CHAPTER © 2012 The McGraw-Hill Companies, Inc. All rights reserved. 1 Introduction to the Medical Billing Cycle

© 2012 The McGraw-Hill Companies, Inc. All rights reserved. Learning Outcomes When you finish this chapter, you will be able to: 1.1Explain the reason that employment opportunities for medical insurance specialists in physician practices are increasing rapidly. 1.2Describe covered services and noncovered services under medical insurance policies. 1.3Compare indemnity and managed care approaches to health plan organization. 1.4Cite three examples of cost containment under health maintenance organizations. 1.5Define a preferred provider organization. 1-2

© 2012 The McGraw-Hill Companies, Inc. All rights reserved. Learning Outcomes (Continued) When you finish this chapter, you will be able to: 1.6State the two elements that are combined in a consumer-driven health plan. 1.7Recognize the three major types of medical insurance payers. 1.8List the ten steps in the medical billing cycle. 1.9Define professionalism. 1.10Explain the purpose of certification. 1-3

© 2012 The McGraw-Hill Companies, Inc. All rights reserved. Key Terms accounts receivable (A/R) adjudication benefits capitation coinsurance compliance consumer-driven health plan (CDHP) copayment covered services 1-4 deductible diagnosis code ethics etiquette excluded services fee-for-service health care claim health maintenance organization (HMO) health plan indemnity plan managed care

© 2012 The McGraw-Hill Companies, Inc. All rights reserved. Key Terms (Continued) managed care organization (MCO) medical coder medical insurance medical insurance specialist medical necessity network noncovered services open-access plan out-of-network out-of-pocket 1-5 participation patient ledger Patient Protection and Affordable Care Act (PPACA) payer per member per month (PMPM) point-of-service (POS) plan policyholder practice management program (PMP)

© 2012 The McGraw-Hill Companies, Inc. All rights reserved. Key Terms (Continued) preauthorization preexisting condition preferred provider organization (PPO) premium preventive medical services primary care physician (PCP) procedure code professionalism provider 1-6 referral schedule of benefits self-funded (self-insured) health plan third-party payer

© 2012 The McGraw-Hill Companies, Inc. All rights reserved. 1.1 The Medical Insurance Field 1-7 Spending on health care in the United States is rising due to the cost of advances in medical technology and an aging population There are many job opportunities in the health care field as a result A TRILLION DOLLAR industry! –12 zeros!

© 2012 The McGraw-Hill Companies, Inc. All rights reserved. 1.2 Medical Insurance Terms 1-8 Medical insurance is a written policy that states the terms of an agreement between a policyholder (an individual) and a health plan (an insurance company, plan or program that provides some form of medical insurance) –Dependents Person other than the insured who is covered under a health plan –Wife, children…? Health plans provide benefits (payments for medical services) Health plans are often referred to as payers A third-party payer is a private or government organization that insures or pays for health care on behalf of beneficiaries

© 2012 The McGraw-Hill Companies, Inc. All rights reserved. 1.2 Medical Insurance Terms (Continued) 1-9 Insurance policies contain a schedule of benefits that summarizes payments that may be made for medical services Payer’s definition of medical necessity determines coverage and payment A provider must meet the payer’s professional standards –Providers include physicians, nurse-practitioners, physician assistants, therapists, hospitals, laboratories, long-term care facilities, and suppliers such as pharmacies and medical supply companies May be individuals, groups, or organizations

© 2012 The McGraw-Hill Companies, Inc. All rights reserved. 1.2 Medical Insurance Terms (Continued) 1-10 Covered services may include primary care, emergency care, medical specialists’ services, and surgery. These are listed in the policy. Preventive medical services include physical examinations, pediatric and adolescent immunizations, prenatal care, and routine screening procedures Not all covered services have the same benefits

© 2012 The McGraw-Hill Companies, Inc. All rights reserved. 1.2 Medical Insurance Terms (Continued) 1-11 Noncovered services are –those not paid for by a health plan Excluded services may include: –Dental services, eye care, employment-related injuries, cosmetic procedures, or experimental procedures –Some other specific items –A preexisting condition a medical condition diagnosed before the policy took effect

© 2012 The McGraw-Hill Companies, Inc. All rights reserved. 1.3 Health Care Plans 1-12 An indemnity plan provides protection against loss Physicians send the health care claim—a formal insurance claim that reports data about the patient and the services provided—to the payer on behalf of the patient Patients pay a premium –the periodic payment they are required to make to keep a policy in effect

© 2012 The McGraw-Hill Companies, Inc. All rights reserved. 1.3 Health Care Plans (Continued) 1-13 Most policies have a deductible –the amount that the insured pays on covered services before benefits begin Coinsurance is the percentage of each claim that the insured pays Some patients must pay out-of-pocket expenses prior to benefits –Example on page 9 Fee-for-service is a charging method based on each service performed –Figure 1.2, page TEN