UNIT 2 HEALTH INSURANCE BASICS CHAPTER 5 THE “UNIVERSAL” CLAIM FORM: CMS-1500 Copyright © 2011, 2009, 2007 by Saunders, an imprint of Elsevier Inc.

THE UNIVERSAL FORM Initially called HCFA-1500 Created in mid-70s Approved by the American Medical Association (AMA) Council on Medical Services Subsequently adopted by all government healthcare programs What are some of the advantages of having a universal claim form? In the mid-70s, the Health Care Financing Administration (HCFA) created a new form for Medicare claims called the HCFA-1500. The form was approved by the American Medical Association (AMA) Council on Medical Services and was subsequently adopted by all government healthcare programs.

Optical Character Recognition (OCR) Use OCR formatting guidelines when completing CMS-1500. CMS-1500 is printed in red ink to optimize OCR. When form is scanned, red drops out. Computer reads only information printed within the blocks. Why is it important to follow OCR formatting rules? Optical Character Recognition (OCR) formatting guidelines should be used when completing the CMS-1500. The CMS-1500 is printed in a special red ink to optimize this OCR process. When the form is scanned, everything in red drops out, and the computer reads the information printed within the blocks.

CMS-1500 with OCR Formatting originals or very clear copies black text in standard mono-spaced type fonts (such as Courier or Times New Roman) in 10 or 12-point font size no punctuation or special formatting all characters falling within the spaces (blocks) provided on the form Refer to pages 73-74 in the text for a complete list of OCR formatting rules.

Before Submission… PROOFREAD! Signature(s) No errors/omissions Attachments What kinds of signatures are acceptable on the CMS-1500 form? Proofread all completed forms before submission. Make sure the required signatures are on the forms. Forms should be thoroughly examined for errors and omissions before mailing to the payer. Make sure any required attachments are included.

Important Reminder! The most important task the health insurance professional is responsible for is to obtain the maximum amount of reimbursement in the minimal amount of time that the medical record will support.

Electronic vs. Paper Claims HIPAA Administrative Simplification Compliance Act (ASCA) mandate: After October 2003, providers must submit claims electronically. HHS cannot pay Medicare paper claims after this date, unless the Secretary grants the provider a waiver for this requirement. The HIPAA Administrative Simplification Compliance Act (ASCA) mandated that providers must submit claims electronically by October 2003. ASCA prohibits HHS from paying Medicare paper claims after this date, unless the Secretary grants a waiver for this requirement. A waiver is granted if a provider has no method available for the submission of electronic claims or if the facility submitting the claim was a small provider of services or supplies.

A waiver is granted: if a provider has no method available for the submission of electronic claims if the facility submitting the claim was a small provider of services or supplies What types of practices are eligible for a waiver?

Definition of Small Provider/Supplier ASCA defines a small provider or supplier as: a provider of services with fewer than 25 full-time equivalent employees or a physician, practitioner, facility or supplier (other than a provider of services) with fewer than 10 full-time equivalent employees. So, who can submit paper claims? Providers that fall into one of the two following exempt categories: Those who are not computerized and do not have the capability of submitting claims electronically, and Small providers who fit the description in the slide This provision, however, does not prevent providers from submitting paper claims to other (non-government) health plans. If a facility falls within these guidelines, the facility does not have to submit claims electronically to Medicare. If the provider falls into one of the two following exempt categories, the paper CMS-1500 form can be used: --Providers who are not computerized and do not have the capability of submitting claims electronically, and --Small providers who fit the descriptions listed on this slide

Documents Needed to Complete the CMS-1500 Claim Form Patient Information Form Insurance Identification (ID) Card Patient’s Health Record Encounter Form Ledger Card Note: Have example(s) of each ready to pass around to the class for students to examine. Explain that every medical facility may have a different style. What type of claims information can be found on the encounter form?

Two Sections of the CMS-1500 Top Half – The patient/insured section Bottom Half – The physician/supplier section Note: Have students refer to forms passed out previously as you point out the different sections.

Submitting Clean Claims Complete claims according to carrier’s guidelines. Proofread, proofread, proofread. Include any necessary documentation explaining unusual circumstances. Affix the proper signature. Make a copy for the file. Why is it so vital to submit clean claims? What happens to a claim that contains errors or omissions? Ask students to enumerate important points for submitting clean claims.

Electronic Claims Experts tell practitioners that processing insurance claims electronically: improves cash flow reduces the expense of claims processing streamlines internal processes Many, if not most, healthcare facilities now submit claims electronically. What are some of the advantages of submitting claims electronically?

There are basically two ways to submit claims electronically: through an electronic claims clearinghouse directly to an insurance carrier Whether a healthcare facility chooses to use a clearinghouse or to submit claims directly to the carrier, it usually must go through an enrollment process. What is an enrollment process, and what does it entail?

What is a Clearinghouse? HIPAA defines a healthcare clearinghouse as: “a public or private entity that processes or facilitates the processing of nonstandard data elements of health information into standard data elements.” What functions in the entire claims process are handled by a claims clearinghouse? More simply put, a claims clearinghouse is a company that receives claims from healthcare providers, consolidates them into batches, and then sends one transmission (containing multiple claims) to each third-party payer.

What do clearinghouses do? They act as points of entry. They check for validity and accuracy. They route clean claims on to proper carrier. They return claims with errors and/or omissions to provider. Clearinghouses act as points of entry for both paper and electronic claims from providers edit claims for validity and accuracy routes them on to the proper third party carrier for payment Clearinghouses return claims to the provider if errors or omissions are detected that will cause the claim to be rejected or denied. They are capable of translating data from one format to another, e.g., electronic to paper or vice versa. Clearinghouses must have the ability to meet the requirements of each insurance company using their specific computer formats.

Direct Claims Submission Typically more involved Must first enroll with carrier(s) Often need additional software to be compatible w/carriers What factor makes submitting electronic claims direct to the carrier the better choice? Submitting electronic claims directly to an insurance carrier is a little more complicated. As explained in the text, you must first enroll with the carrier. Most government and many commercial carriers require the provider to go through an enrollment process before submitting claims electronically. The healthcare facility will probably need additional software from each insurance carrier to whom submit claims. Many carriers have their own software or can refer the health insurance professional to someone who supports direct transmissions in the area.

Clearinghouse vs. Direct Carrier direct is usually less expensive if the medical practice submits most claims to just one carrier. When multiple carriers are used, a clearinghouse is usually less expensive. There are pros and cons with both methods of submitting claims. Whichever method is used, it is important to remember that claims are processed faster and reimbursement time is shortened using electronic claims submission. Also keep in mind, that not all healthcare facilities have to submit claims electronically. (Ask students to review the criteria HIPAA says has to be met before providers can submit paper claims.)