1. U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, ADMINISTRATION FOR COMMUNITY LIVING, WASHINGTON DC 20201 PHONE 202.619.0724 | FAX 202.357.3523 | WEB http://www.hhs.gov/acl/ VD-HCBS Training Series Cash Flow Management/Accounts Receivable January 31, 2012 Trainers: Lori Gerhard, U.S. Administration for Community Living Kevin Foley, U.S. Administration for Community Living

2. U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, ADMINISTRATION FOR COMMUNITY LIVING, WASHINGTON DC 20201 PHONE 202.619.0724 | FAX 202.357.3523 | WEB http://www.hhs.gov/acl/ Learning Objectives At the end of this session, participants should: 1.Understand the term “cash flow management”. 2.Be able to identify a Cash Flow Management Report. 3.Be able to describe a Cash Flow Management process and identify a cash flow problem. 4.Understand approaches to managing cash flow for VD-HCBS.

3. U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, ADMINISTRATION FOR COMMUNITY LIVING, WASHINGTON DC 20201 PHONE 202.619.0724 | FAX 202.357.3523 | WEB http://www.hhs.gov/acl/ Agenda Definition of key terms Policy guidance and procedures Decision points Lessons learned and recommendations Next steps and timelines Questions and answers

4. U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, ADMINISTRATION FOR COMMUNITY LIVING, WASHINGTON DC 20201 PHONE 202.619.0724 | FAX 202.357.3523 | WEB http://www.hhs.gov/acl/ Definition of Key Terms Accounts Receivable - Money owed by customers or third party payers (individuals or corporations) to another entity in exchange for goods or services that have been delivered or used, but not yet paid for. For VD-HCBS program, accounts receivable are the Assessment Fee, the monthly bundled rate for each veteran (Veteran-Directed Budget + VD-HCBS Administrative Fee). This is money coming into the AAA/SAA. Additional accounts receivables for AAA/SAAs may include payment for Care Transition services, payment for Options Counseling provided to individuals in health plans. Accounts Receivable System - Key part of an organization’s business infrastructure and is used to assure timely receipt of payment for services rendered. Includes billing and invoicing, receipt and deposit of funds, generation of monthly Accounts Receivable Report, collection processes. Accounts Payable - Money which a company owes to vendors for products and services. For the VD-HCBS program, the primary accounts payable are to FMS Contractor and employees of Vendors (if applicable). This is money leaving the AAA/SAA.

5. U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, ADMINISTRATION FOR COMMUNITY LIVING, WASHINGTON DC 20201 PHONE 202.619.0724 | FAX 202.357.3523 | WEB http://www.hhs.gov/acl/ Definition of Key Terms Cash Flow System – A system used by an organization to manage cash and assure funds are available to pay obligations. The system includes a Cash Flow Management Report, Cash Cycle, Cash Flow Analysis, and a performance metric (Days Cash on Hand) to manage Cash Flow. Cash Flow Management Report – Monthly report that includes cash received and cash paid out for loans and owner investments and purchase of fixed assets. The cash flow report is like the “checkbook” for the organization. The report records every cash entry into the business and cash payment out of the business on a monthly basis. Cash Flow Analysis – A process used to determine the amount of funds needed to keep the organization running while waiting for the cash cycle to be completed.

6. U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, ADMINISTRATION FOR COMMUNITY LIVING, WASHINGTON DC 20201 PHONE 202.619.0724 | FAX 202.357.3523 | WEB http://www.hhs.gov/acl/ Definition of Key Terms Cash Cycle– The period of time from paying out cash to generate sales (paying employees, purchasing inventory) and the time until receipt of cash from those sales. For VD-HCBS the cash cycle begins with the referral from the VAMC and ends when the payment for the monthly services is received at the SAA/AAA. The cash cycle for VD-HCBS ranges from 5 days (for assessments) to 45-90 days for monthly payments. Days Cash on Hand – A performance metric used to project the number of days operating expenses that a not-for-profit could pay with its current cash available. Formula is (Total cash on Hand divided by Daily Operating Cost = Days Cash on Hand) Operating Cost formula is (Non-Profit’s Total Operating Expenses divided by 365 = Daily Operating Cost) Days Cash Outstanding— A performance metric used to estimate the collection period. Formula is (Total Receivable/Total Revenue from Sales for Period) x Days in Period = Total Days Cash Outstanding.

7. U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, ADMINISTRATION FOR COMMUNITY LIVING, WASHINGTON DC 20201 PHONE 202.619.0724 | FAX 202.357.3523 | WEB http://www.hhs.gov/acl/ Business Acumen Business Plan Operating Budget Operating Statement & Census Report Accounts Receivable Accounts Payable Cash Flow Management Annual Program Performance

8. U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, ADMINISTRATION FOR COMMUNITY LIVING, WASHINGTON DC 20201 PHONE 202.619.0724 | FAX 202.357.3523 | WEB http://www.hhs.gov/acl/ Reports Reimbursement Authorization of Plan AAA bills 1 time full assessment fee Authorization of Plan AAA bills 1 time full assessment fee Authorization of Plan AAA bills 1 time full assessment fee Authorization of Plan AAA bills 1 time full assessment fee 8 A/R= (Accounts Receivable) Money coming in Referral Intake Assessment Candidate Not Appropriate for PD Bill 1 time half assessment fee Candidate Not Appropriate for PD Bill 1 time half assessment fee Candidate Appropriate for PD Candidate Appropriate for PD Authorization of Budget Amount 6 Develop Veteran Monthly Budget 5 Develop Plan Plan Distribution Employer Paperwork Hiring Assistance 11 Employee Paperwork Establish Employment Initiate Services 14 Quality Assurance Monitoring Reports Planned Savings Fund Rainy Day Fund Timesheets and Invoices 13 Payments 16 Reassessment Reimbursement Quarterly Reconciliation Quality Assurance Monitoring 4a 11 8 3 2 1 7 12 910 15 2017 1819 24 232221 4b VD-HCBS Model Work Flow A/P= (Accounts Payable) Money going out Initiate Services 14

9. U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, ADMINISTRATION FOR COMMUNITY LIVING, WASHINGTON DC 20201 PHONE 202.619.0724 | FAX 202.357.3523 | WEB http://www.hhs.gov/acl/ ABOUT THIS DIAGRAM: The primary purpose of this diagram is to establish the sequencing of steps associated with billing and payment. The solid lines represent cash flow. The dotted lines show the flow of information as part of the referral and billing processes. The Veterans Administration recognizes the value of long term service and support systems. VAMCs fund VDHCBS through their operating budgets as part of their rebalancing efforts. Options Counselor

10. U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, ADMINISTRATION FOR COMMUNITY LIVING, WASHINGTON DC 20201 PHONE 202.619.0724 | FAX 202.357.3523 | WEB http://www.hhs.gov/acl/ EXAMPLE INFORMATION TO ILLUSTRATE CASH FLOW & ACCOUNTS RECEIVABLE

11. U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, ADMINISTRATION FOR COMMUNITY LIVING, WASHINGTON DC 20201 PHONE 202.619.0724 | FAX 202.357.3523 | WEB http://www.hhs.gov/acl/ Final Schedule of Services and Price Example Financial Information on VHA Form 10-1170 (Part of Provider Agreement) Rate Range: $1,710 - $3,510 $1,710 - $3,510 The rates above the range require VA Central Office Approval. Administrative Fee - $525.00 $525.00 One Time Assessment Fee: $800.00 $800.00 Partial Assessment Fee for declined services $400.00 $400.00 -When Veteran is hospitalized, no payments for -Personal Care, Household services/purchases continue - on case-by-case basis, monthly oversight continues -not to exceed 15 days. -- Veteran discharged when VAMC determines program can no longer meet needs.

12. U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, ADMINISTRATION FOR COMMUNITY LIVING, WASHINGTON DC 20201 PHONE 202.619.0724 | FAX 202.357.3523 | WEB http://www.hhs.gov/acl/ Cash Flow Management Example Assumptions: Staffing for Options Counseling, Fiscal Office oversight, Project management and Quality Assurance. These can be hidden costs that will need to be factored in to the overall management of this program. Veteran Referral Date Assessment Fee Service Initiation Approved Spending Plan/Veteran Directed Budget VDHCBS Admin Fee Monthly Bundled Rate Actual SpendingPlanned/Rainy Day JanFebJanFeb 1 12/13/2011 $800 12/15/2011 $2,500$525$3,025$2,200$2,400$300$100 2 1/1/2012 $400 n/a 3 1/12/2012 $800 1/15/2012 $1800 ($900 50%) $525 $2,325 ($1,425 50%) $750$1,700$150$100 4 1/28/2012 $800 2/1/2012 $3,500$525$4,025n/a$3,200n/a$300 5 2/12/2012 $800 2/15/2012 $1,975 $525 $2,500 n/a$900n/a$88 ($988 50%)($1,513 50%)

13. U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, ADMINISTRATION FOR COMMUNITY LIVING, WASHINGTON DC 20201 PHONE 202.619.0724 | FAX 202.357.3523 | WEB http://www.hhs.gov/acl/ Administrative Fee Example Breakdown Assumptions: 10% overhead is added to the Case Management & FMS to cover costs incurred at the AAA/ADRC On average, an Options Counselor will spend approximately 10 hours with each Veteran. Number of hours can fluctuate from month to month. FMS costs will vary from program to program. There can be hidden costs that will need to be factored in to the overall management of this program. Program Administration and Oversight Ongoing Options Counseling/Care Management (10hrs) Fiscal Operations at AAA, ADRC or SUA Quality Assurance Monitoring & Reporting Financial Management Services (FMS) Should Include the following: VDHCBS Administrative Fee Per Veteran Per Month$525.00

14. U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, ADMINISTRATION FOR COMMUNITY LIVING, WASHINGTON DC 20201 PHONE 202.619.0724 | FAX 202.357.3523 | WEB http://www.hhs.gov/acl/ DECJANFEB Medicare$6,500$7,250$7,000 Private Pay$3,250$3,000$4,100 Additional Assumptions as part of Example The organization received payment from the Medicare program and private paying individuals for services rendered. Organization’s Annual Operating Expenses:$193,641

15. U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, ADMINISTRATION FOR COMMUNITY LIVING, WASHINGTON DC 20201 PHONE 202.619.0724 | FAX 202.357.3523 | WEB http://www.hhs.gov/acl/ Monthly Closing Package Produced by Fiscal Office Operating Statement Cash Flow Management Report Accounts Receivable Report Cost Allocation Report Accounts Payable Report Key Metrics: Days Cash on Hand Days Cash Outstanding

16. U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, ADMINISTRATION FOR COMMUNITY LIVING, WASHINGTON DC 20201 PHONE 202.619.0724 | FAX 202.357.3523 | WEB http://www.hhs.gov/acl/ Cash Flow Management Report Cash Flow Report Example 2012DECJANFEB Cash In Cash Sales$ - Collections from Accounts Receivables - Consumer Directed Programs VDHCBS 13253237.56811 Medicare Medicare Reimbursement650072507000 Private Pay Private Pay Income325030004100 Equity Received--- Loans Received5000-- Other Cash in (receipts from other assets)--- Other Cash in (Interest, royalties)--- Total Cash In16,07513487.517911 Beginning Cash Balance10,00016,70218,820 Total Cash Available (Ttl Cash In + Bgn Bal) 26,07530,18936,731 2012DECJANFEB Cash out Inventory Expenditures $ - Operating Expenses --- Advertising --- Insurance225 Office Expense150 Office Supplies100 Payroll Expenses Salaries and Wages2000 Payroll Taxes300 Benefits1000 Rent4200 Loan Principal Payments (2.97%)148.5144.1139.8 Interest Payments (1%)50 VDHCBS Veteran Expenditures (Total VDHCBS)11003000 8725 Administrative Fee (FMS)100200 400 Total Cash Out9373.511369.117289.8 Monthly Cash Flow (Cash In-Cash Out)6,7022,118621 Ending Cash Balance16,70218,82019,441

17. U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, ADMINISTRATION FOR COMMUNITY LIVING, WASHINGTON DC 20201 PHONE 202.619.0724 | FAX 202.357.3523 | WEB http://www.hhs.gov/acl/ Days Cash on Hand Calculating Day’s Cash on Hand 1.Identify organization’s Total Cash on Hand Organization’s annual operating expenses 2.Calculate organization’s daily operating cost : Organization’s Annual Operating Expenses/365 = Organization’s Daily Operating Cost 3.Calculate days cash on hand : Total Cash on Hand/Daily Operating Cost = Days Cash on Hand Definition A performance metric used to project the number of days operating expenses that a not-for-profit could pay with its current cash available.

18. U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, ADMINISTRATION FOR COMMUNITY LIVING, WASHINGTON DC 20201 PHONE 202.619.0724 | FAX 202.357.3523 | WEB http://www.hhs.gov/acl/ Example: Days Cash on Hand for December Using Assumptions & Examples $16,013 $193,641 $193,641/365 = $530.52 $16,013/$530.52 = 30.18 days Calculating Day’s Cash on Hand 1.Identify organization’s Total Cash on Hand Organization’s annual operating expenses 2.Calculate organization’s daily operating cost : Organization’s Annual Operating Expenses/365 = Organization’s Daily Operating Cost 3.Calculate days cash on hand : Total Cash on Hand/Daily Operating Cost = Days Cash on Hand

19. U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, ADMINISTRATION FOR COMMUNITY LIVING, WASHINGTON DC 20201 PHONE 202.619.0724 | FAX 202.357.3523 | WEB http://www.hhs.gov/acl/ Example: Days Cash on Hand for January Using Assumptions & Examples $9,514 $193,641 $193,641/365 = $530.52 $9,514/$530.52 = 17.93 days Calculating Day’s Cash on Hand 1.Identify organization’s Total Cash on Hand Organization’s annual operating expenses 2.Calculate organization’s daily operating cost : Organization’s Annual Operating Expenses/365 = Organization’s Daily Operating Cost 3.Calculate days cash on hand : Total Cash on Hand/Daily Operating Cost = Days Cash on Hand

20. U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, ADMINISTRATION FOR COMMUNITY LIVING, WASHINGTON DC 20201 PHONE 202.619.0724 | FAX 202.357.3523 | WEB http://www.hhs.gov/acl/ Example: Days Cash on Hand for February Using Assumptions & Examples $7,345 $193,641 $193,641/365 = $532.52 $7,345/$532.52 = 13.79 days Calculating Day’s Cash on Hand 1.Identify organization’s Total Cash on Hand Organization’s annual operating expenses 2.Calculate organization’s daily operating cost : Organization’s Annual Operating Expenses/365 = Organization’s Daily Operating Cost 3.Calculate days cash on hand : Total Cash on Hand/Daily Operating Cost = Days Cash on Hand

21. U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, ADMINISTRATION FOR COMMUNITY LIVING, WASHINGTON DC 20201 PHONE 202.619.0724 | FAX 202.357.3523 | WEB http://www.hhs.gov/acl/ How to Improve Days Cash on Hand 1. Timely billing for services rendered—bill for services as soon as service has been delivered or month has closed. For VD-HCBS bill based on approved spending plan amounts with quarterly reconciliation For VD-HCBS submit Assessment bills as soon as assessment is completed and submit monthly invoice (bill) on first day of next month for previous month. 2. Accounts Receivable/Collections Performance —Reduce length of time between billing for services and receipt of payment. Assure using correct billing/invoice form Set up ETF (electronic transfer of funds) with VA Confirm VA payment cycle and process and assure that process will result in timely payment (goal is to receive payment within 5-14 days) 3.Assure that price charged for product/service covers cost + margin to produce product/service

22. U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, ADMINISTRATION FOR COMMUNITY LIVING, WASHINGTON DC 20201 PHONE 202.619.0724 | FAX 202.357.3523 | WEB http://www.hhs.gov/acl/ How to Improve Days Cash on Hand 4.Assure that cash received for services rendered are kept at AAA/SAA and moved to FMS just in time to pay expenditures for services veteran has purchased For VD-HCBS, keep cash associated with rainy day/savings funds at AAA/SAA and maintain/record rainy day fund balances for each veteran 5.Assure that price charged for product/service covers cost + margin to produce product/service 6.Review operating expenses For VD-HCBS— Is staffing ratio appropriate (1 Options Counselor for 25 veterans) Are all expenses necessary? Are inventory supply levels appropriate 7. Serve more people/Increase other sources of revenue (Care Transitions, Money Follows the Person)

23. U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, ADMINISTRATION FOR COMMUNITY LIVING, WASHINGTON DC 20201 PHONE 202.619.0724 | FAX 202.357.3523 | WEB http://www.hhs.gov/acl/ Cash Flow Management Example As of February 1, 2012 Submit Assessment Invoice ($400) #2 Start Receive Assessment Payment for Vet #2 #3 Start #4 Start Submit Assessment Invoice ($800) Receive Assessment Payment for Vet #3 Submit Assessment Invoice ($800) Receive Assessment Payment for Vet #4 #5 Start Submit January Monthly Invoice #1 ($3,025), #3 ($1,425) Submit February Monthly Invoice #1 ($3,025) #3 ($2,325), #4( $4,025), #5($1,513) Submit Assessment Invoice ($800 est.) Receive Assessment Est. Payment for Vet #5 Receive January Monthly Invoice #1 ($3,025), #3 ($1,425) Assumption: Existing Caseload 1 Veteran from previous month Assumption: End of February Caseload 4 Veterans

24. U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, ADMINISTRATION FOR COMMUNITY LIVING, WASHINGTON DC 20201 PHONE 202.619.0724 | FAX 202.357.3523 | WEB http://www.hhs.gov/acl/ Cash Cycle—45 days Veteran Referred to AAA/SAA Day 1 Assessment Completed Day 3 Bill VA for Assessment Day 4 Payment received for Assessment Day 28 Veteran received services for the part of month Day 30 (last day of month) Bill submitted to VAMC for approved spending plan and VD-HCBS Administrative Fee Day 31 (first day of next month) Payment received from VAMC for first month services Day 45 Using assumption Veteran referred first day of month and receipt of payment 14 days after bill sent to VAMC

25. U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, ADMINISTRATION FOR COMMUNITY LIVING, WASHINGTON DC 20201 PHONE 202.619.0724 | FAX 202.357.3523 | WEB http://www.hhs.gov/acl/ Cash Cycle—61 days Using assumption Veteran referred first day of month and receipt of payment 30 days after bill sent to VAMC Veteran Referred to AAA/SAA Day 1 Assessment Completed Day 3 Bill VA for Assessment Day 4 Veteran received services for the part of month Day 30 (last day of month) Bill submitted to VAMC for approved spending plan and VD-HCBS Administrative Fee Day 31 (first day of next month) Payment received for assessment billed on day 4 Day 34 Payment received from VAMC for first month services Day 61

26. U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, ADMINISTRATION FOR COMMUNITY LIVING, WASHINGTON DC 20201 PHONE 202.619.0724 | FAX 202.357.3523 | WEB http://www.hhs.gov/acl/ How to Reduce Cash Cycle 1.Initiate services as soon as receipt of referral 2.Complete work functions timely Reduce number of days between receipt of referral and completion of assessment Reduce number of days between completion of assessment and development of service plan Reduce number of days between completion of service plan and initiation of service plan 3.Timely billing for services rendered—bill for services as soon as service has been delivered or month has closed. For VD-HCBS bill based on approved spending plan amounts with quarterly reconciliation For VD-HCBS submit Assessment bills as soon as assessment is completed and submit monthly invoice (bill) on first day of next month for previous month. 4.Accounts Receivable/Collections Performance—Reduce length of time between billing for services and receipt of payment. Assure using correct billing/invoice form Set up ETF (electronic transfer of funds) with VA Confirm VA payment cycle and process and assure that process will result in timely payment (goal is to receive payment within 5-14 days)

27. U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, ADMINISTRATION FOR COMMUNITY LIVING, WASHINGTON DC 20201 PHONE 202.619.0724 | FAX 202.357.3523 | WEB http://www.hhs.gov/acl/ Sample Accounts Receivable Report Month Ending Feb 29, 2012 Example 1 CustomerPayer30 days (Feb- 29) 60 days (Jan)90 days (Dec)120 + days (Nov +) Totals Bolt, BPP$525 $2,100 Doe, JPP$525$0 $525 PP Total$1,050$525 $2625 Veteran 1VA$3,025 $0-- Veteran 2VA$0 --- Veteran 3VA$2,325$1,425--- Veteran 4VA$4,025$800--- Veteran 5VA$2,313---- VA Total$11,688$5,250$0-$16,938 Medicare Total$7,000$1,000$1,250$225$9475 Total Cash Outstanding$19,738$6,775$1,775$750$29,038 Total Revenue from Sales$19,738 20,00019,800$79,276

28. U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, ADMINISTRATION FOR COMMUNITY LIVING, WASHINGTON DC 20201 PHONE 202.619.0724 | FAX 202.357.3523 | WEB http://www.hhs.gov/acl/ Days Cash Outstanding Calculating Day’s Cash Outstanding 1.Determine period of time measuring 2.Identify organization’s Total Receivable for period Total Revenue from sales for period Days in the Period 3.Calculate days cash outstanding : Total Receivable/Total Revenue from Sales) x Days in Period = Total Days Cash Outstanding. Definition A performance metric used to estimate the collection period. Formula is (Total Receivable/Total Revenue from Sales for Period) x Days in Period = Total Days Cash Outstanding.

29. U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, ADMINISTRATION FOR COMMUNITY LIVING, WASHINGTON DC 20201 PHONE 202.619.0724 | FAX 202.357.3523 | WEB http://www.hhs.gov/acl/ Example: Days Cash Outstanding February Using Assumptions & Example 1 11/1/11 through 2/29/12 $29,038 ($19,738 + $6,775 + $1,775+ $750 = $29,038) $79,276 ($19,738 + $19,738 + $20,000 + $19,800 = $79,276 ) 121 days (29 (Feb) + 31 (Jan) + 31 (Dec) + 30 (Nov) = 121 days in period) 44 days cash outstanding ( ($29,038/$79,276) x 121 days = 44days cash outstanding) Calculating Day’s Cash Outstanding 1.Determine period of time measuring 2.Identify organization’s Total Receivable for period Total Revenue from Sales for period Days in the Period 3.Calculate days cash outstanding : (Total Receivable/Total Days of Service) x Days in Period = Total Days Cash Outstanding.

30. U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, ADMINISTRATION FOR COMMUNITY LIVING, WASHINGTON DC 20201 PHONE 202.619.0724 | FAX 202.357.3523 | WEB http://www.hhs.gov/acl/ Sample Accounts Receivable Report Month Ending Feb 29, 2012 Example 2 CustomerPayer30 days (Feb- 29) 60 days (Jan)90 days (Dec)120 + days (Nov +) Totals Bolt, BPP$525 $2,100 Doe, JPP$525$0 $525 PP Total$1,050$525 $2625 Veteran 1VA$3,025 $0-- Veteran 2VA$0 --- Veteran 3VA$2,325$1,425--- Veteran 4VA$4,025$800--- Veteran 5VA$2,313---- VA Total$11,688$5,250$0-$16,938 Medicare Total$7,000$10,000$9,000$7,000$33,000 Total Cash Outstanding$19,738$15,775$9,525$7,525$52,563 Total Revenue from Sales$19,738 20,00019,800$79,276

31. U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, ADMINISTRATION FOR COMMUNITY LIVING, WASHINGTON DC 20201 PHONE 202.619.0724 | FAX 202.357.3523 | WEB http://www.hhs.gov/acl/ Example 2: Days Cash Outstanding February Using Assumptions & Example 2 11/1/11 through 2/29/12 $52,563 ($19,738 + $15,775 + $9,525+ $7,525 = $52,563) $79,276 ($19,738 + $19,738 + $20,000 + $19,800 = $79,276 ) 121 days (29 (Feb) + 31 (Jan) + 31 (Dec) + 30 (Nov) = 121 days in period) 80 days cash outstanding ( ($ 52,563 /$79,276) x 121 days = 80 days cash outstanding) Calculating Day’s Cash Outstanding 1.Determine period of time measuring 2.Identify organization’s Total Receivable for period Total Revenue from Sales for period Days in the Period 3.Calculate days cash outstanding : (Total Receivable/Total Days of Service) x Days in Period = Total Days Cash Outstanding.

32. U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, ADMINISTRATION FOR COMMUNITY LIVING, WASHINGTON DC 20201 PHONE 202.619.0724 | FAX 202.357.3523 | WEB http://www.hhs.gov/acl/ Interpreting Days Cash Outstanding Metric Days Cash Outstanding is a calculation that indicates the number of days it takes to receive payment for services If payment terms are net 30 days, 40 – 45 days cash outstanding is good Greater than 45 days cash outstanding is signal of collection, billing issue, enrollment issue, or communication issue

33. U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, ADMINISTRATION FOR COMMUNITY LIVING, WASHINGTON DC 20201 PHONE 202.619.0724 | FAX 202.357.3523 | WEB http://www.hhs.gov/acl/ How to Improve Days Cash Outstanding 1. Timely billing for services rendered—bill for services as soon as service has been delivered or month has closed. For VD-HCBS bill based on approved spending plan amounts with quarterly reconciliation For VD-HCBS submit Assessment bills as soon as assessment is completed and submit monthly invoice (bill) on first day of next month for previous month. 2. Accounts Receivable/Collections Performance —Reduce length of time between billing for services and receipt of payment. Assure using correct billing/invoice form Set up ETF (electronic transfer of funds) with VA Confirm VA payment cycle and process and assure that process will result in timely payment (goal is to receive payment within 5-14 days) 3.Develop and implement a Collection Policy and Procedure Manual.

34. U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, ADMINISTRATION FOR COMMUNITY LIVING, WASHINGTON DC 20201 PHONE 202.619.0724 | FAX 202.357.3523 | WEB http://www.hhs.gov/acl/ How to Improve Days Cash Outstanding 4.Appoint/assign a staff person to be responsible for Accounts Receivable/Collection and assure they have clear performance metrics 5. CEO or Leadership meet with Accounts Receivable/Collection Team monthly to discuss outstanding accounts and develop plan of action and follow-up on action items from previous month. 6. Develop relationship with third party payers and conduct regular communication regarding billing/accounts receivable process and items. When payments occur timely, be sure to acknowledge and thank them for the quick turnaround. 7. Build a CQI approach internally and externally so that billing and payment receipt processes are improved and work in the most efficient/expedited fashion. 8. Review enrollment processes, particularly with those receiving third party coverage (VA, Medicare, Medicaid, Private Insurance) 9.Assure regular communication (daily) between program office and fiscal office.

35. U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, ADMINISTRATION FOR COMMUNITY LIVING, WASHINGTON DC 20201 PHONE 202.619.0724 | FAX 202.357.3523 | WEB http://www.hhs.gov/acl/ Business Plan Operating Budget Operating Statement & Census Report Accounts Receivable Accounts Payable Cash Flow Management Annual Program Performance Business Acumen