A very important accounting principle is to accurately reflect the revenues and expenses on the profit or loss statements.  Accountants use accounts receivable and payable the same way Actuaries use "incurred but not reported claims reserves" (IBNR). The goal is to use the accrual method of accounting by matching revenues and expenses.  Accountants need to recognize IBNR liability when it occurs.

Health Maintenance Organizations (HMOs), Independent Practice Associations (IPAs) and other managed care organizations that accept capitated risk need to account for incurred but not reported (IBNR) claims. Incurred but not reported claims is an industry term referring to those claims for medical services provided prior to the end of a reporting period which a bill has not been received a from the provider of medical services.  In other words there is a lag period (called "the lag") between when care is actually rendered and when the bill is submitted to the payer of the claim (typically HMOs, Third Party Administrators (TPAs), self insured groups, IPAs and other entities.

GMA has developed 3 different models to calculate IBNRs.  One uses the historical percentage of completion factors.  The other two are actuarial models using the two distinct different methods of projecting the IBNRs. 

There are various reports generated for our clients.  (Please click  left button 'IBNR EXAMPLES" for a list of all sample reports, or the lines below to see selected sample reports).

1. IBNR calculation using 3 different methods
1. Tables for estimated incurred for the most recent 12 months
2. Tables for the IBNR for the most current 12 months
3. Tables for the average daily amount of claims for current 12 months
4. Tables for IBNR completion factor

2. Report per member per month (PMPM) claims cost
1. Total paid, incurred claims (paid plus IBNRs)
2. Chart reflecting PMPM cost most recent 20 months

The PMPM cost can be calculated for five (5) categories of claims, e.g. In Patient, Out Patient, Professional Fees (physicians), 2 other as well as the grand total

3. Run out report.  Comparing IBNR calculations to actual claims paid after the period IBNRs were calculated.  

 What the client has to provide. 

This should be a simple task for our clients.  It is a matter of providing GMA with the most recent 20 months paid claims on a month or year to date basis.  The data can be emailed to GMA as an Excel file or printed.  GMA will shortly  add a form to allow clients to enter and submit data in our secure web site.

GMA can assist our clients in all aspects in the IBNR process from reconciling claims data to the general ledger to the preparation and reporting of the IBNRs.

CLICK HERE FOR  IBNRs examples