Preparing Your Lab Company or Hospital for Big Changes in Revenue Recognition Standards and Audits by Your CPA Firm
Webinar was held
Tuesday, May 30, 2017
All clinical lab companies and hospitals following GAAP must comply with a rule change that a national CPA association says “has the potential to affect every entity’s day-to-day accounting, and possibly the way business is executed through contracts with customers”
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There’s a major challenge about to confront every public and private lab company that prepares its financial statements according to generally-accepted accounting principles (GAAP). It is the substantial change in revenue recognition standards and this change may cause a measurable downward adjustment in your lab company’s reported financial results.
Managed care contracts are the lifeblood of every successful clinical laboratory and anatomic pathology company. That is why this new accounting rule, known as “FASB Rule 606–Revenue Recognition Standard,” has the potential to be disruptive, because it changes how lab companies must account for revenue from these three categories:
- Payer type: Private payers, Medicare, Medicaid, Medicare Advantage
- Patient responsibility type: Uninsured, self-pay, by size of deductibles
- Self-pay type: Identify relevant sub-categories
Is the financial team at your lab company familiar with FASB Rule 606-Revenue Recognition Standard? Do they understand all the requirements, as well as the pitfalls for failing to properly prepare to comply with this rule? Would your executives, CFOs, and CPA firm benefit from hearing the latest developments on this subject from national experts?
Answer yes to any of these questions, and you and your lab’s financial team—as well as the CPA firm that audits your company’s books—will want to join us for a special, first-in-the-lab-industry, webinar event. “Preparing your Lab Company for Big Changes Coming in Revenue Recognition Standards and Audits by Your CPA Firm,” taking place on Tuesday, May 30, at 1:00 PM EDT.
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This is the first webinar learning opportunity that explores the requirements of FASB ASC 606-Revenue Recognition Standard as it applies to clinical laboratory companies, diagnostic firms, and other types of molecular, genetic, and pharmacogenetics testing enterprises.
To help you and your lab company get a head start on the steps needed to comply with ASC 606, your first expert presenter will be Casey Hayes, Audit Partner, Ernst & Young, San Diego, CA. He will show you what other diagnostics companies are doing to be ready to properly recognize revenue from contracts—including managed care contracts—as ASC 606 becomes effective.
Next, Hayes will explain the ‘Five-Step Model’ that lab companies should follow to adhere to the new requirements. You will learn how to recognize revenue that accurately accounts for the transfer of promised goods or services to customers, in an amount that reflects the consideration (payment) for which your company expects to be entitled in exchange for those goods and services.
Given the complexities of each managed care contract for lab and diagnostic testing services, this will deliver essential insights on how to get it right the first time, and avoid the unpleasant financial consequences that might result when the CPA firm that does your accounting comes in the for the GAAP-compliant audit and samples your financial team’s handling of various categories of payers, including health plans, self-pay patients, and others.
Next to present during this essential webinar is Roger Newman, Financial Analyst at XIFIN, Inc., located in San Diego, CA. His company provides revenue cycle management to more than 200 lab clients, processes as many as 300 million lab test claims annually, and is electronically-interfaced to every health plan in the United States.
This is all relevant because Newman will provide you and your team with the practical lessons learned as his company has worked with clients to prepare their compliance with the ASC 606-Revenue Recognition Standard. Here is where your investment in this webinar will be returned tenfold or more! You’ll hear what approaches work best with the least cost and fewest resources.
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At the same time, you’ll also learn about specific problems that every lab must address to take the existing financial accounting flow and tailor it to comply with ASC 606. These are the hard-won lessons that you can take from the webinar and apply in your laboratory—with the important benefit of avoiding the mistakes that others have made.
Another feature of this webinar that makes it unique and highly valuable for your lab organization is that Newman will show the types of informatics toolsets that have been developed to make it easier to sort data from dozens or hundreds of different managed care contracts and payer types. These tools collect and assess data in ways that enable a faster, more accurate analysis of each contract and customer-type. What this means to you is that your financial team will do a better job preparing to comply with ASC 606 with less effort and more confidence.
Newman will also explain the concept of the “collections waterfall” as a way to analyze individual contracts and customers so as to comply with ASC 606. This collections waterfall is unique to his company and, until this special webinar, has been mostly shown to clients, not to the wider lab and diagnostics industry.
Learn all this and more during the information-packed 90-minute session
- Understand why ASC 606-Revenue Recognition Standard makes fundamental changes to the existing requirements for reporting revenue from individual contracts
- Learn to create a framework to analyze your lab’s unique mix of contracts and payer types to comply with ASC 606
- Know the specific problems you’ll face when analyzing data from contracts involving high-deductible health plans and the patient-pay component
- Identify specific ways that ASC 606-Revenue Recognition Standard can improve your lab’s audited financial performance
- Appreciate the reasons why implementation of ASC 606 can produce a weaker financial performance compared to your lab’s current accounting practices
- Discover what—consistent with GAAP—your CPA firm will do when auditing your company’s records for compliance with ASC 606
- Know your risks for improper or inappropriate compliance with the new rule, from best case to worst case
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Rule 606–Revenue Recognition Standard becomes effective on a rolling timeline that starts in 2017. Many lab company executives and their accounting teams have yet to take necessary steps to comply with the new requirements of Rule 606. There are also a substantial number of lab executives whose private lab company follows GAAP in their financial reporting, but who remain unaware of the new requirements of Rule 606. Don’t be one of the lab executives to make a costly mistake—failure to comply in a timely manner can have major consequences—register for this indispensable webinar now!
Casey Hayes, Audit Partner, Ernst & Young, San Diego, CA.
Casey has nearly thirteen years of public accounting experience overseeing the planning, execution and reporting phases of public and private company audits, including working directly with client executives and identifying and resolving accounting issues. Public companies served include: Life Technologies, NuVasive, Quidel, Alphatec Spine, and ACADIA Pharmaceuticals. Private clients served include: AltheaDx, Human Longevity, XIFIN, Tealium, RuiYi, Lumena Pharmaceuticals, Covario, and Prometheus Laboratories.
Roger Newman, Financial Analyst, XIFIN, Inc., San Diego, CA.
Roger has served as a financial analyst at XIFIN for over four years. He’s worked with customers on reviewing and analyzing the plethora of XIFIN reports available. He’s helped customers with their financial reporting, budgeting, forecasting, and audits. Roger graduated from the University of San Diego in 2008 from their business school. Prior to XIFIN, he was a financial analyst for a golf real estate company.