HEALTH CARE CLAIM PREPARATION AND TRANSMISSION Chapter 6 HEALTH CARE CLAIM PREPARATION AND TRANSMISSION

Health Care Claim Preparation and Transmission Learning Objectives Describe the process of using medical billing programs to prepare health care claims. Briefly describe the information contained in the five major sections of the HIPAA claim. Discuss the importance and use of claim control numbers and line item control numbers. Identify the three major methods of electronic claim transmission. Chapter 6

Key Terms Audit-edit claim response Billing provider Birthday rule Claim attachment Claim control number CMS-1500 claim form Coordination of benefits (COB) Database Data element Destination payer Edit Electronic data interchange (EDI) HIPAA claim HIPAA Electronic Health Care Transaction and Code Sets (TCS) HIPAA Security Rule Chapter 6

Key Terms (cont’d) Line item control number National Patient ID National Payer ID National Provider Identifier (NPI) Password Pay-to provider Place of service (POS) code Primary insurance Secondary insurance Referring physician Rendering provider Subscriber Taxonomy code Transactions Verification report Chapter 6

Claim Preparation Using Medical Billing Programs Computerized billing and claims Most medical practices use software programs to prepare claims The program’s databases are set up with data about: Physicians Diagnosis and Procedure Codes Fee Schedules Insurance Carriers (payers) Chapter 6

Claim Preparation Using Medical Billing Programs (cont’d) To prepare a claim, a medical insurance specialist: Records the patient’s information, including primary insurance plan Records the services, charges, and payments based on the patient’s encounter form Creates and transmits the claims to the appropriate payer Chapter 6

Recording Patients’ Information Patient Information Forms Data from new or updated forms is entered into program New records are created for new patients When a patient is covered by more than one Group Plan, the Medical Insurance Specialist must determine which plan is primary and which is secondary. Chapter 6

Recording Patient’s Information Primary Insurance (Payer) is a Health Plan that pays benefits first when a patient is covered by more than one Group Plan. Secondary Insurance (Payer) is a Health Plan that pays benefits after the Primary Plan, when a patient is covered by more than one Group Plan. Chapter 6

Recording Patient’s Information Dependent Child(ren) – the primary plan is determined by the Birthday Rule. The Rule states that the parent whose day of birth is earlier in the calendar year is Primary. Chapter 6

Coordination of Benefits Coordination of Benefits (COB) is a provision which establishes the order in which insurance plans pay claims when an individual has coverage under more than one plan. The insurance industry has developed a consistent and orderly way to determine which plan pays its full benefits and which plan pays a reduced amount (if any), which when added together equal more than a single plan's benefit, but not more than the total amount of the allowable charges incurred. It is intended that individuals do not profit when having coverage under more than one plan, and that Members and/or providers receive the appropriate amount of reimbursement for medical services. Chapter 6

Coordination of Benefits Coordination of Benefits (COB) applies when: Both spouses cover their family through their employers Both spouses are covered by the same insurance carrier but work for different employers. Member is Federal Medicare eligible Member is retired from one job and actively employed elsewhere Member is injured in an automobile accident Member is injured on the job The primary subscriber has more than one employer Chapter 6

Coordination of Benefits The following criteria is used to determine the order of benefits: The subscriber's active employee plan is primary over their spouse's coverage Active employee coverage is primary over inactive (or retiree) employee coverage If the Member has two policies that are both active, the policy that has been active the longest is primary. Chapter 6

Coordination of Benefits Birthday Rule Birthday Rule: When a dependent child is covered under both parents' health plans, the plan of the parent whose birthday falls earlier in the calendar year pays first. When a newborn is covered for the first 31 days (enrolled or not enrolled), the plan of the parent whose birthday falls earlier in the calendar year pays first. Chapter 6

Coordination of Benefits Birthday Rule Only the month and the day are considered, not the parents' years of birth. FOR EXAMPLE: If the mother's birthday month is March and the father's birthday month is June, then the mother's health plan is primary If both parents have the same birthday, then the plan which covered the parent longer is primary over the plan which covered the parent for a shorter time. Chapter 6

Coordination of Benefits The Provider is responsible for supplying information about the Secondary Insurance & coverage to the Primary Payer The Providers must also include this information in the Insurance Claim Form. Chapter 6

Coordination of Benefits– (cont.) When the RA (remittance advice) is received the Medical Insurance Specialist prepares another Claim Form for the Secondary Plan. The claim reports: The Amount the first Insurance Policy paid The Patient Balance, if any After both carriers have made payments, any unpaid bills are submitted to the patient (depending on deductible, coinsurance, PAR, non-PAR, etc) Chapter 6

Recording Services, Charges, & Payments for Patients’ Encounter Patient’s Encounter Form Diagnosis and Procedure Codes Charges for Services and Procedures Patient Payment Information Patient’s Insurance Coverage for visit is selected Patient’s Provider for visit is entered into the system Chapter 6

Creating & Transmitting Claims To Payers Electronic Claim Files Medical insurance specialist instructs program to create claims for appropriate payer Program draws on databases to create claim files Files may then be printed, but most are submitted electronically to payer Chapter 6

Accuracy & Security Issues Medical Billing Programs The Major Databases in Billing Programs are: Provider – The provider database has information about the physician(s), medical office, the practice name, phone number, etc. Patient/Guarantor – The database where each patient information form is stored, such as name, address, phone, birth date, social security number, etc. Chapter 6

Accuracy & Security Issues Medical Billing Programs The Major Databases in Billing Programs are: Insurance Carrier – This database contains the names, addresses, plan types, and other data about the major health plans used by the practice’s patients. Diagnosis Codes – This database contain the ICD-9 Codes that indicate the reason a service is provided. The Codes stored are those most frequently used by the Practice. Chapter 6

Accuracy & Security Issues Medical Billing Programs The Major Databases in Billing Programs are: Procedure Codes – The Procedure Code database contains the data needed to create charges. The CPT Codes most often used by the practice are selected for this database. Transactions – This database stores information about each patient’s visit, charges and the related diagnoses and procedures, as well as received and outstanding payments. Chapter 6

Data Entry in Computer Billing Tips for accurate Data Entry Do not use prefixes for names (avoid Mr., Ms., etc.) Do not use special characters (hyphens, commas, etc.) Use only valid data in all fields (avoid words such as same) Enter the required number of characters for each data element, but do not worry about the format—most programs reformat data correctly Chapter 6

Data Security HIPAA Security Rule Sets standards for protecting PHI when it is maintained or transmitted electronically PHI: Protected Health Information Office’s Database files contain PHI Chapter 6

Data Security Security Measures in a Medical Office Access control and passwords Users are given IDs & Passwords that will permit them to use the files that they have been granted access. Backup Files The process of copying files to another medium so that they will be preserved in case the originals are not longer available. Security policy A Process must be in place to train staff on protecting PHI when electronically stored and/or sent. Chapter 6

Types of Claims HIPAA (Health Insurance Portability & Accountability Act of 1996) Claim Electronic transaction called the 837 claim Paper Claim CMS-1500 claim form (formerly the HCFA-1500 claim form) Chapter 6

Types of Claims (cont’d) HIPAA claim Follows requirements of the HIPAA Electronic Health Care Transaction and Code Sets (TCS) Must be sent as an electronic file with required format CMS mandates use of this form for all Medicare claims Required or preferred by most other payers as well Paper Claim May be used for Medicare claims by very small practices only Still accepted by most payers Chapter 6

Preparing HIPAA Claims The HIPAA Claim has Five Major Sections 1 Provider information 2 Subscriber and patient information 3 Payer information 4 Claim details 5 Services Chapter 6

Provider Information Includes Addresses and NPIs (National Providers Identifier) of: Billing provider—organization or person transmitting the claim to payer May be the medical practice or an outside organization (billing service or clearinghouse hired by the practice) Pay-to provider—organization or person receiving payment If billing provider and pay-to provider are the same, not necessary to report pay-to provider Chapter 6

Provider Information (cont’d) NPI National Provider Identifier Ten-digit number PIN (Provider Identification Number UPIN (Unique Provider Identification Number) Recent HIPAA rule: Until assigned, tax identification number or other identifier can be used in place of NPI Chapter 6

Taxonomy Code Taxonomy Code – is a ten-digit number that stands for a physician’s medical specialty. Example: 207NP0225X for Pediatric Dermatology Chapter 6

Subscriber/Patient Information Policyholder or Guarantor May be the patient, but if not, patient information also required Data Elements: Subscriber’s name, health plan number, policy number and plan name, claim filing indicator code (shows type of plan, such as HMO) Chapter 6

Subscriber/Patient Information (cont’d) Relationship to Patient If the subscriber is the patient, select “self” When the subscriber and patient are different, select the correct relationship from list of options Software stores corresponding code Chapter 6

Subscriber/Patient Information (cont’d) Data Elements: Name, address, gender, date of birth, primary identifier (such as a health plan member ID—to be replaced soon by National Patient ID under HIPAA) Possibly secondary identifier (such as SSN) Chapter 6

Payer Information Destination payer Payer receiving the claim Data Elements: Payer’s name and ID (to be replaced with National Payer ID when legislated) Assignment-of-benefits code Chapter 6

Claim Information Details of the claim Data elements: Claim control number, for tracking Assigned by the medical insurance specialist Maximum of 20 characters; can incorporate account number but should not be the same Total charges and patient payment, if any Place of service (POS) code; diagnosis codes Rendering or referring provider data, if any Chapter 6

Service Line Information Service Line Information – List the Services performed for patient Each service is listed on separate line Data elements for each service: Line item control number, for tracking payments from insurance carrier Date of service Procedure code Diagnosis code links Charge Chapter 6

Transmitting HIPAA Claims Electronic Data Interchange (EDI) HIPAA requires particular format for transmission Called X12 transmission Patients’ PHI must be secure and private, when claims are sent Claim Attachments HIPAA electronic standard underway At present, may be paper or electronic Chapter 6

Methods of Sending Claims Three Major methods for sending electronic claims Clearinghouse Direct Transmission Direct Data Entry (DDE) Most medical offices use Clearinghouses for HIPAA EDI Format Chapter 6

Methods of Sending Claims (cont’d) Clearinghouse Acts as an intermediary between provider and payer Reformats data from provider to a form accepted by the payer Charges fee for service Performs edits Checks claim for missing or incorrect data Creates audit/edit report for provider Lists errors and sends claim back for correction (dirty claims) Chapter 6

Methods of Sending Claims Three Major methods for sending electronic claims – Cont. Direct Transmission - Provider & Payer receive payment directly. Direct Data Entry (DDE) - Office uses the Internet-based Service connected to the payer where data elements are keyed. Chapter 6

Preparing Paper Claims CMS-1500 (HCFA-1500) claim form Paper claim containing 33 form locators Form locators 1-13 Patient and patient’s insurance coverage Form locators 14-33 Provider and transactions data (diagnoses, procedures, charges) Claim is printed and sent to payer Chapter 6

Quiz Matching Paper claim form Ten-digit number 837 NPI POS code CMS-1500 Paper claim form Ten-digit number Another name for the HIPAA claim A number that shows where a patient received services Chapter 6

Critical Thinking Name one advantage and one disadvantage of electronic claims. Advantages such as: lower costs, reduced rejection, faster payment, access to status reports. Disadvantages such as: initial expense, security, disruption due to power failure or equipment problems, unable to include attachments. Chapter 6