Chapter 17 Hospital Billing Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.

Learning Objectives Define common terms related to hospital billing. Name qualifications necessary to work in the financial section of a hospital. List instances of breach of confidentiality in a hospital setting. Explain the purpose of the appropriateness evaluation protocols. Describe criteria used for admission screening. Define the 72-hour rule. Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.

Learning Objectives (cont’d.) Describe the quality improvement organization and its role in the hospital reimbursement system. State the role of ICD-9-CM Volume 3 in hospital billing. Identify categories in ICD-9-CM Volume 3. Explain the basic flow of an inpatient hospital stay from billing through receipt of payment. Describe the charge description master. Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.

Learning Objectives (cont’d.) State reimbursement methods used when paying for hospital services under managed care contracts. State when the CMS-1450 (UB-04) paper or electronic claim form may and may not be used. Describe the history and purpose of diagnosis-related groups. Identify how payment is made based on diagnosis-related groups. Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.

Learning Objectives (cont’d.) State how payment is made based on the ambulatory payment classification system. Name the four types of ambulatory payment classifications. Edit and complete insurance claims in both hospital inpatient and outpatient settings to minimize their rejection by insurance carriers. State the general guidelines for completion of the CMS-1450 (Uniform Bill [UB-04]) and transmission of the electronic claim form. Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.

Chapter 17 Lesson 17.1 Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.

Patient Service Representative Qualifications Knowledge and competence in: ICD-9-CM diagnostic codes CPT and HCPCS procedure codes CMS-1500 insurance claim form Uniform Bill (UB-04) insurance claim form Explanation of benefits and remittance advice document Medical terminology Major health insurance programs Managed care plans Insurance claim submission Denied and delinquent claims These are qualifications for working in a hospital setting, not a physician’s office. Explain how the qualifications differ. (Answers will vary.) Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.

Patient Service Representative Fig. 17-1 (p. 558) This is a sample job description for a patient service representative. Note the scope of the responsibilities. Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.

ICD-9-CM Inpatient Coding Box 17.1 (p. 559). These are the coding competencies for the ICD-9-CM form. The ICD-9-CM codes will be discussed in more detail later in this chapter. Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.

Medicolegal Confidentiality Issues Documents May not be released unless a patient has signed an authorization form. Verbal communication New employees may have to sign a confidentiality statement. Describe an exception to the rule that documents cannot be released without patient authorization. (When a medical record is subpoenaed by a court) A confidentiality statement may inform the employee that his/her employment may be terminated if he/she violates confidentiality rules. Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.

Medicolegal Confidentiality Issues (cont’d.) Computer security Use of passwords Policies for email and faxes Downloading of data from one department to another Length of time documents may be retained on hard drive Procedures for deletion of confidential information Closing out when leaving a workstation or desk Computer security is a vital part of patient confidentiality. It is important for all employees to adhere to the hospital’s policies regarding computer security. Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.

Appropriateness Evaluation Protocol Figure 17-3 (p. 561). Explain when a patient is considered an inpatient. (When he or she is admitted to the hospital for an overnight stay) AEPs must be met to certify that the patient’s complaints warrant admission to the hospital. The Medicare Prospective Payment System (PPS) requires that all patients must meet at least on severity of illness (SI) or intensity of services (IS) criterion, unless otherwise indicated, to be certified for hospital admission. Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.

Admitting Procedures for Major Insurance Programs Private insurance Managed care Emergency inpatient admission Nonemergency inpatient admission Admission to a participating hospital Admission to a nonparticipating hospital Explain what a patient under private insurance must provide when he or she is admitted. (A current insurance card) Explain when the managed care program must be notified in an emergency inpatient admission to a hospital. What must be obtained? (An authorization number) In a nonemergency admission to a hospital with a managed care contract, what must the physician do to obtain authorization for the length of the hospital stay? (Refer to primary care physician) Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.

Admitting Procedures for Major Insurance Programs (cont’d.) Medicaid Medicare TRICARE and CHAMPVA Workers’ compensation Explain how the requirements for admission to a hospital differ between Medicare and Medicaid. (A treatment authorization form) Explain what must be obtained before admission to a civilian hospital under TRICARE and CHAMPVA. (Precertification) Since employees do not carry workers’ compensation insurance cards, explain what must happen before a hospital or physician’s insurance claim can be submitted. Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.

Preadmission Testing Preadmission testing (PAT) includes: Diagnostic studies Laboratory tests Chest x-ray Electrocardiography When a laboratory panel of tests is performed, each separate test must be itemized and must show the clinical benefit for each test performed based on the patient’s diagnosis. Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.

Medicare 72-Hour Rule Also called 3-day payment window rule If patient receives diagnostic tests and hospital outpatient services within 72 hours of admission to hospital, all such tests and services are combined with inpatient services Preadmission services become part of the DRG payment to hospital and may not be billed separately If a hospital owns or operates a physician’s office that provides diagnostic or other services related to the admission within 3 days of subsequent admission, the services must be included in the DRG payment. If the rule is not followed, fraud and abuse may be considered. Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.

Exceptions to the 72-Hour Rule Services provided by home health agencies, hospice, nursing facilities, and ambulance services Physician’s professional portion of a diagnostic service Preadmission testing at an independent laboratory when the laboratory has no formal agreement with the healthcare facility Discuss what billing should be done with a patient with private (non-Medicare) insurance receiving tests within 20 hours of hospital admission. (Include charges for such tests with inpatient billing.) Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.

Utilization Review Department conducts an admission and concurrent review and prepares a discharge plan on all cases. Utilization review (UR) companies exist for self-insured employers, third-party administrators, and insurance companies. Explain what the utilization review process determines. (Whether admissions are justified. The process also anticipates length of stay and concludes the expected discharge date.) Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.

Quality Improvement Organization (QIO) Admission review Readmission review Procedure review Day outlier review Cost outlier review DRG validation Transfer review QIOs are composed of licensed doctors of medicine or osteopathy actively engaged in the practice of medicine or surgery. Working under federal guidelines, these physicians evaluate other physicians on the quality of professional care, as well as other factors. Describe what would happen if a hospital did not have a QIO contract. (It would not receive payment from Medicare.) Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.

Chapter 17 Lesson 17.2 Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.

Coding Hospital Procedures Outpatient hospital insurance claims use Current Procedural Terminology (CPT) and International Classification of Diseases, Ninth Revision, Clinical Modification (ICD-9-CM), Volumes 1 and 2 Inpatient hospital insurance claims use ICD-9-CM, Volumes 1 and 2, for diagnoses and Volume 3 for procedures CPT is Medicare’s Healthcare Common Procedure Coding System and is used with the three volumes of the ICD-9-CM to provide codes on hospital insurance claims. There are computer software programs that contain the same data and can make looking up the codes quicker and easier. Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.

Inpatient - Principal Diagnosis Principal diagnosis: condition assigned a code representing the diagnosis established after study that is chiefly responsible for patient admission Diagnostic code sequence in correct order is very important in billing of hospital inpatient cases Always list the principal diagnosis first. Define “comorbidity.” (An ongoing condition that exists along with the condition for which the patient is receiving treatment) Explain what a secondary diagnosis is. (A diagnosis that may contribute to the condition, treatment, or recovery from the condition shown as the principal diagnosis) Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.

Rules for Coding Inpatient Diagnoses Some differences exist between coding diagnoses for inpatient and outpatient cases. Codes for signs and symptoms of ICD-9-CM are not reported as principal diagnoses. When two or more conditions are principal diagnosis, either condition may be sequenced first. When a symptom is followed by a contrasting comparative diagnosis, sequence symptom code first. Describe the important differences between coding diagnoses for inpatient and outpatient cases. (Outpatient coding uses the final outpatient diagnosis for coding purposes; inpatient coding assigns codes based upon the condition that is chiefly responsible for the visit, and codes are also assigned for all conditions on the medical record.) Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.

Principal Diagnoses Subject to 100% Review Arteriosclerosis heart disease (ASHD) Diabetes mellitus without complications Right or left bundle branch block Coronary atherosclerosis Local hospital health information management personnel should be contacted periodically to find out whether new items have been added to this list. Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.

ICD-9-CM Volume 3 Procedures Used for inpatient hospital billing Tabular list divided into chapters that relate to operations or procedures for various body system Alphabetic index is arranged by procedure and not anatomic site Alphabetic index used to locate procedure referred to as main term Procedure codes are two digits at the category code level with one or two digits beyond the decimal point. Explain the significance of the third and fourth digits. Provide the term for an operation named after a person. (Eponym) Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.

Coding Outpatient Procedures Use up-to-date Current Procedural Terminology (CPT) Use HCPCS to obtain medical procedural codes for Medicare and some non-Medicare patients on outpatient hospital insurance claims that are not in CPT code book Use modifiers as noted in CPT/HCPCS guidelines CPT codes are updated each year; billing software must be updated with new codes to receive maximum reimbursement. Tell students how to pronounce HCPCS. (“Hick-picks”) See Table 17.1 (p. 566) and Table 17.2 (p. 567) for CPT and HCPCS modifiers. Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.

Inpatient Billing Process Fig. 17-4 (p. 568). Provide the titles of the major personnel involved in the inpatient billing process. (Admitting clerk, insurance verifier, attending physician, nursing staff, medical transcriptionist, discharge analyst, code specialist, insurance billing editor, nurse auditor) Follow the flow chart to illustrate the inpatient billing process. Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.

Charge Description Master Services and procedures are checked off and coded internally Data includes Procedure code Charge Revenue code The charge master database must be kept current and accurate to obtain proper reimbursement and must be regularly audited. Master charge list (charge description list) is a computer file unique to each hospital that accommodates the charges for items and services that may be provided to patients. Revenue code usually lines up with specific lines on the CMS-1450 (UB-04), the form used for inpatient claims. Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.

Reimbursement Methods Ambulatory payment classifications Bed leasing Capitation or percentage of revenue Case rate Diagnosis-related groups Differential by day in hospital Differential by service type Explain what an ambulatory payment classification is. (Method is based on procedure rather than diagnoses; services are associated with a specific procedure/visit, and are bundled together) Define “capitation.” (Reimbursement to the hospital on a per-member per-month basis) DRGs will be discussed in more detail in Lesson 17.3. Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.

Reimbursement Methods (cont’d.) Fee schedule Flat rate Per diem Periodic interim payments (PIPs) and cash advances Withhold Managed care stop loss outliers Describe a stop loss. (A form of guarantee that may be written into a contract using one of a variety of methods) Some methods of managed care stop loss outliers include case-based stop loss, reimbursement stop loss, percentage stop loss, and Medicare stop loss. Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.

Reimbursement Methods (cont’d.) Charges Discounts in the form of sliding scale Sliding scales for discounts and per diems Explain what a sliding scale is. (A form of discount with a limit in which the percentage amount increases, based on hospital numbers, e.g., number of bed-days per year) Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.

Elements of the Reimbursement Process Electronic data interchange Allows computer to help in scrubbing bill Hard copy billing Used for insurance companies that are not capable of receiving electronic claims Receiving payment After receipt of payment, patient sent net bill listing any owed deductible, coinsurance amount, and charges not covered Discuss the benefits of EDI. (Answers will vary.) Define “scrubbing a bill.” (Using computer software to check for errors before submitting the claim) Timeliness of payment may be included in a contract to encourage a hospital to join a plan, or a hospital may demand a penalty for claims not processed within 30 days. Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.

Chapter 17 Lesson 17.3 Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.

Outpatient Insurance Claims Emergency department visits Elective surgeries Only outpatient services provided by the hospital should be submitted by the hospital unless the hospital is billing for physicians Using the hospital for surgical or medical consultations that could be done in a physician’s office should be avoided Define “outpatient.” (A patient who receives medical services and goes home the same day) Some insurance policies require a second opinion for elective surgery. List some of the outpatient hospital services that should be submitted for reimbursement. (Answers will vary.) Individuals who work in the departments mentioned on the slide may be employees of the hospital. The hospital submits bills for professional services in that situation. Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.

Billing Errors and Problems Incorrect name on form Wrong subscriber, patient name listed in error Covered days vs. noncovered days Duplicate statements Double billing Phantom charges A patient has the right to request, examine, and question a detailed statement as mentioned in the Patient’s Bill of Rights. Consumer advocates encourage patients to scrutinize hospital bills for mistakes. When can duplicate billings occur? (When a patient receives inpatient and outpatient preadmission tests or services) What is a phantom charge? How do you make sure to avoid phantom charges? (Charges for items or tests the patient cancelled or refused or incorrectly billed charges; a review of the patient record should be done to eliminate these charges) Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.

Uniform Bill (UB-04) Used since 1982 for inpatient and outpatient hospital claims Updated in 2007 Considered as a summary document supported by an itemized bill Printed in red ink on white paper Dates of service and monetary amounts entered without spaces or decimal points Dates of birth are entered using two sets of two-digit numbers for the month and day, four-digit numbers for the year Provide the other name for the UB-04 claim form. (The CMS-1450 form) Explain why the UB-04 claim form is printed in red ink on white paper. (So it can be processed with optical scanning equipment) This lesson only covers general guidelines for completing the UB-04 form. The medical hospital manual and, if available, the local UB-04 manual should always be consulted to determine whether billing guidelines pertain to a particular region. Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.

Uniform Bill (UB-04) Form Fig. 17-5 (p. 576). This is the example of the UB-04 form discussed here. Another example appears at the end of this presentation. Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.

Diagnosis-Related Groups System Patient classification method that categorizes patients who are medically related with respect to diagnosis and treatment and statistically similar in length of stay Used to classify and measure past cases and to classify current cases to determine payment 25 basic major diagnostic categories The purpose of a DRG-based system used for Medicare reimbursement is to hold down rising medical costs. Explain how many DRG classifications there are. (More than 10,000 ICD-9-CM codes) Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.

Seven Variables Responsible for DRG Classifications Principal diagnosis Secondary diagnosis (up to eight) Surgical procedures (up to six) Comorbidity and complications Age and sex Discharge status Trim points Explain what a computer program called a “grouper” does. (Calculates and assigned a DRG payment group) Name the grouper process of searching all listed diagnoses for the presence of any comorbid condition or complication or searching all procedures for operating room procedures or more specific procedures. (“Looping”) Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.

Sample Case History Fig. 17-6 (p. 577) This is an example of a case of a patient with chronic bronchitis who is admitted to the hospital with pneumonia. Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.

Cost Outliers Clinical outliers include: Inliers include: Unique combinations of diagnoses and surgeries causing high costs Long length of stay (day outliers) Low-volume DRGs Inliers include: Death Leaving against medical advice (AMA) Admitted and discharged on same day A case that cannot be assigned to an appropriate DRG because of an atypical situation is a cost outlier. An inlier is a hospital case that falls below the mean average or expected length of stay. Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.

DRG Common Terms DRG creep Downcoding Comorbidity Most-resource-intensive Ask students to define each term. (Answers will vary.) Downcoding can also erroneously occur when sequencing several diagnoses. Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.

DRGs and the Physician’s Office When calling the hospital to admit a patient, give all of the diagnoses authorized by the physician. Ask the physician to review the treatment or procedure in question when a hospital representative calls with questions. Get to know hospital personnel on a first-name basis. Records and hospital insurance claims must contain the correct principal diagnosis, detailed facts to support the principal diagnosis and complications, medical data to justify all procedures performed, patient’s age, and discharge diagnosis. Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.

Ambulatory Payment Classification System Developed as outpatient classification systems by Health System International Based on patient classification rather than disease classifications More than 500 APCs are continually being modified; updated and released twice a year in the Federal Register The ambulatory patient groups (APGs) were based on ICD-9-CM diagnoses, CPT and HCPCS procedures, age, and gender. Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.

APC Applications Ambulatory surgical procedures Chemotherapy Clinic visits Diagnostic services and diagnostic tests Emergency department visits Implants Outpatient services furnished to nursing facility patients not packaged into nursing facility consolidated billing These are the procedures that APCs are applied to. Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.

APC Applications (cont’d.) Partial hospitalization services for community mental health centers (CMHCs) Preventive services (colorectal cancer screening) Radiology including radiation therapy Services for patients who have exhausted Part A benefits Services to hospice patient for treatment of a non-terminal illness Surgical pathology These are more of the procedures that APCs are applied to. Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.

Hospital Outpatient Prospective Payment System Procedure code is primary axis of classification, not the diagnostic code. Reimbursement methodology based on median costs of services and facility cost to determine charge ratios and copayment amounts. Adjustment for area wage differences based on the hospital wage index currently used for inpatient services. OPPS may be updated annually. An APC group may have a number of services or items packaged within it so that separate payment may not be obtained. Categories of services have payment status indicators for use with APCs. See the list on p. 579 in the textbook. Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.

Types of APCs Surgical procedure APCs Significant procedure APCs Medical APCs Ancillary APCs Surgical procedure APCs are procedures for which payment is allowed under the PPS. List some surgical procedure APCs. (Answers will vary.) Significant procedures consist of nonsurgical procedures that are the main reason for the visit and account for the majority of the time and service used during the visit. List some significant procedure APCs. (Answers will vary.) Medical APCs include encounters with a health care professional for evaluation and management services. Explain what factors determine the medical APC. (Site of service, level of E/M service, diagnosis for one of 20 diagnostic categories) List some ancillary APCs. (Answers will vary.) Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.