Calendar year is a very predictable January 1-December 31 each year. With very few exceptions, this is “the year” and most folks say “Happy New Year” on January 1st. The exception to that is in the world of business—where there are arcane and unusual, but well thought out, differences and exceptions.
Fiscal year is a concept that has its roots in the business community. As tax deadlines and dates were developed, it became apparent that ending everything on December 31st and starting anew on January 1st wasn’t necessarily a great idea. To alleviate a logjam of tax preparation deadlines and payment due dates, the business community gradually adopted the concept of fiscal year. Fiscal year is defined as “a year as reckoned for taxing or accounting purposes which varies from country to country and is used by businesses and other organizations for financial planning, budgeting, and reporting”.
Fiscal years were typically July 1-June 30th, although that was not written in stone anywhere and companies were generally free to select any date range and call it their fiscal year. In the 1970’s, Congress was slow to develop their budget and Congress changed filing deadlines, causing companies to delay and eventually change their fiscal year designation. Today, fiscal years can be January 1-December 31, July 1-June 30, October 1-September 30, or any other 12 months cycle they choose.
Organizations choose a range of dates based on their business model and with tax strategies in mind. For instance, school systems may like the July 1-June 30 fiscal year because it closes in the summer when staff presumably has less going on.
DME organizations also have the ability to choose which date range will constitute their fiscal year. Often, an accounting firm makes that decision for your company. For smaller companies, it may simply be a matter of preference, while with larger companies—especially those that are publicly traded—there may specific rules or strategies that lead them to select a given fiscal year.
Regardless of when your fiscal year starts and stops, picking some arbitrary date to do “annual” tasks is a good idea. If your fiscal year ends on June 30, there’s no time like the present to make sure you’ve kept up with these tasks.
Perhaps the most important example of this is the PRO 1 POLICY & PROCEDURE standard requirement that companies review their Policy & Procedure Manual at least annually and document that review. Many companies perceive this to be as simple as inserting a cover sheet in the manual that says all policies and procedures were reviewed and are acceptable as of such & such a date. While the cover sheet documenting the review is a good idea, there’s a little more to it than that!
Reviewing your Policy & Procedure Manual should be a thoughtful and thorough process. Use multiple staff members to assist with the review—leaning on the expertise of staff members based on their job descriptions. For instance, clinicians should review any clinical procedures. Billing specialists should review how billing is conducted. Date each update or revision individually. The blanket review document is fine to demonstrate the entire manual was reviewed, but if revisions are made, it’s helpful to know when that specific policy was updated.
Pay careful attention to equipment or service specific procedures. Step one in this portion of the review should be consideration of whether any new products or services were added (or taken away). For any new service, make sure there are written procedures that cover how service is provided. Update your scope of service to include any new equipment, services, or processes.
Update any policies that require updating because of new regulations, state licensure rules, or accreditation standards. For instance, HQAA added requirements to the ICS 7 DISASTER PLAN standard which require planning for pandemics (such as Covid). That means your policy needs updated to reflect that additional layer of planning.
Finally, make sure any policies such as your financial planning policies, your QI/PI plan, and your emergency preparedness policy have been updated. You’ll want to include any new budgetary issues, any new improvement initiatives or studies, and any new emergency planning procedures that you’ve implemented. HQAA will ask you for the updated versions of these when you renew your accreditation. This happens every three years; but note that the requirement is annual, so you’ll need to remember to review and update these sections accordingly.
Last, keep in mind that these dates are ARBITRARY. The requirement isn’t that you conduct them at the end of the calendar year, or that you conduct them at the end of the fiscal year, or that you conduct them any specific day, date, or time. As long as you do an annual review, you’ll be compliant.
Happy New Fiscal Year for those who count July 1 as the beginning of the year—and everyone else as well.
