Did you know that healthcare fraud has increased by almost 20% since 2020? Fraud often targets your cash account, which can wreak havoc on your cash flow management, financial stability, and operational goals.
Cash internal controls are a vital component of not only preventing and detecting fraud, but also increasing the accuracy of your accounting records and maintaining compliance with regulatory agencies and insurance providers.
In this article, we’ll cover a variety of cash control strategies you can implement in your medical or dental practice to improve oversight and compliance.
Managing the Control Environment
The first component of controlling cash in your practice is to manage the control environment. Your control environment is the foundation of your internal control system and consists of standards, processes, and practices that your team follows. For example, when hiring a new employee, one of your control environment protocols might be to conduct a background check, especially for someone who is managing money. Your control environment can also extend to employee training, technology use, and other best practices. Frequently reviewing and adjusting your control environment is important to safeguard your cash account.
Prioritizing Segregation of Duties
One of the most effective strategies for controlling cash is to segregate duties. For example, the team member processing payroll shouldn’t be the one reconciling the cash account. This opens the door to the opportunity to commit and conceal fraud. Separating collection, recording, and reconciling responsibilities is important; however, this isn’t always ideal for a small practice. If you don’t have the funds to hire separate roles, consider outsourcing or having independent verification by an external accountant.
Monitoring Receivables and Payables
Receivables and payables are the two components that influence your cash account. On a regular basis, you should be monitoring receivables for collections, refunds, and adjustments. At the same time, your payable function should have the necessary inventory controls and ordering procedures in place. This might look like having another team member double check the authenticity of a new vendor or verify that a refund is going to the proper patient. These simple checks can go a long way in ensuring accuracy and preventing fraud.
Performing Regular Audits and Reconciliations
Cash controls also involve performing regular audits and reconciliations. Each month, your bank and credit card accounts should be reconciled against statements to catch any discrepancies. If you accept cash payments, these should be reconciled every day. On a regular basis, such as weekly or monthly, your billing system should also be reviewed for any discrepancies or mistakes. As your practice begins to grow, the frequency of your procedures should as well. For example, as a small practice, you might check your billing system bi-weekly. However, as your practice grows, weekly or semi-weekly might make more sense. These audits and checks should be performed by an independent party. For example, the team member collecting cash shouldn’t be the one performing the daily audit.
Ensuring Cybersecurity and Patient Data Protection
Cybersecurity controls are important not only to protect your cash account, but also to safeguard your patients’ data. Simple procedures, like requiring two-factor authentication, password using data encryption, and conducting cybersecurity audits, can safeguard the information in your practice and help you comply with HIPAA and other data privacy laws. Cybersecurity protocols should also extend to your cash account. For example, limiting who has access to your bank accounts, setting up real-time monitoring alerts, and regularly reviewing transactions are three ways to lower cybersecurity threats.
Developing Compliance and Training Protocols
You might know the standards of your practice, but do your team members? Developing compliance checklists and training protocols keeps everyone on the same page with cash controls. It can be helpful to use training programs, such as the Anti-Fraud Fundamentals Certificate Program through the Association of Certified Fraud Examiners. There are also training programs specific to the medical industry, such as through the National Health Care Anti-Fraud Association. These programs give employees control over when they complete training and are more interactive compared to in-person lectures.
Summary
When it comes to cash management, you can either control it or lose it. Finding the right cash controls to implement in your practice is essential to protect your organization. If you have questions about controlling cash, please contact us.