Accounting and Healthcare   Term Paper ID:44057 Click to get this paper

Essay Subject: This paper examines a broad array of questions in connection with revenue recognition and ...... More...

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Paper Abstract: This paper examines a broad array of questions in connection with revenue recognition and the health care industry Paper Introduction: Accounting What is the difference between accounting and finance Accordingto an essay published online on the Smartpros com website accountinginvolves the accumulation of historical information The occupation ofaccounting involves maintaining and auditing records and preparingfinancial reports for an organization On the other hand finance involvesanalyzing historical financial and accounting information and using it tomake future decisions Finance involves budgeting forecasting planningand due diligence A simple definition of the difference between accountingand finance is that accounting is backwards looking and finance is aforward Text of the Paper: The entire text of the paper is shown below. However, the text is somewhat scrambled. We want to give you as much information as we possibly can about our papers and essays, but we cannot give them away for free. In the text below you will find that while disordered, many of the phrases are essentially intact. From this text you will be able to get a solid sense of the writing style, the concepts addressed, and the sources used in the research paper. Do healthcare organizations typically get paid based on theirestablished charges? A simple definition of the difference between accountingand finance is that accounting is backwards looking and finance is aforward focused (2 3). References(2 3, January). Retrieved June 16, 2 9, from International Student Web site: http://www. External users primarily rely on financial information aboutthe company that are included in the Company's Balance Sheet, IncomeStatement, and the Statement of Cash Flows as well as the notes thataccompany these financial statements. Private healthcoverage in the United States is often tied to employment. According to an essaywritten by Anne Casto and Elizabeth Lehman published online by the AmericanHealth Information Management Association, reimbursement for healthcareservices is often dependent on patients having some form of healthinsurance. According to an essay written by Melissa Bushmanand published online on the Associatedcontent.com website, both financialand managerial accounting involves the preparation and the analysis offinancial data. healthcare system involves the wayin which healthcare is funded. 3. Retrieved June 16, 2 9, from Associated Content Web site: http://www. In the United States, the Financial Accounting StandardsBoard establishes guidance for accountants in preparing financialstatements. A fee scheduleis a predetermined list of fees a third party payer allows for payment ofspecific health care services. healthcare system is complex because it is difficult tounderstand, even for American citizens. The price is fixed handed determinable for the services in question . Financialaccounting primarily provides information for external users includingstockholders, lenders and creditors. healthcare system is extremely complex. What is the difference between accounting and finance? However, healthcare organizationsare different to the extent that their compensation often comes from thirdparty payers. The allowable fee represents either theaverage or the maximum amount that the third party payer will reimbursehealth care providers for their service. The relationship betweenrisk and return is that one must be willing to accept a greater risk if onewants to obtain greater rewards. 2. healthcare system considered complex? Retrieved June 16, 2 9, from American Health Information Management Association Web site: http://library.ahima. On the other hand, finance involvesanalyzing historical financial and accounting information and using it tomake future decisions. The general rule is that revenues recognized when it has beensubstantially earned, and expenses recognized when they are incurred inconformance to the Matching Principle. As a general rule, thefollowing criteria should be considered before charges for healthcareservices provided can be recognized as revenue: . Often, third-party payers establish a fee schedule. However, reimbursement neednot necessarily be for the established charges that appear on the patient'sbill. There is pervasive evidence of a payment agreement between the healthcare provider and the patient . Retrieved June 16, 2 9, from Smart Pros Web site: http://accounting.smartpros.com/x36714.xml(2 7, January). As mentioned previously, a health insurance company receives apremium payment in return for assuming some portion of the insuredpatient's exposure to the cost of health care coverage. Various governmententities are the largest provider of health care coverage for Americans.Government entities typically do not negotiate payment. Expenses under the system such as the cost for surgery hospitalizationare not paid necessarily according to the invoices generated by thehealthcare service provider. Why are charges was not reported as revenue for healthcareorganizations? The occupation ofaccounting involves maintaining and auditing records and preparingfinancial reports for an organization. Risk/return Trade-Off. Collectability it can be reasonably assured Revenue and the related receivables for health care services usuallyare recorded in the accounting records on an accrual basis at theprovider's full established rates. Services have in fact been rendered . 4. In the healthcare field, "reimbursement" is a term used to describecompensation repayment for healthcare services. The higher the potential reward, the higher the risk that theinvestment will not produce the desired high return on investment (2 9). According to a documentpublished online on investor words.com, the relationship between risk andreturn is relatively easy to describe or define. 5. Part of the complexity of the U.S. Health Care in the USA. According tothe Investor Words website, the relationship between risk and reward is atrade-off. Accounting 1. Retrieved June 16, 2 9, from World Bank Web site: http://www.worldbank.org/html/fpd/ infrastructure/toolkits/Highways/Highways/3_public/37/3723.htm The Differences Between Financial Accounting and Management Accounting. According to an essay published by the World Bank on its officialwebsite, there is a basic principle of finance involving or describing therelationship between the risk assumed in any given project and the expectedreturn for an investment in that project. On the other hand, managerialaccounting provides information for internal users including employees,managers, executives, and members of the Board of Directors. As mentioned previously, reimbursement is often receivedfrom third party payers. What is the difference between a financial accounting andmanagerial accounting? On the other hand, internal users areinterested in financial information about the company including thestatements listed above. In this scenario, if a healthcare provider charges in excess of the allowable fees, the provider isexpected to absorb the difference and write it off rather than requiringthe patient to pay the difference. This process is particularly important when the servicesrendered are for individuals without insurance, the indigent, orindividuals covered by some form of government sponsored health insurancerather than by private health insurance (2 7). Accordingto an essay published in June of 2 8 on the internationalstudent.comwebsite, the U.S. This implies that services are usually provided beforepayment is made. As a result, healthcare organizationsoften do not get paid based on their established charges. Principles of Healthcare Reimbursement. Unlike many othercountries, the United States does not provide socialized healthcare.Instead, a number of private companies offer health insurance plansdesigned either for individuals, groups, or for companies and theiremployees. Quality health care is availableeverywhere in the country and from a variety of sources. Instead,government entity simply define the amounts they will pay for specificservices and rules under which compensation will be provided making behealthcare system, and specifically the financial aspects of the healthcaresystem complex. Retrieved June 16, 2 9, from Investor Words Web site: http://www.investorwords.com/ 43 8/risk_return_trade_off.htmlBushman, Melissa (2 7, May 7). Why is the U.S. The type ofinformation needed by external users and internal users is actually quitedifferent. As the name suggests, under a fee-for-service reimbursement program the healthcare provider, at least in theory,receives payment for each service rendered. org/xpedio/groups/public/documents/ahima/bok1_ 3 575.pdfRisk-Return Relationship. In other words, there is always a trade-off in any business opportunity between the risk and reward. However, financial accounting and managerial accountingprovides information for two distinctly different user groups. An insurance premium is an amount that anindividual pays to purchase health insurance coverage. Instead, theyare compensated based on the allowable fees as determined by third-partypayers (Casto, 2 6). Finance involves budgeting, forecasting, planningand due diligence. Co-insurance is the percentage that the insured individual pays even after adeductible has been paid. associatedcontent.com/article/233154/the_differences_between_financial_ accounting.htmlCasto, Anne (2 6). Professional Crossroads Accounting to Finance. This refers to the factthat the healthcare provider is being compensated for expenses it hasalready incurred. As unemploymentrises, the number of individuals who are uninsured tends to increase. Since the vast majority of payment forhealthcare services is not actually paid by the patient, but rather bythird-party on behalf of the patient, the billing and payment process inthe U.S. The most readily understood type of third-party reimbursement involvesfee for service reimbursement. What is the relationship between financial risk and financialreturn? Accounting and Reporting for Revenue from Uninsured (Self Insured) Patients. If not, how do they get paid? In addition, internal users are also interestedin non-financial information, and they often focus on more detailed datathat can provide insights necessary to evaluate the performance ofindividuals or subunits within the company such as division, subsidiariesand individual departments (Bushman, 2 7). Therefore, rather than recognize revenue only to have toreverse it at a later date, certain guidance has been offered to healthcare organizations relating to revenue recognition. 6. Instead, private health insurance companiestypically pay what are now referred to as "reasonable and customarycharges." What this means is that the insurance company will not pay morethan what it considers to be a reasonable cost for the type of health careservices provided to the individual. Retrieved June 16, 2 9, from AICPA Web site: http://www.aicpa.org/download/members /div/acctstd/general/ 1 7_acsec_agenda_materials/Health_Care_Guide- Revenue_Recognition.pdf(2 8, June 3). A deductible is theamount the insured individual must pay for health care services before theinsurance company starts paying some or all of the remaining balance. Accordingto an essay published online on the Smartpros.com website, accountinginvolves the accumulation of historical information. internationalstudent.com/study_usa/preparation/health-care.shtml(2 9). The provision for contractualadjustments and discounts defined as the difference between establishedrates and the amount considered to be collectible are recognized on anaccrual basis and deducted from gross service revenue to determine netservice revenue. If this paper is not what you are looking for, you can search again: Search for: or Click here to request an essay written just for you.