Revenue design thinking: constructing an accelerated cash /phased write down story

A well-designed data story is a launch point for revenue cycle
professionals using analytics to manage accounts receivable according to
portfolio principles. In the last 100 (one hundred) days before the close
of a fiscal year, holding accounts receivables too long poses an
inordinate risk on the perceived value of UCSD Health's trial balance
inventory. In April 2018, we started to design a Tableau dashboard that
would more accurately forecast two things First Future free cash flow
growth FCFFt where t = 100 calendar days Second Cash expenses
resulting from variable LGDt where t = 100 calendar days
The incentive to hold on to accounts receivable inventory is diminishes
starting on 03 22. This is because there is a compressed schedule
for adjudicating accounts with outstanding balances. Before this
date, claims and payments can be qualified as future cash flows that are
risk adjusted along a spectrum from probability of default PD,
exposure at default EAD and loss given default LGD. Claims that are
submited to payers between 07 01 and 03 22 have from 001 - 264
days to complete the health care payment revenue cycle [1]. For example,
this 264d period we determine that only 5% of a certain class of trial
balance accounts default. However, after 264d, without vendor led
recoveries, those same classes of accounts might incur 30% LGD.
The really interesting question is whether there are UCSD interventions
that might alter this increased rate of LGD rates. With a full historical
data set same class of payer and plan accounts may help trace IFRS 17
default behaviors. For now, we used this dashboard to identifiy the payers
and plans most likely to be engaged in accellerated cash or LGD accounting
entries.  We set out to collect timely information from a prior
fiscal year (FY2017) that incorporated claims volume [2], payment history
[3] and account trial balances [4] from independent data brokers.
These data sets were combined (full union) to create a dashboard for these
100 critical days that exemplifies thoughtful planning, informed
design, and a critical eye for details that translate into verified
accounting entries.   References 1 Electronic (or paper) health
care claims may create data as a result of one or several ANSI
X12 INS 100  insurance / health code transactions [4]. The
accounting level description of an individual account's 'trial
balance' might involve the notification to UCSD Health of a probable
default PD in a returned 835. Some of this data may triggers a system
action (in Epic) to place the acount into an exceptions work queue. In
other cases, there may be administrative decision making related to
denials reviews or inquiries like 277 health care claim status
notification that will trigger an assignment to a work queue. A person at
UCSD Health could engage the payer personally, or designate the account
for engagement by a vendor. The decision to assign or retain the liability
might be made after a certain threshold number of UCSD Health initiated
sequential actions. When assigned to a revenue recovery vendor, the
accounting description of the account changes to exposure at default EAD.
At the end of the fiscal year, EAD accounts are qualified for inclusion /
exclusion from the balance sheet for UCSD's fiscal
year.  IFRS 17 [5] is a comprehensive international
accounting financial reporting standard than can be used to
analyse these accounts, their payers and the plan designs reflected in
contracts. 2 d/279a 2018 14 095 c1992801 claim detail r3696s 2017 d 081
112 d/279a 2018 14 095 c1992801 claim detail r3696s 2017 d 113 144 d/279a
2018 14 095 c1992801 claim detail r3696s 2017 d 145 176 These data sets
contain ~195,450 claims and US$ 559.5M in anticipated FFCF revenue. 3 4
  4 The Accredited Standards Committee X12 ASC X12 is a
standards organization. Chartered by the American National Standards
Institute ANSI in 1979, it develops and maintains the
X12 Electronic data interchange (EDI) and Context Inspired Component
Architecture (CICA) standards along with XML schemas which drive UCSD
Health's business processes. 270 eligibility, coverage or
benefit inquiry; 271 eligibility, coverage or benefit
information; 274 health care provider information; 275 patient
information; 276 health care claim status request; 277 health care claim
status notification; 278 health care services review information; 500
medical event reporting (government program worker's compensation);
820 premium payments (payer accounts
payable); 834 benefit enrollment and
maintenance; 835 health care claim payment / advice; 837 health
care claim The critical path for a claim that returns with a rejection,
denial and / or an under payment might be as follows: 837, followed by
835, UC San Diego Health follow on activities, assignment to a revenue
recovery vendor, measurement of that vendor's performance (return
data), then administrative determination for final accounting
treatments.  See Health care in the United
States, 'System efficiency and equity'
<http://bit.ly/2H4At3L> last accessed 2018 04 03. According
to the insurance industry group America's Health Insurance Plans,
administrative costs for private health insurance plans have averaged
approximately 12% of premiums over the last 40 years. There has been a
shift in the type and distribution of administrative expenses over that
period. The cost of adjudicating claims has fallen, while insurers are
spending more on other administrative activities, such as medical
management, nurse help lines, and negotiating discounted fees with health
care providers. Young P and Olsen L 2010. Roundtable on evidence-based
medicine; Institute of Medicine. The healthcare imperative: lowering costs
and improving outcomes: workshop series summary 
<http://bit.ly/2HbEnYU> last accessed 2018 04 03. 5 IFRS 17
Insurance contracts 05 2017. For UCSD Health present value of future cash
flows + risk adjustment + unearned revenue = insurance obligations avoided
AI Accumulated impairment, accumulated changes in fair value due to
operational risk and provisions For payers present value of future cash
flows + risk adjustment + unearned profit = insurance obligations A2
Allowances for collectively assessed financial assets
This standard is issued by the IFRS Foundation and the
International Accounting Standards Board IASB. The standard
allows investors and analysts to (a) identify which groups of
insurance contracts are profit making or loss making; and (b) analyse
trend information about insurance contracts.