Tuesday, March 29, 2011

Medical Billing - Training Manual

MEDICAL BILLING TRAINING MANUAL

MEDICAL BILLING

An Introduction

There are more than 500,000 healthcare professionals in the United States who need to bill
for their services. Most healthcare providers employ billing staff in their own office or are
part of a larger organization like a group practice or a hospital that processes their claims
and helps manage their finances. Some healthcare providers choose to outsource their
claim processing and accounts receivable management, and qualified billing services have
the opportunity to provide these services.

What is a billing center/ house?

Billing center is a centralized office that handles the provider/ hospital’s billing activities. It
could be a part of the hospital network or can be an outsourced organization. Billing houses
relieve the burden of maintaining hospital bills and accounts and assist in claims submission
process. Billing houses can handle more than one hospital/ provider at a time as they are
independent organization.

How Billing Companies Charge For Services?

Two common methods used to charge for billing services are:
• Flat fee per claim basis
• Percentage of accounts receivables per month
The flat fee method was popular when this service business first came into being.
Companies would charge from $2.50-$4.50 per claim and 50% of that amount for
resubmissions. All other charges would be billed separately. Ex: patient bills, EMC fees, and
postage costs. This method is not widely used today.
The number one method used today is the percentage of accounts receivables in a given
month. This percentage can range from 5% to as high as 16%. It is our opinion that 10% and
up is on the high end. If you are contemplating going with a company charging this rate be
sure that there are no additional charges and try to lock that rate in for a few years. Many
companies will include patient bills, clearing house fees, and postage costs as part of your
percentage. This is an area where you may be able to negotiate. The one time set up fees
range from $500.00-$2500.00 depending on the level of work that is required up front. Prior
to the first claim being generated your practice needs to be set up on computer. This
involves setting up your providers, places of service, provider ID's, insurance carriers,
ICD9/CPT codes, fee schedules, patient base and productivity reporting. The billing service
needs to contact carriers advising them of the billing intermediary status on your behalf as
well as testing and getting you set up with the EMC carriers. Those companies charging the
higher rates may be setting up software for you and or training your staff along with some
consulting services.

What is the overall billing process?

After the provider renders services to the patient, the billing company will submit bills to the
insurance company/ payer, using the insurance information that was last provided, as well
as information about the reason for the examination, and the exact type of procedure
performed.

Medical Billing and Collection Lifecycle
What does a billing center do with respect to claims process?

A billing center's full service approach includes:
 claim entry,
 primary and secondary electronic and computer generated hard copy claims,
 patient primary, co-insurance and deductible billing,
 the handling of all telephone and written inquires regarding claims and billing issues,
 payment application and deposits,
 and insurance and patient follow-up on unpaid claims.
 It should be able to provide electronic billing for all insurance carriers, including
Medicare, Medicaid, Blue Cross/Blue Shield and NEIC companies and also a vast array
of medical practice analysis reports, to facilitate better management of your medical
practice operation.
The needs of all medical practices are not the same. The billing center should customize its
services to meet the unique needs of each client. Whenever possible, however, procedures
and forms already in place should be utilized. The billing center should be able to adapt its
protocols

Various Departments in the Billing House:
Charge Entry Team
Quality Assurance
Transmission
Scan
Cash Posting Team
AR

CHARGE ENTRY TEAM:
They are responsible for registering patient details & the charges in the billing system.

Registration Process:
This is a process wherein patient information is collected from the patient at the time of
entry at the hospital. The hospital front office staff has to do the following functions in this
regard:
When a patient first requests an appointment, before the formal registration process begins,
the practice requests the patient for the name of his or her insurance company. For e.g. if a
patient has an insurance plan that requires him or her to seek services only from a
contracted physician and the practice does not include a contracted physician from that
plan, but still the patient insists on an appointment, the hospital informs the patient of his or
her obligation to pay the physician in full on the day of the appointment. If a patient belongs
to a plan, which requires a referral (an authorization from a patient’s PCP), the correct
referral information - the proper paper form or an authorization number is collected.
After fixing up the appointment of when the patient comes into the hospital, the staff gives
a registration packet to the patient. This contains the hospital brochure, the financial policy
and the registration form. With the hospital brochure, the hospital welcomes the patient,
describes in brief about the hospital history and structure, about its doctors, staff, facilities
etc. It also gives the scheduled appointment timings of various doctors. The financial policy
details about the payments by patients for treatments not covered by insurance, noncontracted
payers etc. The registration form contains the patient information and the
insurance information. The patient or an authorized person should sign the registration form
at two places - one for authorizing the physician to release medical information in order to
submit a claim and one for assigning benefits to the physician. Ideally this packet would be
mailed to the patient immediately after his appointment is fixed so that when the patient
arrives on the appointment day, he or she would have completed filling in the registration
form.
The hospital must also request the patient to give a copy of his insurance cards. This is very
much necessary since the card copy contains the insurance plan details and the correct
identification number of the plan and the claims mailing address. A copy in the patient’s file
is also necessary for the fact that at the time the patient leaves the hospital, the card copy
can be verified to see if any co-pay needs to be collected from the patient.
A copy of the patient’s driver’s license is also necessary. This is required because, patient
can be traced of his whereabouts when he has moved or left no forwarding address.

Pre-authorization:

This is a requirement to be adhered to before the patient gets registered for treatment. Also
known as pre-certification, this requires notification to the plan of certain planned services
and all elective inpatient hospitalizations before they are rendered. Depending on the plan,
either the patient or the provider must seek pre-authorization for these services. Certain
managed care plans require the patients to go through a contracted physician participating
in their network. If the patient gets treated through a physician not part of the network then
the managed care plan require the physician to call the plan and notify them of the
treatment before hand. Only after their approval can the treatment proceed. If the
treatment is done without the approval, then the managed care plan will not reimburse the
physician for their services nor can the physician bill the patient. This approval is called preauthorization
and a copy of this should be made available in the patient’s file before the
treatment is rendered. Another requirement is to obtain a second opinion from an impartial
physician regarding medical necessity of the procedure to be performed.
A service is deemed medically necessary when-
It is appropriate for the diagnosis being reported.
It is provided in the appropriate location.
It is not provided for the patient’s or his/ her family’s convenience.
It is not custodial care. (Custodial care is care that can be provided by people who
are not trained medical professionals.)
Once the authorization has been granted, an authorization number would be given. This
number should be reported on the claim for the service.

Demographic Entry requires the following information:

1. Patient Details – Last name, First name, Middle Initial.
2. Patient’s Sex & DOB – DOB should be in the format MM/DD/YYYY.
3. Patient’s SSN# - Social Security Number is always 9 digit numeric. The Social
Security Administration of the United States of America allots this number to all
American Citizens.
4. Patient’s Address
5. Guarantor’s Details
6. Employer Details
7. Insurance Details – Name, ID#, Group#, Address, Subscriber Details.

Charge Entry Process:

When the initial procedure of registration of patients is completed, the treatment is carried
out. During this activity, the physician has to fill in the charge sheet or the super-bill
showing details of the treatment rendered. This form shows the patient name, date of
service, time of service, doctor performing the service, procedure description and diagnosis
description. The attending doctor should sign this form. A sample charge sheet/ super-bill is
attached. Based on the procedure & diagnosis descriptions, the CPT/ HCPCS codes and the
ICD-9 codes would be filled in. This is an internal form and would be used in filling up the
claim to be sent to the carrier. This should not be used as a medical record to be attached
along with the claim.
Frequently there may be situations where there is more than one diagnosis to be fixed for a
particular procedure. In such cases it should be made clear on the charge sheet or superbill.
Coding of procedures & diagnosis:

This is a process whereby the procedures and diagnosis given in the charge sheet are
coded. As discussed earlier the most common coding systems used for procedures and
diagnosis is CPT-4 and ICD-9 respectively. Based on the doctor’s medical impressions and
the indications in the super-bill we need to fix a proper code for the procedure and
diagnosis. This is a complicated, lengthy and time-consuming process and involves research
and analysis. Since incorrect coding leads to breach of compliance, we need to be very
careful in this aspect.
Some carriers, particularly Medicare, require only certain diagnosis to be reported for
certain procedures since according to them other diagnosis is not medically necessary to be
treated with this procedure. Hence HCFA has set up a CPT-ICD9 linkage wherein they state
the list of ICD9 codes that correspond to a CPT code. In other words, it specifies what may
be the kinds of diseases/ symptoms for which this treatment is being given.
ICD or International Classification of Diseases is a cluster of codes defined to describe the
symptoms and ailments of patients. Originally based on a list of codes published by WHO
(World Health Organization), this is recognized by the US Department of Health and Human
Services. ICD-9-CM refers to International Classification of Diseases, Ninth Revision, and
Clinical Modification.
ICD-9-CM codes are 3, 4 or 5 digit numerical codes from 001 to 999.9. The three-digit code
is the parent code giving the name of the disease. The supplemental four or five digit codes
under that three-digit code are more specific. When there are more specific codes for a
particular disease, we need to use that code only. We should use the three-digit code only
where the fourth or fifth digit is not available. In addition there are V-codes and E-codes. V
Codes are Supplementary of Factors Influencing Health Status and Contact with Health
Services (V01-V82). E Codes are Supplementary Classification of External Causes of Injury
and Poisoning (E800-E999).
The following terms are important to understand.
Unbundling: This refers to a situation where two procedures are reported where one is
included in the other or there is a third procedure which covers both for a lesser value
(lesser than the value of both the procedures put together).
Up coding: This refers to a situation where a more complex procedure is used than is
warranted by the diagnosis reported. A simpler procedure could be used instead.
Pre-coding
Before the actual data entry is commenced for demographics and charge-entry, it is
desirable to pre-code all those fields wherein a code is available. For e.g. in demographics,
patient account number and insurance company number are ideal for coding. Similarly in
charge-entry, doctor number, referring doctor number, facility id, place of service and
modifier are ideal for coding. If this coding is done before hand, it will be simple & fast for
the data entry person and will save him/her a lot of time in searching for the code or adding
masters.

Procedures: CPT-4, HCPCS & Other Coding Systems

CPT-4 or Current Procedural Terminology is a set of codes defined to describe the
procedures/ treatment rendered to the patients. Developed by the American Medical
Association, this coding system has been acknowledged by the Health Care Financing
Administration and all Insurance Carriers. This is a five digit numeric code starting from
10000-99999. The entire set of codes from 10000-99999 is subdivided into various ranges
of codes covering various body sites/ specialty of treatment such as Integumentary,
Musculoskeletal, Respiratory, Female Genital, Male Genital, Digestive, Urinary,
Cardiovascular & Nervous Systems, Radiology, Nuclear Medicine, Evaluation & Management
etc.


HCPCS
In 1985, the health care financing administration [HCFA], an administrative agency of the US
congress responsible for the operations of Medicare & Medicaid programs, began using the
HCPCS [HCFA common procedural coding system] a national uniform coding system for
reporting health care services to the Medicare program. HCPCS is a tri level system
developed to augment the existing CPT-4 system and to provide a clearing house for the
assignment of temporary code numbers for newly developed medical and surgical
procedures prior to their appearance in the CPT system :
Level I codes are the existing CPT 4 codes

Level II codes are national codes augmenting CPT-4. These codes are established to allow
more definitive reporting of physician services, such as injections of specific medications.
These codes are also used for reporting non physician services such as a patient
transportation
services, durable medical equipment, orthotics, prosthetics, specific medical supplies,
dental procedures, rehabilitative services, speech, language and auditory screening, etc..

Level III codes generally are codes used by each regional Medicare fiscal intermediary. A
fiscal intermediary is a large private insurance company that has been awarded the federal
contract for processing claims for federally administered programmes.
HCPCS Codes meaning HCFA Common Procedure Coding System are codes designed by the
Health Care Financing Administration (HCFA). They are alphanumeric codes, which are
accepted by certain limited carriers and are used in cases where no appropriate code
figures in CPT-4.
ASA Codes developed by American Society of Anesthesiologists are codes that need to be
used for anesthesia billing. The codes range from 00100 through 01999. All Medicare
carriers and certain Medicaid carriers accept these codes.

Relative Value Units
RVU or Relative Value Units are units assigned to CPT codes for reimbursement. This is
brought out by the Omnibus Budget Reconciliation Act of 1989 (OBRA, later amended in
1990). The relative value for each service is the sum of relative value units (RVUs) that
reflect the resources involved in furnishing the three components of a physician’s service:
(1) Work; (2) Practice Expenses; and (3) Cost of Malpractice insurance.

Facility
Facility is the place where the doctor sees the patient. It can be a hospital, a nursing home,
a skilled nursing facility, Ambulatory Surgical Center, Radiation Oncology Center, a clinic or
even the patient’s home.

Place of Service,
Give the correct place of service code for inpatient, outpatient, office consultation,
emergency room, ambulatory surgical center etc.
Admit Date, Discharge Date, Injury Date,
Though these are not compulsory fields it is desirable to provide this information. Injury
date is a must for Workmen’s compensation claims.

Referral Number, Prior authorization Number

As explained above, for cases that require prior authorization the authorization or the
referral number should be stated. If there is an authorization or referral on file but no
number has been allotted, we should just state “referral on file” in the above field.
From Date of Service, To Date of Service,
Date of service is the date on which the treatment is rendered to the patient. This may be
just one date or a range of dates. We need to fill in this information as given in the charge
sheet/ super-bill.

Modifier

Modifiers are codes that are used to "enhance or alter the description of a service or supply"
under certain circumstances. A modifier provides the means by which the reporting
physician can indicate that a service or procedure that has been performed has been
altered by some specific circumstance but has not changed in its definition or code. The
judicious application of modifiers obviates the necessity for separate procedure listings that
may describe the modifying circumstance. Modifiers may be used to indicate to the
recipient of a report that:
A service or procedure has both a professional and technical component.
A service or procedure was performed by more than one physician and/or in more
than one location.
A service or procedure has been increased or reduced.
Only part of a service was performed.
An adjunctive service was performed.
A bilateral procedure was performed.
A service or procedure was provided more than once.
Unusual events occurred.

Locum Tenens & Reciprocal Billing
Locum Tenens is an arrangement whereby the regular physician hires another physician to
take care of his services while he is on leave for reasons such as illness, pregnancy,
vacation or continuing medical education. The regular physician may submit claims and
receive payment for services provided by the substitute physician during his absence. The
substitute physician also called locum tenens physicians are paid on a per diem basis or fee
for service basis and are considered independent contractors rather than employees of the
physician’s practice.
The following basic criteria should be met in order to bill under a locum tenens
arrangement:
The regular physician is unavailable to provide the visit services.
Patient has arranged or seeks to receive the visit services from the regular
physician.
The substitute physician does not provide services over a continuous period of
more than 60 days. The regular physician uses Q6 modifier in Box 24D of HCFA-
1500 when reporting the services.
The regular physician pays the substitute physician on a per diem or fee for
service basis for the services rendered.
The regular physician must keep on record all such services and must be able to
produce it on demand.
The continuous period of 60 days begins with the first day on which the substitute
physician provides covered visit services.
Also a physician who has left the group and for whom the group has engaged a locum
tenens physician as a temporary replacement may still be considered a member of the
group until a permanent replacement is obtained.
Reciprocal billing arrangements are those in which a substitute physician is not paid for
the services. Instead, he has an agreement with the regular physician for whom he is
covering to provide patient care coverage in exchange for equivalent coverage for his
practice by the regular physician when he needs the coverage himself.
The rules are similar to that of the locum tenens arrangement except that payment on a per
diem or fee for service basis does not exist here and the physician uses Q5 modifier in Box
24D of HCFA-1500 when reporting the services.


QUALITY ASSURANCE
After the charges are entered it is forwarded to the quality assurance for auditing &
ensuring the accuracy of the charges entered. If there are any errors it is forwarded back to
the charge entry team to make the necessary correction.
GENERATION OF CLAIMS, PRINTING & TRANSMISSION
The next step is claims generation. Claims may be paper claims or electronic claims.
A claim is a comprehensive pooling of all data relating to a patient for a particular
treatment. All registration, charges and provider information is contained in this form that is
sent to the insurance carrier for processing. The data presented in this form should be 100%
accurate since payment or otherwise to the doctor for the patient’s treatment is based on
the information provided in this form. Hence this should be thoroughly audited before
sending to the carriers.
Paper claims
There are various types of forms for paper claims. The most widely used form is HCFA-1500
designed by the Health Care Financing Administration. This is a red color form in white
background. The other forms used by specific carriers are UB92, Green-and-white form for
NY Medicaid, Georgia Medicaid Form 8 etc. These forms are set up in the billing system that
you are using in order to enable you to print directly from your system.
Proper filling up of all required fields in the HCFA-1500 is the most essential function of a
billing company. Attached are the basic instructions in filling up each field in HCFA-1500 and
a copy of the HCFA-1500.
Once the claims are generated and printed, they should be packed and sent to the carriers.
The red HCFA-1500 forms are designed for OCR (Optical Character Recognition) scanners.
When the computer printed HCFA runs through the scanner (around 2400 claims per hour
can be processed), it stores in the computer all the data available in the HCFA. This
eliminates data entry by the insurance processing staff on receipt of the HCFA. This is the
reason why HCFA should be properly aligned (all fields should be printed in proper places)
while printing. The following precautions should be taken while printing:
Use the most common type of font.
Use only black inked impressions.
Print only in the white areas. Any prints in the shaded areas will not be
OCRd.
Use only UPPER cases.
Do not erase or use correction fluid after printing. If there is an error, print a
new HCFA.
Do not highlight.
Fold only at the proper places.
Above all the print quality should be clear and alignment should be perfect.

Electronic Transmission

Electronic transmission of claims is the modern way of sending claims with less paper work.
The most common means of transmission are through magnetic tape, diskette or using
modem and now through Internet too. The claim information is directly loaded into the
insurance company’s computer system. The major advantages of this method are less
administrative costs, no concerns of claims being lost in transit, no concerns regarding data
entry errors being made by insurance staff while processing claims, less rejections, less
turnaround time between the process of data and process of claim by the carrier and above
all we can receive reports of the number of claims sent and received by the carriers.
Transmission of Patient Bills:
Bills are sent to the patient for two purposes:
1. When the patient is a self pay i.e. he has no insurance coverage
2. When the patient is responsible for co-insurance, if any, after the primary and the
secondary, if any, makes payment.
In addition we may also bill patients in the following cases.
Insurance denies claims as:
Coverage terminated
Coverage not valid for DOS
Benefits exhausted
Procedure not covered
Applied to deductible
Unable to identify patient
Requested information from patient not received by insurance
Insurance information in demographics insufficient and no phone number
available even through directory assistance for calling insurance.
It should be remembered that we should not bill MEDICAID patients unless they are denied
for the reason coverage terminated or coverage not valid for DOS.
Patient bills show the amount due from the patient and the due date of payment.
The following are the contents of a patient bill:
Date of printing of bill
Patient’s/ Guarantor’s Name
Patient’s/ Guarantor’s Address
Patient Account Number
Patient Balance
Address to which payment should be remitted
Date of service
Description of procedure performed
Name of attending doctor
Billed amount
Amount paid by Medicare/ other insurance
Amount paid by patient
Adjustments
Balance due
Due date of payment
Some billing companies have the facility to receive payments through credit cards in
addition to cash and check.

SCAN DEPARTMENT
The scan department is responsible for downloading all the scanned files from the facility /
hospital, printing & forwarding it to the respective departments.

REIMBURSEMENT OF CLAIMS & CASH POSTING
Once the claims reach the carriers and they complete processing, they issue a check and
prepare an Explanation of Benefits (EOB). The checks and the EOBs would be sent to the
pay-to address with the carrier or in the HCFA. Pay-to address is the common address that
the provider has set up to receive checks and EOBs from carriers and patients. This is most
likely a PO Box address set up in arrangement with the bank where the provider has an
account. The checks and EOBs are received on all working days. The bank deposits the
checks every day into the provider’s account, prepares a deposit statement and sends the
statement, EOBs and copies of checks every day to the provider. The provider forwards
them to the billing office for posting.

Explanation of Benefits

Explanation of Benefits or EOB is the detailed statement of the carrier’s determination of
the claims processed. The determination can result in a payment or a denial.
The Explanation of Benefits contains the following information:
Name of the payer, Name of the provider, Pay-to address, Name of the patient, Name of the
member, ID number, date of service, procedure code, amount billed by the provider,
amount allowed by the payer, co-insurance, deductible, amount paid by the payer. The
amount paid by the payer is equal to the amount shown by the check.
Allowed Amount: This is the amount allowed by the carrier. Not all carriers and in all
circumstances allow the entire amount billed. Certain carriers have fee schedules based on
which they make payments. These fee schedules determine the allowed amount. A Fee
Schedule is a list of reimbursement amount for each procedure. These vary according to
various localities. This allowed amount is the maximum that a carrier will pay for a
particular procedure.
Write Off: This is an amount that the provider has to remove from his books. There are two
types of write off: One is contractual write off and the other one is adjustments. Contractual
write off are those wherein the excess of billed amount over the carrier’s allowed amount is
written off. This is used only when the provider has a contract with the carrier.
Co-ordination of Benefits (COB)
With COB, the primary insurance plan is responsible for paying the full benefit amount
allowed by its contract. The secondary insurance plan is responsible for any part of the
benefit not covered by the primary insurance provided the benefit is covered by the
secondary plan. BCBS also refined the COB for dependent children. Here the birthday rule
applies. The plan of the parent whose birthday appears first in the calendar year would be
the primary plan while the plan of the other parent would be the secondary plan and would
be subject to COB. For e.g. Julia and Robert are parents of Christopher. Julia’s birthday falls
on Oct 24th while Robert’s birthday falls on Nov 28th. Julia’s plan would be primary and
Robert’s plan would be secondary and subject to COB. In case the birthday is identical for
both the parents, the plan, which is in force for a longer period of time, would be primary for
the dependent. This rule not only applies to BCBS but for other insurance carriers as well.
ACCOUNTS RECEIVABLES – ANALYSIS & CALLING
The objective of a medical billing office is to obtain maximum & timely reimbursement for as
many of the claims & patient bills as possible. The AR analyst plays a crucial role in
achieving this objective. An analyst is a person who monitors the receivables such that it is
well within control. He should also keep in mind that the main objective of a billing company
is to maximize collections. He/ She should work towards it and set his work methods such
that his goal is attained. For this purpose, the analyst should set a target every month of
what his collections would be for that month taking into account various factors such as the
average turnaround time and unresolved issues. Thus there are two major functions of an
analyst – Maximizing collections and Bringing down receivables
Duties of an analyst
The basic duties of an analyst are apart from the above:
Should constantly keep track of electronic claims.
Should constantly keep track of paper claims.
Should watch out for major rejections – clearing house/ carrier.
Should constantly keep a watch on EOBs received from major carriers for payments, payto
address, provider numbers etc.
Should constantly get himself/herself updated on the latest in billing.
Should compulsorily go through each regular mail since they are the source of a lot of
information.
Should be thoroughly aware of all the billing rules for the specialty, which he takes care
of.
Should advise his co-staff of any changes in data entry rules.
Should ensure that AR days meet industry standards.
Should co-ordinate with the call center crew/ Client coordinator and solve problems.
Should ensure that claims for every carrier goes electronically and work towards
achieving it wherever possible.
Call Team:
The call team places call to the insurance carriers for checking eligibility / benefits of the
patient or to check status on claims submitted. They also make calls to the patients to find
the status of bills submitted to them.
Verification Questionnaire
Patient's Name
Insurance Carrier
Center Name
Primary / Secondary
Policy ID#
Plan
Group#
Subscriber's Name
Effective Date
Phone # of the carrier
Address for mailing claims
Fax #
Time limit for filing claims
Pre existing conditions if any
Is Referral required
Is there any referral on file
Is pre authorisation required
Benefits payable
Is there any copay
Is there any Deductible
Is there any OOP expenses
Is there a Life time max for benefits
Is the provider In network
If no, details of Out of network
benefits
Pcp's name
Phone#
If it is PPO Plan - name of the pricing
agency
Phone#
Status Querries:
Paid No Record In Process Denied
Date of payment
To check if the address
we have is correct
Date they received
the claim Date of denial
Amount paid
If new address, get the
information & the
effective date of the
same. Also to check if it
applies globally
Normal processing
time Reason for denial
Chk#
Confirm the eligibility of
the PT for that DOS Reference claim#
Try reprocessing over
phone
Bulk amount of the
chk Get fax # if applicable
If no, Find if it can be
appealed with documents
Cashed date
If yes get appeals
address, fax# time limit
Address where the
chk was mailed
If no, find whether we
can bill the patient
AR Strategies
Medicare
Average AR days:
For electronic claims 30 days
For paper claims 45 days
Appeal Limit:
120 Days from the EOB date.
Medicare makes payment in 14 days for claims transmitted electronically and 27 days for
claims transmitted on paper. Giving some time for posting of checks by the carrier,
depositing in bank account, clearing of checks and receipt of EOBs at the billing office there
should be no claims outstanding greater than 30 days for claims transmitted electronically
and 45 days for claims sent by paper.
Medicaid
Average AR days:
For electronic claims 45 days
For paper claims 90 days
Filing Limit (for certain states):
New York Medicaid 90 days from DOS
Texas Medicaid 95 days from DOS
Pennsylvania Medicaid 180 days from DOS
Florida Medicaid 1 year from DOS
Since Medicaid is a state insurance plan, the processing time varies from state to state.
Overall, you should not have any outstanding for more than 45 days for electronic and 90
days for paper claims. Since the filing limit for Medicaid claims is only 90 days for certain
states (Some states have 180 days while some 1 year), we need to ensure that all claims
reach the carrier within the first filing limit. This is very important because claims which do
not reach the carrier within the filing limit would be blindly denied for crossing the filing limit
and has to go through appeal process wherein you have to prove with supporting
documents that you have submitted the claim within the filing limit.
BCBS
Average AR days:
For electronic claims 45 days
For paper claims 60 days
Filing Limit (in general): 1 year from DOS
BCBS has various plans covering all states. Each one of them has different rules and
regulations. There are local plans and out-of-state plans. You need to be clearly focussed on
where you should submit the claims. Also the id formats for each plan differ.
Utilization Review
Here the emphasis is on paid claims. Here we would be discussing how to tackle low paid
claims. Low paid claims are those where the amount paid is less than the allowed amount.
For this purpose, as far as possible we need to gather the allowed amounts of all procedures
by various carriers. Medicare is the only carrier that publishes its fee schedule openly. Other
carriers may also publish them but may not be available freely. We need to request for it.
Majority of the carriers do not have a fee schedule. They follow the UCR (usual, customary
and reasonable). We need to establish the UCR for all major procedures for major carriers
and any payments below this amount should be questioned. This is a separate review apart
from the regular AR analysis and need to be constantly done. This needs to be carefully
done since some or many of the claims may not form part of the AR outstanding as write off
would have been taken for the balance amount.
We need to appeal these claims with a covering letter and a copy of the EOB explaining in
detail what should have been paid and why and what has been paid. Constant follow up is
also necessary in this regard.
TERMINOLOGIES IN MEDICAL BILLING:
Payor: Insurance
Provider: Hospital or Physician
SSN: Social Security Number
PCP: Primary Care Physician
PCL: Professional Courtesy Letter
HMO: Health Maintenance Organization
PPO: Preferred Provider Organization
POS: Point of Service
EPO: Exclusive Provider Organization
EOB: Explanation of Benefits
CMS: Center for Medicare and Medicaid Services
COBRA: Consolidated Omnibus Budget Reconciliation Act
CPT Current Procedural Terminology
OIG: Office of Inspector General
DME: Durable Medical Equipment
ESRD: End Stage Renal Disease
EOMB: Explanation of Medicare Benefits
LGHP: Large Group Health Plan
EGHP: Employer Group Health Plan
GEP: General Enrollment Period
HCFA: Health Care Financing Administration
HIPAA: Health Insurance Portability and Accountability Act
IEP: Initial Enrollment Period
LTR: Life Time Reserve Days
MSN: Medicare Summary Notice
MSP: Medicare Secondary Payer
NP: Nurse Practitioner
IP: Inpatient
OP: Outpatient
PA: Physician Assistant
PSO: Provider Sponsored Organization
QMB: Qualified Medicare Beneficiary
SNF: Skilled Nursing Facility
HHA: Home Health Agency
SHMO: Social Health Maintenance Organization
WC: Workers Compensation
VA: Veterans Administration
CHAMPUS: Civilian Health and Medical Program of the Uniformed Services
MEDIGAP Medicare Supplement Insurance
HCFA Health Care Financing Administration
CCI: Correct Coding Initiatives.
Piggyback Process of automatic cross over of claims from Medicare to the secondary
Carrier
Capitation A fixed pre determined amount is paid to the provider by the carrier
irrespective
0 of any number of treatments rendered for its members.
Advanced Beneficiary Notice [ ABN ]
When you believe Medicare will deny a service as not reasonable and necessary or too
frequent, an advance written notice to the beneficiary can protect you from liability. One
year is the limit for use of a single ABN for an extended course of treatment. If the course of
treatment extends beyond one year, a new ABN is required for the remainder of the course
of treatment.
The provisions on advance notice are only effective when the advance notices are in writing,
signed by the beneficiary, and dated. In cases where you elect to use advance written
notices, you must use the modifier GA. The use of the GA will indicate that an advance
written notification was provided to the beneficiary.
Health Professional Shortage Area (HPSA)
The Medicare program provides incentive payments to physicians who render services in a
Health Professional Shortage Area. A Health Professional Shortage Area is an area urban or
rural, designated as having a shortage of healthcare professionals.
Incentive Payments Physicians
who render services in a geographic area designated as an urban or rural HPSA may receive
a 10 percent incentive payment. The 10 percent payment is based on the amount paid, not
the approved amount. The determining factor for receiving the incentive payment is the
location where the service was actually provided.
How to Bill for HPSA Incentive Payments To
receive the incentive payment for services rendered within a designated HPSA, you must
report one of the following modifiers with each procedure code that was rendered within the
eligible HPSA: QB - Rural Area QU - Urban Area
When Will Incentive Payments be Issued?
The incentive payment is issued on a quarterly basis to physicians for assigned as well as
non-assigned claims.

FORMS USED IN MEDICAL BILLING
Hcfa 1500 – Most commonly used claim form for billing services that are rendered at an
office location. This form is used only to bill for Professional services. There are 33 fields in
this form.
In this form we fill the charge details - CPT code the standardized code format for the
service rendered, Type of service, Place of service, modifier – is added along with the CPT
code which gives an additional value to the code, diagnosis code – the part of the body
where the service was rendered, units & billed amount.

UB 92 - This form is used for billing services rendered at a facility or a hospital, it is used
only for billing Technical services. There are 83 fields in this form.

PD [Patient Demographics] – This form gives us the below details:
Patient Details – Name, Age, DOB, Sex, SSN#, Address, Phone#.
Employer Details – Employer’s Name, Address, Phone#.
Insurance Details – Name of the carrier, Policy ID#.
Chief diagnosis code
Guarantor’s information.
Referring Doctor’s name & phone#
This form is normally filled in the center by the manager when the patient comes for the
first time.

Insurance Card copy - Contains the name of the carrier, subscriber, policy ID#, group#,
effective date, copay & deductible information, photograph of the subscriber & the claims
mailing address with phone#.

Verification Sheet – Contains the details of the policy, eligibility & benefits.

Release & Assignment of benefits form - It is a written acceptance by the patient to
entitle the physician to receive payments from their carrier for the services rendered.
Preauthorization form – In certain HMO policies, services have to be preauthorized before
they can be rendered. This has to be obtained from the utilization management department
of the carrier by the center manager.
Referral – It is a written document by the PCP of the patient to meet a specialist.
Paper referrals will have only the date; Electronic referrals will have a #.
Self Referral – If a patient meets a non HMO panel specialist without a referral from the
PCP it is known as a Self Referral. The enrollee will have to pay a large deductible & copay.
Super Bill [CS] - The document where the treatment information are entered is called as a
super bill. It has the DOS, CPT code, Units, Diag code, TOS, POS.
W9 form – It is the authorized form by the US government which enables a physician to
update his tax id# & practice / pay to address with the insurance carriers.
Explanation of Benefits – It is a document which is sent by the carrier along with the chk
which has the summary of payment details or the denial information.
ADJUDICATION PROCESS
Processing of paper claims starts in the mail room where the envelopes are opened,
attachments unstapled, and clipped to the claim. Claims are then scanned into the
computer. Processing of elect claims begins when a file of transmitted claims is opened in
the claims processing computer.
1. The computer then scans each claim for patient & policy identification and compares
them with the master policy file. claims will be rejected if the patient & subscriber names do
not match.
2. CPT codes on the claim form are matched with the policy's master benefits list, incase of
a managed care claim both the codes & DOS are checked to ensure if they were authorized.
Non covered codes will be rejected.
3. CPT codes are cross matched with the diag code to ensure the medical necessity of all
services performed.
4. Claim is checked against common data file.
5. A determination is made of allowed charges.
6. Determination of patient's annual deductible obligation is made.
7. The co-payment or coinsurance requirement is determined.
8. The EOB is completed.
9. EOB & Benefit check is mailed.

CLASSIFICATIONS OF INSURANCE CARRIERS:

Insurance carriers can be broadly classified into two: Federal & Private.
Federal carriers are those which are funded & administered by government agencies.
Medicare & Medicaid are the most two common federal carriers.
Non Federal / Private carriers are administered by private agencies.
Blue Cross Blue Shield, Commercial and Managed Care carriers are some of the private
carriers.

Medicare Part A and Part B

Medicare is a federal health insurance program, which provides coverage for people 65 and
older, for certain disabled people, and for some people with End Stage Renal Disease
(ESRD). The Program was enacted into law in 1965 by Congress through Title XVIII of the
Federal Social Security Act. The Program is managed by the Centers for Medicare and
Medicaid Services (CMS), which is a branch of the Department of Health and Human
Services (DHHS), of the U. S. Federal Government.
Part A: Part A of the Medicare Program is for inpatient services. This coverage helps pay
for inpatient hospital care, some inpatient care in a skilled nursing facility, some home
healthcare, and hospice care. Hospitals submit Medicare claims to their Part A intermediary.
Part A benefits include
Inpatient hospital care
Inpatient care in a skilled nursing facility
Care in a psychiatric hospital (up to 90 days in a lifetime)
Hospice care and respite care when a terminally ill patient can be admitted to a
hospice. A hospice is a public or private organization that provides respite care,
support and symptom management to terminally ill patients and their families.
Nursing home care (patient spends at least 3 days as inpatient in a benefit
period)
Home health services such as intermittent nursing care and physical,
occupational or speech therapy; part-time services of home health aides,
medical supplies and equipment (no drugs). These patients are generally
confined to their homes by injury or illness.
Part B: Part B of the Medicare Program is for professional / physician services. This
coverage helps pay for medical and surgical services by physicians, as well as certain other
health benefits such as ambulance transportation, durable medical equipment, outpatient
hospital services, and independent laboratory services. It is designed to complement the
coverage provided by Part A of the Program. Healthcare providers submit Medicare claims to
their Part B carrier.
Part B benefits include
Physician services including surgery, consultations, home, office and
institutional services and supplies incidental to physician services; drugs and
biologicals that cannot be self-administered; physician therapy; speech
pathology; blood and blood transfusions.
Outpatient hospital services, including outpatient diagnostic services and
physical and occupational therapy or speech pathology services furnished by
certain approved institutions and public agencies; outpatient physician and
occupational therapy services (up to a monetary limit per calendar year)
furnished by an independently practicing therapist in the patient’s home or the
therapist’s office; hospital services furnished to outpatients in connection with
a doctor’s services; outpatient (ambulatory surgery) and emergency hospital
outpatient services.
Diagnostic x-ray and laboratory tests and other diagnostic tests, including in
certain cases, diagnostic x-rays taken in a patient’s home.
X-ray, radium and radioactive isotope therapy.
Durable medical equipment such as oxygen, hospital beds and walkers for use
in the home whether furnished on a rental basis or purchased.
Artificial devices (other than dental) such as pacemakers that replace all or
part of an internal body organ, colostomy or ileostomy bags and related
supplies are also covered; one pair of glasses or contact lenses after cataract
surgery is covered if an intraocular lens has been inserted.
Braces and artificial legs.
Rural and community health clinic services performed by licensed nurses and
physician assistants plus similar services provided to homebound patients in
certain areas.
Certified registered nurse anesthetist (CRNA), nurse midwife and physician
assistant services.
Psychologist and social worker services provided in connection with a
physician’s service.
Limited chiropatic services, pediatric and optometric services.
Ambulance service (when the patient’s condition rules out other means of
transportation).
Home dialysis supplies and equipment, self-care home dialysis support
services, and institutional dialysis services and supplies.
Eligibility criteria for Medicare coverage
The following category of persons are entitled to Medicare benefits:
a) Individuals who are 65 years and above and have paid FICA (Federal Insurance
Contributions Act) taxes or Railroad Retirement taxes for at least 40 calendar
quarters (10 years).
b) Adults disabled before age 18 and Parents are either disabled or eligible for
retirement Social Security benefits.
c) Disabled individuals who are entitled to Railroad Retirement or SS benefits due to
disability. There is an additional 5-month waiting period for Medicare after
disability has been determined.
d) Spouse of a deceased, disabled, or retired worker provided the individual is
entitled.
e) Individuals of any age who receive dialysis or a renal transplant for End-Stage
Renal Disease (ESRD): Entitlement begins the first day of the month after an
individual begins renal dialysis. For those in self-dialysis training, entitlement
begins with the first month of training. Entitlement begins the month the
individual is admitted to the hospital for a renal transplant, provided that the
transplant is performed within 2 months. If this does not occur, entitlement begins
the second month before the month of the transplant
Persons 65 and older
Generally, people age 65 and over can get premium-free Medicare Part A benefits, based on
their own or their spouse's employment. (Premium-free means there are no monthly
premiums. Most people do not pay premiums for Medicare Part A). Persons age 65 and over
are eligible to receive Medicare Part A when:
they receive benefits under the Social Security or Railroad Retirement system,
they could receive benefits under Social Security or the Railroad Retirement system
but have not filed for them, or
the beneficiary or spouse was certain government employees.
Generally, if either the beneficiary or their spouse worked for 10 years, they will be able to
get premium-free Medicare Part A benefits.
Any person who can get premium-free Medicare Part A benefits based on work as described
above can enroll and receive Part B benefits, when they pay the monthly Part B premium.
Some individuals pay more than the basic premium because they enrolled late or they
withdrew from the program and later re-enrolled. Most United States citizens, age 65 or
over, can enroll in Medicare Part B.
For Medicare Part B benefits, the beneficiary is responsible for a monthly premium of $54.00
in 2002. In addition, a beneficiary is required to meet a $100.00 annual deductible under
Part B. The deductible is applied based on the calendar year in which the services were
rendered. Medicare Part B generally pays 80% of the approved charges, leaving the other
20% (known as coinsurance) payable by the patient or their coinsurer.
Disability
Additionally, a person under 65 may also receive premium-free Medicare Part A benefits if
he/she has been receiving disability benefits under Social Security or the Railroad
Retirement Board for more than 24 months.
A person who is entitled to Social Security, Railroad Retirement, or equivalent federal
government benefits on the basis of disability is automatically entitled to hospital insurance
(Part A), and is considered enrolled for Part B unless coverage is refused. This entitlement
begins after the individual has been disabled for a total of 29 months (five month waiting
period plus 24 months of entitlement). This type of entitlement is also available to a
disabled widow, widower or child of a deceased, disabled or retired worker. If an individual
recovers from a disability, Medicare entitlement ends in the month following notification of
the disability termination.
End Stage Renal Disease
A person with end stage renal disease may be any age, receiving dialysis or renal
transplantation. An individual is eligible for Part A (and is considered enrolled for Part B
unless coverage was refused) if he/she:
meets certain work requirements for insured status under Social Security or Railroad
Retirement programs or as a government employee;
is entitled to monthly Social Security benefits or an annuity under the Railroad
Retirement Act; or
is the spouse or dependent child of an insured or entitled individual.
Entitlement usually begins three months after a course of renal dialysis begins; however, it
may begin sooner if the individual receives a transplant or participates in a self-dialysis
training program during the waiting period. Coverage ends on the last day of the 12th
month after the course of dialysis is discontinued, or the last day of the 36th month after a
kidney transplant.
Medicare Fee Schedule – The Resource Based Relative Value Scale (RBRVS)
The Omnibus Budget Reconciliation Act of 1989 (OBRA, later amended in 1990) changed the
way physicians were paid by Medicare. Under the Act, the payment for each service is the
product of three factors: (1) A nationally uniform relative value; (2) A geographical
adjustment factor; and (3) A National uniform conversion factor.
The relative value for each service is the sum of relative value units (RVUs) that reflect the
resources involved in furnishing the three components of a physician’s service: (1) Work; (2)
Practice Expenses; and (3) Cost of Malpractice insurance.
The geographical adjustment factor (GAF) for a geographical area is equal to the weighted
average of the individual geographic practice cost indices (GPCIs) for each of the three
components of the service.
The conversion factor (CF) is a national dollar value that converts RVUs into payment
amounts.
Work RVUs were developed primarily by a research team headed by William Hsiao, Ph.D. at
the Harvard School of Public Health in a co-operative agreement with HCFA.
Practice and malpractice expense RVUs equal the product of the base allowed charges and
the practice expense and malpractice percentages for the service. Base allowed charges are
defined as the national average allowed charges for the service furnished during 1991, as
estimated using the most recent data available. HCFA used 1989 charge data “aged” to
reflect the 1991 payment rules, since those were those were the most recent data available.
Section 121 of the Social Security Act Amendments of 1994 required HCFA to replace the
existing charge-based practice expense relative value units for all Medicare Physician Fee
Schedule services with new resource-based ones. The Balanced Budget Act of 1997
requires a four-year transition from the existing charge-based system to the new resourcebased
system beginning on January 1, 1999. In 1999, the practice expense relative value
units are based on 75 percent of the charge-based system and 25 percent of the resourcebased
system. In 2000, they are based on 50 percent of the charge-based system and 50
percent of the resource-based system. In 2001, they are based on 25 percent of the chargebased
system and 75 percent of the resource-based system. In 2002, the practice expense
relative value units are based
Entirely on the resource-based system. In 1999, the implementation of the practice expense
transition was implemented in the fee schedule calculation formula. In 2000, to eliminate
confusion, the calculation formula will use the transitioned practice expense value. The
payment formula for 2000 is as follows:
2000 Non-Facility Pricing Amount =
[(Work RVU * Work GPCI) + (Transitioned RB Non-Facility PE RVU * PE GPCI) + (MP
RVU * MP GPCI)] * Conversion Factor
2000 Facility Pricing Amount =
[(Work RVU * Work GPCI) + (Transitioned RB Facility PE RVU * PE GPCI) + (MP
RVU * MP GPCI)] * Conversion Factor
The Medicare limiting charge is set by law at 115 percent of the payment amount for the
service furnished by the nonparticipating physician. However, the law sets the payment
amount for nonparticipating physicians at 95 percent of the payment amount for
participating physicians (i.e. the full fee schedule amount). Calculating 95 percent of
115 percent of an amount is equivalent to multiplying the amount by a factor of 1.0925 (or
109.25 percent). Therefore, to calculate the Medicare limiting charge for a physician service
for a locality, multiply the full fee schedule amount by a factor of 1.0925. The result is the
Medicare limiting charge for that service for that locality to which the full fee schedule
amount applies
Let us take a few examples:
Geographical Area = Miami, Florida
The geographical practice cost index for work, practice and malpractice is 1.015, 1.077 &
2.350 respectively.
The conversion factor for 2000 is $36.6137
The formula for calculating fee schedule is:
[(Work RVU * Work GPCI) + (Transitioned RB Non-Facility PE RVU * PE GPCI) + (MP
RVU * MP GPCI)] * Conversion Factor
Procedure 47135 – Liver allotransplantion; orthotopic, partial or whole, from cadaver or
living donor, any age
The fee schedule is $5712.52
The work, adjusted practice and malpractice RVU is 81.52, 49.51 & 8.49 respectively
[(81.52*1.015)+(49.51*1.077)+(8.49*2.350)]*36.6137=$5712.52
Procedure 33935 – Heart-Lung transplant with recipient cardiectomy-pneumonectomy
The fee schedule is $5089.91
The work, adjusted practice and malpractice RVU is 60.96, 42.08 & 13.54 respectively
[(60.96*1.015)+(42.08*1.077)+(13.54*2.350)*36.6137=$5089.91
Procedure 70300 – Radiologic Examination, teeth; single view
The fee schedule is $18.92
The work, adjusted practice and malpractice RVU is 0.10, 0.32 & 0.03 respectively
[(0.10*1.015)+(0.32*1.077)+(0.03*2.350)*36.6137=$18.92
Medicare + Choice or Medicare Part C
When Congress passed the Balanced Budget Act of 1997, it included changes to the
Medicare program. The new law includes a section called Medicare + Choice, which provides
new health plan options to Medicare beneficiaries effective January 1, 1999. This new
provision may be referred to as Medicare “Part C” by some beneficiaries. All of the plans
under Medicare + Choice provide the basic Medicare benefits currently available. One
option will continue to be the Original Medicare plan or the Original Medicare Plan with a
supplemental (Medigap) policy. Or, beneficiaries who are eligible for both Part A and Part B
may choose to have covered items and services furnished by one of the other Medicare +
Choice health plan options available in their area. The Centers for Medicare and Medicaid
Services (CMS) determines the annual deductible amount for Original Medicare only. All
other Medicare + Choice plans can set their own deductible amounts or choose not to
charge a deductible. They also decide whether to charge a monthly premium in addition to
the Medicare Part B premium. Medicare beneficiaries do not have to change to a different
health plan. If a beneficiary is happy with the Medicare plan they now have, they do not
have to change to another Medicare + Choice plan. No matter which Medicare + Choice
health plan option a beneficiary chooses to join or stay in, they are still in the Medicare
program.
ID format - 9 digit Numeric followed by a 1 digit Alpha suffix.
Medicare Deductibles
Deductible is a pre-determined amount that the beneficiary should pay before the medical
benefits come into force.
The Part A annual deductible is $812 per benefit period. A benefit period is the period
beginning with the day the patient is giving inpatient hospital treatment and ends with the
day when he is out of the hospital or skilled nursing facility for 60 consecutive days.
The Part B annual deductible is $100.
Medicare Co-Payments
Co-payments are part of the Medicare allowed amount that the patient is responsible to pay.
Co-payment for Part A is as follows:
Inpatient Hospital: 61st to 90th day $203 per day
91st to 150th day $406 per day
Skilled Nursing Facility: 21st to 100th day $101.50 per day
101st day & Over Patient pays the entire amount
Co-payment for Part B is as follows:
20% of Medicare’s approved amount, or 50% of Medicare’s approved amount for outpatient
psychiatric services. After the patient has met the annual deductible, Medicare pays 80% of
the approved amount (except for psychiatric services).
For outpatient psychiatric services, the co-insurance is 50% of Medicare’s approved amount.
This is because Medicare reimbursement is reduced for outpatient psychiatric services.
For example:
Approved Medicare charge $100.00
Outpatient psychiatric limitation 62.5%
Amended approved charge $62.50
Medicare pays 80% 80%
Medicare reimbursement $50.00
The beneficiary is responsible for the coinsurance amount of $50 because it is the difference
between the Medicare approved amount ($100) and what Medicare paid the provider ($50).
Medigap Coverage
This is a policy provided by private carriers to supplement Medicare’s coverage to cover
services not covered by Medicare, deductibles and co-insurance. The patient pays the
premium for such policies.

The Medicare ID Card
This is a red, white and blue card. It gives the patient name exactly as it appears in the
Social Security records. The Health Insurance Claim Number (HICN) (This is generally the
beneficiary’s nine-digit Social Security Number followed by an alphabetic character say 123-
45-6789A), Patient’s sex, Effective date of coverage and type of benefits is given in the card
Medicare as a Secondary Payer (MSP)
Medicare can be secondary to another insurance plan in the following cases:
a) Patient is above 65 and is still working and is covered by an Employer Group Health Plan
(EGHP) or spouse who is employed with coverage by an EGHP
b) Disability beneficiaries
c) Automobile no-fault insurance or other liability
d) Patient is covered under workers’ compensation
Medicare Appeals Process
Appeals
After a claim is processed, Medicare sends the EOBs to the providers determining payment
or denial. If the provider feels that the denial or payment is incorrect, a request can be
made for review of a claim. A review is another look at the claim. The request for review
must be made in writing within 120 days from the date of the EOB. Some Medicare carriers
have the facility of telephonic appeal that can be explored. In the case of written request
for review, the following documents should be sent to the carrier: Copy of EOB, the claim
and medical records. A covering letter explaining the need for review would be helpful. A
completely different team who has not taken part in the original processing of the claim
makes the review. It is purely based on the documentation sent for review. The
determination is made within 45 days from the receipt of the request for review and the
decision whether favorable or unfavorable is notified to the provider. If the provider is still
not satisfied with the decision, he goes in for a fair hearing.
Fair Hearing
The next step in the appeals process is a Fair Hearing. Fair Hearing can be requested if the
disputed amount is at least $100 and not later than 6 months of the review determination.
The amount represents the amount that should have been paid according to the provider
and not the difference amount. Also the amount may not be of a single claim. It can be
more than one claim too. A covering letter with the additional documents as sent for appeal
is required for this too. The hearing officer should acknowledge the provider’s request within
2 weeks of receipt. There are three modes of hearing:
In-person hearing wherein the provider or his representative appears before the hearing
officer in person on the designated date and time notified by the hearing officer and
answers questions raised by the hearing officer and produces documentary evidence
required by the hearing officer. The hearing officer is a neutral person appointed by the
carrier and is aware of all Medicare rules and regulations.
Telephone hearing wherein questions raised by the hearing officer is answered over phone.
This is less time consuming.
On-the-record decisions; wherein the decision is based on past information and new
information presented by the practice in writing. The Hearing officer will inform decision to
the provider’s office in writing within 30 days of the request for hearing. If the provider is
still not satisfied with the decision, he goes to the Federal Administrative Law Judge.
Federal Administrative Law Judge.
These Judges are lawyers who work for the Social Security Administration. Here the disputed
amount should be atleast $500. The providers should send a letter within 60 days of the
hearing decision to the carrier or the local Social Security office requesting ALJ’s hearing.
The process will be the same as that of the hearing officer. The decision should be made
and notified to the provider within 15 days of the receipt of request. If the decision is still
unfavorable to the provider, the provider can send his request within 60 days to the appeals
council.
Appeals Council
This is the last resort. This is done by the Federal District Court and the disputed amount
should be at least $1000. Here both the provider and his attorney are requested to appear
before the court. The decision made will be final and binding on both the parties.
Railroad Medicare
Palmetto GBA is the Part B carrier for Railroad Medicare nationwide. Palmetto GBA is
contracted by the independent federal agency Railroad Retirement Board (RRB), who
administers comprehensive retirement-survivor and unemployment-sickness benefit
programs for railroad workers and their families under the Railroad Retirement and Railroad
Unemployment Insurance Acts.
ID format – 1digit Alpha prefix followed by 9 digit numeric.
Mediciad.
Medicaid is a jointly-funded, Federal-State health insurance program for certain low-income
and needy people. It covers approximately 36 million individuals including children, the
aged, blind, and/or disabled, and people who are eligible to receive federally assisted
income maintenance payments.
Title XIX of the Social Security Act is a program, which provides medical assistance for
certain individuals and families with low incomes and resources. The program, known as
Medicaid, became law in 1965 as a jointly funded cooperative venture between the Federal
and State governments to assist States in the provision of adequate medical care to eligible
needy persons. Medicaid is the largest program providing medical and health-related
services to America's poorest people. Within broad national guidelines which the Federal
government provides, each of the States:
1. establishes its own eligibility standards;
2. determines the type, amount, duration, and scope of services;
3. sets the rate of payment for services; and
4. administers its own program.
Thus, the Medicaid program varies considerably from State to State, as well as within each
State over time.
Medicaid Eligibility:
States have some discretion in determining which groups their Medicaid programs will cover
and the financial criteria for Medicaid eligibility. Some examples of the mandatory Medicaid
eligibility groups are:
Low income families with children, as described in Section 1931 of the Social Security
Act, who meet certain of the eligibility requirements in the State's AFDC plan in effect
on July 16, 1996;
Supplemental Security Income (SSI) recipients (or in States using more restrictive
criteria--aged, blind, and disabled individuals who meet criteria which are more
restrictive than those of the SSI program and which were in place in the State's
approved Medicaid plan as of January 1, 1972);
infants born to Medicaid-eligible pregnant women. Medicaid eligibility must continue
throughout the first year of life so long as the infant remains in the mother's
household and she remains eligible, or would be eligible if she were still pregnant;
Children under age 6 and pregnant women whose family income is at or below 133
percent of the Federal poverty level. (The minimum mandatory income level for
pregnant women and infants in certain States may be higher than 133 percent, if as
of certain dates the State had established a higher percentage for covering those
groups.) States are required to extend Medicaid eligibility until age 19 to all children
born after September 30, 1983(or such earlier date as the State may choose) in
families with incomes at or below the Federal poverty level. This phases in coverage,
so that by the year 2002, all poor children under age 19 will be covered. Once
eligibility is established, pregnant women remain eligible for Medicaid through the
end of the calendar month in which the 60th day after the end of the pregnancy falls,
regardless of any change in family income. States are not required to have a resource
test for these poverty level related groups. However, any resource test imposed can
be no more restrictive than that of the AFDC program for infants and children and the
SSI program for pregnant women;
recipients of adoption assistance and foster care under Title IV-E of the Social Security
Act;
certain Medicare beneficiaries (described later); and
Special protected groups who may keep Medicaid for a period of time. Examples are:
persons who lose SSI payments due to earnings from work or increased Social
Security benefits; and families who are provided 6 to 12 months of Medicaid coverage
following loss of eligibility under Section 1931 due to earnings, or 4 months of
Medicaid coverage following loss of eligibility under Section 1931 due to an increase
in child or spousal support.
Claims Submission & Payment
Federal Law requires Medicaid to accept HCFA 1500 for claims processing in states where
optical scanning facility is not available. Some states like New York and Georgia have special
forms developed exclusively for claims processing by their state and which has optical
scanning facilities. Though the Health Care Financing Administration (HCFA) of the
Department of Human Services of the US Government is responsible for administering
Medicaid, each State Government has its own requirements and they append to what HCFA
determines. Hence claims submission in some states may go directly to Department of
Human Services, while in some states it goes to county department of welfare and so on.
Medicaid carriers in almost all states have the facility of receiving claims
electronically.
Filing Limit – This is the period within which claims need to be submitted failing which
claims would be denied for lapse of time. Some Medicaid carriers have this as 1 year from
date of service while some have this as 90 days from date of service and so on.
Other insurance plan – It is to be ensured that the patient has no other coverage other
than Medicaid. If he has one and it is still valid, then we need to submit it to that coverage
first.
Crossover – Crossover is a process wherein Medicare is automatically sending claims to the
supplemental carriers after Medicare processes the primary claims and makes payment to
the providers. The supplemental carriers processes and make payment to the providers.
Some Medicaid carriers would have this facility. Here the provider need not have to submit a
fresh claim to the secondary carrier.
Blue Cross Blue Shield
The origin of Blue Cross Blue Shield dates back to 1929 when a University employee
persuaded a group of schoolteachers to pay $6 every year into a fund. In return the
University hospital will give them and their families 21 days of free care every year. This
concept worked and spread like wildfire. It has now become a multi-million dollar network
covering everything in healthcare. Blue Cross covers hospital services while Blue Shield
covers outpatient and physician services. Blue Cross and Blue Shield are non-profit
organizations and all money received as premiums are paid out as benefits except for
financial reserves.
BCBS ID card:
BCBS ID card is different for different plans. Each Plan has its own design and format for ID
card, certificate # etc. Since the number of plans is huge, it is absolutely essential that each
card is unique. By looking at the card, we would be able to identify which plan the patient
has. Generally the ID format for a BCBS Plan is 3 alphabets followed by 9 digits except for
the Federal Plan where it is R followed by 8 digits.
Blue Card program
It was formerly known as the Out Of Area program, eases the processing of claims from Par
providers when they provide services to Bcbs patients enrolled in plans outside the health
care provider’s local service area.
Home Plan means the area which provides benefits to the patient.
Local Plan means the area where the service is rendered.
Eg : If patient resides in CA & gets services in PA
Bcbs CA is the home plan & Bcbs PA is the local plan.
Federal Employees Program
This is a government plan for providing medical insurance for federal employees. The
phrase “Government-wide service benefit plan” appears on all subscriber cards. The
subscriber identification number begins with letter R followed by eight digits. The kind of
coverage is important to be noted. FEP 101 (Single); and FEP 102 (Family) are known as
high option policies, and FEP 104 (Single) and FEP 105 (Family) are known as low option
policies. The co-payment for the high option is lower than that of the low option.
Methods of Payment
Many BCBS carriers determine physician payments using the lowest of the usual, customary
and reasonable (UCR) amounts charged by the physicians. The usual is the fee the provider
normally submits for service. The customary is the range of fees charged by physicians in
similar specialties for the same service in the same geographic area. Reasonable refers to
the fee the insurance company determines after analyzing the customary and usual data
received on BCBS claims. Some BCBS carriers are changing over to RBRVS.
Claims Submission:
Majority of BCBS carriers accept only HCFA. Some accept UB92 and other forms. Also they
have facility of receiving claims electronically.
Champus - Civilian Health and Medical Program of the Uniformed Services, was designed as
a benefit for dependents of personnel serving the in the armed forces, and the uniformed
branches of the Public Health Service & the National Oceanic & Atmospheric Administration.
This is a cost-sharing program for military families, retirees and their families, some former
spouses, and survivors of deceased military personnel. The program is administered by the
Office for Civilian Health and Medical Program of the Uniformed Services (OCHAMPUS).
CHAMPUS covers all seven uniformed services (Army, Navy, Marine Corps, Air Force, Coast
Guard, Public Health Service and National Oceanic and Atmospheric Administration).
Eligibility:
Active-duty family members (spouses and children to age 21 if unmarried, to age 23 if fulltime
students, and beyond age 21 if disabled and unmarried).
Retired service personnel and their dependents. If the former military member dies, the
eligibility of the spouse does not change unless the spouse remarries. The eligibility of the
children remains unchanged if a spouse remarries.
Dependents (the spouse, children, and/or stepchildren) of service personnel who die while
on active duty.
DEERS: (Defense Enrollment Eligibility Reporting System). This is a worldwide
database of military families. In US, active-duty and retired military personnel are
automatically enrolled in DEERS but their sponsor must register their family members.
Sponsors are military personnel.
TRICARE: This is a program implemented by CHAMPUS nationwide. It includes managed
care and offers CHAMPUS service families three types of coverage-Tricare-Standard, which
includes the traditional CHAMPUS benefits; Tricare-Extra, which consists of a PPO network
panel with discounted cost sharing and Tricare-Prime, which is a managed care program
with annual enrollment requirements and the lowest out-of-pocket costs.
Claims:
The claims filing limit is 1 year from date of service. HCFA-1500 is used for submitting
claims. Physician or his representative should sign the HCFA in box 31. For computergenerated
claims, a signature authorization form should be sent to the carrier.
CHAMPVA (Civilian Health and Medical Program for the Veteran Administration) is
a medical benefit plan for the families of veterans with a 100 percent service-connected
disability and the surviving spouses or children of veterans who die from a serviceconnected
disability. These beneficiaries have similar benefits under the same conditions
and cost sharing plans as dependents of retired and deceased uniformed services personnel
under CHAMPUS. The same claims processors handle both CHAMPUS and CHAMPVA claims
and have the same requirements.
Workman’s Compensation – This plan covers the employees for any work related injuries
at the work place. It is sponsored by the employer.
There are five types of compensation for on-the-job injuries and illnesses.
1. Medical treatment and rehabilitation
2. Loss of wages (disability payments)
3. Permanent disability (payments in one sum or weekly or monthly payments)
4. Vocational rehabilitation
5. Compensation to the dependents of employees who are fatally injured (death benefits)
For claims submission, the most widely used form is HCFA 1500 though certain carriers
require their own forms to report injury claims. However all of them require the employer
information and the injury date on the claims. Without this information no workers
compensation claim would get paid. The amount paid by the workers compensation carrier
to the provider is in full and final settlement of the claims. If there is any dispute, we can
appeal in the form sent by the carrier within the time limit mentioned therein. On no
account should the patient be billed for the balance after a workers compensation claim has
been paid.
Self Funded – Under this plan the carrier process the claims for the patient & forwards it to
the employer. The employer has to release the funds to the insurance for them to pay the
providers.
Managed Care – An operations study
Introduction and Definition
Managed care is the application of administrative methods to controlling healthcare costs
and patients’ access to providers. Managed care’s administrative methods integrate the
financing and delivery of medical care for enrollees. They combine an insurance payer with
medical resource monitoring and a provider delivery system.
In other words, Managed Care refers to health care insurance plans that are managed in
such a way that the COST and QUALITY of health care services and supplies are controlled.
The stated objective is to bring the best of health care services to patients at low cost.
Managed health care plans operate within a fixed or controlled budget. Such plans also seek
to reduce the burden on the health care consumer. Care is "MANAGED".
Managed Healthcare is thus a health care delivery system that aims to control the cost and
quality of services rendered by providers and suppliers of health care. Managed care plans
to achieve this aim by (a) fixing the rates for each service; (b) monitoring the need for
each service, or insist on medical necessity of services rendered; (c) emphasizing
preventive care, to help detect and treat diseases before they become serious and
necessitate costly treatment.
To control costs, services are monitored to ensure that they are medically necessary. Prior
authorization is made compulsory for expensive services. Monitoring of services is either
done by a "gatekeeper" physician or through other officials appointed by the plan. A
“gatekeeper” physician is a primary care physician (PCP) who is responsible for coordinating
and authorizing the services of specialists. In this manner, the gatekeeper PCP is the case
manager. A member must always go to the gatekeeper to have the gate opened to other
participating providers. This is known as a referral.
Objectives of Managed Care
Organizations that offer managed care plans will say that they aim at offering high-quality
medical care at affordable rates. Managed Care plans are generally understood to have the
following objectives:
1. Quality Improvement: Health care is monitored for quality and necessity. Consequently,
services rendered are more effective and efficient. Physicians are encouraged to render
appropriate and timely care.
2. Prevention: Managed care plans encourage preventive care by covering procedures
such as annual physical check-ups, cancer screening, prenatal examinations, etc., etc., so
that doctors can help either prevent illnesses or detect diseases in their early stages.
Diseases can be easier and cheaper to treat when detected early.
3. Care Coordination: Due to the wide range of medical services available, and the growth
of medical technology, a patient may need help in deciding what sort of care he/she needs.
The patient must be advised of the best methods of treatment or the best facilities available
to attend to his/her health needs. Managed care plans provide the concerned medical
professionals to ensure that each patient receives the best health care available under the
plan.
4. Accountability: Managed care plans make the physicians more accountable for the
services they render. Physicians are prevented from wasting money on costly, inappropriate
or unexplained services. They are encouraged to adhere to certain treatment standards and
conserve health care resources.
5. Affordability: By reducing the burden of out-of-pocket expenses on the member,
managed care plans aim to make high quality care affordable. They offer insurance at
reduced costs, despite the ever-growing cost of health care.
Types of Managed Care Plans
Managed Care Plans are operated by private companies, which act as the payer. Examples
are Prudential Health Care (an HMO) and Independent Health (a PPO). Physicians sign a
contract with a managed care plan to accept the plan’s fee schedule, which is usually lower
than the prevailing market rate. The physicians are considered part of a MCO (managed
care organization’s panel of providers).
HMO - Health Maintenance Organisation:
An HMO is defined, for Medicare purposes, as a public or private organization which
provides, either directly or through arrangements with others, a comprehensive range of
health services to enrolled members who live within a specified service area. An HMO’s
service area is defined as the geographic area in which the HMO offers a full range of
services to its members. A Medicare HMO patient must have all services rendered by the
plan’s network of professional health care providers. These plans may assign a primary care
physician, known as a “gatekeeper”, who decides whether or not the patient may be
referred to a specialist
PPO – Preferred Provider Organisation
A Preferred Provider Organization (PPO) is a plan that buys health care services from a
select group of participating specialists. Most PPOs will require the patient to pay a small
copayment for each service rendered. Patient dosen’t have to get referred by the PCP to
meet the specialist.
If the patient meets a specialist who is not participating with the PPO, then the claims get
processed at out of network rates [ normally a certain % age of UCR ] and the balance will
be patient’s liability.
Methods of Payment:
Fee for Service: This is fixed charge for the service performed. Either the doctor or the
patient submitted a claim and received payment.
Capitation: This is a fixed pre-paid amount based on the number of patients assigned to a
practice for a specified period of time.
Case Rates: A single fee for a specified procedure or course of treatment that is inclusive
of all medical services
Hospice Care
Beneficiaries who have a terminal illness with a life expectancy of six months or less have
the option of electing hospice coverage instead of the standard Medicare coverage.
Effective August 5, 1997, hospice care is available for two 90-day periods and an unlimited
number of 60-day periods during the hospice patient's lifetime. Even though a beneficiary
elects hospice coverage, he or she may designate and use a private attending physician,
who is not employed by the hospice for professional services in addition to the services of
hospice-employed physicians. It is the responsibility of the hospice to send a Notice of
Admission (NOA) form to both the Medicare Part A Intermediary and the Medicare Part B
Carrier. The NOA form identifies the hospice, the private attending physician, and the
terminal diagnosis.
PHYSICIAN
The Term physician includes a doctor of medicine (M.D), a doctor of osteopathy (D.O), a
doctor of dental surgery or dental medicine (D.D.S or D.M.S), a chiropractor, a doctor of
podiatry or surgical chiropody, and a doctor of optometry. All physicians must be legally
authorized (licensed) to practice by the state in which they perform procedures or services.
PCP – Primary Care Physician in general term is a family doctor or the doctor one who is
visited by the patient first for any kind of health problems. Primary care physicians are also
called Gate Keepers, as they are the ones who are contacted first by the patient.
Specialist – Specialists are physician who practice on a particular specialty. Some of the
Practitioners are Dentist, Oral Surgeon, Chiropractor, Podiatrist, and Optometrist etc.
A specialist can also be a PCP for the patient, in cases where the patient directly comes to
the doctor for his health problems and the doctor diagnoses some problem, which is also is
specialty then he becomes the PCP and Specialist for the patients.
PCP ‘s are termed as the referring doctors, while the specialist are termed as the rendering
doctors.
A PCP can also be both the rendering and referring doctor as mentioned above.
Participating & Non Participating -
Agree to Participate with an Insurance program means:
1. Physician agrees to accept assignment for all claims he submits; assignment means the
physician requests direct payment from the Insurance Company.
2. The Physician agrees to accept Insurance allowable as payment in full for the services,
regardless of the charge he makes.
3. The physician agrees to complete and file the claim forms for the patient at no charge to
the patient.
4. The physician agrees not to bill the patient for services determined by the carrier to be
not reasonable and necessary (unless he provided advance written notice and the patient
agreed to pay). However the physician may bill for any non-covered services.
A physician or a group of physician can participate with as a single entity with Insurance
Company. The process of getting participated with Insurance Company is called Enrollment.
A provider number is assigned to the group or individual physician based on the type of
enrollment.
If the physician or a group does not agree upon the above points are termed as Non-
Participating Providers.
Enrollment
Provider Enrollment is the crux of a proper billing setup. Before we send claims to insurance
companies, we should ensure that all providers (doctors) are enrolled with the respective
carriers, all providers are contracted. This is also known as credentialing.
The process is as follows:
For Federal carriers such as Medicare and Medicaid, we need the provider # to submit
claims.
When a new provider has joined the group, we need to ensure the following:
Does the provider have all the credentials?
Does the provider have a State License? Without State License the doctor cannot
perform in that State.
Does the provider have a contract with major carriers in the State? If so we can
just write a letter to the carrier saying that this provider has joined the group and
request them to merge the provider with the group.
Where the provider does not have a contract with a carrier, a fresh application for
enrollment is required.
An application for Medicare is Form 855. It is filled and signed by the doctor and sent to the
carrier. This form should be filled up with details such as the doctor’s name, his Social
Security Number (SSN), his State License Number, the name and address of the facility(s) in
which he is or will be providing services, the name and address of the group of which he has
become a member, the name of the owner of the group, the pay-to address of the group,
the group provider, etc.
The carrier processes the application and furnishes the group the provider number. This
provider number is the individual provider number for that doctor it is also known as a PIN
number. This number needs to be stated in Box 24K and Box 33-PIN number on the HCFA-
1500 form.
Box 33 of the HCFA also contains the Pay-to address where the checks and EOBs need to be
sent by the carriers. But Medicare and Medicaid do not go by what is mentioned in this box
with regard to pay-to address. Based on the pay-to address mentioned in Form 855 at the
time of enrollment the carrier records it in its system. All checks and EOBs will be sent to
this address. If there is a change of address, the carriers need to be notified in Form 855-C.
Based on this, the carriers update this information in their system.
In this regard the following terms need to be understood:
Employer Identification Number (EIN): This is a tax identification number (TAX ID) of the
group into which the doctor has joined. The IRS for the purpose of submitting the tax returns
allots this number. The group needs to show this number in all claim forms and
correspondence with the carrier.
W-9 Form: This is a “Request for tax payer identification number and certification” form.
This shows the provider’s individual tax id # (SSN) or the group tax id # (EIN) along with the
pay-to address. This can be used for updating the tax id # and the pay-to address with the
carriers. The provider should sign this.
1099 Form: This is a form of identification to the government that the physician is not an
employee but a contracted physician. The physician is responsible for paying his own taxes,
retirement benefits etc.
K-1 employee: this is the third type of employee status reserved for partners or owners of
partnerships and/or Limited Liability Corporations.
EDI Enrollment
EDI is Electronic Data Interchange. Certain carriers have the facility to accept claims
electronically. For this purpose we need to enroll the providers with the EDI Department of
the insurance carriers. This is mandatory requirement in the case of Federal Carriers such as
Medicare and Medicaid. This is a separate process apart from the above Provider Enrollment
process. We need to fill in a separate EDI enrollment form for providers and send them to
the carrier. The carrier will then add the provider in the EDI database. Only then can we
submit claims to that carrier for that provider electronically.
PATIENT’S LIABILITY
New patient -
A member who has not recd any professional service from the health care provider or
another provider of the same specialty in the same group practice within the last 36
months.
Established Patient
A member who has seen within the last 36 months by the health care provider or another
provider of the same specialty in the same group practice.
Deductible / Out of pocket expense – It is a fixed amount set by the insurance carrier for
the patient to pay before their benefits can start. This is normally set per year & varies
according to the plans opted. For HMO members when they come in with a self referral will
be liable for a higher deductible & co pay.
Coinsurance - It is the balance amount pending after the primary carrier pays. If there is
no secondary insurance or if the secondary carrier doesn’t pay the entire coins bal, then it
becomes patient’s liability.
Co pay – In most of the HMO plans the patient will be liable to pay a nominal amount for
their consultation with the doctor.
Patients in Budget
Patients who are financially weak & are not able to meet their bill in full are given an option
to pay in monthly installments. In such cases the billing office enters into a contract with
the patient & coupons are mailed to the patient to facilitate payments.
Patients in Collections
When the patient does not make payment after a long time in spite of repeated reminders,
their accounts is moved to a collection agency. The collection agency may be an internal
collection agency of the client or an external collection agency.
In an internal collection agency, the client would have retained an employee to handle this.
The employee would telephone the patient saying that a certain amount is due for the
services provided to them and they should pay before a certain date. If no payments are
received after the due date specified, a second notice is sent to them giving an indication
that if the patient does not pay before the due date specified in the second notice then legal
action would be taken against them. In an external collection agency, the entire work done
by the employee in an internal collection agency is entrusted to a third party. In either case
the fees would be a percentage on the collections.
COMPLIANCE
Description
Elements
Risk Areas
Claims Processing
Credit Balance Policy
Role of a Compliance Officer
Benefits
Conduct of Employees
Description
There are established laws, rules and regulations that govern medical billing. Disregard or
breach of these laws and regulations, in the course of our billing operations, can result in
one or more of the following:
Rejection of claims
Delay in reimbursement
Reduction in reimbursement
Fraud and abuse, leading to penalties.
Such laws, rules and regulations may be set down by
The Federal and State governments or their agencies, such as the various Workers
Compensation Boards, Department of Veterans' Affairs, Department of Health and Human
Services, Social Security Administration, etc.
a) The Health Care Financing Administration (that controls the Medicare and Medicaid
Programs). Office of the Inspector General (OIG) The Department of Justice (DOJ) The FBI
b) The individual insurance companies, managed care organizations
The Federal and State laws, including HCFA regulations were formulated to prevent fraud
and abuse in the health insurance industry, especially in the Federal programs such as
Medicare, and Medicaid.
In other words, Compliance amounts to following (or complying with) these laws and
regulations, and ensuring billing offices maintain high ethical standards in the conduct of
their business, including the entire range of billing operations, beginning with the entering
of patient demographics to the refund of overpayments.
When we adhere to these rules we are said to be in compliance i.e. our business operations
comply with federal and state laws concerning such corporate activities.
ELEMENTS OF A COMPLIANCE PROGRAM
The Office of the Inspector General (OIG) has published guidelines to help health care
organizations implement a compliance program to prevent the occurrence of fraud and
abuse in their respective practices.
In view of the increasing efforts on the part of government agencies to detect and eliminate
malpractice in the health care industry, and in order to help prevent losses to government
health insurance programs due to fraud and abuse by health care agencies, the OIG has
brought out these guidelines. Towards this end the OIG has been given additional resources
to fight health care fraud and abuse.
Billing practices will be seriously affected if there are any audit findings of fraud and abuse.
This may result in seizure of license and expulsion from the Medicare and Medicaid
programs. Also there may be fines amounting to several thousand dollars for every claim
involved.
Given below are the basic elements that every compliance program should contain:
1. The development and implementation of written policies, procedures and
standards of conduct; with special focus on areas where fraud or abuse is likely
to occur.
2. The designation of a Chief Compliance Officer, who will preside over a
compliance committee. This committee will operate and monitor the
compliance program. The compliance officer will report directly to the CEO and
the governing board.
3. The development and implementation of regular education and training
programs for employees, highlighting the importance of compliance.
4. Developments of effective lines of communication, which can help uncover
cases of fraud and abuse, and expedite corrective measures.
5. Enforcing established standards of conduct through disciplinary action against
employees who disregard compliance rules.
6. Regular internal monitoring, auditing and evaluation procedures to help identify
any breach of compliance rules, with special focus on risk areas such as coding
and claim generation.
7. The investigation of identified cases of breakdown in compliance systems and
procedures, and responding adequately to any breach in compliance with
expeditious corrective action.
These are the seven fundamental elements that all compliance programs must contain,
according to the Office of the Inspector General.
SPECIFIC COMPLIANCE RISK AREAS for all third party billing companies
identified by the office of the inspector general
The first 17 specific risk areas:
Billing for items or services not actually documented.
Unbundling.
Upcoding, such as "DRG creep". - "DRG creep" is billing with a DRG that provides a
higher reimbursement rate than that which should be used. Not following CCI
guidelines
Inappropriate balance billing - billing Medicare beneficiaries for the difference
between the total provider charges and the Medicare Part B allowable amount.
Inadequate resolution of overpayments.
Lack of integrity in computer systems - all billing companies should have a backup
system.
Computer software programs that encourage billing personnel to enter data in
fields indicating services were rendered though not actually performed or
documented.
Failure to maintain the confidentiality of information or records.
Knowing misuse of provider identification numbers.
Outpatient services rendered in connection with inpatient stays.
Duplicate billing.
Billing for discharge in lieu of transfer.
Failure to properly use modifiers.
Billing company incentives that violate the anti-kickback statute or other similar
federal or state laws or regulations.
Joint ventures - OIG is concerned that these may violate the anti-kickback statute
by providing incentives to induce improper referrals.
Routine waivers of co-payments and billing third party insurance only.
Discounts and professional courtesy
The 7 additional risk areas for billing companies that provide coding services:
Internal coding practices - these, including software edits, should be reviewed
periodically to make sure they meet all government requirements.
“Assumption” coding - coding without supporting clinical documentation.
Alteration of the documentation.
Coding without proper documentation.
Billing for services provided by unqualified or unlicensed personnel.
Availability of all necessary documentation at the time of coding.
Employment of sanctioned individuals
Health Insurance Portability and Accountability Act (HIPAA)
The Health Insurance Portability and Accountability Act (HIPAA) of 1996 was signed into law
by President Clinton on August 21, 1996. The act was originally conceived to guarantee that
health insurance coverage is available to workers and their families when they change or
lose their jobs. The law's original scope has expanded and now requires the Secretary of
Health and Human Services to include provisions for standardizing the data content and
format for electronic transactions (administrative simplification), privacy of confidential
personal health care information, secure physical access to records, and national identifiers
for providers, employers, and health plans.
Title I of HIPAA protects health insurance coverage by:
Increasing your ability to get health coverage for yourself and your dependents if you
start a new job;
Lowering your chance of losing existing health care coverage, whether you have that
coverage through a job, or through individual health insurance;
Helping you maintain continuous health coverage for yourself and your dependents
when you change jobs;
Helping you buy health insurance coverage on your own if you lose coverage under
an employer's group health plan and have no other health coverage available.
Among its specific protections, HIPAA:
Limits the use of pre-existing condition exclusions;
Prohibits group health plans from discriminating by denying you coverage or charging
you extra for coverage based on your or your family member's past or present poor
health;
Guarantees certain small employers, and certain individuals who lose job-related
coverage, the right to purchase health insurance; and
Guarantees, in most cases, that employers or individuals who purchase health
insurance can renew the coverage regardless of any health conditions of individuals
covered under the insurance policy.
In short, HIPAA may lower your chance of losing existing coverage, ease your ability to
switch health plans and/or help you buy coverage on your own if you lose your employer's
plan and have no other coverage available.
What is Administrative Simplification?
Title II, Subtitle F - Administration Simplification
Use of electronic health care transactions has grown significantly, however, each health
insurer has different format requirements for each electronic transaction. This forces
practitioners to interact electronically with each insurer using different identifiers, coding,
and format requirements for billing, payment, beneficiary eligibility inquiry, and claim status
inquiry. This is inefficient, expensive, and confusing.
HIPAA is the Remedy
HIPAA will remedy this inefficient way of electronic billing to multiple insurers. By October
2002, all health care payers, including Medicare and private health insurers, must have the
capability to utilize the American National Standards Institute (ANSI) ASC X12N standard
format for all electronically submitted medical claims. Practitioners electing to submit claims
electronically must submit all of their claims in compliance with the requirements in the
X12N 837 version 4010. If practitioners choose to contract with a clearinghouse to translate
claim data into the X12N 837 4010 format, the practitioner must furnish the clearinghouse
with all the data required by the X12N 837 version 4010. Practitioners, their agents, or
clearinghouses, which elect to use a clearinghouse for translation services, are liable for
those costs. On a more global perspective, the HIPAA legislation will also mandate the
utilization of standard code sets, identifiers, security, and privacy provisions. By October
2002, the transaction standards for medical claims will be mandatory for all parties who
communicate electronically.
To coordinate the transfer of health care information between providers it became evident
that the administrative overhead of treatment, payment, and health care operations (TPO)
must be reduced.
The Secretary of Health and Human Services was given the authority, through Title II of
HIPAA, to simplify these three necessary functions of the health care industry by adopting
"administrative simplification" rules designed to reduce the cost of administering both
private and public health plans. This authority allows the Secretary to adopt standards for
transactions, and data elements for such transactions, to enable health information to be
exchanged electronically. The transactions included health care claims, eligibility, and health
care payment as well as other transactions related to TPO. The transactions were developed
by private sector standards development organizations accredited by the American National
Standards Institute (ANSI). All of the transactions are from the Accredited Standards
Committee (ASC) X12N except the standards for retail pharmacy transactions, which are
from the National Council for Prescription Drug Programs (NCPDP).
The intent of Title II of HIPAA is to improve the efficiency and effectiveness of the health
care system by encouraging the development of health information systems that utilize
electronic data interchange for certain administrative and financial transactions. HIPAA
seeks to establish the required use of national transaction standards when performing these
business transactions between organizations electronically and requires that all parties
using these transactions for health care follow the guidelines established by national
implementation guides.
The administrative simplification subtitle of HIPAA allows the Secretary of Health and Human
Services the authority to establish standards for five specific areas of electronic data
interchange (EDI).
Transactions - requires the Secretary to adopt standards for transactions, and data
elements for such transactions, to enable health information to be exchanged electronically.
The transactions named are with respect to health claims or equivalent encounter
information, health claims attachments, enrollment and dis enrollment in a health plan,
eligibility for a health plan, health care payment and remittance advice, health plan
premium payments, first report of injury, health claim status, and referral certification and
authorization.
Code Sets - allows the Secretary to select from among code sets that have been developed
by private and public entities or to establish code sets for the named transactions.
Privacy - defines the rights that an individual has in regards to their individually identifiable
health information and under what circumstances such information should be disclosed.
Security - requires, health plans, clearinghouses, and providers to safeguard the integrity
and confidentiality of health care information maintained or transmitted in electronic form
and to protect against unauthorized uses or disclosures.
Unique Health Identifiers - requires the Secretary to adopt unique health identifiers for
individuals (presently on hold), employers, health plans, and health care providers for use in
the health care system.
What Can We Expect After Implementation?
Ultimately, implementation of the standards promises the Medicaid agency, and other
payers, improvements in data exchange processes, lower operating costs, consistent data
for statewide and national analysis and comparisons, better fraud detection capabilities, a
happier provider community, and the opportunity to renovate antiquated systems and
streamline business processes. Standardized formats and data content should also improve
the coordination of benefit process.
The provider community can expect that major efficiencies will be achieved after the
standards have been implemented. As in the payer community, the providers are also
challenged with upgrading their systems and their data exchange capabilities, resulting in
more efficient and timely inter-provider communications such as handling coordination of
benefits, sending laboratory reports, making referrals, and ordering tests and filling
prescriptions. Standards should also speed up inquiry and response for eligibility
verification, service requests, or claim status.
Beneficiaries share indirectly in the improvements associated with Administrative
Simplification as the standards, combined with online data exchange, result in improved
coordination of care for the patient. Standards may remove some of the barriers to provider
participation, which could lead to more choice for the Medicaid beneficiary. With the
blending of web and television technologies, Medicaid clients could have access to
information such as health care education, rosters of providers, and directions to medical
facilities, that were previously unavailable or difficult to obtain. As medical record standards
are introduced, we can expect more efficient transfer of information as the beneficiary
moves between fee-for-service and managed care, and from Medicaid eligibility to the State
Children's Health Insurance Program (SCHIP).
Who are Covered?
Administrative Simplification defines a covered entity as one of the following:
a health plan,
a health care clearinghouse, or
a health care provider
who transmits any health information in electronic form in connection with a covered
transaction.
Health Plans - means an individual or group plan that provides, or pays the cost of medical
care, including, when applied to government funded programs, the components of the
government agency administering the program. A health plan includes the following, singly
or in combination:
A group health plan.
A health insurance issuer.
An HMO.
Part A or Part B of the Medicare program under title XVIII of the Act.
The Medicaid program under title XIX.
An issuer of a Medicare supplemental policy.
An issuer of a long-term care policy, excluding a nursing home fixed-indemnity policy.
An employee welfare benefit plan or any other arrangement that is established or
maintained for the purpose of offering or providing health benefits to the employees
of two or more employers.
The health care program for active military personnel.
The veterans health care program.
The Civilian Health and Medical Program of the Uniformed Services (CHAMPUS).
The Indian Health Service program.
The Federal Employees Health Benefit Program.
An approved State child health plan under title XXI.
The Medicare + Choice program under part C of title XVIII.
Any other individual or group plan, or combination of individual or group plans, that
provides or pays for the cost of medical care.
Health Care Clearinghouses - a public or private entity that does either of the following:
Processes or facilitates the processing of information received from another entity in
a nonstandard format or containing nonstandard data content into standard data
elements or a standard transaction.
Receives a standard transaction from another entity and processes or facilitates the
processing of information into nonstandard forma t or nonstandard data content for
a receiving entity.
Health Care Providers - means a provider of services and any other person or
organization that furnishes, bills, or is paid for health care in the normal course of business.
What is Being Done?
The State of Florida Medicaid HIPAA Project is based in the bureau of Medicaid Contract
Management with oversight by the Governor's office and State Legislature. Various
workgroups have been formed to increase awareness throughout state government. The
Executive Steering Committee provides sponsorship and resources for the Medicaid HIPAA
Team, which is directly responsible for policy and operations issues.
The Interagency/Provider Medicaid HIPAA Workgroup was formed to communicate with other
state agencies with HIPAA involvement and statewide provider associations. Information
Technology is involved at both the agency and state level.
Florida's representatives in Washington are in contact with the National Governor's
Association and members of Congress to gather and provide information to the HIPAA
Project members about legislation that may affect the course of HIPAA implementation.
Billing information:
If all the demographic information is completed then the charge entry process can be
continued with the following.
(i) Date of service:
The date of service is the date that describes the procedure/service performed in the charge
sheet/charge ticket. According to the hospital(s), it is termed as Exam date or Service date
or Ordering date on the reports.
(ii) Billing provider:
The rendering physician who actually performs the services will be listed on the reports. The
rendering physicians will be entered into the billing software according to the client
specifications. The client specifications will have an associate of doctors who works in the
hospital with their specialties.
(iii) Place of service:
This is the place/facility where the services are actually performed by the rendering
physicians. These are broadly classified as Outpatient Hospital services, Inpatient Hospital
services and Emergency Hospital services. Every hospital will have a list of codes to specify
the place of services where the services are performed.
(iv) Admission date:
Date of hospital admission is necessary in case of all inpatient charges. The date of
admission must be before the date of service.
(v) Referring physician:
This physician is the one who refers the patient(s) to the rendering physicians for the
services performed.
The field on the charge sheet/ticket will have the following list as referring physicians
according to client specifications.
They are -
(a) Ordering physician
(b) Admitting physician
(c) Family physician or Primary care physician (PCP)
(d) Copy for or Additional physician
(vi) Referral #:
Referral number/Pre-certification number given on the reports will be entered along with the
primary care physician name.
(ix) Diagnosis code:
The signs and symptoms for the visit are denoted as diagnosis codes. These are termed as
International Classification of Diseases (ICD codes). The symptoms can be found in the
History, Clinical data, Clinical history, Reason for exam, Reason for visit etc on the charge
sheets/charge tickets according to the hospitals.
(vii) Procedure code (CPT) and the number of units performed:
Current procedural terminology (CPT) is a standardized system of five-digit codes and
descriptive terms used to report the medical services and procedures performed by
physicians. These will be coded on the charge sheets or checked off on the charge tickets. If
the procedure is performed more than once then it will also be specified as units on the
charge sheets/charge tickets as per client specifications.
(viii) Modifiers:
This is an extension of the procedure code, which further
Explains treatment performed.
Modifiers can indicate:
(i) A service or procedure has both a professional and a technical component.
(ii) A service or procedure was performed by more than
one physician
(iii) Only part of a service was performed
(iv) An adjunctive service was performed.
(v) A service or procedure was provided more than once
(vii) Unusual events occurred
DEFINITION FOR TERMS STARTS WITH "A"
Appeal:
It is a request for more payment by asking for a review of an insurance claim that has been
inadequately or incorrectly paid or denied by an insurance company. Usually there is a time
limit for appealing a claim.
ALJ Hearing:
A request for hearing before an ALJ may be made if the amount still in question is $500 or
more. The request must be made within 60 days of receiving the Fair Hearing Officer's (FHO)
decision.
Appeals Council Review:
The Appeals Council is a part of the Office of Hearings and Appeals of the Social Security
Admn. A request must be made within 60 days of the ALJ decision.
Adjudication:
Final determination of the issues involving settlement of an industrial accident is known as
adjudication or the rating of a case. A physician does not rate disability but renders a
professional opinion on whether the injured individual has temporary or permanent disability
that prevents him or her from gainful employment. Rating itself is carried out the state's
industrial accident commission or workers compensation board. Wage loss, earning capacity
and physical impairment are the categories that may be taken into consideration to rate
disability. If an injured person is dissatisfied with the rating he or she may appeal the case to
the Workers Compensation Appeals Board or the Industrial Accident Commission.
Aberrancy:
Medical services that deviate from what is considered normal or typical when compared to
the national average.
Abuse:
Any incident or practice of a provider,physicain, or supplir which, although not usually
considered fraudulent, is inconsistent with accepted and sound medical, business, or fiscal
practices and directly or indirectly results in unnecessary costs to the Medicare program,
improper reimbursement, or program reimbursement for services that fail to meet
professionally recognized standards of care or, in some cases, may be medically
unnecessary.
Adjudication:
The process of deciding whether to allow or deny a claim based upon the information
submitted and the eligibility of the recipient. For claims to be paid, the determination of the
amount to be allowd is based on the contract, type of coverage and prior utilization.
Adjustment:
Additional payment or correction of records on a previously processed claim.
Admission:
Entry to a hospital or other health care institution as an inpatient.
Ambulatory Surgical Center(ASC):
A facility that operates exclusively for the purpose of providing outpatient services to
patients.
ANSI format (American National Standard Institute):
Electronic format used to submit Medicare claim forms. The ANSI format is used to file
Medicare Part A and Part B claims to Medicare.
Anti-Kickback Staute:
Federal statute outlawing certain forms of discounts, rebates, and other reductions in price
which induce the purchase of items or services payable by Medicare or Medicaid.
Appeal:
Written or verbal statement from a customer that conveys an explicit or implicit request for
a review of the intial determination of a claim.
Approved Charge:
The amount that Medicare has determined is appropriate for payment.
Assigned Claims:
Claims submitted to Medicare by a Part B provider who agrees to accept the Medicare
approved charges ad payment in full for the rendered service.
Assigment:
A process in which a Medicare beneficiary agress to have Medicare's share of the cost of a
service paid directly to a physician or other Provider. The Provider agrees to accept the
Medicare approved charges as payment in full and will only collect money from the Medicare
patient for non-convered Medicare services, any unmet Medicare deductible, and copayment
from the Medicare patient.
AUTO POLICY
There are basically six different types of coverages. Some may be required by law. Others
are optional. They are:
1. Bodily injury liability, for injuries the policyholder causes to someone else.
2. Medical payments or Personal Injury Protection (PIP) for treatment of injuries to the driver
and passengers of the policyholder's car.
3. Property damage liability, for damage the policyholder causes to someone else's property.
4. Collision, for damage to the policyholder's car from a collision.
5. Comprehensive, for damage to the policyholder's car not involving a collision with
another car (including damage from fire, explosions, earthquakes, floods, and riots), and
theft.
6. Uninsured motorists coverage, for costs resulting from an accident involving a
hit-and-run driver or a driver who does not have insurance.
DEFINITION FOR TERMS STARTS WITH "D"
Dependants:
This terms refers to the spouse and children of the insured, but under some contracts,
parents or other family members may be dependents.
Primary Diagnosis:
It is the underlying cause of the condition. It must be listed first.
Secondary Diagnosis:
It is that which may contribute to the condition but is not the underlying cause.
Principal Diagnosis:
It is the illness or injury that prompted the hospitalization or office visit.
Eg: if a diabetic patient comes in for management of oral insulin therapy, a dx code for
diabetes would be used as both the primary and principal dx. But if he comes in with a
complaint of blood in the urine, the dx code for hematuria would be listed first and the dx
code for diabetes would be second.
DRG System :
This sys is a pt classification scheme that categorizes pts who are medically related wrt to
diagnosis and treatment and who are statistically similar in length of hospital stay. This sys
changed hospital reimbursement from a fee for service sys to a lump-sum, fixed fee
payment based on the dx rather than on time or service rendered .
Date of Service:
The date the services were actually performed.
Deductible:
The amount of money a patient must pay before Medicare begins to pay for services and
supplies covered under the program.
Development Letter:
A notice from Medicare that a claim submitted by a provider organization cannot be
processed without additional information/documentation. The letter identifies the additional
information needed and the date by which the information must be received by Medicare.
Diagnosis:
An action that identifies the condition or cause for disease of the patient.
Diagnosis coding:
Translating the medical terminology used for each service and/or item provided by a
provider or healthcare facility (as noted in the medical records) into a code.
DEFINITION FOR TERMS STARTS WITH "E"
EPO:
A MC where the subscribers are eligible for benefits if they use the services of a limited
network of providers.
Estb. Patient:
One who has received medical services within 3 yrs.
Emergency care:
Given in the ER dept.
Levels of E/M services:
Problem focused: A limited examination of the affected body area or organ system.
Expanded problem focused: A limited examination of the affected body area of organ
system and other symptomatic or related organ system.
Detailed: An extended examination of the affected body areas and other symptomatic or
related body organ systems.
Comprehensive: A general multi-system examination or complete examination of a single
organ system.
Explanation of Benefits (EOB):
After an insurance carrier processed a claim, and the claim is paid, a document known as an
Explanation of Benefits is usually issued to the patient (insured), and the physician receives
one along with a payment check if the benefits have been assigned. If the claim has not
been assigned, payment goes to the patient and the physician may have a difficult time
obtaining this payment.
Medicare EOB:
Medicare used to mail Remittance Advice (RA) to providers and the patient receives a
Beneficiary RA. RA has been replaced by Medicare Remittance Advice also called the
Medicare Summary Notice. Electronic Claim sending offices receive Electronic Remittance
Advice (ERA), The ERA post payments automatically.
Elective Surgery:
It means a surgical procedure that can be scheduled in advance, is not an emergency and is
discretionary on the part of the physician and the patient.
EGHP:
A health insurance plan sponsored by either a patient's or the spouse of a patient's
employer where a single employer of 20 or more employees is the sponsor and/or
contributor to the EGHP, or two or more employers are sponsors and/or contributors and at
least one of them has 20 or more employees.
Entitlement:
The first date that a Medicare beneficiary can receive benefits under the Medicare program.
Explanation of Medicare Benefits(EOMB):
A form sent to a Medicare Beneficiary after a claim is processed which indicates how
Medicare processed the claim.
DEFINITION FOR TERMS STARTS WITH "I"
Insurance Policy:
An insurance policy is a legally enforceable agreement or contract. If a policy is issued the
applicant becomes part of the insurance contract or plan. The policy becomes effective only
after the company offers the policy and the person accepts it and then pays the premium. If
a premium is paid at the time the application is submitted, then the insurance coverage can
be put into force before the policy is delivered. To keep the insurance in force, a person
must pay a monthly, quarterly or annual fee called a premium. In addition, usually a
deductible must be paid each year before the policy benefits begin. The higher the
deductible, the lower cost of the policy.
IPA:
Medical capitation plan that provides a no: of basic medical services at no charge with addl.
Charges for more costly procedures. In an IPA, the physicians are not employees and are not
paid salaries. Instead they are paid fees for their services out of a fund drawn form the
premiums collected by an organization that markets the health plan minus a discount up to
30% withheld to cover operating costs. At the year end the physicians share in any surplus
or pay any deficits.
International Classification of Diseases (ICD):
The ninth revision of ICD-9 was published by the World Health Orgn. (WHO). It has 3
volumes, Vol. 1 is Diseases: Tabular (numerical) list, Vol. 2 is Diseases: Alphabetic Index, Vol.
3 is Procedures: Tabular list and Alphabetic index.
Vol. 1 and 2 are used in a physician’s office. Vol. 3 is used in hospital setting.
Annual update of ICD-9-CM occurs each Oct. 1
Individual contract:- any insurance plan issued to an individual ( and dependents) is
called an individual contract. Also called as personal ins.
Inpatient
One who occupies a regular hospital or other institutional bed while receiving care, including
room, board and general nursing.
Inquiry
A written request for information usually pertaining to claim status or general information
such as deductible, entitlement, etc.
Intermediaries
Private organizations, usually insurance companies, that have contracts with the Health
Care Financing Administration to process calims under Part A (hospital insurance) of
Medicare.
Internal Control Number(ICN)
A 13-digit number assigned to a claim, which is used for identification purposes and
retrieval purposes, if necessary.
Indemnity
Indemnity is a concept, which can be employed in promoting an insurance plan. Under this
concept the insurer and the insured will have a contract. The terms of the contract will not
impose any restriction on the insured. However the insurer will be very clear in his
reimbursements, which will be a % of the bill. The plans most often except in the case of
basic coverage will have a deductible. Here the insured will have no restrictions imposed for
accessing healthcare benefits. The payment here is on a Fee For Service basis because
participating as well as non-participating providers will render healthcare service.
DEFINITION FOR TERMS STARTS WITH "F"
Fee Schedule:
It is a listing of accepted charges or established allowances for specific medical procedures.
A medical practice can have more than one fee schedule unless specific state laws restrict
this practice.
Fiscal Agents:
Organisations handling claims from physicians and other supplier of services covered under
Medicare Part B are called carriers or fiscal agents.
Financial Responsibility for WC cases:
The contract for treatment in a personal illness or injury case is between the physician and
the patient who is responsible for the entire bill. However, when a business is self-insured, a
person is under a state program for care, or an individual is being treated as a workers
compesation case, the financial responsibility exists between the physician and insurance
company or state program. No copayments can be collected and no balance billing of the
patient can be done which is not covered by the WC fee schedule.
Fee Schedule:
A list of certain services and payable amounts indicating the maximum Medicare payment
for the service.
Fee-For-Service:
Medicare benefits that allow beneficiaries to go to almost any doctor, hospital or other
healthcare provider they desire. Generally, a fee is charges to the patient each time a
service is rendered by a provider.
Fiscal Intermediary(FI):
An insurance company that contracts with HCFA to process Medicare Part A bills. (hospital
insurance).
Fraud:
Intentional deception or misrepresentation which an individual or entity makes, knowing it
to be false and that the deception could result in some unauthorized benefit.
DEFINITION FOR TERMS STARTS WITH "B"
Benefit Period:
For Medicare Part A patients, benefit period begins the day a patient enters a hospital and
ends when the patient has not been a bed patient in any hospital or SNF for 60 consecutive
days. There is not limit to the number of benefit periods a patient can have for hospital or
SNF care. However, limits apply for hospice care.
Benefit Period:
A Benefit period is the maximum amount of time that benefits will be paid to the injured or
ill person for the disability( eg. 2yrs, 5yrs, to age 65 or lifetime). Benefits paid to the insured
disabled person are called indemnity and can be received daily, weekly, monthly or
semiannually depending on the policy.
Balance Billing:
The difference between the billed amount and the amount approved by Medicare.
Beneficiaries:
Persons entitled to Medicare benefits under the Social Security Administration.
Billed Amount:
The amount charged for each service performed by the provider.
Buckslip:
A form given to patients to gather identification, contract, insurance, and various healthrelated
information.
Billing on a “stat” basis
There are two levels of billing for some medical procedures depending on whether the
services are ordered on a “routine” basis or a “stat,” basis. “Stat” basis is immediate and
unplanned and generally results in a higher charge to Medicare and more income for the
hospital or physician. Emergency room charges usually generate larger bills as compared to
outpatient services for this reason.
DEFINITION FOR TERMS STARTS WITH "C"
Coordination of Benefits:
A statement that shows which policy is primary so that benefits do not overlap. Birthday
rule is a part of this.
CPT:
Current Procedural Terminology was first issued in 1966. CPT uses a 5 digit system for
coding services rendered by physicians, plus a 2 digit add-on modifiers to indicate
complications of special circumstances. Code numbers represent diagnostic and therapeutic
procedures on medical billing statements and insurance forms.
Concurrent care:
Providing of similar services to the same patient by more than one physician on the same
day.
Critical care:
Care of critically ill patients in a variety of medical emergencies requiring constant bedside
attention by a physician. Eg. Care given in Coronary Care Unit, Intensive Care Unit etc.
Counseling:
It is a discussion with a patient, family or both concerning one or more of the following:
Diagnostic results
Impressions
Recommended diagnostic studies
Prognosis
Risks and benefits of treatment options etc.,
Consultation:
It includes services rendered by a physician whose opinion or advice is requested by
another physician or agency in the evaluation or treatment of a patient's illness.
Consultations may occur in a home, office, hospital, extended care facility and so on.
Office or other outpatient consultations (new or estb. Patient) – 99241 to 99245
Initial inpatient consultations ( new or estb. Patient) – 99251 to 99255
Follow-up inpatient consultation (estb. Patient) – 99261 to 99263
Confirmatory consultation ( new or estb. Patient) – 99271 to 99275
Crib Sheet:
It is summary form listing key components of the E/M codes. It is used by specialty
physicians. They make the job of coding and billing quicker and easier.
Clearinghouse:
It is also referred to as Third Party Administrator (TPA). It is an entity that receives
transmission of claims, separates the claims and sends each one to the correct insurance
payer. They may charge a flat fee per claim or charge a percentage of dollar volume.
Carrier-Direct:
In this system, the physician must have his own or leased computer, software and modem
to transmit data directly over a dedicated phone line. Fiscal agents for Medicare, Medicaid,
CHAMPUS, BCBS and many private insurances use this system.
Contract Maximum:- Maximum amt allowed by the insurance.
Bundled Codes:
Bundled codes means to group codes together that are related to a procedure.
Unbundling:
It is coding and billing numerous CPT codes to identify procedures that are usually described
by a single code. It is also known as exploding or a la carte medicine.
Down Coding:
Down coding occurs when the coding system used on a claim submitted to an insurance
carrier does not match the coding system used by the company receiving the claim. The
computer system converts the code submitted to the closest code in use, but the payment
generated may be less than if the claim was not down coded.
Upcoding:
This term is used to describe the deliberate manipulation of CPT codes for increased
payment. Intentional upcoding is when a physician selects one level of service code for all
visits with an attitude that it evens out.
Medicare Global Surgery Policy (eff from 1/1/92)
a.Preoperative visits ( 1day before surgery)
b.Intraoperative Services that are a usual and necessary part of the surgical procedure.
c.Complications after surgery that do not require additional trips to the operating room.
d.Post operative visit. ( 0, 10, 90 days)
E Codes:
E Codes are supplementary classification of coding in which you look for external causes of
injury rather than disease. The use of an E code after the primary or secondary dx tells the
insurance carrier what caused the injury.
V Codes:
V codes are also a supplementary classification of coding. V codes are used when a person
who is not currently sick encounters health services for some specific purpose, such as to
act as a donor of an organ, receive vaccination, seek consultation regarding family planning,
allergies etc.,
Paper Claim:
It is one that is submitted on paper including optically scanned claims that are converted to
electronic form by insurance carriers.
Electronic Claim:
It is one that is submitted to the insurance carrier via a CPU, tape diskette, digital fax etc.,
Clean Claim:
It means the claim was submitted within the program of policy time limit and correctly
completed.
Dingy Claims:
It happens when the Medicare contractor cannot process a claim for a particular service or
bill type. The claims are held until the necessary system changes are implemented to pay
the claim correctly.
Dirty Claims:
These are claims submitted with errors or those requiring manual processing for resolving
problems or rejection of payment.
Rejected Claims:
They are those that require investigation and need further clarification. These may need to
be resubmitted.
Incomplete Claims:
It is any claim missing the required information. These may have to be resubmitted.
Invalid Claims:
It is any claim that contains complete, necessary information but is illogical or incorrect
(e.g., listing incorrect provider# for a referring physician). These are to be resubmitted.
Participating Provider Claims:
These are processed within approx. 14 days of receipt. Non participating provider claims are
processed within approx. 27 days of receipt.
Claims must be submitted no later than dec. 31 of the calender year following the year
during which the services or supplies were received. Eg. For DOS May 8,1995, claims should
be submitted no later than Dec. 31,1996. Claims for long hospital stays or other long-terms
care must be submitted every 30 days.
Carrier:
An insurance company that contracts with Health care Financing Administration(HCFA) to
provide claims processing and payment for Medicare Part B services.
Claim:
Forms submitted for payment of physician services, other medical services and supplies
provided to Medicare beneficiaries.
Clinical Laboratory Improvement Amendments (CLIA):
Regulations which set quality and performance standards for all laboratory testing. All
providers of laboratory services are required to be certified under the CLIA program.
Co-insurance:
A cost-sharing requirement that a beneficiary will assume a portion or percentage of the
costs of covered services.
Comprehensive Examination:
A General multi-system examination, or complete examination of a single organ system and
other symptomatic or related body area(s) or organ system(s)
Constitutional Symptoms:
Symptoms that relate to the general conditions of a person's body(eg. fever, weight loss).
Contractor:
A contractor for Medicare purposes is defined as a Fiscal Intermediary(FI), Carrier, Durable
Medical Equipment Regional Carrier(DMERC), or Regional Home Health Intermediary(RHHI).
Correspondence Control Number:
Number assigned to an inquiry or appeal(written or telephone), which is used for
identification purposes.
Covered Services:
Services rendered to Medicare or Medicaid patients that are reimbursable by the program to
the Provider.
CPT:(Current Procedural Terminology)
The coding system for physician services developed by the CPT Editorial Panel of the AMA.
Crossover:
A situation whereby Medicare will forward any gaps in coverage to the Medigap insurer for
payment. Medigap cross-overs only occur if correct Medigap information is completed on
the Medicare claim form and if the patient has previously sent a signed Medigap cross-over
authorization form to Medicare through a participating Medicare provider.
Capitation:
Capitation means a set dollar payment per patient per unit of time (usually per month) that
is paid to cover a specified set of services and administrative costs without regard to the
actual number of services provided. The services covered may include a physician's own
services, referral services or all medical services.
Case Mix Index
The case mix index is a tool to identify hospitals that systematically upcode patient
diagnoses to inflate reimbursement. The HHS-OIG examines trends in the case mix index of
individual hospitals to determine whether historic increases and recent declines in case mix
occurred uniformly across the industry. They look for either specific patterns that
significantly influence national trends or specific hospital variations.
Cobra
COBRA is not the insurance, it is the law, since 1985 - the Consolidated Omnibus Budget
Reconciliation Act.
COBRA allows for the temporary continuation of employer group health insurance for
employees and their dependents, when that insurance would otherwise end.
Insurance plans under COBRA are private health plans, not sold by the government.
Who is Eligible for COBRA?
Plan coverage - you must be in the employer group health plan and the plan must have over
20 employees.
You must have worked at least 50% of the working days in the previous calendar year.
Beneficiary coverage - you (employee, spouse, and/or dependent child) must be covered by
the group health plan on the day before the "qualifying event".
Qualifying events - a specific event happens that causes you to lose employer group health
care coverage.
CMP: (Competitive Medical Plan)
A type of managed care organization created by the 1982 Tax equity and fiscal responsibility
act (TEFRA). federal legislation for enrollment of Medicare beneficiaries into managed care
plans.
CASE MANAGEMENT
A system of coordinating medical services to treat a patient, improve care, and reduce cost.
A case manager coordinates health care delivery for patients.
Catastrophic limit
For services with copayments or coinsurance, this is the maximum amount out-of-pocket
charges you have to pay in a calendar year. Separate limits are usually applied on a per
person and per family basis.
Catastrophic limit-per person
For services with copayments or coinsurance, this is the maximum amount out-of-pocket
charges you have to pay in a calendar year. Separate limits are usually applied on a per
person and per family basis.
Catastrophic limit-per family
For services with copayments or coinsurance, this is the maximum amount out-of-pocket
charges you have to pay in a calendar year. Separate limits are usually applied on a per
person and per family basis.
AMERICAN HEALTHCARE INDUSTRY
Health conscious
Practice preventive medicine
Constant intervention of government
Continuous increase in investment
Access to professional and specialized medical care
Major part of American population in age group of 40 – 70 years
HEALTHCARE REIMBURSEMENT
“Healthcare Reimbursement” is the charging of and receiving payment for provider services
rendered to a patient. While a patient is responsible for paying some of the costs associated
with treatment, the patient’s payor pays the bulk of the costs directly to the provider. Thus,
the entity paying for a patient’s care is called a third party payor.
HISTORY OF US HEALTHCARE REIMBURSEMENT SYSTEM
Patients paid providers directly for services.
Patients who could not afford to pay for services relied on religious and charitable
organizations to pay for their care or to provide free care.
Technological advances in healthcare made free care more expensive and difficult to
provide. Covering the cost of someone else's care also became more difficult.
Health insurance was created to alleviate a patient’s risk of not being able to pay for future
medical costs and a provider’s risk of not being paid for services rendered.
Large percentage of US population has health insurance through their employers and
government and private insurance companies also extend coverage.
HEALTH INSURANCE
Health insurance is a mechanism to reduce individual’s risk of incurring high medical
expenses in the future that he may be unable to pay. In order to cover these possible future
medical expenses a person pays periodic payments (premiums), to an insurance company.
These Premium payments allow that person to be enrolled with the company.
That person is then referred to as an “enrollee” or “insured”. All other individuals who enjoy
the benefit of the plan are referred to as “covered”. Health care insurance or health
insurance is a contract between a policyholder and an insurance carrier or government
program to reimburse the policyholder for all or a portion of the cost of medically necessary
treatment or preventive care rendered by health care professionals.
INSURANCE PLAN
Insurance coverage is referred to as an “insurance plan” and covers services that were
previously agreed to. Individual is given a health insurance card on purchase of the
“insurance plan”, which contains details of the patient’s insurance policy.
A policyholder is not eligible for health insurance unless and until he/she pays the predetermined
premium specified by the insurance.
COMPONENTS OF INSURANCE PLAN
Premium to be paid
Services covered
Services not covered
Patient’s responsibility on a bill/claim
Provider network
HOW IS PROVIDER PAID BY HEALTH INSURANCE?
Once patient receives treatment or evaluation, the provider compiles diagnostic and
insurance information. Clinical and charge information is coded. A claim is generated and
submitted to the insurance carrier. The insurance carrier reviews bill/claim and reimburses
provider according to contract or reimbursement agreements. Provider receives payment as
per contractual or reimbursement arrangement.
REIMBURSEMENT PROCESS
When a provider first sees a patient for treatment, the patient’s health insurance and
clinical information is compiled. All clinical and charge information are coded while the
patient receives the treatment.
After treating a patient, the provider sends a bill directly to the patient’s insurance carrier.
This provider bill is called a claim.
The patient’s insurance carrier pays for the patient’s covered services by sending a
payment directly to the provider.
Only if some provider’s services are not paid by the payor, will the provider send a bill for
the remaining services to the patient. If the patient does not have health insurance, he is
responsible for the entire provider bill.
OBJECTIVES OF BILLING COMPANY
Offer fast, efficient, and error free claims processing,
Collect money due from insurance company,
Zero out balance on a patient record, and
Collates information and generates reports.
PARTICIPANTS IN US HEALTHCARE SYSTEM
Patients
Providers
Payors
Suppliers
Researchers
Business Associates
PATIENTS
Patient is also called beneficiary: person who has a medical condition (illness or diseases)
and gets in contact with the medical provider for healthcare services.
A new patient is a person who has not received any professional service from healthcare
provider or another provider of the same specialty in the same group practice within the last
36 months
An established patient is a person who has been seen within the last 36 months by the
healthcare provider or another provider of the same specialty in the same group practice.
PROVIDERS
Providers are individuals, corporations, institutions, or facilities who are licensed by the
government to provide medical care, services, goods and supplies to patients.
Examples of providers: Physicians, Nurses, Hospitals, and Nursing homes, Emergency room
technicians, Ambulatory surgery centers.
PHYSICIANS
PCP: Primary Care Physician in general term is a family doctor or the doctor one who is
visited by the patient first for any kind of health problem. Primary care physicians are also
called Gate Keepers, as they are the ones who are contacted first by the patient.
PCP is also called referring doctor
Specialist: Specialists are physician who practice on a particular specialty. Some of the
practitioners are Dentist, Oral Surgeon, Chiropractor. A specialist can also be a PCP for the
patient. In cases where the patient directly comes to the doctor for his health problems and
the doctor diagnosis some problem, which is also his specialty, then he becomes the PCP
and Specialist for the patient
Specialist is also called rendering doctor
Ordering Physician: Ordering Physician is a physician who orders for non-physician services
for the patient such as diagnostic laboratory tests, clinical laboratory tests, pharmaceutical
services, and durable medical equipment.
All claims for insurance covered services and items that are the result of a physician's order
or referral must include the ordering/referring physician's name and Unique Physician
Identification Number (UPIN).
FACILITY PROVIDERS
Following are the most common facility providers:
Hospitals
Ambulatory Surgery Center (ASC)
Skilled Nursing Facility (SNF)
Home Health
Hospice
HOSPITALS
A Hospital today is a center for professional health care provided by physicians and nurses.
It is a facility that provides the most intensive and comprehensive medical services
available. Hospitals are generally classified as General Hospital, Specialized Hospital, and
Medical Centers.
Acute Care Hospitals: Provides intensive care to patients on a short-term basis. This could
also include overnight stay. (Children’s, Adult, and Specialty hospitals)
Chronic Care Hospitals: Provides care on a long-term basis. The care provided is not as
intensive as that of an Acute Care Unit. (Skilled nursing, Rehabilitative hospital)
CARE EXTENDED AT HOSPITALS
Inpatient: A person who is admitted to the hospital so that he may receive care overnight.
Outpatient: A person who receives hospital services but does not need to receive care
overnight; outpatients are not admitted but can be under observation for some hours.
Emergency: A person who requires immediate service because the illness is severe or life
threatening.
PROVIDER CARE
Primary Care: Involves common health problems; it accounts for 80-90% of all patient care;
usually provided at a physician’s private office (immunizations and sore throat).
Secondary Care: Involves illnesses/sickness that requires somewhat specialized care;
usually provided at a local hospital (stroke and delivery).
Tertiary Care: Involves the most complex and/or rare diseases that require the most
specialized, provider expertise; usually provided at a university teaching hospital or medical
center (congenital malformations).
AMBULATORY SURGERY CENTER (ASC)
Ambulatory surgery is surgery that does not require an overnight hospital stay. It is also
called ‘Day Surgery’, ‘Same Day Surgery’ (SDS), or ‘Short Procedure Unit’ (SPU). ASC may
either be affiliated with a hospital or have no affiliation with a hospital. Ambulatory Surgery
Centers act as autonomous units and are treated as separate entities.
Ambulatory programs offer patients the convenience of being treated and released the
same day without being admitted to the hospital. This means that eligible patients come to
the hospital either in the morning or afternoon of the day of surgery, undergo the operation,
and are discharged within the same day to recover in the comfort of their home.
Ambulatory surgery centers, or freestanding ambulatory centers, provide outpatient
services. This day-care or ambulatory technique provides an efficient and flexible approach
to provision of many surgical and therapeutic procedures. It is a freestanding facility, other
than a physician’s office, that operates exclusively to provide surgical services to patients
who do not require hospitalization.
WHY PATIENTS PREFER AMBULATORY SURGERY
Modern advances in technology; research and new operating methods have greatly reduced
the need for overnight hospitalization for surgical patients.
Faster recovery means less discomfort.
Less disruption and time away from family and business commitments.
Recovery in the comfort of the patients own home.
Reduction in the cost of healthcare.
SKILLED NURSING FACILITY (SNF)
SNF is a facility that primarily provides inpatient, skilled nursing care and related services to
patients at a lesser intensity than an acute facility (hospital). SNFs are used for patients who
need medical, nursing care, or rehabilitation services.
Patients are usually treated on a long-term basis and care is less expensive than in a
hospital. The most common SNF facility is a nursing home. These facilities are usually run by
nurses and would just have a visiting doctor on call.
HOME HEALTH
Home Health agencies are organizations, which are engaged in providing services (medical
and non-medical) to patients and their families in their home or place of residence according
to a written plan of treatment signed by the patient’s physician.
These services are delivered (at home) to recovering, disabled, chronically, or terminally ill
persons in need of medical, nursing, social, or therapeutic treatment and/or assistance with
the essential activities of daily living.
HOSPICE
Hospice programs make it possible for terminally ill persons to spend the final stages of
their lives at home or in home-like settings. An emphasis on palliative and supportive care
will enable them and their families to cope with this difficult transition.
Hospice can be hospital-based or freestanding. Only terminally ill patients are eligible for
hospice care.
It is a comprehensive, medically directed, team oriented program of care that seeks to treat,
comfort, and counsel the terminally ill individuals and their families on pain relief and
management, symptom management, and understanding that psychological and spiritual
pain are as significant as physical pain.
Treatment of the terminal illness ceases when a patient chooses hospice care; only
symptom management remains and treatments for any other illness besides the one
causing death.
PAYORS
A Payor is an organization that has contracted with a patient to pay for a patient’s
healthcare services. Payor may be either government agencies or private companies.
Private companies who pay for patient’s healthcare services are called insurance
companies. Each payor has its own set of covered benefits, payment mechanism, and
regulations.
SUPPLIERS
Suppliers are organizations that sell healthcare products to providers to be used in the
delivery of healthcare.
Examples of suppliers: Merck, Johnson and Johnson
RESEARCHER
Healthcare Researchers are persons or organizations that use scientific methods to discover
new causes of morbidity, methods of treatment, or ways to avert illness. This research leads
to technological advances in the healthcare.
Examples of researchers: National Institute of Health (NIH), The University of Michigan (U of
M), and Pharmacia Corporation.
BUSINESS ASSOCIATES
HIPAA defines a “Business Associate” as an individual or corporate person who performs on
behalf of the covered entity any function or activity involving the use/disclosure of Protected
Health Information (PHI) and is not a member of the covered entity’s workforce.
Covered entity discloses PHI to a business associate and allows it to create/receive PHI on
its behalf only if the covered entity executes a satisfactory contract or other written
agreement (Ex: Memorandum of Understanding).
TYPES OF PAYORS
Medicare
Medicaid
Blue Cross and Blue Shield
Commercial Insurance
Managed care Organizations
Worker’s Compensation
No-Fault
TRICARE
MEDICARE
Medicare is a federal government health insurance program which pays for certain
healthcare services and originated from a federal law, title XVIII of the Social Security Act.
Medicare is health insurance program for people age 65 or older. Certain people younger
than age 65 can qualify for Medicare, too, including those who have disabilities and those
who have permanent kidney failure. The program helps with the cost of health care, but it
does not cover all medical expenses or the cost of most long term care.
Medicare is managed by Centers for Medicare and Medicaid Services (CMS), which covers
nearly 40 million Americans and provides coverage for:
People age 65 or older,
Some people under age 65 with disabilities,
People with End-Stage Renal Disease (ESRD), which is permanent kidney failure requiring
dialysis or a kidney transplant.
Medicare consists of two parts: Part A and Part B
Part A
Hospital insurance plan financed mostly through taxes on employers and employees.
Persons who qualify for Medicare receive Part A automatically. A beneficiary or beneficiary’s
spouse must have paid Social Security Taxes or premiums for at least 10 years/40 quarters.
Part B
Supplementary medical insurance that pays for physician services and other services not
covered under Part A. persons who qualify for Medicare do not automatically receive Part B.
These individuals must purchase Part B.
Medicare Part A:
Part A of the Medicare Program is for inpatient services and hospitals submit Medicare
claims to Part A intermediary. Part A benefits include: Hospital stays, Skilled nursing facility,
Home health care, Hospice care, or care in a psychiatric hospital.
Medicare Part B:
Part B of the Medicare Program is for professional/physician services. This coverage helps
pay for medical and surgical services by physicians as well as certain other health benefits
such as ambulance transportation, durable medical equipment, outpatient hospital services,
and independent laboratory services.
MEDICARE+CHOICE OR MEDICARE PART C
Medicare + Choice is also called Medicare Managed Care Program, which is offered by
private insurance companies under the regulations and guidelines of Medicare. Part C
covers all services of Medicare Part A and B plus some additional services. There are a
number of Medicare Managed Care Plans that one can choose from at a premium. In order
to be eligible to buy Part C one must be eligible for Part A and one must necessarily buy Part
B. Part C covers services such as hearing aids, eyeglasses, dental services etc.
MEDIGAP
People who have both Part A and Part B coverage will still not have all possible healthcare
services covered. Other than Part C at times, Medicare enrollees may also purchase
additional insurance from a private company to fill in the gaps of Medicare coverage. This
additional insurance is called “Medigap”.
Medigap is “Supplemental Medicare Coverage”. Medigap is a private program sold by
insurance companies or managed-care health organizations, that plug/fill the gaps in the
Original Medicare Plan coverage (usually, Medicare deductibles and co-insurance payments
are covered). Insured must have Medicare Part A and B to apply for Medigap.
MEDICAID
Medicaid is a program that pays for medical assistance for certain individuals and families
with low incomes and resources. It originates from title XIX of Social Security Act. It is jointly
funded by Federal and State governments to assist states in furnishing medical assistance
to eligible needy persons. Medicaid is the largest source of funding for medical and healthrelated
services for America’s poorest people and covers 36 million individuals.
Within certain federal guidelines, each state operates its own Medicaid Program. Thus each
states Medicaid Program has its own features, benefits, costs, and regulations. Within broad
national guidelines established by federal statutes, regulations, and policies, each State:
Establishes its own eligibility standards
Determines the type, amount, duration, and scope of services
Sets the rate of payment for services
Administers its own program
Medicaid policies for eligibility, services, and payment are complex and vary considerably,
even among States of similar size or geographic proximity. Thus, a person who is eligible for
Medicaid in one State may not be eligible in another State, and the services provided by one
State may differ considerably in amount, duration, or scope from services provided in
similar or neighboring State. Generally the State offers coverage to one or more of the
following groups:
Mandatory
Categorically Needy
Medically Needy
WHAT IS THE DIFFERENCE BETWEEN MEDICARE AND MEDICAID
Medicare was created in an attempt to address the fact that older citizens have medical bills
significantly higher than the rest of the population, while it is much more difficult for most
seniors to continue to earn enough money to cover those bills. Eligibility for Medicare is not
tied to individual need. Rather, it is an entitlement program; and the patients are entitled to
it because patient or patient’s spouse paid for it through Social Security Taxes. Medicare is a
federal program.
Medicaid is a federal assistance program for low-income, financially needy people, set up by
federal government and administered differently in each state. Medical bills are paid from
federal, state, and local tax funds. It serves low-income people of every age. Patients
usually pay no part of costs for covered medical expenses. A small co-payment is
sometimes required. Medicaid is a federal-state program and varies from state to state. It is
run by state and local governments within federal guidelines.
MEDICARE VS MEDICAID
Who is eligible
Medicare covers almost everyone 65 or older, certain people on Social Security disability,
and some people with permanent kidney failure.
Medicaid covers low-income and financially needy people, including those over 65 who are
also on Medicare.
Who administers the program
Medicare rules are the same all over the country. Medicare information is available at the
local Social Security Office.
Medicaid rules differ in each state. Medicaid information is available at the local county
social services, welfare or Department of Human Services Office.
Coverage Provided
Medicare hospital insurance (Part A) provides basic coverage for hospital stays and posthospital
nursing facility and home health care.
Medicare medical insurance (Part B) pays most of basic doctor and laboratory costs, and
some of other outpatient medical services, including medical equipment and supplies,
physical therapy.
In many states, Medicaid covers services and costs Medicare does not cover, including
prescription drugs, diagnostic and preventive care and eyeglasses.
Costs to consumer
Patients must pay a yearly deductible for both Medicare Part A and Part B. They must also
pay hefty co-payments for extended hospital stay.
Under Part B, the patient must pay 20% of doctors’ bill and Part B also charges some
monthly premium.
Medicaid can pay Medicare deductibles and the 20% portion of charges not paid by
Medicare. Medicaid can also pay Medicare premium.
In some states, Medicaid charges consumers small amounts for certain services.
BLUE CROSS AND BLUE SHIELD (BCBS)
BCBS is a not-for-profit entity that offers health insurance through more than 70 different
organizations located in every state. Within general guidelines, each individual organization
operates as a separate company with its own benefits and payment policies. BCBS was one
of the first private health insurance organizations; therefore, it has a large enrollee
population. It offers only health insurance, both for individual and group plans. BCBS also
offers commercial and managed care plans (although BCBS is not a commercial or managed
care company).
MAJOR BCBS PLANS
Federal Employee Program: The largest BCBS national account is the plan serving federal
government employees and retirees. The BCBS Federal Employee Program (FEP) is just one
of many commercial plans available for election by federal government employees. All
Federal subscribers ID numbers start with letter ‘R’ followed by eight numerical digits.
Traditional Fee-For-Service Coverage: BCBS offers a wide variety of fee-for-service plans. The
most basic plan is elected by individuals who do not have access to a group plan and by
many small group employers.
Blue Card Program: Blue card PPO Program is the premier national Blue Cross Blue Shield
Preferred provider Program that links together network of doctors and hospitals. Members
can use any network doctor or network hospital and need not select a PCP. They can avail
the service directly from the specialist who is part of the network.
BCBS National Account: Employer group that has offices and branches in more than one, but
offers uniform coverage benefits to all of its employees. Employee can take the service
anywhere he/she travels outside their home plan area where the employer has offices.
COMMERCIAL INSURANCE
Commercial insurance can be a type of company or type of plan offered by company.
Commercial insurance company (Carrier) – These are private, for-profit (those companies
whose goal is to make money) companies. Offer more than just health insurance; they may
also offer auto, life, and home insurance. Commercial insurance is financed by enrollee
premiums.
Commercial insurance plan (Indemnity) – Typically, the insurance company will pay 80% of
claim while the patient pays 20%; another common arrangement is where company pays
70% of claim while the patient pays 30%.
COMMERCIAL PLANS
Individual Plans: When a commercial insurance is purchased by an individual.
Group Plans: When the same type of commercial plan is collectively purchased by a group of
people. Group insurance is usually purchased by employers for their employees. Group
plans can be EGHP or LGHP.
EGHP: Employer Group Health Plan, is a facility offered by employers to their employees
where they can pay a small premium and enroll themselves. There are two types of EGHP
where,
Number of employee is 1-19
Number of employee is 20-99
These employees are enrolled under one group number but differently policy numbers.
LGHP: Large Group Health Plan has characteristics of EGHP, but the number of enrollees
(employees) should be more than 100.
MANAGED CARE
Managed Care can be a type of company or type of plan offered by company.
Managed Care Companies: Are both for profit and non-profit companies, which offer only
managed care plans. It is financed by premiums and sell both group and individual plans
and only health insurance.
Managed Care Plan: There are three common types of managed care plans: Health
Maintenance Organization, Point of Service Organization, and Preferred Provider
organization. Each plan has a different balance of a patient’s cost for the plan. In general,
the more choice a patient has of which provider he can see, the more expensive the plan.
Managed care is different from Commercial Insurance because it attempts to “manage a
person’s care” by restricting the providers an enrollee can visit. Managed care usually has
cheaper premiums than Commercial insurance.
The main emphasis of managed care is to control utilization of services to achieve
appropriate, efficient use of resources along with positive outcomes. As a result, managed
care organizations employ such strategies as pre-authorizations, re-authorizations, and ongoing
case review. Most often patient care under managed care is coordinated by a
managed care case manager who may follow patients through all settings or just specific
settings.
HEALTH MAINTENANCE ORGANIZATION (HMO)
HMO consists of a network of physicians, hospitals, and other healthcare providers that have
contracted with an insurance company to manage an enrollee’s care. Services rendered by
providers outside of network are not eligible for coverage.
With an HMO plan, a patient must first refer a primary care physician (PCP); the PCP then
manages the patient’s care and may refer that patient to other provider if necessary. HMO’s
are generally the least expensive managed care plans for enrollees because this type of
plan has the most restrictions on provider choice.
POINT OF SERVICE (POS)
In POS, patients have the option of using in-network providers or out-of-network providers. A
POS plan will reimburse services received from in-network providers at a higher rate than
out-of-network providers.
If the patient remains in-network, the patient must still use a PCP to coordinate care; patient
who seeks out-of-network care does not need to go through a PCP. Claim received from the
out-of-network providers may be rejected or paid at a lower rate. Also the patient
responsibility on a bill would be higher if he goes out of network.
PREFERRED PROVIDER ORGANIZATION (PPO)
PPO is made up of group of providers who have simply agreed to discount their services for
a specific insurance plan; this provider group is generally much larger than the network in
an HMO and POS.
With PPO’s, a PCP or even the group of providers does not manage a patient’s care; a
patient can see any physician he wants to among the providers offering discounts. Out of all
managed care plans, PPO’s give patient the most choice of providers and so they are the
most expensive plans. Also, patients are not required to visit a PCP before visiting a
specialty care physician.
WORKERS COMPENSATION
Workers Compensation provides disability income to employees who are unable to work due
to an injury that occurred on the job. It is an insurance system for employees who have
become ill or injured while at work. This plan covers only work related problems.
Employees are eligible to receive a percentage of their wages and medical care depending
on the time needed before they can work again and the extent of medical treatment
needed.
If an employee gets high fever while at work and this is not due to his working condition it
will not be covered under Workers Compensation, as the fever was not due to the nature of
work.
Workers Compensation is funded by employer taxes; employees cannot be charged any
premiums and there is no patient responsibility on these bills. Workers Compensation is
required by the government but varies by state; each state has its own rules and regulations
and fee schedule/UCR rates.
Workmen’s Compensation should not be confused with EGHP and LGHP. The EGHP and LGHP
plans are a facility provided to the employees by employers to cover their medical expenses
at a lower premium, whereas workmen’s compensation coverage is a coverage provided by
employers in order to cover the employees medical expenses caused due to the nature of
work.
NO FAULT
Basically, no-fault insurance is what its name suggests: there’s no fault placed in the event
of an accident. The drivers involved would submit a claim to their own insurance companies
and receive compensation from them rather than target one another, trying to figure out
who’s to blame.
No-fault insurance is not offered in every state. State governments govern it and so each
state has its own coverage stipulations and regulations. States that offer No-fault insurance
are called ‘No-Fault States’.
WHAT IS CHAMPUS?
CHAMPUS, the Civilian Health and Medical Program of the Uniformed Services, is a federally
funded health care program that provides hospital and medical services to dependants of
deceased or active duty service personnel, retired service personnel and their dependants,
and Public Health Service Individuals.
WHAT IS CHAMPVA?
CHAMPVA, the Civilian Health and Medical Program of the Veterans Administration, is a
program by the Veterans Administration that shares the cost of medical bills of veterans
with total or permanent service-connected disabilities with their spouses and children or
surviving spouses or children of veterans who died as a result of service connected
disabilities.
WHAT IS TRICARE?
TRICARE is a regionally managed health care program for active duty and retired members
of the uniformed services, their families, and survivors. TRICARE brings together the health
care resources of the Army, Navy, and Air Force and supplements them with networks of
civilian health care professionals to provide better access and high quality service while
maintaining the capability to support military operations.
TRICARE is being phased in gradually on a nationwide, region-to-region basis to:
Improve overall access to health care for beneficiaries,
Provide faster, more convenient access to civilian health care,
Create a more efficient way to receive health care,
Offer enhanced services, including preventive care,
Provide choices for health care, and
Control escalating costs.
PRIMARY INSURANCE
Many people in US have more than one insurance coverage. They may have up to three
insurance coverage's. This is possible if one person is the subscribers to two policies, a
person subscribes to one policy and is covered under his spouse’s coverage or the person
may be a dependent of two working parents. In these cases, one insurance company takes
first responsibility for the patient’s medical bills.it would pay major portion of the bill. This
would be patient’s primary coverage.
SECONDARY INSURANCE
When a patient has more than one insurance company, the insurance that is responsible for
balance on a bill after the primary insurance has paid, is the secondary insurance. They will
pay their portion of the bill based on what the primary has already paid. To determine their
portion of the bill they will require a copy of the primary insurance’s EOB. For this reason, a
secondary claim is always sent with a copy of the primary EOB.
DEFINITION FOR TERMS STARTS WITH "A"
Appeal:
It is a request for more payment by asking for a review of an insurance claim that has been
inadequately or incorrectly paid or denied by an insurance company. Usually there is a time
limit for appealing a claim.
ALJ Hearing:
A request for hearing before an ALJ may be made if the amount still in question is $500 or
more. The request must be made within 60 days of receiving the Fair Hearing Officer's (FHO)
decision.
Appeals Council Review:
The Appeals Council is a part of the Office of Hearings and Appeals of the Social Security
Admn. A request must be made within 60 days of the ALJ decision.
Adjudication:
Final determination of the issues involving settlement of an industrial accident is known as
adjudication or the rating of a case. A physician does not rate disability but renders a
professional opinion on whether the injured individual has temporary or permanent disability
that prevents him or her from gainful employment. Rating itself is carried out the state's
industrial accident commission or workers compensation board. Wage loss, earning capacity
and physical impairment are the categories that may be taken into consideration to rate
disability. If an injured person is dissatisfied with the rating he or she may appeal the case to
the Workers Compensation Appeals Board or the Industrial Accident Commission.
Aberrancy:
Medical services that deviate from what is considered normal or typical when compared to
the national average.
Abuse:
Any incident or practice of a provider,physicain, or supplir which, although not usually
considered fraudulent, is inconsistent with accepted and sound medical, business, or fiscal
practices and directly or indirectly results in unnecessary costs to the Medicare program,
improper reimbursement, or program reimbursement for services that fail to meet
professionally recognized standards of care or, in some cases, may be medically
unnecessary.
Adjudication:
The process of deciding whether to allow or deny a claim based upon the information
submitted and the eligibility of the recipient. For claims to be paid, the determination of the
amount to be allowed is based on the contract, type of coverage and prior utilization.
Adjustment:
Additional payment or correction of records on a previously processed claim.
Admission:
Entry to a hospital or other health care institution as an inpatient.
Ambulatory Surgical Center(ASC):
A facility that operates exclusively for the purpose of providing outpatient services to
patients.
ANSI format (American National Standard Institute):
Electronic format used to submit Medicare claim forms. The ANSI format is used to file
Medicare Part A and Part B claims to Medicare.
Anti-Kickback Statue:32771
Federal statute outlawing certain forms of discounts, rebates, and other reductions in price
which induce the purchase of items or services payable by Medicare or Medicaid.
Appeal:
Written or verbal statement from a customer that conveys an explicit or implicit request for
a review of the initial determination of a claim.
Approved Charge:
The amount that Medicare has determined is appropriate for payment.
Assigned Claims:
Claims submitted to Medicare by a Part B provider who agrees to accept the Medicare
approved charges ad payment in full for the rendered service.
Assigment:
A process in which a Medicare beneficiary aggresses to have Medicare's share of the cost of
a service paid directly to a physician or other Provider. The Provider agrees to accept the
Medicare approved charges as payment in full and will only collect money from the Medicare
patient for non-covered Medicare services, any unmet Medicare deductible, and co-payment
from the Medicare patient.
AUTO POLICY
There are basically six different types of overages. Law may require some. Others are
optional. They are:
1. Bodily injury liability, for injuries the policyholder causes to someone else.
2. Medical payments or Personal Injury Protection (PIP) for treatment of injuries to the driver
and passengers of the policyholder's car.
3. Property damage liability, for damage the policyholder causes to someone else's property.
4. Collision, for damage to the policyholder's car from a collision.
5. Comprehensive, for damage to the policyholder's car not involving a collision with
another car (including damage from fire, explosions, earthquakes, floods, and riots), and
theft.
6. Uninsured motorists coverage, for costs resulting from an accident involving a
hit-and-run driver or a driver who does not have insurance.
DEFINITION FOR TERMS STARTS WITH "B"
Benefit Period:
For Medicare Part A patients, benefit period begins the day a patient enters a hospital and
ends when the patient has not been a bed patient in any hospital or SNF for 60 consecutive
days. There is not limit to the number of benefit periods a patient can have for hospital or
SNF care. However, limits apply for hospice care.
Benefit Period:
A Benefit period is the maximum amount of time that benefits will be paid to the injured or
ill person for the disability( eg. 2yrs, 5yrs, to age 65 or lifetime). Benefits paid to the insured
disabled person are called indemnity and can be received daily, weekly, monthly or
semiannually depending on the policy.
Balance Billing:
The difference between the billed amount and the amount approved by Medicare.
Beneficiaries:
Persons entitled to Medicare benefits under the Social Security Administration.
Billed Amount:
The amount charged for each service performed by the provider.
Buckslip:
A form given to patients to gather identification, contract, insurance, and various healthrelated
information.
Billing on a “stat” basis
There are two levels of billing for some medical procedures depending on whether the
services are ordered on a “routine” basis or a “stat,” basis. “Stat” basis is immediate and
unplanned and generally results in a higher charge to Medicare and more income for the
hospital or physician. Emergency room charges usually generate larger bills as compared to
outpatient services for this reason.
DEFINITION FOR TERMS STARTS WITH "C"
Coordination of Benefits:
A statement that shows which policy is primary so that benefits do not overlap. Birthday
rule is a part of this.
CPT:
Current Procedural Terminology was first issued in 1966. CPT uses a 5 digit system for
coding services rendered by physicians, plus a 2 digit add-on modifiers to indicate
complications of special circumstances. Code numbers represent diagnostic and therapeutic
procedures on medical billing statements and insurance forms.
Concurrent care:
Providing of similar services to the same patient by more than one physician on the same
day.
Critical care:
Care of critically ill patients in a variety of medical emergencies requiring constant bedside
attention by a physician. Eg. Care given in Coronary Care Unit, Intensive Care Unit etc.
Counseling:
It is a discussion with a patient, family or both concerning one or more of the following:
Diagnostic results
Impressions
Recommended diagnostic studies
Prognosis
Risks and benefits of treatment options etc.,
Consultation:
It includes services rendered by a physician whose opinion or advice is requested by
another physician or agency in the evaluation or treatment of a patient's illness.
Consultations may occur in a home, office, hospital, extended care facility and so on.
Office or other outpatient consultations (new or estb. Patient) – 99241 to 99245
Initial inpatient consultations ( new or estb. Patient) – 99251 to 99255
Follow-up inpatient consultation (estb. Patient) – 99261 to 99263
Confirmatory consultation ( new or estb. Patient) – 99271 to 99275
Crib Sheet:
It is summary form listing key components of the E/M codes. It is used by specialty
physicians. They make the job of coding and billing quicker and easier.
Clearinghouse:
It is also referred to as Third Party Administrator (TPA). It is an entity that receives
transmission of claims, separates the claims and sends each one to the correct insurance
payer. They may charge a flat fee per claim or charge a percentage of dollar volume.
Carrier-Direct:
In this system, the physician must have his own or leased computer, software and modem
to transmit data directly over a dedicated phone line. Fiscal agents for Medicare, Medicaid,
CHAMPUS, BCBS and many private insurances use this system.
Contract Maximum:- Maximum amt allowed by the insurance.
Bundled Codes:
Bundled codes means to group codes together that are related to a procedure.
Unbundling:
It is coding and billing numerous CPT codes to identify procedures that are usually described
by a single code. It is also known as exploding or a la carte medicine.
Down Coding:
Down coding occurs when the coding system used on a claim submitted to an insurance
carrier does not match the coding system used by the company receiving the claim. The
computer system converts the code submitted to the closest code in use, but the payment
generated may be less than if the claim was not down coded.
Upcoding:
This term is used to describe the deliberate manipulation of CPT codes for increased
payment. Intentional upcoding is when a physician selects one level of service code for all
visits with an attitude that it evens out.
Medicare Global Surgery Policy (eff from 1/1/92)
a.Preoperative visits ( 1day before surgery)
b.Intraoperative Services that are a usual and necessary part of the surgical procedure.
c.Complications after surgery that do not require additional trips to the operating room.
d.Post operative visit. ( 0, 10, 90 days)
E Codes:
E Codes are supplementary classification of coding in which you look for external causes of
injury rather than disease. The use of an E code after the primary or secondary dx tells the
insurance carrier what caused the injury.
V Codes:
V codes are also a supplementary classification of coding. V codes are used when a person
who is not currently sick encounters health services for some specific purpose, such as to
act as a donor of an organ, receive vaccination, seek consultation regarding family planning,
allergies etc.,
Paper Claim:
It is one that is submitted on paper including optically scanned claims that are converted to
electronic form by insurance carriers.
Electronic Claim:
It is one that is submitted to the insurance carrier via a CPU, tape diskette, digital fax etc.,
Clean Claim:
It means the claim was submitted within the program of policy time limit and correctly
completed.
Dingy Claims:
It happens when the Medicare contractor cannot process a claim for a particular service or
bill type. The claims are held until the necessary system changes are implemented to pay
the claim correctly.
Dirty Claims:
These are claims submitted with errors or those requiring manual processing for resolving
problems or rejection of payment.
Rejected Claims:
They are those that require investigation and need further clarification. These may need to
be resubmitted.
Incomplete Claims:
It is any claim missing the required information. These may have to be resubmitted.
Invalid Claims:
It is any claim that contains complete, necessary information but is illogical or incorrect
(e.g., listing incorrect provider# for a referring physician). These are to be resubmitted.
Participating Provider Claims:
These are processed within approx. 14 days of receipt. Non participating provider claims are
processed within approx. 27 days of receipt.
Claims must be submitted no later than dec. 31 of the calender year following the year
during which the services or supplies were received. Eg. For DOS May 8,1995, claims should
be submitted no later than Dec. 31,1996. Claims for long hospital stays or other long-terms
care must be submitted every 30 days.
Carrier:
An insurance company that contracts with Health care Financing Administration(HCFA) to
provide claims processing and payment for Medicare Part B services.
Claim:
Forms submitted for payment of physician services, other medical services and supplies
provided to Medicare beneficiaries.
Clinical Laboratory Improvement Amendments (CLIA):
Regulations which set quality and performance standards for all laboratory testing. All
providers of laboratory services are required to be certified under the CLIA program.
Co-insurance:
A cost-sharing requirement that a beneficiary will assume a portion or percentage of the
costs of covered services.
Comprehensive Examination:
A General multi-system examination, or complete examination of a single organ system and
other symptomatic or related body area(s) or organ system(s)
Constitutional Symptoms:
Symptoms that relate to the general conditions of a person's body(eg. fever, weight loss).
Contractor:
A contractor for Medicare purposes is defined as a Fiscal Intermediary(FI), Carrier, Durable
Medical Equipment Regional Carrier(DMERC), or Regional Home Health Intermediary(RHHI).
Correspondence Control Number:
Number assigned to an inquiry or appeal(written or telephone), which is used for
identification purposes.
Covered Services:
Services rendered to Medicare or Medicaid patients that are reimbursable by the program to
the Provider.
CPT:(Current Procedural Terminology)
The coding system for physician services developed by the CPT Editorial Panel of the AMA.
Crossover:
A situation whereby Medicare will forward any gaps in coverage to the Medigap insurer for
payment. Medigap cross-overs only occur if correct Medigap information is completed on
the Medicare claim form and if the patient has previously sent a signed Medigap cross-over
authorization form to Medicare through a participating Medicare provider.
Capitation:
Capitation means a set dollar payment per patient per unit of time (usually per month) that
is paid to cover a specified set of services and administrative costs without regard to the
actual number of services provided. The services covered may include a physician's own
services, referral services or all medical services.
Case Mix Index
The case mix index is a tool to identify hospitals that systematically upcode patient
diagnoses to inflate reimbursement. The HHS-OIG examines trends in the case mix index of
individual hospitals to determine whether historic increases and recent declines in case mix
occurred uniformly across the industry. They look for either specific patterns that
significantly influence national trends or specific hospital variations.
Cobra
COBRA is not the insurance, it is the law, since 1985 - the Consolidated Omnibus Budget
Reconciliation Act.
COBRA allows for the temporary continuation of employer group health insurance for
employees and their dependents, when that insurance would otherwise end.
Insurance plans under COBRA are private health plans, not sold by the government.
Who is Eligible for COBRA?
Plan coverage - you must be in the employer group health plan and the plan must have over
20 employees.
You must have worked at least 50% of the working days in the previous calendar year.
Beneficiary coverage - you (employee, spouse, and/or dependent child) must be covered by
the group health plan on the day before the "qualifying event".
Qualifying events - a specific event happens that causes you to lose employer group health
care coverage.
CMP: (Competitive Medical Plan)
A type of managed care organization created by the 1982 Tax equity and fiscal responsibility
act (TEFRA). federal legislation for enrollment of Medicare beneficiaries into managed care
plans.
CASE MANAGEMENT
A system of coordinating medical services to treat a patient, improve care, and reduce cost.
A case manager coordinates health care delivery for patients.
Catastrophic limit
For services with copayments or coinsurance, this is the maximum amount out-of-pocket
charges you have to pay in a calendar year. Separate limits are usually applied on a per
person and per family basis.
Catastrophic limit-per person
For services with copayments or coinsurance, this is the maximum amount out-of-pocket
charges you have to pay in a calendar year. Separate limits are usually applied on a per
person and per family basis.
Catastrophic limit-per family
For services with copayments or coinsurance, this is the maximum amount out-of-pocket
charges you have to pay in a calendar year. Separate limits are usually applied on a per
person and per family basis.
DEFINITION FOR TERMS STARTS WITH "D"
Dependants:
This terms refers to the spouse and children of the insured, but under some contracts,
parents or other family members may be dependents.
Primary Diagnosis:
It is the underlying cause of the condition. It must be listed first.
Secondary Diagnosis:
It is that which may contribute to the condition but is not the underlying cause.
Principal Diagnosis:
It is the illness or injury that prompted the hospitalization or office visit.
Eg: if a diabetic patient comes in for management of oral insulin therapy, a dx code for
diabetes would be used as both the primary and principal dx. But if he comes in with a
complaint of blood in the urine, the dx code for hematuria would be listed first and the dx
code for diabetes would be second.
DRG System :
This sys is a pt classification scheme that categorizes pts who are medically related wrt to
diagnosis and treatment and who are statistically similar in length of hospital stay. This sys
changed hospital reimbursement from a fee for service sys to a lump-sum, fixed fee
payment based on the dx rather than on time or service rendered .
Date of Service:
The date the services were actually performed.
Deductible:
The amount of money a patient must pay before Medicare begins to pay for services and
supplies covered under the program.
Development Letter:
A notice from Medicare that a claim submitted by a provider organization cannot be
processed without additional information/documentation. The letter identifies the additional
information needed and the date by which the information must be received by Medicare.
Diagnosis:
An action that identifies the condition or cause for disease of the patient.
Diagnosis coding:
Translating the medical terminology used for each service and/or item provided by a
provider or healthcare facility (as noted in the medical records) into a code.
DEFINITION FOR TERMS STARTS WITH "E"
EPO:
A MC where the subscribers are eligible for benefits if they use the services of a limited
network of providers.
Estb. Patient:
One who has received medical services within 3 yrs.
Emergency care:
Given in the ER dept.
Levels of E/M services:
Problem focused: A limited examination of the affected body area or organ system.
Expanded problem focused: A limited examination of the affected body area of organ
system and other symptomatic or related organ system.
Detailed: An extended examination of the affected body areas and other symptomatic or
related body organ systems.
Comprehensive: A general multi-system examination or complete examination of a single
organ system.
Explanation of Benefits (EOB):
After an insurance carrier processed a claim, and the claim is paid, a document known as an
Explanation of Benefits is usually issued to the patient (insured), and the physician receives
one along with a payment check if the benefits have been assigned. If the claim has not
been assigned, payment goes to the patient and the physician may have a difficult time
obtaining this payment.
Medicare EOB:
Medicare used to mail Remittance Advice (RA) to providers and the patient receives a
Beneficiary RA. RA has been replaced by Medicare Remittance Advice also called the
Medicare Summary Notice. Electronic Claim sending offices receive Electronic Remittance
Advice (ERA), The ERA post payments automatically.
Elective Surgery:
It means a surgical procedure that can be scheduled in advance, is not an emergency and is
discretionary on the part of the physician and the patient.
EGHP:
A health insurance plan sponsored by either a patient's or the spouse of a patient's
employer where a single employer of 20 or more employees is the sponsor and/or
contributor to the EGHP, or two or more employers are sponsors and/or contributors and at
least one of them has 20 or more employees.
Entitlement:
The first date that a Medicare beneficiary can receive benefits under the Medicare program.
Explanation of Medicare Benefits(EOMB):
A form sent to a Medicare Beneficiary after a claim is processed which indicates how
Medicare processed the claim.
DEFINITION FOR TERMS STARTS WITH "F"
Fee Schedule:
It is a listing of accepted charges or established allowances for specific medical procedures.
A medical practice can have more than one fee schedule unless specific state laws restrict
this practice.
Fiscal Agents:
Organisations handling claims from physicians and other supplier of services covered under
Medicare Part B are called carriers or fiscal agents.
Financial Responsibility for WC cases:
The contract for treatment in a personal illness or injury case is between the physician and
the patient who is responsible for the entire bill. However, when a business is self-insured, a
person is under a state program for care, or an individual is being treated as a workers
compesation case, the financial responsibility exists between the physician and insurance
company or state program. No copayments can be collected and no balance billing of the
patient can be done which is not covered by the WC fee schedule.
Fee Schedule:
A list of certain services and payable amounts indicating the maximum Medicare payment
for the service.
Fee-For-Service:
Medicare benefits that allow beneficiaries to go to almost any doctor, hospital or other
healthcare provider they desire. Generally, a fee is charges to the patient each time a
service is rendered by a provider.
Fiscal Intermediary(FI):
An insurance company that contracts with HCFA to process Medicare Part A bills. (hospital
insurance).
Fraud:
Intentional deception or misrepresentation which an individual or entity makes, knowing it
to be false and that the deception could result in some unauthorized benefit.
DEFINITION FOR TERMS STARTS WITH "I"
Insurance Policy:
An insurance policy is a legally enforceable agreement or contract. If a policy is issued the
applicant becomes part of the insurance contract or plan. The policy becomes effective only
after the company offers the policy and the person accepts it and then pays the premium. If
a premium is paid at the time the application is submitted, then the insurance coverage can
be put into force before the policy is delivered. To keep the insurance in force, a person
must pay a monthly, quarterly or annual fee called a premium. In addition, usually a
deductible must be paid each year before the policy benefits begin. The higher the
deductible, the lower cost of the policy.
IPA:
Medical capitation plan that provides a no: of basic medical services at no charge with addl.
Charges for more costly procedures. In an IPA, the physicians are not employees and are not
paid salaries. Instead they are paid fees for their services out of a fund drawn form the
premiums collected by an organization that markets the health plan minus a discount up to
30% withheld to cover operating costs. At the year end the physicians share in any surplus
or pay any deficits.
International Classification of Diseases (ICD):
The ninth revision of ICD-9 was published by the World Health Orgn. (WHO). It has 3
volumes, Vol. 1 is Diseases: Tabular (numerical) list, Vol. 2 is Diseases: Alphabetic Index, Vol.
3 is Procedures: Tabular list and Alphabetic index.
Vol. 1 and 2 are used in a physician’s office. Vol. 3 is used in hospital setting.
Annual update of ICD-9-CM occurs each Oct. 1
Individual contract:- any insurance plan issued to an individual ( and dependents) is
called an individual contract. Also called as personal ins.
Inpatient
One who occupies a regular hospital or other institutional bed while receiving care, including
room, board and general nursing.
Inquiry
A written request for information usually pertaining to claim status or general information
such as deductible, entitlement, etc.
Intermediaries
Private organizations, usually insurance companies, that have contracts with the Health
Care Financing Administration to process calims under Part A (hospital insurance) of
Medicare.
Internal Control Number(ICN)
A 13-digit number assigned to a claim, which is used for identification purposes and
retrieval purposes, if necessary.
Indemnity
Indemnity is a concept, which can be employed in promoting an insurance plan. Under this
concept the insurer and the insured will have a contract. The terms of the contract will not
impose any restriction on the insured. However the insurer will be very clear in his
reimbursements, which will be a % of the bill. The plans most often except in the case of
basic coverage will have a deductible. Here the insured will have no restrictions imposed for
accessing healthcare benefits. The payment here is on a Fee For Service basis because
participating as well as non-participating providers will render healthcare service.
BILLING INFO
http://searce.com/Solutions/Medical_Billing/glossary.htm#A
HMO vs. PPO
Q: What is the difference between an HMO and a PPO? Which one is better?
Answer:
Health maintenance organizations (HMOs) and preferred provider organizations (PPOs) are
both types of managed health-care systems. There are differences between the corporate
structures of each, but they are typically not important to the average consumer. However,
several other important distinctions exist, including the following:
HMO members must choose a primary care physician (PCP) from among the HMO
member physicians. The PCP provides general medical care and must be consulted
before you can see a specialist, who must also be part of the HMO. PPO members do
not choose a primary care physician and can refer themselves to specialists.
HMOs typically provide no coverage for care received from non-network physicians
(with exceptions for emergency care while traveling, etc.). PPO members are not
required to stay within the PPO network, but there is usually a strong financial
incentive to do so. For example, the PPO may reimburse 90 percent of costs for care
received within the network, but only 70 percent of costs for non-network care.
HMOs typically do not set deductibles that must be met before insurance benefits
begin (e.g., $5 or $10). Instead, HMO members often pay a nominal co-payment for
care. In contrast, PPOs sometimes require members to meet a deductible (especially
for hospitalization) and may have larger co-payments than HMOs.
So, which is better? Of course, there isn't one right answer; the best choice depends on your
particular needs. For example, if you are considering an HMO, it's important to make sure
that your physician is part of the HMO network (unless you are willing to see another
physician). If not, a PPO might be a better choice, because you can still receive at least
partial coverage regardless of network affiliation. You might also prefer a PPO if you have a
medical condition that requires specialized care, because PPO members do not need a
referral before seeing a specialist. However, if ongoing out-of-pocket costs are a major
concern, an HMO is often a better choice, because there are no deductibles and copayments
are typically lower.
If you are fortunate enough to have a choice between HMO and PPO coverage, you will need
to take some time to evaluate the coverage offered by each and determine which one best
suits the needs of yourself and your fam
List of Modifiers,
CPT Modifiers
The list below provide modifiers applicable to CPT 2007 codes. See the Current Procedural
Terminology (CPT®) 2006 Professional Edition (Appendix A) for full definitions.1
-21 Prolonged Evaluation and Management Service
-22 Unusual Procedural Service
-23 Unusual Anesthesia
-24 Unrelated Evaluation and Management Service by the Same Physician During a Postoperative
Period
-25 Significant, Separately Identifiable Evaluation and Management Service by the Same
Physician on the Same Day of a Procedure or Other Service
-26 Professional Component
-32 Mandated Service
-47 Anesthesia by Surgeon
-50 Bilateral Procedure
-51 Multiple Procedures
-52 Reduced Service
-53 Discontinued Procedure
-54 Surgical Care Only
-55 Postoperative Management Only
-56 Preoperative Management Only
-57 Decision for Surgery
-58 Staged or Related Procedure or Service by the Same Physician During a Postoperative
Period
-59 Distinct Procedural Service
-62 Two Surgeons
-63 Procedure Performed on Infants less than 4 kg.
-66 Surgical Team
-76 Repeat Procedure by Same Physician
-77 Repeat Procedure by Another Physician
-78 Return to the Operating Room for a Related Procedure During the Post-operative Period
-79 Unrelated Procedure or Service by the Same Physician During the Post-operative Period
-80 Assistant Surgeon
-81 Minimum Assistant Surgeon
-82 Assistant Surgeon (when qualified resident surgeon not available)
-90 Reference (Outside) Laboratory
-91 Repeat Clinical Laboratory Diagnostic Test
-99 Multiple Modifiers
-FB Item provided without cost to provider, supplier, or practitioner (examples, but not
limited to: covered under warranty, replaced due to defect, free samples)
-QR Item or service provided in a Medicare qualifying clinical trial
CPT Modifiers Approved for Hospital Outpatient Use
The list below provides modifiers approved for hospital outpatient use (Level 1 [CPT]). See
the Current Procedural Terminology (CPT®) 2007 Professional Edition (Appendix A) for full
definitions.1
-25 Significant, Separately Identifiable Evaluation and Management Service by the Same
Physician on the Same Day of a Procedure or Other Service
-27 Multiple Outpatient Hospital E/M Encounters on the Same Date
-50 Bilateral Procedure
-52 Reduced Service
-58 Staged or Related Procedure or Service by the Same Physician During a Post-operative
Period
-59 Distinct Procedural Service
-73 Discontinued Out-Patient Procedure Prior to Anesthesia Administration
-74 Discontinued Out-Patient Procedure After Anesthesia Administration
-76 Repeat Procedure by Same Physician
-77 Repeat Procedure by Another Physician
-78 Return to the Operating Room for a Related Procedure During the Post-operative Period
-79 Unrelated Procedure or Service by the Same Physician During the Post-operative Period
-91 Repeat Clinical Laboratory Diagnostic Test
Primary care
From Wikipedia, the free encyclopedia
Primary care may be provided in community health centres.
Primary care is a term used for the activity of a health care provider who acts as a first
point of consultation for all patients. Generally, primary care physicians, nurse practitioners
and physician assistants are based in the community, as opposed to the hospital.
Alternative names for the field are "general practice" and "family medicine", although the
terms are not synonymous.
General practitioners in the United Kingdom are physicians who have completed four to five
years of post-medical school training including three to four years based in hospitals and
one year attached to a training general practitioner in the community.
Family medicine in the United States is a physician specialty that requires a minimum of
three years of residency training followed by board certification. This specialty is considered
the traditional general medicine specialty in the U.S.
Secondary care
From Wikipedia, the free encyclopedia
Jump to: navigation, search
The term secondary care is a service provided by medical specialists who generally do not
have first contact with patients, for example, cardiologists, urologists and dermatologists. In
the United States, however, there has been a trend toward self-referral by patients for these
services, rather than referral by primary care providers. This is quite different from the
practice in the United Kingdom and Canada, for example, all patients must first seek care
for primary care providers and then refer secondary and/or tertiary care providers needed.
In Canada, secondary care providers will not be paid by the publicly funded health care
system unless the patient has been assessed by a primary care provider (a hospital
emergency room doctor is considered a primary care provider, as is a general practitioner or
family doctor).
Tertiary care
From Wikipedia, the free encyclopedia
Jump to: navigation, search
In medicine, tertiary healthcare is specialized consultative care, usually on referral from
primary or secondary medical care personnel, by specialists working in a center that has
personnel and facilities for special investigation and treatment.
Specialist cancer care, neurosurgery (brain surgery), burns care and plastic surgery are
examples of tertiary care services.
In comparison, secondary medical care is the medical care provided by a physician who acts
as a consultant at the request of the primary physician.
Medigap (Supplemental Insurance) Policies
A Medigap policy is health insurance sold by private insurance companies to fill the “gaps”
in Original Medicare Plan coverage
Hospices: / Palliative care :
Hospices care for the whole person, aiming to meet all needs - physical, emotional, social
and spiritual. They care for the person who is dying and for those who love them, at home,
in day care and in the hospice. Nearly half of all people admitted to a hospice return home
again. The average length of stay is just 13 days. All care is free of charge
A
Account
The number a patient is given by the doctor or hospital for a medical visit.
Accounts receivable
The total amount of money owed for professional services provided.
Adjudication
The final determination of the issues involving settlement of an insurance claim, also known
as a claim settlement.
Adjustment
The portion of the bill that the doctor or hospital has agreed not to charge you.
Advance Beneficiary Notice (ABN)
An agreement given to the patient to read and sign before providing a service if the
participating physician thinks that it may be denied for payment because of medical
necessity or limitation of liability by Medicare. Once a patient signs the ABN and if Medicare
does not pay for it, then the patient will have to pay the physician for it. The patient agrees
to pay for the service; also known as a waiver of liability agreement or responsibility
statement.
Appeal
To request correct payment by asking for a review of an insurance claim that has been paid
or denied by an insurance company.
Applicant
Person applying for insurance coverage.
Approved Amount
The fee Medicare sets as reasonable for a covered medical service. This is the amount a
doctor or supplier is paid by you and Medicare for a service or supply. It may be less than
the actual amount charged by a doctor or supplier. The approved amount is sometimes
called the "Approved Charge."
B
Beneficiary
Person covered by health insurance or Medicare benefits.
Benefit
The amount your insurance company pays for medical services.
Benefit period
A benefit period begins the day you go to a hospital or skilled nursing facility. The benefit
period ends when you haven't received hospital or skilled nursing care for 60 days in a row.
If you go into the hospital after one benefit period has ended, a new benefit period begins.
You must pay the inpatient hospital deductible for each benefit period. There is no limit to
the number of benefit periods you can have.
Blue Cross and Blue Shield Association (BSBSA)
An association that represents the common interests of Blue Cross and Blue Shield health
plans. The BCBSA serves as the administrator for the Health Care Code Maintenance
Committee and also helps maintain the HCPCS Level II codes.
C
Capitation
A fixed amount of money, per capita amount for each patient enrolled over a stated period
of time, paid to a health plan or doctor (regardless of the type and number of services
provided). This is used to cover the cost of a health plan member's health care services for a
certain length of time.
Centers for Medicare and Medicaid Services (CMS)
Formerly known as the Health Care Financing Administration (HCFA). CMS is responsible for
oversight of HIPAA administrative simplification transaction and code sets, health identifiers,
and security standards. CMS also maintains the HCPCS medical code set and the Medicare
Remittance Advice Remark Codes administrative code set.
Claim Control Number
A number assigned by the Medi-Cal fiscal intermediary on a Treatment Authorization
Request and used for reference when processing the request.
Claims Inquiry Form (CIF)
A Medi-Cal form used for tracing a claim, resubmitting a claim after a denial, or when
requesting an adjustment for underpaid or overpaid claims.
Clean Claim
A completed insurance claim form submitted within the program time limit that contains all
the necessary information without deficiencies so it can be processed and paid promptly.
Clearinghouse
A company that, for a fee, electronically receives batches of claims from providers or billing
centers in a single format, reformats the claims data according to the software requirements
of the indicated insurance carriers or governmental agencies, and retransmits the data
electronically to those designated payers. There is a contractual financial relationship
between the clearinghouse and the payer. The electronic claims are edited upon arrival at
the clearinghouse terminal. A report is issued describing on the requirements of the ultimate
payer.
Coding
A system whereby a numerical code is applied to medical descriptions of diagnoses,
procedures, pharmaceutical elements, and durable medical equipment. These numerical
descriptions permit easy accounting procedures for statistical classification.
Coinsurance
A fixed percentage of the total amount paid for a health care service that can be charged to
a beneficiary on a per service basis.
Collection ratio
The relationship between the amount of money owed and the amount the money collected
in reference to the doctor’s accounts receivable.
Contractual Adjustment
A part of the bill that the doctor or hospital must write off (not charge the patient) because
of billing agreements with his/her insurance company.
Coordination of Benefits (COB)
A process that determines which plan or insurance policy will pay first if two health plans or
insurance policies cover the same benefits. If one of the plans is a Medicare health plan,
Federal law may decide who pays first.
Copayment
A copayment is usually a specified flat amount you pay for a service (e.g., $10 per visit, $25
per inpatient hospital day), with the insurer paying the balance. Also referred to as
coinsurance.
CPT codes
A coding system used to describe what treatment or services were given to the patient by
the doctor.
Crossover claim
Bill for services rendered to a patient receiving benefits simultaneously from Medicare and
Medicaid.
Current Procedural Terminology (CPT)
A reference procedural codebook using a numerical system for procedures, established by
the American Medical Association.
D
Date of Service (DOS)
The date(s) when a patient was treated.
Day Sheet
A register for recording daily business transactions (charges, payments, or adjustments);
also known as daybook, daily log, or daily record sheet.
Deductible
Specific dollar amount that must be paid by the insured before a medical insurance plan or
government program begins covering health care costs.
Defense Enrollment Eligibility Reporting System (DEERS)
An electronic database used to verify beneficiary eligibility for those individuals in the
TRICARE programs.
Denied claim
Insurance claims submitted to an insurance company in which payment has been rejected
due to technical error or because of medical coverage policy issues.
Diagnosis Code
A code used for billing that describes the illness.
Diagnosis-Related Groups (DRGS)
A classification system that groups patients according to diagnosis, type of treatment, age,
and other relevant criteria. Under the prospective payment system, hospitals are paid a set
fee for treating patients in a single DRG category, regardless of the actual cost of care for
the individual.
Direct Referral
Certain services in a managed care plan may not require preauthorization. The authorization
request form is completed and signed by the physician and handed to the patient to be
done directly.
Dirty Claim
A claim submitted with errors or one that requires manual processing to resolve problems or
is rejected for payment.
Downcoding
Reduce the value and code of a claim when the documentation does not support the level of
service billed by a provider. The insurance company computer system converts the code
submitted to the closest code in use, which is usually down one level from the submitted
code, generating decreased payment.
E
E codes
A classification of ICD-9-CM coding used to describe environmental events, circumstances,
and conditions as the external cause of injury, poisoning, and other adverse effects. E codes
are also used in coding adverse reactions to medications.
Electronic Claim
Insurance claim submitted to the insurance carrier via a central processing unit (CPU), tape
diskette, direct date entry, direct wire, dial-in-telephone, digital fax, or personal computer
download or upload.
Electronic Claims Professional (ECP)
Individual who converts insurance claims to standardized electronic format and transmits
electronic insurance claims date to the insurance carrier or clearinghouse to help the
physician receive payment.
Electronic Funds Transfer
A paperless computerized system enabling funds to be debited, credited, or transferred,
eliminating the need fore personal handling of checks.
Employer Identification number (EI)
An individual’s federal tax identification number issued by the Internal Revenue Service for
income tax purposes.
Explanation of Benefits (EOB)
An explanation of services periodically issued to recipients or providers on whose behalf
claims have been paid. It tells what was billed, the payment amount approved by the
insurance, the amount paid, and what the patient has to pay. It also gives the reasons for
denying a claim.
Explanation of Medical Benefits (EOMB)
An explanation of Part B services under the Original Medicare Plan sent to patients and/or
physicians on whose behalf claims have been paid. This notice explains what the provider
billed for, the Medicare-approved amount, how much Medicare paid, and what you must pay.
F
Fiscal Intermediary
A private company that has a contract with Medicare to pay Part A and some Part B bills. For
TRICARE and CHAMPVA, the insurance company that handles the claims for care received
within a particular state or country.
G
Group provider number
A number assigned to a group of physicians submitting insurance claims under the group
name and reporting income under one name; used instead of the individual’s physician’s
number for the performing provider.
Guarantor
Someone other than the patient who has agreed to pay the bill on the patient’s behalf.
H
Health Care Financing Administration (HCFA), now changed to CMS
Formerly known as the Social Security Administration, HCFA is that part of the Department
of Health and Human Services that oversees Medicare, among other governmental health
programs. Health Insurance – known at Medicare part A. A program providing basic
protection against the costs of hospital and related post hospital services for individuals
eligible under the Medicare program. Pronounced “Hick-fa”.
Health Maintenance Organization
An insurance plan that pays for preventative and other medical services provided by a
specific group of participating providers.
Health Maintenance Organization (HMO)
A type of health care program in which enrollees receive benefits when they obtain services
that are provided or authorized by selected providers, usually with a primary care physician
“gatekeeper.” In general, enrollees do not receive coverage for the services of providers
who are not in the HMO network, except for emergency services.
Healthcare Common Procedure Coding System (HCPCS)
A medical code set, which has been selected for use in the HIPAA transactions, identifies
health care procedures, equipment, and supplies for claim submission purposes. HCPCS
Level I contains numeric CPT codes which are maintained by the AMA. HCPCS Level II
contains alphanumeric codes used to identify various items and services that are not
included in the CPT medical code set. These are maintained by HCFA, the BCBSA, and the
HIAA. HCPCS Level III contains alphanumeric codes that are assigned by Medicaid state
agencies to identify additional items and services not included in levels I or II. These are
usually called "local codes", and must have "W", "X", "Y", or "Z" in the first position. HCPCS
Procedure Modifier Codes can be used with all three levels, with the WA - ZY range used for
locally assigned procedure modifiers.
HIPAA
Health Insurance Portability and Accountability Act. This federal act sets standards for
protecting the privacy of your health information.
I
Inpatient
A term used when a patient is admitted to the hospital for overnight stay.
Insurance balance billing
A statement sent to the patient after his or her insurance company has paid its portion of
the claim.
Insurance Billing Specialist
A practitioner who carries out claims completion, coding, and billing responsibilities and may
or may not perform managerial and supervisory functions; also known as an insurance
claims processor or reimbursement specialist.
M
Major Diagnostic Categories (MDCs)
A broad classification of diagnoses. There are 83 coding system-oriented MDCs in the
original DRGs and 23 body system-oriented MDCs in the revised set of DRGs.
Managed Care Organizations (MCOs)
Entities that serve Medicare or Medicaid beneficiaries on a risk basis through a network of
employed or affiliated providers. May apply to EPO, HMO, PPO, integrated delivery system,
or other weird arrangement, MCOs are usually prepaid group plans, and physicians are
typically paid by the capitation method.
Managed Care Plans
An insurance plan that requires patients to see doctors and hospitals that have a contract
with the managed care company, except in the case of medical emergencies or urgently
needed care if you are out of the plan's service area.
Manual Billing
Processing statements by hand; may involve typing statements or photocopying the
patient’s financial accounting record and placing it in a window envelope, which then
becomes the statement.
Medicaid (MCD)
A federal aided, state-operated and administered program that provides medical benefits
for some people with low incomes and limited resources. Medicaid programs vary from state
to state, but most health care costs are covered if you qualify for both Medicare and
Medicaid. California’s Medicaid program is known as Medi-Cal.
Medical Record Number
The number assigned by the doctor or hospital that identifies a patient’s individual medical
record.
Medicare Assignment
Doctors and hospitals that have accepted Medicare patients and agreed not to charge them
more than Medicare has approved.
Medicare Medical Savings Account
A Medicare health plan option made up of two parts. One part is a Medicare MSA Health
Policy with a high deductible. The other part is a special savings account, called a Medicare
MSA.
Medicare Part A
Usually referred to as Hospital insurance, it helps pay for inpatient care in hospitals and
hospices, as well as some skilled nursing costs.
Medicare Part B
Helps pay for doctor services, outpatient care and other medical services not paid for by
Medicare Part A.
Medigap
A specialized supplemental insurance policy devised for the Medicare beneficiary that
covers the deductible and copayment amounts typically not covered under the main
Medicare policy written by a non-governmental third-party payer. Also known as Medifill.
Medigap Policy
A Medicare supplement insurance policy sold by private insurance companies to fill "gaps"
in Original Medicare Plan coverage. It may pay deductible, coinsurance amounts, and so
forth. It does not include limited benefit coverage, such as “specified disease” or “hospital
indemnity” coverage. It excludes a policy or plan offered by an employer or labor
organization.
Modifier
In CPT coding, a two-digit add-on or five-digit number, representing the modifier, placed
after the usual procedure code number. The two-digit modifier may be separated by a
hyphen. In HCPCS coding, one-digit or two-digit add-on alpha characters, placed after the
usual HCPCS code number.
N
National Association of Claims Assistance Professionals
A national professional society for those that submit manual and/or electronic health
insurance claims.
NEC
Not Elsewhere Classifiable. This term is used in ICD-9-CM when the coder lacks the
information necessary to code the term in a more specific category.
Non-Covered Charges
Charges for medical services denied or excluded by the patient’s insurance. He/she may be
billed for these charges.
Non-Participating Provider
A doctor, hospital or other healthcare provider that is not part of an insurance plan's doctor
or hospital network.
NOS
Not Otherwise Specified, unspecified. Used in ICD-9-CM.
O
Old Age survivors, Health and Disability Insurance (OASHDI) Program (C)
A group that in entitled to benefits under the Medi-Cal program.
Original Medicare Plan
The traditional pay-per-visit arrangement that covers Part A and Part B services.
Out-of-Network Provider
A doctor or other healthcare provider who is not part of an insurance plan's doctor or
hospital network. Same as non-participating provider.
Outpatient
A patient who receives services in a health care facility, such as a physician’s office, clinic,
urgent care center, emergency department, or ambulatory surgical center and goes home
the same day.
P
Participating Provider
A doctor or hospital that agrees to accept a patient’s insurance payment for covered
services as payment in full, minus the deductibles, co-pays and coinsurance amounts.
Patient Type
A way to classify patients - outpatient, inpatient, etc.
Point of Service Plan (POS)
An insurance plan that allows a patient to choose doctors and hospitals without having to
first get a referral from his/her primary care doctor.
Preauthorization
A requirement of some health insurance plans to obtain permission for a service or
procedure before it is done and to see whether the insurance program agrees it is medically
necessary.
Precertification
To find out whether treatment (surgery, tests, hospitalization) is covered under a patient’s
health insurance policy.
Predetermination
To determine before treatment the maximum dollar amount the insurance company will pay
for surgery, consultations, postoperative care, and so forth.
Preferred Provider Organization (PPO)
A type of health benefit program in which enrollees receive the highest level of benefits
when they obtain services from a physician, hospital, or to her health provider designated
by their program as a “preferred provider”. Enrollees may receive substantial, though
reduced, benefits when they obtain care from a provider of their own choosing who is not
designated as a “preferred provider” by their program.
Primary Care Physician (PCP)
A physician who is trained to give you basic care. Your primary care doctor is the doctor you
see first for most health problems and may talk with other doctors and health care providers
about your care and refer you to them. In many Medicare managed care plans, you must
see your primary care doctor before you see any other health care provider.
Primary Insurance Company
The insurance company responsible for paying a patient’s claim first. If he/she has another
insurance company, it is referred to as the Secondary Insurance Company.
Private Fee-for-Service Plan
A private insurance plan that accepts Medicare beneficiaries.
Procedure Code (CPT)
A code given to medical and surgical procedures and treatments.
Provider
A person, organization, or institution enrolled and certified to provide health care services
authorized under Medicaid, Medicare, or managed care programs. For CHAMPUS, the doctor,
hospital, or other person or place that provides medical services and/or supplies.
R
Reauthorization
Requirement in some health insurance plans to obtain permission for service or procedure
before it is done and to see whether the insurance program agrees it is medically necessary.
Referral
Permission from your primary care doctor for you to see a specialist or get certain services.
In many Medicare managed care plans, you need to get a referral before you get care from
anyone except your primary care doctor.
Responsible Party
The person(s) responsible for paying a patient’s hospital bill-usually referred to as the
guarantor.
S
Scrubbing
The process in which computer software checks for errors before a claim is submitted to an
insurance carrier for payment; also known as edit check or cleaning the bill.
Secondary Insurance
Extra insurance that may pay some charges not paid by the patient’s primary insurance
company. Whether payment is made depends on his/her insurance benefits, the coverage
and the benefit coordination.
Secondary Payer (SP)
An insurance policy, plan, or program that pays second on a claim for medical care. This
could be Medicare, Medicaid, or other health insurance depending on the situation.
Skilled Nursing Facility
An inpatient facility in which patients who do not need acute care are given nursing care or
other therapy.
Supplemental Insurance Policy
An additional insurance company that handles claims for deductibles and coinsurance
reimbursement. Many private insurance companies sell Medicare Supplemental Insurance.
Supplementary Medical Insurance (SMI)
The Medicare program that pays for a portion of the costs of physicians' services, outpatient
hospital services, and other related medical and health services for voluntarily insured aged
and disabled individuals. Also known as Medicare Part B.
U
UB-92
A uniform Bill insurance claim form developed by the National Uniform Billing Committee for
hospital inpatient billing and payment transactions.
UPIN
The Unique Physician identification Number given to each physician providing services paid
by Medicare. This six-place Alpha-numeric UPIN is in effect throughout Medicare affiliation in
the physician’s current state and any other subsequent states. It is used for assigned or
unassigned claims.
Urgently Need Care
Unexpected illness or injury that needs immediate medical attention, but is not life
threatening.
Usual, Customary and Reasonable (UCR)
A method used by insurance companies to establish their fee schedules. UCR uses the
conversion factor method of establishing maximums; the method of reimbursement used
under Medicaid B which state Medicaid programs set reimbursement rates using the
Medicare method or a fee schedule, whichever is lower.
Utilization Review (UR)
Hospital staff who work with doctors to determine whether a patient can get care at a lower
cost or as an outpatient.
V
V Codes
A classification of ICD-9-CM coding to identify health care encounters for reasons other than
illness or injury and to identify patients whose injury or illness is influenced by special
circumstances or problems
Cafeteria Plan
A plan which offers a choice between two or more benefits, or a choice between cash and
one or more qualified benefits, and which complies with Section 125 of the Internal Revenue
Code. (Also known as flexible benefit plans or "flex" plans).
Claim
A claim is an itemized statement of healthcare services and their costs provided by a
hospital, physician's office, or other provider facility. Claims are submitted to the insurer or
managed care plan by either the plan member or the provider for payment of the costs
incurred.
Co-payment
A specific dollar amount paid out-of-pocket by a policy holder for a specified service at the
time the service is rendered
COBRA
Under the federal Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA),
employers of 20 or more employees are required to include a coverage continuation
provision in their group medical benefit plans. This provision gives an employee whose
employment is terminated for any reason other than gross misconduct the right to continue
coverage for up to 18 months. The continued coverage is paid for by the employee, who
may be charged no more than 102 percent of the group premium rate.
Consumer Driven Health Care (CDHC)
A savings account which allows money to be put in before tax is paid on it and then to
withdraw the money tax free for qualified medical expenses.
Custodian
A custodial arrangement is like a trust, but the custodian simply holds the assets on behalf
of the owner of the assets. Other than holding the assets and doing as the owner orders, the
custodian has no fiduciary obligations to the owner. The determination of what constitutes a
trust or custodial arrangement is a determination made under state law.
Deductible
The flat amount a group member must pay before the insurer will make any benefit
payments.
Defined Benefit Plan
An employer-sponsored retirement plan for which retirement benefits are based on a
formula indicating the exact benefit that one can expect upon retiring. Investment risk and
portfolio management are entirely under the control of the company. There are restrictions
on when and how you can withdraw these funds without penalties.
Flexible Spending Account (FSA)
Special accounts authorized under Section 125 of the Internal Revenue Code and typically
funded by an employee's salary reduction to help pay certain expenses not covered by the
employer's plan or insurance contract. Because FSA deposits escape federal income taxes,
participants can pay for medical care with pretax dollars, but they forfeit any unused funds
at the end of each calendar year.
Health Care Debit Card
A health care debit card can be issued to members under a qualified HSA plan. The card can
be used with medical providers and at pharmacies to transfer funds from the HSA for
payment of health care services. In order for such accounts to properly qualify for taxadvantaged
treatment, the administration of the debit card payments must meet IRS
requirements.
Health Insurance Portability and Accountability Act (HIPAA)
Federal law that states the requirements that employer-sponsored group insurance plans,
insurance companies, and health plans must adhere to, in order to provide health insurance
coverage in both the individual and group healthcare markets.
Health maintenance organization (HMO)
A healthcare system that assumes or shares both the financial risks and the delivery risks
associated with providing comprehensive medical services to a voluntarily enrolled
population in a particular geographic area, usually in return for a fixed, prepaid fee.
Health Reimbursement Arrangement (HRA)
An HRA can be offered in conjunction with a high-deductible health plan, and is funded by
the employer for each participating employee. It pays for eligible health care expenses
typically covered under the medical plan. Unused funds can be carried over to the next year
to cover future health care expenses, an incentive to employees to use their personal HRA
wisely. If funds are exhausted, the employee is responsible for satisfying the remaining
deductible before the plan begins to pay. If the employee changes jobs, the money stays
with the employer.
Health Savings Account (HSA)
A funding mechanism in which the participant pays for health costs through a fully insured,
tax-exempt savings account. Employees or employers or both fund the account. An HSA is
subject to regulations mandated by the federal government that limit coverage to IRS
section 213(d) medical coverage. All unused amounts carry over indefinitely during a
participant's lifetime
High deductible health product (HDHP)
Often referred to as a "catastrophic" health insurance plan, the HDHP is an inexpensive
health insurance plan that generally doesn't pay for the first several thousand dollars of
healthcare expenses (i.e., your "deductible") but will generally cover costs over the
deductible amount. In order to open an HSA, your HDHP minimum deductible must be at
least $1,000 for self-only coverage or $2,000 for family coverage.
Managed care
The integration of both the financing and delivery of health¬care within a system that seeks
to manage the accessibility, cost, and quality of that care. Managed Care: Term used to
describe the coordination of financing and provision of health care to produce high-quality
health care for the lowest possible cost. A system that imposes control on the utilization of
medical services and on the providers who renders the care. Managed care is provided
through managed indemnity plans; Preferred Provider Organizations (PPOs), Exclusive
Provider Organizations (EPOs), Health Maintenance Organizations (HMOs), or any other cost
management environment.
Medicaid
A joint federal and state program that provides hospital expense and medical expense
coverage to the low-income population and certain aged and disabled individuals.
Medical Savings Account (MSA)
An MSA is a trust or custodial account established to pay medical expenses in conjunction
with a high-deductible health plan. To be eligible for an MSA, an individual must be either
employed by a small employer that establishes a high deductible health plan, or a selfemployed
person covered by a high deductible health plan.
Medicare
A federal government program established under Title XVIII of the Social Security Act of
1965 to provide hospital expense and medical expense insurance to elderly and disabled
persons.
Medicare Part A
The Medicare component that provides basic hospital insurance to cover the costs of
inpatient hospital services, confinement in nursing facilities or other extended care facilities
after hospitalization, home care services following hospitalization, and hospice care.
Medicare Part B
The Medicare component that provides benefits to cover the costs of physicians'
professional services, whether the services are provided in a hospital, a physician's office,
an extended-care facility, a nursing home, or an insured's home.
Medigap policies
Medigap insurance is specifically designed to supplement Medicare's benefits and is
regulated by federal and state law. It must be clearly identified as Medicare supplemental
insurance and it must provide specific benefits that help fill the gaps in Medicare coverage.
Personal Health Accounts
Consumer controlled personal health accounts allow consumers to control a portion of their
own health care dollars and pay directly for incidental medical needs such as physician
visits and prescription drugs. These include Medical Savings Accounts (MSAs), Health
Reimbursement Arrangements (HRAs) or Flexible Spending Accounts (FSAs). These may
accompany a high-deductible policy, or are often used to pay copayments and deductibles
on a traditional policy, or in some cases may accompany no insurance policy at all.
Point-of-service (POS) product
A healthcare option that allows members to choose at the time medical services are needed
whether they will go to a provider within the plan's network or seek medical care outside the
network. They provide a comprehensive set of health benefits and offer a full range of
health services much the same as the HMO. However, the member does not have to choose
how to receive services until they need them. The member can then opt to use the defined
managed care program, or can go out-of-plan for services but pay the difference for nonplan
benefits.
Preferred provider organization (PPO)
A healthcare benefit arrangement designed to supply services at a discounted cost by
providing incentives for members to use designated healthcare providers (who contract with
the PPO at a discount), but which also provides coverage for services rendered by
healthcare providers who are not part of the PPO network.
Premium
A prepaid payment or series of payments made to a health plan by purchasers, and often
plan members, for medical benefits.
Preventive Medicine
Wellness and health promotion services that are part of the basic benefits package of a
managed health care plan.
Qualifying Medical Expense
There is no definitive list as to what constitutes a "qualifying medical expense." A partial list
is provided by the IRS (pdf). A determination of whether an expense is for "medical care" is
based on all the relevant facts and circumstances. To be an expense for medical care, the
expense has to be primarily for the prevention or alleviation of a physical or mental defect
or illness. The policy holder is responsible for deciding what constitutes a "qualifying
medical expense," and should be familiar with the guidelines.
Third party administrator (TPA)
A company that provides administrative services to health plans or self-funded health plans
but that does not have the financial responsibility for paying benefits.
Third-Party Payment
The practice of an insurer paying providers directly for services rendered to an insured, as
opposed to an indemnity contract which pays the insured person for the losses incurred.
Trustee
The differences between a "custodian" and a "trustee" are minor. A trustee represents a
legal entity under which assets are actually owned and held on behalf of a beneficiary. The
trustee has some level of discretionary fiduciary authority over the assets of the fund. The
trustee must exercise that authority in the best interests of the beneficiary.
What Is Consumer-Directed Health Care?
John C. Goodman
“A savings account which allows money to be put in before tax is paid on it and
then to withdraw the money tax free for qualified medical expenses.”
To control health care costs, someone must choose between health care and other uses of
money. The value of most health care is experienced subjectively, as is the value of other
goods and services. No one is in a better position to make these subjective trade-offs than
patients themselves. The current system not only systematically denies patients the
opportunity to make such choices, it distorts the incentives of providers in the process.
Chronic patients in particular would be much better off if they could manage more of their
own health care dollars and if providers were free to compete to meet their needs.
What is CDHC?
Consumer Driven Health Care (CDHC), defined narrowly, refers to health plans in which
employees have a personal health account such as a Medical Savings Account or a Health
Reimbursement Arrangement; which they pay medical expenses directly.
The phrase is sometimes used more loosely to refer to defined contribution health plans
under which employees receive a fixed dollar contribution from an employer to choose
among various plans. Those opting for plans with rich benefits may have to contribute
significant amounts of their own money in addition to the employer's contribution. Those
choosing bare-bones health plans contribute less of their own money.
Picking a consumer-driven health care plan
By Jennie L. Phipps • Bankrate.com
As you plow through your company's benefits material this open season, you may encounter
a new health insurance offering: consumer-driven coverage.
These plans generally combine a medical reimbursement account with high-deductible
insurance. Here are some issues to consider before making your choice.
How is the reimbursement account funded and what are its use guidelines?
There are differences, but both medical savings accounts and health reimbursement
arrangements are tax-free for the employee if the employer puts in the money. The
accounts can't be cashed out, but they can be rolled over. After a few years of rolling over,
you can accumulate quite a bit of cash to pay for health care. If you put in the money
yourself, then the Internal Revenue Service designates these as flexible spending accounts,
which demand you spend all your account or lose it at the end of your benefit year. Some
employers ignore the tax issue altogether and just hand over the money without many
strings. These accounts are not tax-advantaged; you'll pay taxes on the money. But if you
don't spend it, you get to pocket it at the end of the year.
What are the limits on health care provider choices and charges?
In the most minimal of plans, the employer gives you the money and says, "Go buy health
care." But there's more to consider. First costs: Doctors have rate sheets that are mostly
wishful thinking since insurers and the government spell out what they are willing to pay. A
self-pay customer doesn't have a maximum-payment schedule and can be hit with a
significantly higher bill. If your consumer-driven insurer does the negotiating, the costs may
be more reasonable, but you'll probably have limits on which health care providers you can
use. If you have to do the negotiating, you'll have more freedom to choose, but you'll have
to work out the best deal, and haggling when you're sick can be daunting
Consumer Driven Health Plans Compared to Commercial Insurance Plans
April 25, 2007
When health plan members are in charge of their own health spending in a CDH, do they
seek more efficient pathways to care or do they compromise quality in order to save a few
dollars? This study of evidence-based care and preventive care in over 250,000 Definity
Health plan members in 2004 and 2005 verifies that members of a CDH plan receive
evidence-based care at the same rate as members of traditional plans.
View Original Article
RAND Report: Consumer Use of Information When Making Treatment Decisions
February 20, 2007
The RAND Institute surveyed a group of consumers regarding their use of health
information. They found that better knowledge of treatment decision support tools can lead
to better and more affordable care. Consumers who use these tools are:
More informed about their condition
Less conflicted over their treatment options
Have more realistic expectations about their care
Less likely to have certain types of elective surgery
More likely to receive medical screenings and other preventive treatment
The RAND study showed that consumers want some say in their own medical care and are
very interested in health information when they face important treatment decisions.
Consider:
Most consumers in the sample want to take an active role in their own treatment
decisions; fifty-two percent of survey respondents want to make the final health
decision while another 38 percent want to make the decision together with their
doctor.
Sixty-one percent of respondents sought health information for themselves or a
family member in the last 12 months.
Fifty-five percent of searchers said they were very satisfied with the information they
found; an additional 38 percent said they were somewhat satisfied.
Current treatment practices in many areas can be improved by better decision-making
based on sound clinical information. By empowering consumers to take a more active role
in their own treatment decisions, decision tools are a potentially powerful way to improve
the quality and efficiency of healthcare.
The Impact of Consumer-Directed Health Plans with Integrated Health
Improvement Services on Health Care Consumers
December 04, 2006
Aon Consulting has five years of CDH experience with plan sponsors in the US, UK, and
South Africa and the emerging data are very positive. Aon's analysis reinforces existing
evidence that CDH represents a significant opportunity to rein in medical costs, improve
adherence to preventive care, increase member "ownership" for their personal health and
reduce the over-utilization of health care services. Consider their findings:
Members consume less health care when paying from their savings; this behavior
change is seen across different cultures and health care models.
Wellness programs that support personal health improvement programs result in a
further reduction in health-care utilization.
Short term benefits do not come at the expense of longer term cost. Members that
have been on the Discovery plan longer exhibit, on average, lower claims and lower
hospital admissions than recent joiners, suggesting that there is no long-term
deterioration in the health for members of the CDH plan.
The South African experience suggests that an environment with CDH-based product
designs, high levels of consumerism, cost transparency and choice also allows
consumers, though market forces, to impact the price of selected health care
services.
CDH positively impacts the adherence to preventive care; the CDH design provides
the member an increased interest in reducing longer term cost, which supports
preventive care usage.
CDH plan design can accommodate members with chronic disease. To the extent that
the incidence of chronic disease is related to age, the model allows for younger
members to accumulate savings over time, thus providing funded protection against
the increased likelihood of suffering from a chronic condition at higher ages.
Members who take ownership for their personal health prefer a CDH plan.
Tom Lerche, "The Impact of Consumer-Directed Health Plans with Integrated Health
Improvement Services on Health Care Consumers," Aon Consulting's Research Brief,
October 2006.
National Survey of Enrollees in Consumer Directed Health Plans
December 04, 2006
The Kaiser Family Foundation surveyed a random sample of CDHP enrollees to learn more
about who is enrolling in CDHPs, their reasons for enrolling, their attitudes about health
care, and their experiences with their health plans. Responses from CDHP enrollees are
compared with those from a random sample of enrollees from more traditional private
employer-sponsored health insurance plans. Consider their findings:
People in CDHPs are wealthier, more educated, more likely to be white, and report
being in better health than their counterparts in other employer-sponsored plans.
Lower premiums and tax-preferred savings are the main motivators people report for
joining these plans.
CDHP participants report higher levels of some cost-conscious attitudes and
behaviors. However, in general, CDHP participants do not report behaving as more
informed, betters shoppers than people in more traditional employer-sponsored plans.
CDHPs are generally satisfied with their plans.
CDHP participants report using fewer health care services than their counterparts in
other private plans. Several explanations for this exist. For example, these healthier
people may need fewer health care services, they may use care more wisely and
avoid care they do not need, or they may delay or skip needed health care because of
the cost.
Why is CDHC better than alternative forms of Health care?
The consumer-driven approach offers employees a wide range of plans they can purchase
with the employer's contribution, their own money, or both.
In contrast to traditional managed care plans, consumer-driven health care:
Enables employees to customize their health benefits -- for example, by allowing
them to trade lower premiums for higher out-of-pocket maximums.
Charges employees the actual cost of insurance
Lets providers, instead of insurers, set prices for their services and reap the benefits
of innovation.
Offers employees comparative quality and cost information about both insurers and
health care providers.
Consumer Driven Health Plans (CDHPs)
Consumer Driven Health Plans (CDHPs) are the outgrowth of the Consumer Driven
Healthcare (CDH) movement, both a recent and rapidly evolving phenomenon in the United
States.
What is Consumer Driven Healthcare?
o Consumer Driven Health Glossary
Consumer driven healthcare focuses on turning healthcare users into educated, empowered,
accountable healthcare consumers. This happens by delivering:
Consumer empowerment. Participants are given the power to make choices about how their
healthcare dollars are spent. With empowerment, employees need information and tools to
help research price and quality, select appropriate providers, become their own healthcare
advocate, and ultimately, improve their health.
Consumer accountability. Having participants be accountable for their health and healthcare
decisions. One way is to give them more responsibility for the financial consequences
associated with their health choices.
What is a Consumer Driven Health Plan, and what are the reasons for their
existence?
Consumer Driven Health Plans (CDHPs), also referred to at times as "defined contribution" or
“consumer (engaged / oriented / directed)” health plans, use both education and technology
to help members (“consumers”) determine how their employer-sponsored health plan
dollars should be spent. In such plans, which often are likened to 401(k) plans, an employer
will typically subsidize the cost of a high deductible health plan (HDHP) with perhaps some
permitted first dollar benefits for preventive care AND provide funding on some basis into
either an employer-funded health reimbursement arrangement (HRA) or a health savings
account (HSA), both of which are tax-advantaged health accounts (Note: The IRS provided
clarification on the tax status of HRAs in June of 2002, and HSAs, a centerpiece of the
Medicare Modernization Act (MMA) passed in December of 2003, have been available since
January 1, 2004).
One basic difference between HDHPs used in conjunction with HRAs and HSAs is that the
HRA model permits the use of fixed dollar copayments for things such as physician office
visits and prescription drugs, whereas HDHPs used in conjunction with HSAs apply expenses
for such services toward deductibles. Also, the range of deductibles with HDHPs used in
conjunction with HRAs is wider than the statutorily defined deductibles and out-of-pocket
limits found under HSA-compatible HDHPs.
The reasons for a shift in the design and administration of health plans from defined benefit
to defined contribution are fairly obvious, none the least of which are the relatively high
costs of health benefits and the fact that managed care’s cost effectiveness seems to have
run its course. In reality, the shift from defined benefit to defined contribution approaches in
health care in many ways mirrors a similar shift in the '80s and ‘90s from defined benefit
pension plans to defined contribution retirement plans.
What is the recent history of the CDH movement?
Early on in the "consumer driven health care movement (late ‘90s and early ‘00s)", three of
the "original" CDH plan providers in the Midwest were Destiny Health, Definity Health and
Lumenos. To this day Destiny seems to be focused on the small-midsized employer market
(2-500 lives), principally promoting insured products, whereas Definity (now owned by
UnitedHealthcare) and Lumenos (now owned by Wellpoint), principally concentrate their
marketing and sales efforts in the larger case market on a self-insured basis.
Here is a fairly comprehensive list of most of the early CDHC providers:
o Destiny Health
o Definity Health
o Lumenos
o Health Allies
o Health Market
Further, over the last 3-4 years the more traditional health insurers have all developed
CDHP products, evidence that CDH has become “mainstream”. Here are some links to the
CDH pages of several of these carriers:
o Mutual of Omaha
o United HealthCare
o Aetna
o Humana
o Blue Cross Blue Shield of Illinois
Does CDH work in the real world?
This is a subject of some substantive, recent debate among public policy types. The
Commonwealth Fund published a rather “scathing” critique of CDH’s effectiveness in
December of 2005. In response to this report, Dan Perrin, the Executive Director of the HSA
Coalition in Washington, DC, weighed in with his own “counterpoint” on the subject.
Further, at least from an overall cost perspective CDHPs seem to be working…
Obstacles to CDHP
An Employee Benefits Research Institute study conducted in December of 2005 revealed
that regardless of their health plans, many consumers in the marketplace did not have
access to the cost and quality information necessary to make informed decisions about their
healthcare. The lack of accurate and easily accessible information regarding healthcare is a
concern that benefit consultant groups acknowledge and is a problem these groups are
working to remedy. Benefit Consultant for C.H. Reams & Associates, Inc, Thomas Reams
points out that “ there rarely exists a fundamental consistency among providers and carriers
to present average cost data to employees.”
The largest obstacle standing in the way of CDHP is the market’s reluctance to make easily
available the information on comparative cost and quality within the market to consumers.
For a wise consumerist paradigm to take hold, consumers need to be able to make informed
decisions regarding their healthcare. Information regarding both cost and quality of
healthcare providers, facilities, and medications must be made more readily available to the
consumer market. CDHP take the market in a direction that consumers push for information
to be made more available on demand.
At the moment, much of the burden is placed on the consumers to make these comparisons
on their own. In order to overcome this hurdle, CDHP Administrator groups have been
working to put together comparison tools as well as other web tool to aid employees in this
manner.
Tackling the Obstacle
Consumer watchdog groups, such as Consumer Reports, do include information on
prescription and over-the-counter (OTC) drugs, however what we will see in the near future
are compilations of accurate information on a state-by-state or region-by-region comparison
of the cost and quality of healthcare facilities, encompassing hospitals, family clinics, and
any other sort of health care providers, including dental and ocular.
There is a crusade on behalf of the consumers to standardize the cost data to the public
being led by the CDHP Administrator Groups, though the ideals and consumer oriented
principles behind CDHP are further ahead than the industry can easily catch up with.
Current CDHP are a step in the direction of forcing the marketplace paradigm to shift,
accommodating the CDHP of the near future in encouraging market honesty and consumer
accountability.
Responsibility as Consumers
A 2006 Consumer Attitudes Survey conducted by Great-West Healthcare showed that the
average consumer could guess the price of a new automobile within 5% of the actual price,
but the consumer perception of how much a routine doctors office visit, an ER visit, and a
four day stay at a hospital were off by 52%, 70%, and 61% respectively. Proponents of CDHP
hope that these astronomical gaps in price awareness will be narrowed drastically as the
insured begin to see just how much healthcare today really costs.
A fundamental idea behind CDHP is that consumers, when faced with the cost of desired
service, will find the best deals on the best quality service, thereby forcing the market to
become more competitive. When the cost to consumers is the same regardless of actual
cost, consumers will have no incentive to avoid buying the most costly choices of products
or services. CDHP seeks to remedy the lack of consumer accountability that has caused the
inflation of healthcare prices without punishing the consumer.
Some employees might be afraid of the accountability and responsibilities of a consumer
within the free-market that being a member of a CDHP will force them to confront. Though
healthcare consumers will see what healthcare actually costs, out of pocket expenses are
reimbursed through HRA and/or HSA funds. According to Insurance Marketing Center Vice
President Robert Poli, “ It quickly teaches the insured the real cost of healthcare without too
large of a ‘stick’.”
A Changing Market-Place
As more businesses begin to embrace CDHP, the market will be forced to adapt to
consumer’s demand for more affordable healthcare. Forrester Research reports that by
2007, as many as 12 million will have enrolled in CDHP. With the growth in CDHP, HDHP
become more commonplace as well, and many large companies have made the move to
offer HDHP with account-based funding mechanisms by the end of the year. As the demand
for CDHP/HDHP grows, the demand for affordable healthcare and the mechanisms for
finding affordable healthcare will grow and be met correspondingly.
The trend toward adopting CDHP reflects the desire among insurance companies, the
employers who offer benefits packages to employees, and the employees who are tired of
paying too much for coverage to bring about a serious turnaround in the healthcare market.
Healthcare need not be a towering leviathan glutting itself at the expense of higher
premiums to the consumer. There is no need to fear a market whose prices, like any other,
are driven by the desire for a quality product or service based on the laws of supply and
demand. As more CDHP are adopted, the healthcare industry will no longer be able to
remain a financial black hole; consumer accountability will eventually force reasonable
prices upon the market.
Well, Why CDHP?
CDHP are a remarkably effective way for small business owners to provide cost-effective
healthcare to employees, and in a sense act as their employees’ health-benefits provider.
CDHP with HRA allow employers to set aside funds from the money saved by switching to
HDHP. The first dollar out-of-pocket strain on employees may be transferred to the employer
out reimbursement accounts. This reinforces the bond of loyalty and responsibility of the
employee to work for his/her employer and the employer to provide for his/her employee.
This is just one of the many often misunderstood aspects of when a company changes from
traditional healthcare to a HDHP.
Rather than losing employee productivity keeping track of faxed claims during business
hours, a company using a CDHP Administrator to handle all of the integrated layers of CDHP,
such as HRA, HSA, FSA accounts and COBRA, is able to cut waste and ensure that benefits
are properly administered. This Administrator also serves as a one-stop Q&A contact for any
employee or employer needs.
How can you make CDHP work for your company?
First, find out what your employee’s needs are. Second, find a good CDHP Administrator who
can work with you and your employees to set up a plan that meets the needs of you and
your company. Make sure you get as much information as you can and make sure that no
one is left with any questions about their benefits. Dispelling any doubts and fears that your
employees might have through educational meetings with your Plan Administrator will
prevent problems for your plan down the road.
Plan design is important to a good CDHP as well as a good Plan Administrator. An
experienced CDHP Administrator will design a plan that allows employees to better control
their health plan dollars and provide for employers to give incentives for those seeking
preventative care. A well-designed plan provides different solutions for different needs.
Some plans may offer health screenings and discounts or rewards for participation in health
and wellness programs. To drive healthcare costs down, it is imperative that employees be
empowered with the necessary tools and information needed to make better healthcare
decisions.
Education is a Must
Employee education and support are integral. Nothing can be more disastrous than a Plan
that is not successfully implemented. Therefore, Plan Administrators are there to ensure that
once a Plan is in place, employers and employees receive the help and guidance they need
when the first claims start coming in. Good Plan Administrators ensure that employers and
employees do not feel like they are alone in the wilderness with their CDHP.
The key to success with CDHP is belief in the Plan. If the employees do not believe that a
plan will save them money or do not understand how they will save money with a plan, they
will be unable to fully embrace it. Dissatisfaction with healthcare can lead to employee
resentment and lower productivity, however with a good CDHP Administrator, employee
satisfaction can be guaranteed and employer investment protected.
To successfully implement a CDHP, holding a mandatory informational meeting is a must.
The Plan Administrators can then take them by the hand, so to speak, and walk employer
and employee alike through the healthcare plans to dispel any doubts or fears of loss of
coverage or increased out of pocket expenses the CDHP might seem to present.
With proper education on HRA and HFSA, Plan participants will see how plans with higher
deductibles combined with employer reimbursement can actually reduce out-of-pocket
expense for healthcare while revealing to claimants the real cost of healthcare.
Fighting Back Against Rising Costs
With carefully administered plans in place, the employees are given the shield of an HRA or
HSA to dampen the blows of healthcare costs. Then, as employees learn about healthcare
costs and market information, they arm themselves with the spear of knowledge. The
consumers can then unite to form an unstoppable phalanx, fighting back against the rising
cost of healthcare.
The CDHP Administrator in this sense serves as weapon-smith and captain of the armory,
outfitting and equipping those within a Plan with the proper tools needed to be a part of this
consumer phalanx, to aid companies in their battle for affordable healthcare coverage. By
finding a good Plan Administrator, employers can guarantee that their employees are well
equipped with the necessary information and resources. They will also ensure that the plan
strategy is fully understood by employer and employee alike. Plan Administrators also know
that one strategy does not always work for every situation, and are therefore able to ensure
the flexibility within the program is meeting the needs of those within the program.
CDHP is already the best alternative to managed healthcare, and as more employers switch
from traditional managed healthcare to CDHP, the possibilities and savings with CDHP grow
better and better with each fiscal year
Pls note that HIP MCD MGD CARE ID# will have one alpha prefix
before MCD ID#
and it could either be J,W,Y,F,T (most common).Do not change it to MCD ID as
HIP will
reject the claim.
GHI - SSN
The other insurance ID formats are,
MCR - SSN followed by alpha suffix
BCBS - Three alpha prefix before SSN (except Federal pt`s)
HIP Mcd Mgd Care - One alpha prefix before MCD ID
MCD - Two alpha prefix,5 numbers,one alpha suffix
Metlife United Health Care - Group#,SSN,01 (or 02...)
Abbreviation Full Form
AAHAM American Association of Healthcare Administrative Management
ABN Advanced Beneficiary Notice
ACF Administration for Children and Families
ADRs Average Daily Revenues
AFDC Aid to Families with Dependent Children
AHA American Hospital Association
AHCA Agency for Health Care Administration
AHRQ Agency for Health Care Research and Quality
ALOS Average Length of Stay
AMA American Medical Association or Against Medical Advice
ANSI American National Standards Institute
AOA Administration on Aging
AOB Assignment of Benefits
APCs Ambulatory Payment Classifications
APR Annual Percentage Rate
ASC Ambulatory Surgical Center
ATB Aged Trial Balance
ATSDR Agency for Toxic Substances and Disease Registry
BBA Balanced Budget Act
BBRA Balanced Budget Refinement Act
BNI Beneficiary Notices Initiative
CAHs Critical Access Hospitals
CCI Correct Coding Initiative
CCS Crippled Children's Service
CDC Centers for Disease Control and Prevention
CDM Charge Description Master
CDT Current Dental Terminology
CEO Chief Executive Officer
CFO Chief Financial Officer
CHAMPUS Civilian Health and Medical Program of the Uniformed Services
CHAMPVA Civilian Health and Medical Program of the Veterans Administration
CHCBP Continued Health Care Benefit Program
CLIA Clinical Laboratory Improvement Amendment
CMHC Community Mental Health Center
CMS Centers for Medicare and Medicaid Services
COB Coordination of Benefits
COBRA Consolidated Omnibus Budget Reconciliation Act
CORF Comprehensive Inpatient Rehabilitation Facility
CPT-4 Current Procedural Terminology, 4th Edition
CPU Central Processing Unit
CRA Credit Reporting Agency
CWF Common Working File
DCN Document Control Number
DEERS Defense Enrollment Eligibility Reporting System
DEFRA Deficit Equity and Reduction Act
DHHS Department of Health and Human Services
DME Durable Medical Equipment
DMERC Durable Medical Equipment Regional Carrier
DOA Dead on Arrival
DOD Department of Defense
DOJ Department of Justice
DRG Diagnosis Related Groups
E/M Evaluation and Management
EDI Electronic Data Interchange
EGHP Employer Group Health Plan
EIN Employer Identification Number
EMTALA Emergency Medical Treatment and Active Labor Act
EOB Explanation of Benefits
EOMB Explanation of Medicare Benefits
ESRD End Stage Renal Disease
FCRA Fair Credit Reporting Act
FDA Food and Drug Administration
FDCPA Fair Debt Collection Practices Act
FEP Federal Employee Program
FFS Fee For Service
FI Fiscal Intermediary
FOIA Freedom of Information Act
FQHCs Federally Qualified Health Clinics
GAAP Generally Accepted Accounting Principles
GAO General Accounting Office
GPO Government Printing Office
HCFA Health Care Financing Administration
HCPCS Healthcare Common Procedure Coding System
HHA Home Health Agency
HICN Health Insurance Claim Number or Health Insurance Coverage Number
HIPAA Health Insurance Portability and Accountability Act
HMO Health Maintenance Organization
HPI History of Present Illness
HPSA Health Provider Shortage Area
HSA Health Savings Accounts
HSRA Health Resources and Services Administration
ICD-9-CM International Classification of Diseases, Volume 9, Clinical Modification
ICF Intermediate Care Facility
ICN Internal Control Number
ICR Image Character Recognition
IDE Investigational Device Exemption
IHS Indian Health Service
JCAHO Joint Commission on Accreditation of Healthcare Organizations
LMRPs Local Medical Review Policies
MAAC Maximum Allowable Actual Charge
MAC Medicare Administrative Contractors
MCO Managed Care Organization
MD Doctorate of Medicine
MDC Major Diagnostic Categories
MHI Medicare Hospital Insurance
MSA Medical Saving Accounts
MSN Medicare Summary Notice
MSP Medicare Secondary Payor
MTF Military Treatment Facility
MVPS Medicare Volume Performance Standard
NAIC National Association of Insurance Commissioners
NAS Non-Availability Statement
NCPs National Coverage Policies
NDC National Drug Code
NF Nursing Facility
NIH National Institutes of Health
NOC Not Otherwise Classified
NPI National Provider Identifier
NPP Non Physician Practitioner
NUBC National Uniform Billing Committee
OBRA Omnibus Budget Reconciliation Act
OIG Office of Inspector General
ORT Operation Restore Trust
OSHA Occupational Safety and Health Act
PAT Pre-Admission Testing
PCP Primary Care Provider
PIN Provider Identification Number
PIP Periodic Interim Payment
PMPM Per Member Per Month
POE Parallel Operating Environment
PPO Preferred Provider Organization
PPS Prospective Payment System
PRO Professional Review Organization
PSA Prostate Specific Antigen
PSDA Patient Self Determination Act
PSRO Professional Standards Review Organization
QA Quality Assurance
QI Qualified Individual
QMB Qualified Medicare Beneficiary
RBRVS Resource-Based Relative Value Scale
RHCs Rural Health Clinics
RHHI Regional Home Health Intermediary
RRB Railroad Retirement Board
RTC Residential Treatment Center
RUGs Resource Utilization Groups
RVU Relative Value Unit
SAMHSA Substance Abuse and Mental Health Services Administration
SCHIP State Children's Health Insurance Program
SLMBs Specified Low-Income Medicare Beneficiaries
SNF Skilled Nursing Facility
SSA Social Security Administration
SSI Supplemental Security Income
SSN Social Security Number
TAN Treatment Authorization Number
TEFRA Tax, Equity and Fiscal Responsibility Act
TFL Tricare for Life
TOB Type of Bill
TPA Third Party Administrator
UB92 Uniform Billing Form 1992
UCR Usual, Customary and Reasonable
UM Utilization Management
UPIN Unique Physician Identification Number
UR Utilization Review
USPHS U.S. Public Health Service
USTFs Uniformed Service Treatment Facilities
VCIS Voice Case Information System
WC Workers Compensation
WHO World Health Organization
What is a Health Reimbursement Arrangement (HRA)
A Health Reimbursement Arrangement is a tax-advantaged benefit that allows both employees and
employers to save on the cost of healthcare.
HRA plans are employer-funded medical reimbursement plans. The employer sets aside a specific amount
of pre-tax dollars for employees to pay for health care expenses on an annual basis. Based on the plan
design, HRAs can generate significant savings in overall health benefits.
The primary requirements for an HRA are that (1) the plan must be funded solely by the employer and
cannot be funded by salary reduction, and (2) the plan may only provide benefits for substantiated medical
expenses.
HRAs may be designed in many fashions to suit the specific needs of the employer and employees. It is
one of the most flexible types of employee benefit plans making it very attractive to most employers.
Benefits to the Employer
HRAs are most commonly offered in conjunction with a High Deductible Health Plan. As a rule, moving
to a high deductible plan will result in reduced premium costs creating real savings on healthcare costs for
the employer. HRA contributions may then be funded using the savings gained from the lower premium
costs. Funding an HRA allows the employer to bridge the gap between the higher deductible and when the
insurance coverage “kicks in” for their employees.
Most importantly, all employer contributions to the Plan are 100% tax deductible to the employer, and
tax-free to the employee.
Employers may establish what expenses the HRA funds may be used for; from as comprehensive as all
health-related eligible expenses to as limited as emergency room expenses only. HRA plans are very
flexible, enabling employers to control their own costs of healthcare while still providing a valuable
employee benefit.
With an HRA, employee healthcare expenditures are visible and clear to both you and your employees,
creating a greater understanding of the costs of healthcare. In addition, by providing employees more
visibility to and control over their healthcare they become smarter healthcare consumers.
Studies show a usage rate of only 20-50% of healthcare coverage by employees, meaning that employers
often pay health insurance premiums for employees who are not utilizing the coverage. An HRA allows
employers to determine the best type of coverage for their employees based on the demographics of their
employee group.
HRA plans may also cover retired employees (and their spouses and tax dependents). Employers may
wish to consider an HRA as an alternative to more expensive traditional retiree health care.
Employee benefits, such as an HRA, enable employers to recruit and retain quality employees. An
employer is viewed in a positive light by current and prospective employees because a benefit package is
being provided with the employee’s interest in mind.
Benefits to the Employee
Enrolling in an HRA provides two major advantages to employees, (1) a reduced health insurance
premium resulting from the High Deductible Health Plan, and (2) availability of employer-sponsored
funds that may be accessed to pay for medical expenses incurred prior to the insurance deductible being
met.
Depending on the plan design, expenses that may be reimbursed from the HRA include: deductibles, copayments,
coinsurance, prescription medications, vision expenses, dental expenses, and other out-ofpocket
health-related expenses.
HRA funds are contributed to employees on a pre-tax basis; therefore the funds are not taxable to the
employee. Due to this, employees need not claim an income tax deduction for an expense that has been
reimbursed under the HRA.
Plan Designs
HRAs are very flexible, allowing the employer to design their plan to meet the unique needs of the
company and the employees. Common plan designs include:
Deductible, Co-pay, and Co-insurance: All medical expenses that are applicable to the health plan’s
deductible, a co-pay amount, or a co-insurance amount qualify for reimbursement. Qualified expenses are
those incurred by the employee or the employee’s family. An Explanation of Benefits (EOB), showing
evidence that the expense is applicable to the insurance deductible, is typically required for substantiation
of request for reimbursement under this design.
Deductible: Under this design all medical expenses that are applicable to the deductible of the health plan
qualify for reimbursement. This plan design does not include co-pays or co-insurance amounts. Qualified
expenses are those incurred by the employee or the employee’s family. An EOB is also typically required
for substantiation of request for reimbursement under this design.
All Uninsured Medical Expenses: All out-of-pocket medical expenses (uninsured costs) are eligible
under this plan design. This includes deductibles, co-pays, coinsurance, dental, vision, prescription, and
other out-of-pocket medical expenses. These expenses can be for the employee and the employee’s
family. An EOB, copy of a receipt, or copy of a bill identifying the date of service, amount of service, and
the name of the service provider are typically used to substantiate requests for reimbursement under this
design.
Specific Expenses Only: Plans may be designed to cover dental expenses only, orthodontia expenses
only, vision expenses only, prescription medical expenses only, and/or other specified expenses. A copy of
a receipt or copy of a bill identifying the date of service, amount of service, and the name of the service
provider are typically used to substantiate requests for reimbursement under this design.
Plan Year (Period of Coverage)
Typically, employers choose to run the HRA concurrent with their health insurance plan year, but this is
not mandatory; the HRA plan year may be run independent of the health insurance plan year. Short plan
years are generally available as well, depending on the options provided by the plan administrator.
Carryover
With an HRA, unused fund amounts may be carried over from year to year. This differs from a Flexible
Spending Account which maintains the “use-it-or-lose-it” rule.
The employer has full discretion over how the carryover is managed. They may choose to allow the
employee to keep all unused funds for use in later years, keep only a portion of unused funds, or forfeit all
remaining unused funds after the Plan year is complete.
Reimbursement
All requests for reimbursement under an HRA must be substantiated. The most common means of
substantiation is the Explanation of Benefits (EOB) statement provided by the employees’ health
insurance provider after a medical expense has been incurred.
Since the HRA typically pays for out-of-pocket expenses up to the amount of the health insurance
deductible, employees must reference the EOB to see what has been covered by insurance and what has
not for a specific medical expense occurrence. They then request reimbursement for the portion of the
expense that was not paid by their insurance plan.
For other out-of-pocket expenses, a copy of a receipt or bill identifying the date of service, amount of
service, and the name of the service provider is normally required to substantiate reimbursement.
Discrimination Testing & HIPAA
Standard non-discrimination rules apply to an HRA. Plans must avoid discriminating toward any
employee(s) regarding the parameters of the plan and how funds are allocated, and must ensure that all
employees have similar access to a funded account.
HIPAA privacy rules also apply.
Coordination with a Flexible Spending Account
An employer may choose to offer a Flexible Spending Account Plan (FSA) in conjunction with an
HRA. An FSA is an employee-funded benefit that allows employees to set aside pre-tax funds to pay for
medical expenses. FSA funds are contributed through salary-reduction, and the amount is determined by
each participating employee.
Combining an FSA with an HRA allows employees to bridge the gap between the employer sponsored
HRA and the health insurance plan.
In a situation where an incurred medical expense could be reimbursed from either the FSA or HRA, the
employer or plan administrator will determine the “ordering rules” which determine which account the
expense shall be reimbursed from first.
COBRA
HRAs are subject to COBRA. Employees experiencing a qualified event must be given the opportunity for
continued participation in the HRA offered by the employer. If an employee experiences a COBRA
qualifying event and makes a COBRA election for the HRA, the employer determines what to charge the
employee a premium in order to continue their participation.
At the beginning of the Plan year, the employer should establish a reasonable premium amount applicable
to the HRA benefit being offered, this decision should take into account the benefit offered for single vs.
family. As the premium is determined at the beginning of the Plan year, it cannot take into consideration
an employee’s account balance at the time of a qualifying event.
The US Medical Billing Industry comprises of the following major components:
Providers
Insurance Companies
Billing Offices
Transcription Agencies
Coding companies
Clearing Houses
Manufacturers and Marketers of Medical equipment and Pharmaceuticals
Federal Government bodies
==
The ‘Modus operandi’ of the American Medical Insurance necessitated the creation of a medical billing
industry.
The Industry that started at a very basic level is a huge industry today. Several Medical Billing Companies
offer a variety of services to providers to make claim processing faster and more efficient. The industry
has seen tremendous growth in the last decade. The services offered have also improved from mere billing
into specialist services such as 'Practice Management' and 'Consultancy Services'.
The large volume of claims and the complexities therein called for the extensive usage of skilled
manpower inside, and outside of the US.
The need for specialized services from skilled manpower called for Outsourcing, both on-shore and offshore.
===
Medical Billing
In short, medical billing is
"The managing of the providers financial transactions"
A Medical Billing company acts on behalf of a provider and carries out all activities that result in "Clean
Claim Processing".
The following are the Objectives and Functions of a billing Office.
==
Objectives of a Medical Billing Company
The objectives of a Billing Company are to :
Offer fast,efficient, and error-free claim processing.
Collect money that is due from insurance companies.
Zero-out the balance on a patient's record.
Collate information and generate reports.
==
Functions
Broadly classified, the Functions of a Billing Office are:
Charge Entry
Cash Posting
Accounts receivable
==
Charge Entry
Charge Entry involves two major activities
i) Entry of Demographics
The entry of Patient details from the Patient registration forms into the billing software.
ii) Entry of details from Charge Sheets/Charge Tickets
The entry of the various details from these documents into the billing software.
==
There are Two kinds of patients.
1. New Patient - The Patient who visits the doctor for the first time or a Patient who has not met the doctor
for 3 yrs.
Entry of a new patient's demographic details is called "Registering a patient".
2. Established Patient - A patient who has already been registered.
For an established patient, the information in the software is updated if there are any changes in his
demographic or insurance information.
The activities involved in the recording of this information in the billing software are called
Charge Entry,
Charge creation and
Registering a Charge.
==
Cash Posting
The main aim or goal of any billing office is to collect payments from insurance companies for the
services rendered by the physician.
The Cash poster will update the patient's records with the help of the Insurance EOB (Explanation Of
Benefits). An EOB is a document sent by the insurance company to the provider/billing company, as a
communication of the decision(s) taken by the insurance company.
The three major functions of a cash poster are :
1. Posting insurance payments in the billing software.
2. Posting insurance denials.
3. Posting the patients payments.(with the help of patient statements)
==
Accounts Receivable
This department is responsible for all the activities that result in the collection of outstanding payments
from the insurance companies and patients. For this purpose the AR department maintains a report called
“Ageing Report”.
The Ageing Report is a report that reflects the pending status of money due to the provider. There are two
types of Ageing Report, namely,
Insurance Ageing Report & Patient Ageing Report
Accounts receivable process can be classified into four different steps as follows.
1) Pre-call analysis
2) Call with the insurance
3) Documentation of call details and
4) Post-call follow-u==
==p
Software requirements
To enable the processing work, the Billing/ Practice Management Software must contain the following
Databases.
Patient
Insurance
Provider
Referring Physician
CPT & Diagnosis Codes
Place Of Service
State / City / Zip Codes
==
Documents for Processing
The documents required for processing are:
Patient Information/Demographic Sheet
Charge Ticket
EOB
Scrubber Report
Support Documents such as Card Copies, Attachments used by the provider, Referral forms, Injury reports
etc.
==
Collection Philosophy
Collection Philosophy of the Provider
Although the Billing office can act on behalf of doctors, it is left to the "Collection Philosophy" of the
provider to collect payments due from his/her patients.
If the Provider so desires, he may contact a collection agency to expedite collections from defaulting
Patients.
==
||||||||||||||||||||||||||||||||||||||||||||||
Billing Terminology
Referral
Referral
In general, referral is the process of a provider sending the patient to another provider for specialist health
care services
Referral Authorization
A formal process that authorizes an HMO member (patient) to get care from a specialist or hospital.
HMOs require patients to get a referral from their primary care physician (PCP) before seeing a
specialist. Otherwise the service may be denied by Insurance as an out-of-network service.
In a Managed Care scenario, a Referral Authorization is essential for the validity of the services rendered
by a Referred Physician which is indicated by Referral Authorisation Number (RAN)
==
Pre-Authorisation / Pre-Certification / Prior Auth
The insurance agencies require the provider to obtain prior authorisation before performing certain
services. This might be because the procedure incurs high costs,or new technology is used etc.
Insurance agencies need to review the situation in order to decide if there is a medical necessity to render
high cost or new technology servies.
==
Pre-Determination
The provider gathers information from the insurance company about the patients coveerage.This, the
provider does because the details given by the patient might not be sufficient. Pre-determination helps the
provider understand if some procedure planned to be conducted,are covered or not. If the plan does not
cover the procedures ,the provider woill intimate the patient on the same.
Once the patients get to know their liabilities for the services, he/she signs a document stating that he/she
would shoulder the responsibilities of the expenditures that are not covered by their insurance. This
document is called the "Waiver of Liability".
===
Offset & Payback
Off-set
When the insurance agency makes a payment in excess to the provider or makes a wrong payment, the
amount is 'offset' by the insurance company in the next transaction(s) and is indicated in the EOB.
Medicare deducts late filing penalty as an offset.
Payback
When the insurance agency makes excess payments to the provider, the provider reimburses the insurance
agency by check. This is called a Payback, also known as a "Refund".
===
Pre-Existing Condition
The medical condition developed prior to issuance of a health insurance policy which may result in the
limitation in the contract on coverage or benefits
Waiting Period
The length of time an individual must wait to become eligible for benefits for a specific condition after
overall coverage has begun
===
Coordination Of Benefits (COB):
Coordination of Benefits (COB) is the mechanism developed to prevent duplication of payment when a
person is covered by more than one insurance plan/payer. It limits the total benefits received to no more
than the actual amount incurred for care, or to something less than the actual amount incurred for care. It
does this by informing all subsequent payers in the billing chain, of the benefits determined and/or paid by
all previous payers.
===
Advance Beneficiary Notice / Note:
There are some services which are termed as 'Medically not necessary' by Medicare. When the patient is a
Medicare beneficiary, the provider sends a prior intimation to the patient describing certain services
planned,which are not covered by Medicare. If ABN is not sent to the patient, MR beneficiaries cannot be
billed for services which are not covered
===
Its a document given by the Provider to MR beneficiaries to know their financial liabilities in advance
Its a legal document signed by the patient accepting the portion of bill that he/she should pay to the doctor
upon Non-payment /Denial by Medicare
Federal government requires the provider to obtain signed ABN from MR beneficiaries for any services
which are not covered
===
DEDUCTIBLE
This is a fixed amount determined by the Insurance company, which the subscriber has to pay towards
his/her initial medical expenditure. Only after the subscriber meets his/her deductible does the insurance
company make its payment. The insurance companies adopted this concept to stop the subscribers
exploiting the policies which were provided to them.
For example :
If the deductible amount for Subscriber A is $500, then A, should take care of his initial medical
expenditures upto $500. The insurance would make its payment right after A's medical expenditure
exceeds $500.
===
COPAY
This is the amount fixed by insurance companies which varies according to the Place of Service. This
amount has to be paid by the patient to the provider at the time of service. It is also called the "Time of
Service Payment". The Insurance company fixes the patient's liability. Patients will not have any liability
on the claim after the Co-pay. This concept is very specific to Managed Care Policies.
===
Out-of-pocket expenses
The sum of copay/coinsurance and deductibles which the subscriber has to bear towards the cost of
healthcare expenses are called Out-of-Pocket Expenses
Stop-Loss Clause (Catastrophic Limit)
The subscriber while taking a plan, fixes a slab amount, which is the total out of pocket expenses. On
reaching the fixed amount, the insurance makes 100% reimbursements for the claims.
==
CAPITATION
This is a fixed periodic payment that the participating provider would receive from the insurance
company, regardless of the number of services rendered by the provider. This is an option given to a
participating provider in the network, mostly the PCPs. With the consent of both the insurance and the
provider, the capitation amount can either be raised or reduced. This might even result in termination of
the contract.
===
Provider Identifiers
UPIN - Unique Physician Identifer Number
This is a number provided by CMS to all Medicare Participating providers. This number is used when a
Medicare beneficiary is refered to another provider.
Format : 6 Alphanumeric characters
PIN - Provider Identification Number
This is a number that private insurance companies use to identify their providers. Since these are provided
by every insurance company, there is no standard format.PINs are very specific to each insurance
company.
NPI - National Provider ID
The National Provider Identifier (NPI) is another key initiative, which helps in the prevention of fraud and
abuse.
NPI is an industry wide unique identifier for providers and suppliers created under the authority of the
Health Insurance Portability and Accountability Act of 1996. The NPI is a single block of 10 characters.
The only advantage of a NPI over PIN numbers is that it is unique for each health plan. NPIs are used in
the administrative and financial transactions as specified by HIPAA
===
HBMA: Healthcare Billing Management Association
AMA: American Medical Association
CPT: Current Procedural Terminology
ICD: International Classification of Diseases
HCFA: Health Care Financial Administration
HCPCS: Health care Common Procedural Coding System
ZIP: Zonal Improvement Plan
UPIN: Unique Physician Identification Number
PIN: Provider Identification Number
NPI: National Provider Identifier
PHI: Protected Health Information
ABN: Advanced Beneficiary Notice
ROI: Release of Information
PCP: Primary Care Physician
HMO: Health Maintenance Organization
POS: Point Of Service
PPO: Preferred Provider Organization
EPO: Exclusive Provider Organization
HIPAA: Health Insurance Portability and Accountability Act
RAN: Referral Authorization Number
IIHI: Individually Identifiable Health Information
CE: Covered Entity
OWCP: Office of Worker’s Compensation Program
CMS: Center for Medicare and Medicaid Services
DHHS: Department of Health and Human Services
SSA: Social Security Administration
OIG: Office of Inspector General
RRB: Railroad Retirement Board
DEERS: Defense Enrollment Eligibility Reporting System
CHAMPUS: Civilian Health And Medical Program for Uniformed Services.
CHAMPVA: Civilian Health And Medical Program for Department of Veteran’s Affairs.
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Federal Agencies
There are many agencies that operate under the Federal govt of the US
The Major agencies are:
DHHS
DEPARTMENT OF HEALTH AND HUMAN SERVICES
SSA
SOCIAL SECURITY ADMINISTRATION
CMS
CENTERS FOR MEDICARE AND MEDICAID SERVICES
OIG
OFFICE OF THE INSPECTOR GENERAL
RRB
RAILROAD RETIREMENT BOARD
INSURANCE COMMISSIONER
==
THE DEPARTMENT OF HEALTH AND HUMAN SERVICES is the United States government's
principal agency for protecting the health of all Americans and providing essential human services,
especially for those who are least able to help themselves.
HHS' Medicare program is the nation's largest health insurer, handling more than 900 million claims per
year.
THE DEPARTMENT INCLUDES MORE THAN 300 PROGRAMS, covering a wide spectrum of
activities.
==
The various activities of DHHS:
Medical and social science research
Preventing outbreak of infectious disease, including immunization services
Assuring food and drug safety
Medicare (health insurance for elderly and disabled Americans) and Medicaid (health insurance for lowincome
people)
Financial assistance and services for low-income families
Improving maternal and infant health
Head Start (pre-school education and services)
Preventing child abuse and domestic violence
Substance abuse treatment and prevention
Services for older Americans, including home-delivered meals
Comprehensive health services for Native Americans
===
HHS WORKS CLOSELY WITH STATE, LOCAL AND TRIBAL GOVERNMENTS, and many HHSfunded
services are provided at the local level by state, county or tribal agencies, or through private sector
grantees. The operating divisions, including agencies in the U.S. Pubic Health Service and human services
agencies, administer the Department’s programs.
In addition to the services they deliver, the HHS programs provide for equitable treatment of beneficiaries
nationwide, and they enable the collection of national health and other data.
===
DHHS Operating Divisions
Public Health Service Operating Divisions
National Institutes of Health
Food and Drug Administration
Centers for Disease Control and Prevention
Indian Health Service
Health Resources and Services Administration
Substance Abuse and Mental Health Services Administration
Agency for Healthcare Research and Quality
Human Services Operating Divisions
Centers for Medicare & Medicaid Services
Administration for Children and Families
Administration on Aging
==
CMS
The Centers for Medicare & Medicaid Services (CMS) is a federal agency within the U.S. Department of
Health and Human Services.
The agency was established as HCFA in 1977 to administer the national health programs. It was renamed
CMS in the year 2001.
===
CMS AT A GLANCE
CMS runs the Medicare and Medicaid programs - two national health care programs that benefit about 75
million Americans. And with the Health Resources and Services Administration, CMS runs the State
Children's Health Insurance Program (SCHIP), a program that is expected to cover many of the
approximately 10 million uninsured children in the United States.
Running the Programs
CMS spends over $360 billion a year buying health care services for beneficiaries of Medicare, Medicaid
and SCHIP.
===
ADDITIONAL RESPONSIBILITIES
CMS also regulates all laboratory testing (except research) performed on humans in the United States.
Approximately 158,000 laboratory entities fall within CMS's regulatory responsibility.
And CMS, along with the Departments of Labor and Treasury, helps millions of Americans and small
companies get health Insurance coverage and helps eliminate discrimination based on income status for
people buying health insurance.
==
CMS:
assures that the Medicaid, Medicare and SCHIP programs are properly run by its contractors and state
agencies;
establishes policies for paying health care providers;
conducts research on the effectiveness of various methods of health care management, treatment, and
financing; and
assesses the quality of health care facilities and services and taking enforcement actions as appropriate.
\\\\\\\\\\\\\\\\\\\\
Insurances
What is Insurance?
It is a contract that exists to protect a person from the losses that he may incur on account of the risk or
hazard that he has stated therein. The person giving the assurance is called the insurer and the person who
receives the protection is called the insured.
l
==
Health Insurance Policy
Simply put, health insurance is protection against medical costs.
A health insurance policy is a contract between an insurer and an individual or group, in which the insurer
agrees to provide specified health insurance at an agreed-upon price (the premium).
==
Module Plan
lIn the first part of the presentation we will dwell in various facets of Health Insurance.
lIn the second part of the session you will be able to identify the types of health Insurance & their role in
Medical Billing.
==
Features of Medical Insurance
lDepending on your policy, the premium may be payable either in a lump sum or in installments.
l
lHealth insurance usually provides either direct payment or reimbursement for expenses associated with
illnesses and injuries.
l
The cost and range of protection provided by your health insurance will depend on your insurance
provider and the policy you have purchased.
If your employer does not offer a health insurance plan, you may wish to purchase health insurance on
your own.
==
Role of Medical Insurance
Prevents the exploitation of the people by the Providers
Enables an organized approach for rendering healthcare service
Reduces cost of overall healthcare expenditure
Improves quality of care
Increases access to healthcare for people of various backgrounds.
Enables improvement in overall health – Preventive vs. Curative approach
==
Unique features of American Healthcare Insurance
Scope of coverage is vast. More than 85% of the population is covered by health Insurance.
Approximately 30,000 plans are in use.
Processing of the claims vests with the Provider.
The Provider offers credit facilities to the patient.
Unconventional associations providers/business management groups/hospitals/insurance companies,
(Managed Care) to
provide comprehensive healthcare solution.
Standardized procedures and documents- Claim forms, codes etc.
==
Automated – Medicare is paperless; many companies accept electronic claims and send electronic
vouchers.
lAccess to more than one insurance coverage per person.
lPercentage of insured as compared to other countries including India is very high.
==
Overview
lFirst, a little history. In the past, health insurance was usually provided by traditional insurers, such as
Blue Cross/ Blue Shield . The patient paid the health care provider and submitted a claim to the insurance
carrier.
Then, after the deductible was satisfied, the patient was reimbursed for some or all of the expenses
incurred for the healthcare costs. The subscriber could go to a doctor or specialist as many times as he/she
wanted.
These plans still exist where the provider takes up the responsibilty to file the claims on behalf of the
patient and the patient authorizes the provider to receive payments directly from the Insurances.
However, these uncontrolled claims resulted in high loss ratios for insurance companies, which, in turn,
caused them to increase health plan premiums significantly. Because the industry needed to lower and
control costs, managed care became popular.
Now, let's look at a classification of Insurance.
==
Types of Health Insurance
Based on the Concepts of Insurance, The classification can be broadly made as
lTraditional Care
and
l
Managed Care.
==
Traditional Care
This is a type of agreement that is the original insurance plan.
These plans are contracts that exist between the insured and the insurer with an understanding that the
insurer will protect the insured from any healthcare cost.
==
Salient Features – Traditional Plans
The salient features of the traditional plan is the following
Reimbursements from the insurance plan will be a fixed % or fixed amount .
Preventive medicine is optional.
No restrictions are imposed on the enrollees but they have higher liabilities.
==
Classification of Traditional Plans
Another mode of classifying the insurances is on the basis of their coverage.
The Traditional Plans/ indemnity plans can be further classified into 3 categories based on their coverage:
Basic Coverage, Major Medical Plans and Comprehensive coverage.
==
BASIC COVERAGE
It would cover a beneficiary in case of a serious illness.
It covers expenses incurred on account of:
Hospitalization
Surgery
General Nursing care
Operating & recovery rooms
Lab tests, X-rays, Anesthesia
Emergency room services
It also covers a few outpatient charges.
==
MAJOR MEDICAL PLANS
This is a supplementary plan to Basic coverage.
It covers all the Outpatient treatments and Prescription cost.
They have an annual deductible to paid on the plan which may range to 100 to $1000
The Insurance plan will reimburse 80% of the bill and the patient will pay the other 20%
==
COMPREHENSIVE PLANS
It is a policy that combines the coverage offered in Basic and Major Medical Plans
The premiums of these plans are high
Comparatively lower co-insurance
The subscriber is required to pay a co-insurance of 20% on the medical expense incurred
The concept of Stop-Loss Clause is predominant in Commercial Plans.
==
Other Traditional Plans
There are some Traditional Plans that cover other services. They are:
Pharmacy Benefits/Drug Plans
Dental Plans
etc.
==
Managed Care
lThis is a type of policy under which the insurance company plays an active role in facilitating the insured
healthcare activities. This is other word referred to a 3P program where in the Provider, Patient and the
third Party administrator plays an important role.
Managed care refers to an overall strategy for containing or minimizing medical care costs while
delivering appropriate medical care. The health care activities of the subscriber are coordinated by the
Insurance Company.
==
Features of Managed Care
Owing to what we have dicussed so far, let's now list out the features of Managed care.
Take a break and make your own list of the features of Managed care.
==
Salient features of managed care
lThe liability of the insured is always a prefixed amount (TOS Payment).
lInsured is provided with a network of Providers
lParticipating Provider most often renders the service
lReferral Authorization Number plays an important role
lFocus on preventive medicine is high
Managed Care Plans
There are methods through which the insurers involve themselves in administering the Healthcare service
to the insured. Depending upon the methods the classification can be made into the following categories:
HMO (The most common form of Managed Care)
The HMO is a form of Managed care where the insurance creates a network of providers termed PCPs
(Primary Care Physicians). The HMO is a pre-paid health plan in which the subscriber pays a monthly
premium. The HMO covers the cost of care to see doctors within their network at pre-negotiated rates.
The member of an HMO pays only the time-of-service (co-pay), which is pre-negotiated and pays nothing
else throughout the treatment. The members must choose a primary care physician out of a list of PCPs
maintained by the HMO. The PCP who is called the Gatekeeper of the network coordinates all of the
member’s care and makes referrals to any specialists when needed. The referrals depend on the plan that
the member is holding an HMO plan with referral benefits or without. The HMO network is very strict. IT
discourages the members and physicians from breaking the network. If the member sees Physicians out of
such a network, he/she usually bears the expenditure of such a visit (Unless it is a case of an emergency).
==
POS
A Point-of-service health plan allows the covered person to choose to receive a service from participating
or a non-participating provider i.e. at the point of service the patient decides to visit a participating or a
non-participating provider. There are different benefit levels associated with the use of Participating
Providers.
POS can be obtained in the following ways.
• An HMO may allow members to obtain limited services from non-participating providers.
• An HMO may provide non-participating benefits through a supplemental major medical policy.
• A PPO may be used to provide both participating and non-participating levels of coverage and
access.
==
PPO
A Preferred Provider Organization typically contracts on behalf of employer groups or other plans with
hospital and physician providers at reduced rates. The hospitals and the physicians Participating in the
preferred provider network are generally called Preferred or Participating Providers. Usually there is an
incentive to the patient to use a Preferred Provider. A Patient who visits a non-Participating provider is
likely to pay a higher co-payment or deductible. Providers offer discounts to PPOs in anticipation of
achieving additional patient volumes or to minimize the chances that their patient volumes will go to other
providers.
EPO
An Exclusive Provider Organization (EPO) is a variation of a PPO. EPOs contract with providers on a
discounted basis, but enrollees must receive care within the network. EPOs, like PPOs, provide no penalty
to providers if the patient opts to obtain care outside the network. Instead, the enrollee assumes
responsibility for out-of-network costs.
==
PHO
A hospital and a physician organization, or physicians and physician groups create a physician hospital
organization. A PHO is created to assist the Managed Care contracting on behalf of the parties. The best
PHOs include a physician organization that has it’s own structure, providing a means for reviewing
pertinent issues both internal and external, such as contracts, payer disputes, or physician monitoring.
IPA
An Independent Practice Association consists of physicians who have not combined their assets and
liabilities and are not practicing in a truly integrated fashion. They maintain their separate practices and
participate in the IPA as a means to contract with HMOs or other health plans. Providers may also see
patients who are not enrolled in HMO plans. Where IPAs primarily contract with the HMO to provide
services to the HMO’s members, the HMO model typically is called the IPA model HMO.
\\\\\\\\\\\\\\\\\\\\\
Federal Agencies
There are many agencies that operate under the Federal govt of the US
The Major agencies are:
DHHS
DEPARTMENT OF HEALTH AND HUMAN SERVICES
SSA
SOCIAL SECURITY ADMINISTRATION
CMS
CENTERS FOR MEDICARE AND MEDICAID SERVICES
OIG
OFFICE OF THE INSPECTOR GENERAL
RRB
RAILROAD RETIREMENT BOARD
INSURANCE COMMISSIONER
==
THE DEPARTMENT OF HEALTH AND HUMAN SERVICES is the United States government's
principal agency for protecting the health of all Americans and providing essential human services,
especially for those who are least able to help themselves.
HHS' Medicare program is the nation's largest health insurer, handling more than 900 million claims per
year.
THE DEPARTMENT INCLUDES MORE THAN 300 PROGRAMS, covering a wide spectrum of
activities.
==
The various activities of DHHS:
Medical and social science research
Preventing outbreak of infectious disease, including immunization services
Assuring food and drug safety
Medicare (health insurance for elderly and disabled Americans) and Medicaid (health insurance for lowincome
people)
Financial assistance and services for low-income families
Improving maternal and infant health
Head Start (pre-school education and services)
Preventing child abuse and domestic violence
Substance abuse treatment and prevention
Services for older Americans, including home-delivered meals
Comprehensive health services for Native Americans
===
HHS WORKS CLOSELY WITH STATE, LOCAL AND TRIBAL GOVERNMENTS, and many HHSfunded
services are provided at the local level by state, county or tribal agencies, or through private sector
grantees. The operating divisions, including agencies in the U.S. Pubic Health Service and human services
agencies, administer the Department’s programs.
In addition to the services they deliver, the HHS programs provide for equitable treatment of beneficiaries
nationwide, and they enable the collection of national health and other data.
===
DHHS Operating Divisions
Public Health Service Operating Divisions
National Institutes of Health
Food and Drug Administration
Centers for Disease Control and Prevention
Indian Health Service
Health Resources and Services Administration
Substance Abuse and Mental Health Services Administration
Agency for Healthcare Research and Quality
Human Services Operating Divisions
Centers for Medicare & Medicaid Services
Administration for Children and Families
Administration on Aging
==
CMS
The Centers for Medicare & Medicaid Services (CMS) is a federal agency within the U.S. Department of
Health and Human Services.
The agency was established as HCFA in 1977 to administer the national health programs. It was renamed
CMS in the year 2001.
===
CMS AT A GLANCE
CMS runs the Medicare and Medicaid programs - two national health care programs that benefit about 75
million Americans. And with the Health Resources and Services Administration, CMS runs the State
Children's Health Insurance Program (SCHIP), a program that is expected to cover many of the
approximately 10 million uninsured children in the United States.
Running the Programs
CMS spends over $360 billion a year buying health care services for beneficiaries of Medicare, Medicaid
and SCHIP.
===
ADDITIONAL RESPONSIBILITIES
CMS also regulates all laboratory testing (except research) performed on humans in the United States.
Approximately 158,000 laboratory entities fall within CMS's regulatory responsibility.
And CMS, along with the Departments of Labor and Treasury, helps millions of Americans and small
companies get health Insurance coverage and helps eliminate discrimination based on income status for
people buying health insurance.
==
CMS:
assures that the Medicaid, Medicare and SCHIP programs are properly run by its contractors and state
agencies;
establishes policies for paying health care providers;
conducts research on the effectiveness of various methods of health care management, treatment, and
financing; and
assesses the quality of health care facilities and services and taking enforcement actions as appropriate.
==
\\\\\\\\\\\\\\\
Liability Insurance
These are plans that provide the subscriber coverage against the risk stated on the policy
It is not a health hazard that is insured but any other liability. In the billing scenario they are registered for
billing because they cover any healthcare cost that they may incur due to the incidence of that particular
risk.
These insurances will not have any priority till the risk insured has caused the healthcare encounter.
Liability Insurance can be classified into the following categories based on the risk covered:
1. General Liability Insurance
2. Auto Accidents Insurance
3. Worker's Compensation Insurance
-----
General Liability
These are plans that insure all other type of accidents. Some examples of General Liability plans are:
House Owner's Risk Insurance
Fire Insurance
School Insurance
---
Auto Accident Insurance protects the subscriber against financial loss in case of an accident. It is a
contract between the insurance company and the subscriber in which the subscriber pays the premium and
insurance agrees to pay for losses defined in the policy
Auto Accident Insurance providesgainst property, liability and medical coverage
Property coverage pays for damage to or theft of your car
Liability coverage pays for the legal responsibility towards other bodily injury or property damage
Medical coverage pays for the cost of treating injuries, rehabilitation, lost wages and sometimes funeral
expenses
An Auto Accident Insurance policy has six type of coverages. Most states require the subscriber to buy
some of them, not all.
Each one has its own pricing depending on the coverage
Most policies are for six months to one year. The insurance company will intimate to the subscriber by
mail, the time of renewal of policy.
----
Medical Payments or Personal Injury Protection
This coverage pays for the treatment of injuries to the driver and passengers of the subcriber's car.
PIP can cover medical payments, lost wages and cost of replacing services normally performed by
someone injured in an auto accident.
It may also cover funeral costs
----
Bodily Injury Liability
This coverage applies to injuries the subscriber/designated driver cause to someone else
The subsriber and family members listed on the policy are also covered when driving someone else's car
with their permission
It is very important to have enough liability insurance, since if involved in a serious accident, may incur
large expenses.
---
Property Damage Liability
This coverage pays for damage the subscriber (or someone driving the car with permission) may cause to
someone else's property
Usually, this means damage to someone else's car
It also includes damage to lamp posts, telephone poles, fences, buildings or other structures the car
damages
----
Collision Coverage
This coverage pays for damage to the car of the insured resulting from a collision with another car, object
or as a result of flipping over, potholes etc
Collision coverage is generally sold with a deductible of $250-$1000
If the insured is at fault, the insurance company will reimburse the costs for repairing the car
If the insured is not at fault, the insurance company may try to recover the amount they paid the insured
from the other driver's insurance company
---
Comprehensive Coverage
Comprehensive Coverage offers reimbursements to damage of car due to any reason other than accidents
This may be due to fire,falling objects, vandalism,missiles, explosion, natural calamities,riot or contact
with animals
The deductible for this coverage is $100-$300
The coverage will also reimburse in case of the windshield cracked or shattered
Some companies offer glass coverage with or without deductible
---
Uninsured & Underinsured Coverage
Uninsured coverage pays reimbursements, if the subscriber/member of family or a designated driver is hit
by the at-fault uninsured driver or a hit-and-run driver
Underinsured coverage pays reimbursements to the subscriber if the at-fault driver has insufficient
coverage to pay for the total loss. This coverage also pays when the subcriber is hit as a pedestrian
----
Contract Maximum
Some insurance companies have a maximum payable amount on certain illness or certain policies. The
insurance policy may say that it will pay a pre-fixed amount on a particular illness or it might also fix a
limited amount for a calendar year. This total amount payable on a patient's policy based on his/her
contract is called 'Contract Maximum'.
After the insurance payment, if there is a balance for the provider, the patient is billed for the balance.
---
No fault Clause
The 'No-Fault' is the system adopted by insurance companies in making compensations to its subscribers
regardless of who was at fault in the accident
This system is intended to lower the cost of auto insurance by taking small claims out of the courts
This benefit which is a mandatory coverage, vary by state to state
It applies only to states where insurance companies pay 'first-party' benefits and where there are no
restrictions on the right to sue
Drivers in no-fault states may sue for severe injuries if the case meets certain conditions
---
History
Worker's Compensation - Employer's Responsibility
if the injury or ailment was work related
By 19th century, state and federal provisions enacted due to increased legal procedures.
In 1911, WC Laws were enacted through which medical care could be received without the intervention of
the court
----
WORKER’S COMPENSATION
Worker’s compensation is a Liability Insurance that pays for the medical expense of the employees who
suffer from work related injury.
Here the employer takes up the insurance and pays the premium for the policies. The entire premium is
payed by the Employer and is not shared between the employer and employees.
--
WHAT INJURIES AND DISEASES ARE COVERED?
WC covers injuries that were sustained as a result of work or at the workplace. Its not Necessary that the
injury need to happen at work place. As long as your injury is job-related, it's covered. For example, you'll
be covered if you are injured while traveling on business, doing a work-related errand or even attending a
required business-related social function.
WC also covers occupational diseases.
Occupational diseases are illnesses caused by substances or conditions that the worker was exposed to at
the workplace. You can claim compensation if you are exposed to these working conditions and then get
the related disease.
The working conditions and diseases caused by these conditions that are covered by the Compensation
Fund are set out in Schedule 3 of the Act.
You can claim for other disease if you can prove using medical evidence and reports that the disease was
caused by conditions at work.
----
Are all on-the-job injuries covered?
Most are. The workers' compensation system is designed to provide benefits to injured workers, even if an
injury is caused by the employer's or employee's carelessness. But there are some limits. Generally,
injuries that happen because an employee is intoxicated or using illegal drugs are not covered by workers'
compensation. Coverage may also be denied in situations involving:
self-inflicted injuries (including those caused by a person who starts a fight)
injuries suffered while a worker was committing a serious crime
injuries suffered while an employee was not on the job, and
injuries suffered when an employee's conduct violated company policy.
----
Worker’s Compensation Insurances
There are different kinds of Worker’s Compensation Insurances. They are:
1) Federal Insurances
2) Private Insurances
3) Self-Insured Plan
1) Federal Insurance – Run and maintained by the government of the state.
2) Private Insurances – They are similar to Private Health Care insurances to which they have to pay
premium.
3) Self-insured – A group of Employers come together to form their own Insurance and pay for the
injury of their own Employees.
---
OWCP
Each work related injury has to be reported to the Office of Worker’s Compensation Program (OWCP) or
to the Worker’s Compensation Board (WCB). Every work related injury that is reported to the
OWCP/WCB would be given a case# or a claim#. Every time a claim is sent to the worker’s compensation
insurance, the claim# or WCB case# needs to be mentioned on it.
The Worker’s Compensation Board is called by different names in different states like
TWCC (Texas Worker’s Compensation Council), Worker’s Compensation Division (Alaska, Alabama,
Colorado, Connecticut, Florida, Iowa, Minnesota, Missouri, New Hampshire, New Jersey), Worker’s
Compensation Commission (Arkansas, California, Maryland, Massachusetts, Mississippi), Office of
Worker’s Compensation (Delaware, DC, Kansas, Louisiana), State Board of Worker’s Compensation
(Georgia), WCB (Indiana, Maine, New York, Montana, Nebraska)
----
Types of State Compensation Benefits
Medical Treatment - hospital, medical & surgical services
Temporory Disability Indemnity - form of weekly payment paid to injured or ill, directly
Permanent Disability Indemnity - Weekly or monthly payments based on rating of percentages of
permanent disability or lumpsum payment
Death Benefits for Survivors - cash payment to dependents of fatally injured employee
Rehabilitation Benefits - in case of several disabilities, can be either vocational or medical rehabilitation
----
Workers Comp Terminologies
BILL:
This is the notification sent to the insurance company that payment of an amount is due under the terms of
the policy. (This is also called as claim in commercial insurance).
ADJUSTER
When an employer group takes up a Worker’s Compensation Insurance, a personal within the insurance
called the CLAIMS ADJUSTER is appointed who adjudicates the claim and decides upon the release of
payment for a particular bill.
INJURY DATE:
The date when the employee was injured,( This injury date should be mentioned on every bill that is sent
to the insurance company.)
-----
CONTERVERTED CLAIM:
If the insurance company disputes on a claim, that it is not work related then claim is called a conterverted
or disputed claim.
BILL REVIEW COMPANY.
The Third party administrates who processes the bills on behalf of the insurance company is called as
BILL REVIEW COMPANY (also known as pricing centers).
FIRST REPORT OF INJURY:
The document used by the employer to report the injury to the INSURANCE or OWCP is called the first
report of injury.
-----
EOR (Explanation of Review)
The Statement Sent to the insurance from the bill revivew company on how the claim was
processed(whether denied or approved for payment) is called EOR ( it is also known as pricing sheets).
Normally in workers comp the EOR and the payment are sent separately.
IME (INDEPENDENT MEDICAL EXAMINATION)
The insurance nominates a neutral doctor to examine a patient and to submit a report to the insurance on
whether the Employee needs further treatment on the injury or not. When IME is being conducted, no bills
will be paid till the release of the result.
If IME is in the favor of the insurance company, then there wouldn’t be any payment for the claims sent
for that injury after the IME date.
WORKER’S COMPENSATION ARBITRATION or APPEALING
If the provider feels that the payment by the insurance is not according to the guidelines or the denial is
incorrect then (s)he has to download the appeal form the respective Worker’s Compensation Board and
send it to them. Appealing to the WCB costs the provider
---
WORKER’S COMPENSATION ADJUDICATION
In most states, employers are required to purchase insurance for their employees from a workers'
compensation insurance company -- also called an insurance carrier. However, in some states, smaller
companies (with fewer than three or four employees) are not required to carry workers' compensation
insurance. In some states, larger employers who are clearly solvent are allowed to self-insure, or act as
their own insurance companies.
Claims adjudication might be done in house (within the insurance) or in a Bill Review Co. Most of the
Workers comp insurance dont process claims inhouse and the claim are forwarded to a bill review
company for processing. The EOR( Explanation Of Review) is then sent to the insurance who issues the
payment to the Provider or Hospital.
---
Purpose of WC Laws
To provide best medical care & maximum recovery
To provide income to injured/ill employee or dependents irrespective of fault
To reduce court delays, costs & work loads due to litigation
To relieve charities of financial drains due to uncompensated disputes
To encourage employer interest in safety & rehabilitation
To promote study of cause of accidents,reduce accidents
----
Fraud & Abuse
Employee
Cannot describe pain or is overly dramatic
Delays in reporting the injury
Reports an injury after missing several days of work
Changes physicians frequently
Is a short-term worker
Has a curious claim history
Fabricates an injury
Exaggeerates a work-related injury to obtain larger benefits
Blames an injury that occurred off the job on the employer
Employer
Misinterprets the annual payroll to get lower premiums
Misinterprets the number of workers employed
Falsely classifies the duties of employees
Insurer
Refuses to pay valid medical claims
Forces the injured worker to settle by using unethical tactics
Medical Provider
Orders or performs unnecessary tests
Charges insurance for service not rendered
Makes multiple referral from a clinic practice regardless of injury
Sends medical reports that look photocopied with the same information typed
Sends in many claims in which injury is of subjective nature
Sends in claims from one employer showing several employees with similar injuries using the same
physicians and/or attorneys
Adjudication
A physician renders professional opinion on whether the individual has temporary or permanent disability
that prevents the person from gainful employment.
Wage loss, physical impairment and earning capacity are the factors taken into consideration to rate
disability
Appeal
Appeals with regard to WC on part of provider, employee, employer or the insurance company can be
done to the Office of the Worker's Compensation program(OWCP) or the Industrial Accident Commission
------
Who can offer WC?
Private Insurance Companies
Employer Groups - In cases, where the private insurance companies offer WC programs at high prices.
The employers join to form a group and offer insurance to their employees. This is called as "Self
Insurance"
Federal Government Bodies - In case where the private insurance companies refuse to offer WC programs
to certain high-risk industry segments,like mines, called "Residual Market". Then, the federal government
offers coverage to these industries.
-----
Who can offer WC?
Private Insurance Companies
Employer Groups - In cases, where the private insurance companies offer WC programs at high prices.
The employers join to form a group and offer insurance to their employees. This is called as "Self
Insurance"
Federal Government Bodies - In case where the private insurance companies refuse to offer WC programs
to certain high-risk industry segments,like mines, called "Residual Market". Then, the federal government
offers coverage to these industries.
---
Documents supporting WC claims
Physician's Notes/Report
First Injury Report
Witness Report
Employer's Report
Ombudsman's Report
Attorney's Notes
WC claims are usually sent as paper claims in HCFA-1500 for Medical Billing and HCFA-1450 for
Hospital Billing
----
Who can chose provider
The provider could be chosen by:
Employer
Employee
Insurance Company
----
How to identify Liability Insurance
If we find either "Work related injury", or "Worker's Compensation", or "Injured at work", or "MVA", or
"MVC", or "Auto Accident" in the charge or demo sheet then we must bill the Liability Ins. Apart from
this, in few clients there is a separate field called as "Financial Class" wherein we can find the codes to
identify the type of insurance.
Example : WC represents Worker's Compensation, AA or Auto represents Auto accident.
We can also identify with the help of the diagnosis codes. Generally "E-codes " are injury codes, that
describes the cause of the injury. The diagnosis codes which start with "8" injury codes due to accidents.
V-codes used for accident codes.
V71.3 - Observation following accident at Work
V71.4 - Observation following other accidents.
----
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Types of Claims
There are two ways in which a claim is generated
Paper Claims
Paper claims have standard formats prescribed by CMS, namely,
CMS 1500 for Physcian claim form
CMS 1450 for Hospital Claim form - UB 92
Electronic Claims
E-claims can be sent in two formats namely,
NSF - National Standard Format - Rigid
ANSI - American National Standard Institute - Flexible
---
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Account Receivable(AR)
What is Accounts Receivable (AR)
AR-Accounts recievable deals with follow up with the insurance companies with respect to pending or
unpaid claims or Follow up with the patients for additonal information or pending money due to the
provider.The pending balance could be current or past due.
AR is also the process of recovering claims past due from payers, either insurance companies or patients,
to maximize revenues.
==
What is the objective of AR?
The AR department or representative needs to ensure “Clean claims processing” on the front-end, before a
claim is transmitted to the insurance company.
AR needs to follow up with past due claims to identify the reason(s) for the delay/denial and take
necessary action to effectively resolve the issue.
==
Benefits of AR follow up
AR helps to maximize revenue by minimizing the balance in Receivables.
AR bridges the gap between the many players in the healthcare reimbursement system and a billing
company.
It plays an important role in being the “Knowledge Point” of an organization through its continuous
contact with outside entities.
===
Accounts Receivable Process
Accounts Receivable process can be classified into four different steps as follows :
Pre-call Analysis
Call with the insurance
Documentation of call details
Post call follow up
====
Pre-call Analysis
The AR - Executive accesses the patient's account information in the client billing system based on the
information from the report sent by the client. The ARE finds out the following information before placing
call with the insurance.
a) Amount pending with the insurance/ patient. (If balance is pending with patient or the balance is zeroed
out on the account, a call is not warranted with the insurance.)
b) Details of the claim as date of service, billed amount, procedure code billed, date of filing of the claim,
payment received any etc.
c) Details of the history of the account by reading the previous billing notes on the billing system.
d) Details of the insurance as name of the insurance, phone number of the insurance, claims mailing
address of the insurance, policy id #, name of the provider, tax id # for the provider, pay to address of the
provider etc.
===
Call with the insurance
Call with the insurance agency can be of the following two types :
Call made on the IVR (interactive voice response) system or
Call with the customer relations’ rep at the insurance office.
On the IVR calls, the ARE would be taken through a series of menus where he/she can enter the details
requested using the telephone key pad and can gather the required information.
During live calls with the insurance reps, the ARE opens the call with the introduction about him/herself,
then proceeds with explaining about the purpose of the call. The call can be completed when all the
information required is gathered from the insurance rep.
====
Documentation of call details
This is an important step in the A/R process. The information gathered during the call with insurance is
communicated to the client by documenting them on the billing notes screen. This is possible since the
billing system is online and the client/ provider/ facility can access the patient account at any time. Since
the objective of the A/R is to get the claim paid as early as possible, suitable recommendations can be
entered on the billing notes to have the claim paid by the insurance.
===
Post call follow up
Depending on the client, follow up activity would be done by the client or Vision. This would basically
involve the plan of action for the claims to get paid after the calls made to the insurance companies. The
post call follow up activities include, refilling claims to the payer, submitting claims with additional
documents, faxing claims/ additional documents, billing another/ secondary payer, billing patients,
adjusting the balance, appealing on the claims, requesting for referral or authorization or medical notes
from the provider’s office etc.
===
Denial Management
Claim denied for untimely filing
Timely filing is the stipulated time from the date of service within which the claim needs to be filed to the
insurance. Failing to do so will result in the denial of the claim. The A/R rep, gathers the date of denial of
the claim. Verifies the address to which the claim needs to be refiled/ appealed. The timely filing limit is
also verified. If the billing system shows that the claim was actually filed within the timely filing time, the
claim can be appealed with proof of timely filing (screen shot of the billing system which has the details
of the date of filing of the claim). Get the fax number and the name of the person whose attention, the fax
can be sent to so that all the information can be faxed across to the insurance.
\\\\\\
Medical Coding
Current Procedural Terminology
Current Procedural Terminology (CPT) is a coding system developed by the American Medical
Association (AMA) in 1966, to convert the medical, surgical and diagnostic services rendered by the
healthcare providers into five-digit numeric codes. The CPT code enables the providers to communicate
both effectively and efficiently to third-party payers about the procedures and services provided to the
patients. The providers are reimbursed based on the codes submitted for the procedures and services
rendered.
Since the practice of medicine is ever changing, the CPT manual also needs to be updated accordingly. It
is updated annually to reflect technologic advances and editorial revisions. It is very important to use the
most current CPT manual available to provide quality data and ensure appropriate reimbursement.
==
HCFA Common Procedural Coding System
HCPCS LEVEL II - FEDERAL HCPCS CODES
The CPTs does not contain all the codes needed to report medical services and supplies, hence CMS
developed the second level of codes - HCPCS. The codes begin with a single letter (A - V) followed by
four numeric digits. They are grouped by the type of service or supply they represent and are updated
annually by CMS with input from private insurance companies. Level II codes are required for reporting
most medical services and supplies provided to Medicare and Medicaid patients and by most private
payers.
These codes are maintained by the HCPCS National Panel. The National Panel is comprised of
representatives from the Blue Cross/Blue Shield Association (BCBSA), the Health Insurance Association
of America (HIAA) and CMS. The Panel is responsible for making decisions about additions, revisions
and deletions to these codes.
==
Local HCPCS
LEVEL III - LOCAL HCPCS
The third level contains codes assigned and maintained by individual state carriers. Like Level II, these
codes begin with a letter (W - Z) followed by four numeric digits, but the most notable difference is that
these codes are not common to all carriers. Individual carriers assign these codes to procedures of their
own discretion. But the carriers must send written notification to the physicians and suppliers in their area
when these local codes are required.
==
International Classification of Disease
ICD 9 CM
The International Classification of Diseases, Ninth Revision, Clinical Modification (ICD -9-CM) is based
on the official release of the World Health Organisation's (WHO) Ninth Revision. In February 1977, a
steering committee was convened by the National Center for Health Statistics to provide advice and
counsel in developing a clinical modification of ICD-9. The term "clinical" is used to emphasize the
modification's intent: to serve as a useful tool to classify morbidity data for indexing medical records,
medical care review, ambulatory and other medical care programs as well as for basic health statistics. To
describe the clinical picture of the patient, the codes must be more precise than those needed only for
statistical groupings and trend analysis.
==
E CODES
External Cause of Injury codes (commonly called E codes) were developed by the World Health
Organization (WHO) as a supplemental code for use with the International Classification of Diseases
(ICD). These four-digit E codes provide a systematic way to classify diagnostic information that doctors,
nurses, and other health care providers have entered into the medical record. They are standardized
internationally; allow consistent comparisons of data among communities, states, and countries (or across
time for purposes of evaluation studies); and are easily used in computerized data systems. If E codes are
included in hospital records, the medical and financial consequences of particular types of motor vehicle
injuries can be examined.
E codes provide information about both the event during which the injury took place and the individuals
who were injured. For example, E codes can record whether the individual injured was a passenger in a
motor vehicle that collided with another motor vehicle (E813.1) or the driver of a motor vehicle that
collided with a train (E810.0). When combined with other information in the medical record (especially N
codes, which define the medical nature of an injury), E codes can tell us a great deal about the types of
events that produce injuries and the types of injuries they produce.
E codes are mandatory on death records for all persons whose deaths are injury related.
==
CPT CODE CLASSIFICATION

CPT - Current Procedural Terminology Nature of Treatment Code Category

1. Evaluation & Management 99201 to 99499
2. Surgery 10040 to 69990
3. Anesthesiology 00100 to 01999
99100 to 99140
4. Radiology 70010 to 79999
(Including Nuclear Medicine & Diagnostic Ultrasound)
5. Pathology & Laboratory 80049 to 89399
6. Medicine 90281 to 99199
===

Abbrevations
HBMA: Healthcare Billing Management Association
AMA: American Medical Association
CPT: Current Procedural Terminology
ICD: International Classification of Diseases
HCFA: Health Care Financial Administration
HCPCS: Health care Common Procedural Coding System
ZIP: Zonal Improvement Plan
UPIN: Unique Physician Identification Number
PIN: Provider Identification Number
NPI: National Provider Identifier
PHI: Protected Health Information
ABN: Advanced Beneficiary Notice
ROI: Release of Information
PCP: Primary Care Physician
HMO: Health Maintenance Organization
POS: Point Of Service
PPO: Preferred Provider Organization
EPO: Exclusive Provider Organization
HIPAA: Health Insurance Portability and Accountability Act
RAN: Referral Authorization Number
IIHI: Individually Identifiable Health Information
CE: Covered Entity
OWCP: Office of Worker’s Compensation Program
CMS: Center for Medicare and Medicaid Services
DHHS: Department of Health and Human Services
SSA: Social Security Administration
OIG: Office of Inspector General
RRB: Railroad Retirement Board
DEERS: Defense Enrollment Eligibility Reporting System
CHAMPUS: Civilian Health And Medical Program for Uniformed Services.
CHAMPVA: Civilian Health And Medical Program for Department of Veteran’s Affairs.

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