Finance Module User Guide

End-to-end guide to Cloud Health Office's four finance modules — premium billing, accounts receivable, capitation, and fee-for-service payment runs. Covers configuration, daily workflows, and integration with downstream clearinghouse and banking systems.

Overview

Cloud Health Office finance is built on four interconnected pillars that cover the complete revenue cycle for healthcare payer organizations:

Each module operates independently but shares a common chart of accounts and GL posting infrastructure. Outputs from Premium Billing and Capitation Runs feed into Accounts Receivable automatically via configurable batch rules.

1. Premium Billing

The Premium Billing module generates monthly invoices for sponsor groups (employers, unions, government agencies) based on enrolled member counts and configured premium rates. It is the primary revenue-recognition entry point for most health plans.

Billing Cycles

Each sponsor group is assigned a billing cycle that determines when invoices are generated and when payment is due:

Field	Description
BillingFrequency	Monthly (default), Quarterly, or Annual
InvoiceGenerationDay	Day of the month the invoice is created (e.g., 1st or 15th)
PaymentDueDays	Number of days after invoice date that payment is due
GracePeriodDays	Days after due date before the invoice is flagged overdue

Sponsor & Member Premium Splits

Premiums are split between the sponsor (employer contribution) and the member (employee contribution). The split is configured at the benefit plan level and can vary by coverage tier:

Coverage Tier	Total Premium	Sponsor %	Member %
Employee Only	$650.00	80%	20%
Employee + Spouse	$1,300.00	75%	25%
Employee + Children	$1,100.00	75%	25%
Family	$1,800.00	70%	30%

Invoice Generation

When a billing cycle triggers, the system:

1. Snapshots all active enrollments for the sponsor group as of the billing period start date
2. Calculates the total premium for each member based on their coverage tier and benefit plan
3. Applies the sponsor/member split to produce two line items per member
4. Aggregates sponsor-portion line items into a single sponsor invoice
5. Creates individual member premium statements (if member payroll deduction is not configured)
6. Posts the receivable entries to the AR ledger via batch rules

Payment Tracking

Each invoice tracks its payment status through a simple lifecycle:

Status	Description
Generated	Invoice created, not yet sent
Sent	Invoice delivered to sponsor (email/EDI 820)
PartiallyPaid	Payment received but less than invoice total
Paid	Full payment received and posted
Overdue	Grace period has elapsed without full payment
WrittenOff	Balance written off via AR adjustment

Overdue Management

When an invoice enters Overdue status, the system can be configured to:

• Send automated reminder notifications to the sponsor's billing contact
• Escalate to a collections queue after a configurable number of days
• Suspend new enrollment processing for the sponsor group
• Generate a retroactive disenrollment file if the grace period defined by state regulation is exceeded

2. Accounts Receivable (AR)

The Accounts Receivable module is the financial backbone of Cloud Health Office. All premium revenue, capitation expenses, and FFS claim payments flow through the AR ledger. It provides a healthcare-specific chart of accounts, period-based balance tracking, cash posting, adjustments, and automated batch posting rules.

GL Accounts (Chart of Accounts)

Cloud Health Office uses a QNXT-compatible 6-segment Chart of Accounts (COA) structure. Each GL account is identified by a composite code that encodes organizational and financial dimensions:

Segment	Label	Example	Purpose
1	Company	100	Legal entity or subsidiary
2	Line of Business	2010	Medicaid, Medicare Advantage, Commercial, Exchange
3	Region	01	Geographic service area
4	Department	4100	Functional cost center
5	Account	510200	Natural account (revenue, expense, asset, liability)
6	Sub-Account	00	Additional detail or project code

A fully qualified COA code looks like: 100-2010-01-4100-510200-00

Account types supported:

• Asset — Cash, premium receivables, capitation prepayments
• Liability — Unearned premium, provider payables, IBNR reserves
• Revenue — Premium revenue, risk adjustment revenue, reinsurance recoveries
• Expense — Medical claims expense, capitation expense, pharmacy expense
• Equity — Retained surplus, statutory reserves

Each GL account can be tagged with a premium split configuration that determines how incoming premium payments are allocated between sponsor-portion and member-portion receivables.

AR Balances & Aging

AR balances are tracked per period (typically monthly) and per sponsor group. The aging view provides instant visibility into outstanding receivables across five standard buckets:

Aging Bucket	Days Outstanding	Typical Action
Current	0 – 30	Normal — no action required
31 – 60	31 – 60	First reminder sent to sponsor
61 – 90	61 – 90	Escalation to finance manager
91 – 120	91 – 120	Collections queue, enrollment suspension review
120+	> 120	Write-off candidate, regulatory reporting trigger

Reconciliation is performed at period close by comparing the AR sub-ledger totals to the GL account balances. Any discrepancies are surfaced in the Reconciliation Exceptions report.

Cash Posting

Cash posting applies incoming payments from sponsors and members to open AR balances. The module supports multiple payment methods:

Payment Method	Source	Typical Use
Check	Manual entry or lockbox file	Small sponsor groups, individual member payments
EFT	Electronic funds transfer	Large sponsor groups with bank integration
Wire	Wire transfer	Government sponsors, large one-time payments
ACH	Automated Clearing House	Recurring sponsor payments, payroll deductions

When a payment is posted, the system:

1. Matches the payment to open invoices (by sponsor ID, check number, or remittance reference)
2. Applies the payment amount to the oldest open invoices first (FIFO) unless manually directed
3. Updates the invoice status (PartiallyPaid or Paid)
4. Creates the GL journal entry (debit Cash, credit Accounts Receivable)
5. Recalculates the aging buckets for the affected sponsor

AR Adjustments

AR adjustments handle non-payment changes to receivable balances. Every adjustment follows a four-stage approval workflow:

Status	Description
Pending	Adjustment created, awaiting review
Approved	Reviewed and approved by authorized user
Posted	GL journal entry created, AR balance updated
Reversed	Previously posted adjustment reversed (creates contra entry)

Common adjustment types include:

• Write-offs — Uncollectible balances removed from the AR ledger after collections exhaustion
• Retroactive enrollment corrections — Member added or removed mid-period; premium recalculated and difference posted
• Grace period adjustments — Premium forgiveness during regulatory grace periods (e.g., ACA 90-day grace period for Exchange members)
• Rate corrections — Premium rate was incorrect at invoice time; adjustment posts the difference

Batch Rules

Batch rules automate the GL posting of outputs from billing runs, payment runs, and capitation runs. Instead of manually creating journal entries, you configure rules that fire when a run completes:

• Billing Run Output — Automatically debits Accounts Receivable and credits Premium Revenue for each generated invoice
• Cash Posting Run — Debits Cash and credits Accounts Receivable for each applied payment
• Capitation Run Output — Debits Capitation Expense and credits Provider Payable for each calculated payment
• FFS Payment Run Output — Debits Claims Expense and credits Claims Payable for each paid claim

Each batch rule specifies the source GL account, destination GL account, and any segment overrides (e.g., force Line of Business segment from the sponsor's enrollment data).

3. Capitation

The Capitation module manages per-member-per-month (PMPM) payments to contracted providers. It covers the full lifecycle from provider contract setup through rate configuration, monthly payment calculation, and disbursement via ACH or Stripe Connect.

Provider Contracts

Each capitation arrangement starts with a ProviderContract — the master agreement between the health plan and a provider or provider group. Contracts follow a four-stage lifecycle:

Status	Description
Draft	Contract being negotiated; rates and terms are editable
Active	Contract in effect; capitation runs include this contract's providers
Suspended	Temporarily paused (e.g., credentialing issue); payments held
Terminated	Contract ended; no further capitation payments generated

Key contract fields:

• Payment Methodology — Determines how providers are compensated:
  • Full Capitation — Provider receives fixed PMPM for all covered services
  • FFS — Fee-for-service; claims paid per encounter (no capitation)
  • Hybrid — Base capitation PMPM plus FFS for specified service categories
  • Global Risk — Provider accepts full financial risk with stop-loss protection
• TIN (Tax Identification Number) — Stored with masking (displayed as ***-**-1234) for compliance; full TIN used only in disbursement files
• Amendments — Rate changes or term modifications during the contract period are tracked as versioned amendments with effective dates

Rate Configuration

Capitation rates are configured as PMPM amounts organized by rate tiers. The rate engine supports multiple dimensions:

Dimension	Description	Example
Age Band	Member age range	0-18, 19-44, 45-64, 65+
Sex	Biological sex for actuarial rating	Male, Female
Service Category	Type of service covered by the rate	Primary Care, Specialty, Behavioral Health, Pharmacy
Region	Geographic service area	Metro, Suburban, Rural

Additional rate components:

• Risk Adjustment — PMPM rates are multiplied by the member's risk score (HCC-based) to account for acuity. A member with a risk score of 1.35 receives 35% more capitation funding than the base rate.
• Withhold/Incentive Pools — A configurable percentage (typically 10-20%) of the capitation payment is withheld and placed in an incentive pool. The withheld amount is distributed at year-end based on quality metrics and utilization targets.
• Stop-Loss — Per-member and aggregate stop-loss thresholds protect providers under Global Risk contracts. Claims exceeding the stop-loss threshold are reimbursed FFS above the cap.

Capitation Runs

A capitation run is the monthly process that calculates provider payments. When a run is executed:

1. Member Matching — The system identifies all members with active coverage whose PCP or assigned provider group matches the contract's provider roster
2. Rate Lookup — For each matched member, the appropriate PMPM rate is selected based on age, sex, service category, and region
3. Risk Adjustment — The base PMPM is multiplied by the member's current risk score
4. Withhold Calculation — The withhold percentage is applied and the withheld amount is tracked separately
5. Aggregation — Member-level amounts are summed to a provider-level payment total
6. Statement Generation — A capitation statement is produced for each provider showing member-level detail, rates applied, and net payment amount
7. GL Posting — Batch rules post the capitation expense to the AR ledger

Disbursements

After a capitation run completes and statements are approved, payments are disbursed to providers through one of the supported channels:

Channel	Format	Use Case
NACHA ACH	ACH credit file (CCD+ or CTX)	Standard provider payments via banking network
Stripe Connect	Stripe API payout	Smaller provider groups, instant or next-day settlement
ERA 835	X12 835 remittance advice	Accompanies payment with claim-level detail for provider reconciliation

The NACHA ACH file is generated in the standard NACHA format with batch headers per provider TIN. The file can be uploaded directly to the health plan's originating bank or transmitted via secure file transfer.

The ERA 835 remittance advice is generated alongside the payment and includes member-level capitation detail, enabling providers to reconcile payments against their own member rosters.

4. FFS Payment Runs

The FFS (Fee-for-Service) Payment Runs module processes claim payments for non-capitated services. Unlike Premium Billing which is organized by sponsor group, FFS payment runs are organized by Line of Business — this is the primary grouping dimension.

Line of Business Grouping

Each payment run targets a single Line of Business (LOB). This ensures that claim payments are properly segregated for financial reporting, regulatory compliance, and fund accounting:

• Medicaid — State-funded claims with specific prompt-pay requirements
• Medicare Advantage — CMS-regulated claims with MA-specific payment rules
• Commercial — Employer-sponsored plan claims
• Exchange (QHP) — ACA marketplace plan claims

Payment Run Creation

To create a payment run:

1. Select the Line of Business for the run
2. Set the claim service date range — only adjudicated claims with service dates in this range are included
3. Set the claim status filter — typically Adjudicated (clean claims ready for payment)
4. Review the claim count and total dollar amount before confirming
5. Execute the run to batch claims into payment groups by rendering provider TIN

The payment run engine:

• Groups claims by rendering provider TIN for payment aggregation
• Applies any provider-level payment holds or offsets
• Calculates net payment amounts after withholding and offsets
• Generates check or EFT payment records
• Posts the claims expense to the GL via batch rules

ERA 835 Generation & Download

Every FFS payment run produces an X12 835 Electronic Remittance Advice for each provider included in the run. The ERA 835 contains:

• Payment header with check/EFT number, payment date, and total amount
• Claim-level detail including original billed amount, allowed amount, patient responsibility, and adjustment reason codes (CARCs/RARCs)
• Service line detail with procedure codes, units, and line-level adjustments

ERA 835 files can be:

• Downloaded directly from the portal in X12 835 format
• Transmitted to providers via clearinghouse EDI (Change Healthcare, Availity, etc.)
• Viewed in the portal as a human-readable remittance summary

Getting Started

Recommended setup order for a new health plan implementation:

1. Chart of Accounts — Configure GL accounts with your organization's COA segments
2. Batch Rules — Set up auto-posting rules for billing, cash, capitation, and FFS runs
3. Premium Billing — Configure sponsor billing cycles and premium splits
4. Provider Contracts — Create capitation contracts with rate tiers
5. Run your first billing cycle — Generate invoices and verify AR postings
6. Run your first capitation run — Calculate provider payments and generate statements

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