payments are being

rolled into large deposits.3. Reducing the number of deposits that are grouped allows easier

reconciliation.

Knowing the make-up of each deposit type adds transparency to the reconciliation process.

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Tip #4 – Consolidate Data

1. Track split deposits by the various patient accounting system and general ledger accounts where the cash belongs.

2. Log batch-posted data in real-time as part of the posters’ workflow.3. The team posting the cash and reconciling the bank account(s)

should leverage the same application.

This quickly highlights any unposted or unreconciled amounts, allowing staff to resolve those exceptions quickly.

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Tip #5 – Reconcile More Frequently

1. Create a formal, documented, and repeatable process.2. Compare your true monthly net deposits back to the sum of

individually-tracked deposits for the given month.3. Finance and cash posting should be using the same work flow

system.

This prevents a backlog of data from developing, and facilitates the ability of staff to deal with issues in more of a real-time manner.

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For more insights on this Case Study and assessing your Cash Reconciliation and Work Flow, please

contact us:

www.colburnhill.com/contact.html

or

by e-mailing [email protected]

We look forward to hearing from you!

24- Proprietary and Confidential -

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Documents

Cash Reconciliation and Management - MaineHFMA...reconciliation process • Transition also shed light on the scale of compliance and audit risk under that manual process • Due to