The following blog post – provided by Pamela Pruitt, a guest contributor for the Kinnser blog and the Chief Accountant at All Nursing Home Health Services, Inc. in Houston, TX – will walk you through her comprehensive process for reconciling Medicare accounts receivable in Kinnser. As questions arise while reading this article, please feel free to use the comment section for interactive Q&A so the entire community can benefit from your questions and comments.

Accounts Receivables (A/R) require close monitoring, tracking and reconciling. When you reconcile your receivables, you need to create a permanent record for your monthly accounts receivable reconciliation as well as for your documentation that supports your entries in your financial statements. Today, I will cover the steps in my systematic process for reconciling Medicare accounts receivable in Kinnser.

Kinnser reports export to Excel. Create a folder named "Accounts Receivables 2010". Inside that folder, create twelve folders, one for each month of the year. Save your Kinnser Excel reports in the appropriate folder so that you can easily find them to review and work. I created a master spreadsheet that shows all twelve months and calculates both the beginning and ending A/R with a simple formula. It works as an A/R "snap shot" and is part of my regular work papers. If you want a copy of my spreadsheet, just add a comment below (or send me an email) and I will follow-up with you.

Let us review a few things before we start the reconciliation process. CMS posts payments to your bank account Monday through Friday with exceptions of holidays; hence, no payments posted on Saturday or Sunday. I post Medicare payments every weekday (Monday-Friday) as well as transmit Medicare claims every weekday (Monday-Friday). The goal is to have an up-to-date A/R. This is part of my morning routine (e.g., reconcile cash, receivables) and having an up-to-date cash flow summary and projection for planning purposes. If you are not posting payments and transmitting claims daily, consider switching your routine. In addition to monitoring receivables more closely, you should experience an increase in cash flow and a decrease in RAPs auto-canceling.

Step 1: On the last day of the month, post all payments received for the day to Pending Claims.
In Kinnser: click Go To and select Billing Manager. Click Pending Claims in the Medicare Claims (PPS) section.
*The bank deposit amount should match your payments posted, excluding adjustments made by CMS such as 33G.

Step 2: Create and transmit RAPs and EOEs.
In Kinnser: click Go To and select Billing Manager. Click Create RAP Claims and Create EOE Claims in the Medicare Claims (PPS) section.

Step 3: *Important* Review all Pending Claims for rejected and terminated claims.
You need to research, correct and resubmit rejected claims. You can correct terminated claims via DDE or resubmission.

After the above three steps are completed, begin reconciling A/R. This means you can neither post additional payments nor transmit additional claims for the day. Otherwise, your reconciliation will not be correct and you will restart this process.

Step 4: Create Pending Claims report.
Export the Pending Claims report to Excel. Save the report to the appropriate monthly folder and rename the Excel file, (i.e., "March Pending Claims").
In Kinnser: click Go To and select Billing Manager. Click Pending Claims in the Medicare Claims (PPS) section.

Step 5: Create Accounts Receivable report.
The "From" and "To" dates should be the month for which you are reconciling, i.e., "From 03/01/2010 To 03/31/2010."
When you click Create Report, save the report to the appropriate monthly folder and rename the Excel file, i.e., "March Accounts Receivable Reports."

In Kinnser: click Go To and select Billing Manager. Click A/R Report in the Claims Reporting section.

Step 6: Go to your monthly folder, where you recently saved your reports, and open the A/R Report.
When you open the report (i.e., March Accounts Receivable Report), it will open one Excel file with five worksheets. You will work with the first three worksheets: Payments, Claims and Receivables.

Step 7: Open the Payments worksheet.
The Payments worksheet shows all the payments posted in the month for which you are reconciling. The total dollar amount shown on the Payments worksheet at the end of column G should match your Medicare bank deposits for the month. If the totals do not match, research and find out why. The discrepancy could be a 33G adjustment, or you may have transposed a number when posting a payment. You must research and account for all discrepancies.

For example, $149,750 worth of Medicare payments deposited to your bank account for March. Your A/R Payments worksheet total, column G, shows $150,000. You need to account for a discrepancy of $250. Under the Total Amount on the Payments worksheet (column G), input the actual amount received and calculate the discrepancy.

Example:
$150,000 total payments posted (already calculated by Kinnser)
-$149,750 actual amount receive (that you enter into the worksheet)
$250 discrepancy to reconcile (simple Excel formula)

Step 8: Review your Remit Advices for a 33G adjustment.
Compare your bank deposit to the payments posted on a per deposit basis, i.e., March 1 deposit $5,000 must match payments posted on March 1.

Step 9: Reconcile discrepancies.
When you find the discrepancies, go back to column G on the Payments worksheet, and under the $250 discrepancy to reconcile, list the discrepancies and show they add up to $250.

$100 CMS 33G adjustment on patient xxxxxxx
$100 CMS 33G adjustment on patient xxxxxxx
$50 transposed payment on patient xxxxxxx
$250 discrepancy reconciled

Now your Payments worksheet total equals your Medicare bank deposits on paper. So how do you show the discrepancies on the actual patients? For accounting purposes, I leave my prior reconciliations and posted payments "as-is" and do not change a prior document that I used as part of my financial statements. Instead, I make the changes in the current month. I go the patients that I have found payment discrepancies and make a note using Kinnser's EOE Detail and Comments box (i.e., CMS recouped $100 for a 33G on 3/17/10. Found and noted by Pam Pruitt while reconciling March A/R on 4/1/10).

My original payment matches my prior month reconciliation; I documented the discrepancy on the patient, and will make the adjustment to my A/R in the current month.

At this point, we have the payments reconciled and we are ready to complete the A/R accounting equation:

For example:
March Beginning A/R $100,000 (February Ending Balance)
Plus Charges (Claims) $200,000 (A/R Claims worksheet, column G)
Less Payments $150,000 (A/R Payments worksheet, column G)
Plus Adjustments $250 (A/R Payments discrepancies, column G)
March Equal Ending A/R $150,250

Ending A/R balance should equal your Pending Claims report total that you created earlier. If it does not, show it as an adjustment. There will always be a few discrepancies with EOE calculation (CMS versus Kinnser). CMS has access to CWF and the EOE adjustment can be from a PEP, LUPA, supplies, or HHRG calculation. My A/R adjustments are usually small.

The third A/R worksheet, Receivables, ages your outstanding claims. 0-30 is an excellent aging. It shows you are working your receivables.

If you are having trouble reconciling your A/R, please comment below. I am pleased to help you.

Pamela Pruitt has over 20 years experience as an accountant, with a majority in public accounting specializing in health care industry such as physicians, anesthesiologists, dentists, hospitals/clinics, etc. Ms. Pruitt is the Chief Accountant at All Nursing Home Health Services, Inc. in Houston, TX, as well as a Certified QuickBooks Pro Advisor, Certified Public Bookkeeper and Certified Bookkeeper. After hours, she blogs on Jobing.com and runs a business providing services to small businesses such as bookkeeping, accounting, and software setup, among other services. To reach Ms. Pruitt, call (281)617-1180 or visit www.ppruitt.com