DOI: 10.15146/r3696s
title: Revenue design thinking: constructing an accelerated cash /phased write down story

description: 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'
 &lt;http://bit.ly/2H4At3L&gt; 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 
 &lt;http://bit.ly/2HbEnYU&gt; 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.
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 ('employees') under the 2015 10 23 University of California
 Presidential Open Access Policy &lt;http://bit.ly/2ptLzaU&gt;. Last accessed 2018 03 20. The authors do not own the copyrights for this work, but grant to the Regents of the University of California a nonexclusive, irrevocable, worldwide license to exercise any and all rights under copyright, in any medium, and to authorize others to do the same, for the purpose of making their articles widely and freely available in this open access repository. See policy text 3(B)(1). There is no embargo period that would delay this publication. See procedures 5(C).