HCA 305 Module 5 Practice Finances and Daily Reconciliation Example

Where the Money Goes: Practice Finances and the End-of-Day Reconciliation

Student Name

Health Care Administration Program, Aspen University

HCA 305: Health Perspectives and Assessment

Instructor Name

Month Day, Year

Where the Money Goes: Practice Finances and the End-of-Day Reconciliation

A medical practice is a small business. It must collect enough revenue to pay staff, rent, supplies and insurance, and much of that revenue passes through the hands of administrative medical assistants. This paper explains the basics of practice finances from the front desk's point of view, then works through an end-of-day reconciliation at a composite four-provider family practice and describes the controls that protect the practice's money.

Where Revenue Comes From

Most practice revenue comes from insurers, including commercial plans, Medicare and Medicaid, which pay for services after claims are submitted. The rest comes from patients through copays at the visit, deductibles and coinsurance billed later, and payments from uninsured patients. Payment from insurers can take weeks, while payment from patients depends on clear communication and convenient payment options.

What Billing Costs

Getting paid is itself expensive. Researchers who timed every billing step at one large university system put the cost of getting paid for a single primary care visit at about $20, some 14.5% of what the visit brought in (Tseng et al., 2018). Payers also differ: an analysis of insurance remittance data found much higher claim denial rates for fee-for-service Medicaid than for Medicare, with private plans similar to Medicare Advantage (Gottlieb et al., 2018). Front desk accuracy reduces these costs by preventing denials and rework.

The Day's Transactions

Each day produces three kinds of financial entries. Charges are the fees for services provided. Payments are money received, from patients at the desk and from insurers by mail or electronic transfer. Adjustments are reductions, such as contractual write-offs or approved discounts. The practice management system records all three, and the day's totals must match the money actually received.

The Reconciliation

At 5:00 p.m., Dana, the front desk lead, runs the day's payment report and counts the cash drawer, checks and card receipts. The table shows the result. The report and the count are printed and initialed before any corrections are made, so the original difference is on record.

Finding the Discrepancy

The cash drawer is $40 short. Dana does not simply note the shortage and go home. She checks the starting cash, the change fund of $100, and confirms it was counted correctly. She then compares each cash payment on the report with the receipt book. One patient's $40 copay was recorded as cash but the receipt shows it was paid by card, and the card batch includes a $40 payment not matched to any patient. The payment was posted to the wrong method; no money is missing. She corrects the entry, and the totals match.

Why Reconcile Daily

Daily reconciliation catches errors while they are fresh and easy to trace. A discrepancy found a week later may be impossible to explain. Reconciliation also deters theft, because staff know every payment will be checked against a receipt. Small practices are vulnerable to embezzlement when one person handles all money tasks without checks.

Internal Controls

The practice uses several controls. The person who collects payments is not the person who posts adjustments. Receipts are prenumbered and every number is accounted for. Cash is deposited daily. The office manager reviews the reconciliation report each day and approves all write-offs over a set amount. Voided transactions require a manager's code. These controls protect honest staff as well as the practice.

Patient Payment Policies

Clear policies make collection easier. The practice collects copays at check-in, provides estimates for services when asked, offers payment plans for larger balances and accepts cards and online payments. Staff use a script to ask for payment politely and to explain balances. Collecting at the visit is far cheaper than sending statements.

Key Financial Measures

The office manager watches a few measures. Days in accounts receivable shows how long it takes to be paid. The collection rate shows how much of what is owed is actually collected. The denial rate shows how many claims are rejected. Front desk accuracy and daily reconciliation affect all three.

The Medical Assistant's Role

Administrative medical assistants handle money at every visit: they verify insurance, collect copays, answer billing questions and reconcile the day. Their accuracy and honesty matter to the practice's survival. The profession's code of ethics, which asks members to uphold the honor and high principles of the profession, applies to these financial tasks as much as to patient care (American Association of Medical Assistants, n.d.).

When Something Is Wrong

If a discrepancy cannot be explained, staff report it to the office manager the same day rather than covering it with their own money or adjusting records. Unexplained shortages are documented, and patterns are investigated. Honest reporting protects the employee and helps the practice find weaknesses in its controls.

End-of-Month Checks

Beyond daily reconciliation, the office manager compares monthly deposits in the bank statement with the payments recorded in the system, reviews all adjustments and write-offs for the month and checks that every visit on the schedule produced a charge. Missing charges are as costly as missing cash, since services provided but never billed produce no revenue.

Explaining Bills to Patients

Patients often call about bills they do not understand. The administrative medical assistant explains what the insurer paid, what was adjusted and why the patient owes the balance, using the explanation of benefits. A calm, clear explanation often resolves the call and leads to payment, while a confused answer leads to disputes and unpaid balances.

Petty Cash and Refunds

Small amounts of cash kept for office purchases are tracked separately from patient payments, with receipts for every expense. Refunds to patients for overpayments are issued by check or card reversal, approved by the office manager and recorded, never paid from the cash drawer. Keeping these flows separate makes reconciliation cleaner.

Conclusion

Practice finances depend on revenue from insurers and patients, and getting paid carries real costs that front desk accuracy can reduce. Daily reconciliation compares the system's records with the money received, catches errors like a payment posted to the wrong method and deters theft. With clear controls and policies, administrative medical assistants protect both the practice's income and their own integrity.

References

American Association of Medical Assistants. (n.d.). AAMA medical assistant code of ethics. https://www.aama-ntl.org

Gottlieb, J. D., Shapiro, A. H., & Dunn, A. (2018). The complexity of billing and paying for physician care. Health Affairs, 37(4), 619-626. https://doi.org/10.1377/hlthaff.2017.1325

Tseng, P., Kaplan, R. S., Richman, B. D., Shah, M. A., & Schulman, K. A. (2018). Administrative costs associated with physician billing and insurance-related activities at an academic health care system. JAMA, 319(7), 691-697. https://doi.org/10.1001/jama.2017.19148