COE - Certified Ophthalmic Executive Ophthalmic Financial Management Questions and Answers — Questions and Answers
Question 1: An ophthalmic practice is analyzing its accounts receivable (A/R). The industry benchmark for A/R days is typically 30-40 days. The practice calculates its current A/R days at 55. Which of the following is the MOST likely cause for this variance?
- Inefficient claims submission and denial management processes. (Correct answer)
- A recent increase in surgical volume.
- High staff-to-provider ratio.
- Successful implementation of a new patient recall system.
Correct answer: Inefficient claims submission and denial management processes.
High A/R days indicate that it is taking longer than average to collect payments owed to the practice. This is most frequently caused by issues within the revenue cycle, such as delayed claim submissions, coding errors leading to denials, and inadequate follow-up on unpaid claims.
Question 2: A practice manager is using benchmarking to evaluate performance. They note the practice's overhead ratio is 70%, while the industry benchmark is closer to 60%. Upon investigation, the staff-per-FTE-provider ratio is in the 90th percentile, and the revenue per encounter is at the 75th percentile. What is the most logical conclusion?
- The practice may be profitable due to high revenue per encounter, but is likely overstaffed. (Correct answer)
- The practice's occupancy and marketing expenses are too high.
- The providers are not seeing enough patients per day.
- The practice is efficient in converting revenue into profit.
Correct answer: The practice may be profitable due to high revenue per encounter, but is likely overstaffed.
A high overhead ratio indicates that expenses are high relative to collections. While revenue per encounter is strong, the staff-per-FTE-provider ratio being in the 90th percentile strongly suggests that excessive payroll costs are driving the high overhead. The practice is generating good revenue from each patient visit but is spending too much on staffing to do so.
Question 3: Which component of the Relative Value Unit (RVU) accounts for the cost of clinical and administrative staff salaries, office space, and medical supplies?
- Physician Work (wRVU)
- Malpractice (mpRVU)
- Practice Expense (peRVU) (Correct answer)
- Geographic Practice Cost Index (GPCI)
Correct answer: Practice Expense (peRVU)
The Practice Expense (peRVU) component is specifically designed to cover the overhead costs of running a practice, which includes staff salaries, rent, utilities, and the cost of equipment and supplies. The Physician Work RVU covers the provider's time and skill, while the Malpractice RVU covers the cost of professional liability insurance.
Question 4: An ophthalmologist in a group practice has an ownership interest in a separate imaging center. The ophthalmologist refers Medicare patients to this imaging center for diagnostic tests. Which federal law is most directly implicated by this arrangement?
- Health Insurance Portability and Accountability Act (HIPAA)
- Stark Law (Physician Self-Referral Law) (Correct answer)
- Emergency Medical Treatment and Labor Act (EMTALA)
- Anti-Kickback Statute (AKS)
Correct answer: Stark Law (Physician Self-Referral Law)
The Stark Law is a strict liability statute that prohibits physicians from referring Medicare or Medicaid patients for 'designated health services' (which includes many imaging services) to an entity with which the physician or an immediate family member has a financial relationship, unless an exception applies. The scenario describes a clear financial relationship and referral for designated health services.
Question 5: When valuing an ophthalmology practice for a potential sale, which of the following is considered an intangible asset?
- Diagnostic equipment
- Accounts receivable
- Optical inventory
- Goodwill (Correct answer)
Correct answer: Goodwill
Goodwill is an intangible asset that represents the non-physical assets of a practice, such as its established patient base, reputation, and brand recognition. Tangible assets include physical items like equipment and inventory, while accounts receivable are considered financial assets.
Question 6: A practice manager is developing a budget for the upcoming year. The first and most critical step in creating a realistic and effective budget is to:
- Project anticipated capital equipment purchases.
- Set physician and staff salary increase percentages.
- Analyze historical revenue and patient volume data. (Correct answer)
- Negotiate new rates with insurance payers.
Correct answer: Analyze historical revenue and patient volume data.
A budget must be grounded in realistic revenue projections. The most reliable way to forecast future revenue is by analyzing past performance, including trends in patient volume, procedure mix, and payer reimbursement. This historical data forms the foundation upon which all other budget components (expenses, capital purchases, etc.) are built.
COE - Certified Ophthalmic Executive Ophthalmic Financial Management Questions and Answers
An ophthalmic practice is analyzing its accounts receivable (A/R).
The industry benchmark for A/R days is typically 30-40 days.
The practice calculates its current A/R days at 55.
Which of the following is the MOST likely cause for this variance?