AUDIT PROGRAM ACCOUNTS RECEIVABLE AUDIT OBJECTIVES: 1. Account balances in receivable status are accurate and properly reflect services rendered and payments made. 2. Billings for services rendered are supported by documentation in the patient's medical record and are submitted to patients or their insurance companies in a timely manner. 3. Payments received are promptly and properly posted. 4. Monthly reports submitted to the Financial Services Department of revenue and other activity are accurate and agree with records in the center and with general Ledger. 5. Accounts are adequately monitored and followed - up to assure prompt collection. 6. Delinquent accounts sent to a collection agency for follow - up are adequately monitored by Center management. 7. Credit balance accounts are promptly researched and refunded as appropriate. 8. Satisfactory internal controls are in effect and working properly. AUDIT PROCEDURES A. Pre-Audit 1. Announce audit to department management, appropriate administrator and other affected persons. 2. Obtain or order trial balances of accounts receivable outstanding, accounts in collection agency status, copies of reports sent to Financial Services and other applicable materials. 3. Review previous audit reports, continuing audit file, departmental procedure manuals, computer operations manuals and other applicable reference materials. 4. Together with the Director - Internal Audit, determine if confirmations will be positive/ negative, sample sizes to be selected, and any special reviews to be performed. 5. Schedule pre - audit discussions or walkthroughs as deemed necessary. 6. Obtain copy of collection agency contract. 7. Announce, or have department management announce, the audit to the collection agency. B. Confirmations 1. Prepare a confirmation letter to be sent to patients/guarantors. a. letter will be positive/negative b. letter should contain at a minimum: patient name and account number; guarantor name and address; date(s) of service; account balance 2. Select a _____% sample of active accounts plus all accounts over $_____ to receive confirmations. 3. Mail confirmation letters. For positive confirmations, be sure to include a postage paid return envelope to Internal Audit. 4. For positive confirmations after 2-3 weeks, send second requests. 5. For confirmations returned with discrepancies, investigate and resolve the discrepancy. 6. For positive confirmations not returned, perform alternative procedures as deemed applicable. 7. Summarize results. C. Reconcilements 1. Using the detailed trial balance of open accounts and monthly reports submitted to Financial Services, reconciles Center A/R to General Ledger. 2. To the extent deemed necessary, reconcile other records to G/L such as payments received, services rendered during the month. 3. Resolve any discrepancies. D. Billings 1. Review and document procedures used for billing of services (to self pay and to insurance companies). Obtain the departmental charge master. 2. Determine that all billing is current. 3. Select a sample of patients from appointment books for the last _____ months. Perform the following: a. Review patient’s medical record to assure that patient was seen that day for scheduled service. b. Trace the service rendered as documented to the patient’s bill. c. If patient paid for service on the date of service, follow the payment through to posting on the account. d. Determine that the bill was given to patient or submitted to insurance in a timely manner. E. Test sample of open accounts. 1. From he trial balance of open accounts, select a _____% sample of open accounts for testing. Perform the following: a. Determine that the service billed is supported by documentation in the patient’s chart b. Determine when billings were sent to the patient or insurance company c. Review any account follow-up performed, including rebillings or insurance rejections. d. Determine that any payments made were posted promptly. 2. Select also a _____ sample of all open accounts over $________. Perform the same account analysis as in E.1. F. Credit Balance Accounts 1. Select all credit balance accounts over $________ and/or outstanding for more than _____ days. 2. Determine research one on the account. 3. Follow-up to determine that a refund was issued or other disposition. G. Analysis of Accounts 1. Prepare an aging of open accounts, using categories, <30, 30-60, 60-90,>90 days old. Consider breaking the >90 day category into more categories if it is large. 2. To the extent possible, break the aging down by payer class. H. Delinquent Account 1. Review and document procedures for in-house collection efforts and charge-off. 2. Select a ____ sample of accounts delinquent for more than __________ and/or with balance greater than $_____. 3. Review efforts taken to collect the account. 4. Determine if account meets department criteria for charge-off. 5. Determine when accounts are sent to a collection agency. I. Collection Agency Accounts 1. Complete applicable sections of Audit Program for Collection Agency Accounts. J. Internal Control Review 1. Document through flowcharts or other means the controls and critical processes audited. 2. Complete Internal Control Questionnaire. 3. Document control strengths and weaknesses. Pay particular attention to controls needed in a computerized environment.