Copyright © 2011, 2006 by Saunders an imprint of Elsevier Inc. UNDERSTANDING HOSPITAL BILLING AND CODING CHAPTER 3 Hospital Organizational Structure and Function

2 Copyright © 2011, 2006 by Saunders an imprint of Elsevier Inc. INTRODUCTION  The mission of a hospital is to provide effective and efficient patient care.  Survival of a hospital is directly related to carrying out the hospital’s mission and maintaining a sound financial base. It is essential for personnel to understand how they contribute to the organization’s mission.  Billing and coding professionals play a significant role in maintaining a sound financial base through accurate billing and coding and ensuring that the hospital is in compliance with billing, coding, and documentation guidelines.

3 Copyright © 2011, 2006 by Saunders an imprint of Elsevier Inc. HOSPITAL MISSION STATEMENT To provide the highest quality care to the members of our community and distant communities effectively and efficiently with compassion, integrity, and kindness through maintaining excellence in health-care professions

4 Copyright © 2011, 2006 by Saunders an imprint of Elsevier Inc. HOSPITAL ORGANIZATIONAL STRUCTURE The organizational structure of a hospital highlights the complex network of personnel within various departments working together to accomplish patient care tasks. Hospital organizational structures may vary based on:  Type of services provided  Type of hospital

5 Copyright © 2011, 2006 by Saunders an imprint of Elsevier Inc. HOSPITAL FUNCTIONS CATEGORIZED EFFICIENT ORGANIZATIONAL DESIGN Departmentalization is an efficient organizational design because it involves grouping functions into like categories.  Financial  Operational  Administrative  Clinical

6 Copyright © 2011, 2006 by Saunders an imprint of Elsevier Inc. DEPARTMENTAL FUNCTIONS  ADMINISTRATIVE FUNCTIONS Involve the coordination and management of various tasks required to provide patient care services, such as recruitment and management of personnel, marketing, public relations, purchasing and inventory of supplies, materials, and equipment, and various legal tasks including compliance  FINANCIAL FUNCTIONS Involve the overall management of the hospital’s finances, such as planning, organizing, and controlling the hospital’s finances (including income and expenses of the organization)  OPERATIONAL FUNCTIONS Entail tasks related to the operation and physical environment of the hospital. Some of the functions in operations include support services, plant operations, satellite development, quality assurance, utilization management, medical staff credentialing, social services, and health information management  CLINICAL FUNCTIONS Consist of various patient care tasks performed by personnel in specialized departments including Nursing, Radiology, Pathology/Lab, Physical Therapy, and Social Services

7 Copyright © 2011, 2006 by Saunders an imprint of Elsevier Inc. DEPARTMENTAL FUNCTIONS: ADMINISTRATIVE Hospital departments that are responsible for administrative functions include:  Human Resources Department  Volunteer Services  Marketing Department  Public Relations Department  Purchasing Department  Legal Departments  Compliance

8 Copyright © 2011, 2006 by Saunders an imprint of Elsevier Inc. DEPARTMENTAL FUNCTIONS: FINANCIAL Hospital departments that are responsible for financial functions include:  Accounting Department  Admitting Department  Patient Financial Services Department  Credit and Collections

9 Copyright © 2011, 2006 by Saunders an imprint of Elsevier Inc. DEPARTMENTAL FUNCTIONS: FINANCIAL ACCOUNTING DEPARTMENT The accounting department is responsible for various financial tasks:  Record keeping  Monitoring, and analyzing financial transactions  Posting to the general ledger  Accounts payable  Payroll  Cost accounting  Cost reports

10 Copyright © 2011, 2006 by Saunders an imprint of Elsevier Inc. DEPARTMENTAL FUNCTIONS FINANCIAL ADMITTING DEPARTMENT The admitting department is responsible for the admission process required to receive a patient in the hospital such as:  Obtain demographic, insurance and medical information  Registration, which involves entering data into the computer system  Obtain appropriate consents, authorizations, Advanced Beneficiary Notice (ABN) as required  Prepare patient chart  Assign a room and bed  Update hospital census

11 Copyright © 2011, 2006 by Saunders an imprint of Elsevier Inc. DEPARTMENTAL FUNCTIONS: FINANCIAL PATIENT FINANCIAL SERVICES (PFS) PFS is commonly referred to as Patient Accounts or the Business Office. PFS is responsible for recording patient transactions and submission of charges to patients and other payers  RECORD PATIENT TRANSACTIONS  Charges, payments, adjustments, and write-offs  PREPARATION OF CHARGES FOR SUBMISSION  Patient statements  Claim form—CMS-1450 (UB-04)  Claim form—CMS-1500

12 Copyright © 2011, 2006 by Saunders an imprint of Elsevier Inc. DEPARTMENTAL FUNCTIONS: FINANCIAL CREDIT AND COLLECTIONS DEPARTMENT  Follow up on accounts receivable (Accounts receivable is money owed to the hospital by patients, insurance companies, and other payers)  Resolve billing issues through research, communications with payers, and the appeals process

13 Copyright © 2011, 2006 by Saunders an imprint of Elsevier Inc. DEPARTMENTAL FUNCTIONS: OPERATIONAL Hospital departments that are responsible for operational functions include:  PLANT OPERATIONS DEPARTMENT  SATELLITE DEVELOPMENT DEPARTMENT  CENTRAL SUPPLY DEPARTMENT  QUALITY ASSURANCE (QA) DEPARTMENT  UTILIZATION MANAGEMENT (UM) DEPARTMENT  RISK MANAGEMENT DEPARTMENT  MEDICAL STAFF CREDENTIALING DEPARTMENT  SOCIAL SERVICES DEPARTMENT  HEALTH INFORMATION MANAGEMENT (HIM) DEPARTMENT DEPARTMENT

14 Copyright © 2011, 2006 by Saunders an imprint of Elsevier Inc. DEPARTMENTAL FUNCTIONS: OPERATIONAL PLANT OPERATIONS The primary responsibility of plant operations is the maintenance of:  Hospital buildings  Equipment  Grounds  Repairs  Air conditioning, heating and other systems

15 Copyright © 2011, 2006 by Saunders an imprint of Elsevier Inc. DEPARTMENTAL FUNCTIONS: OPERATIONAL SATELLITE DEVELOPMENT DEPARTMENT Identifies and develops areas for various types of out-patient services to be performed:  Primary care office  Urgent care center  Walk-in clinic  Imaging Center  Ambulatory surgery center (ASC)

16 Copyright © 2011, 2006 by Saunders an imprint of Elsevier Inc. DEPARTMENTAL FUNCTIONS: OPERATIONAL QUALITY ASSURANCE (QA) DEPARTMENT  QA is designed to monitor and improve the quality of service, product, or process  QA functions help hospitals identify areas that do not meet specified standards and to implement actions to improve standards in those areas

17 Copyright © 2011, 2006 by Saunders an imprint of Elsevier Inc. DEPARTMENTAL FUNCTIONS: OPERATIONAL UTILIZATION MANAGEMENT (UM) DEPARTMENT  FOCUS OF UM  Monitoring healthcare resources used in the hospital to ensure maximum resource utilization  FUNCTIONS OF UM  Utilization review (UR)  Case management  Discharge planning

18 Copyright © 2011, 2006 by Saunders an imprint of Elsevier Inc. DEPARTMENTAL FUNCTIONS: OPERATIONAL RISK MANAGEMENT DEPARTMENT Concentrates on reducing risk to the hospital  Develop and implement procedures designed to minimize the potential for injury within the hospital  Address liability situations as they arise

19 Copyright © 2011, 2006 by Saunders an imprint of Elsevier Inc. DEPARTMENTAL FUNCTIONS: OPERATIONAL MEDICAL STAFF CREDENTIALING DEPARTMENT  Credentialing is the process required to evaluate providers who wish to become a part of the hospital and/or have admitting privileges  Privileges define the scope of patient services and types of patients that can be seen by the healthcare provider  Required documentation includes information regarding licensing, education, and training, clinical competence, an individual’s health status, and liability insurance coverage

20 Copyright © 2011, 2006 by Saunders an imprint of Elsevier Inc. DEPARTMENTAL FUNCTIONS: OPERATIONAL HEALTH INFORMATION MANAGEMENT (HIM) DEPARTMENT Responsible for tasks required to organize, maintain, produce, store, retain, disseminate and secure patient health information including:  Transcribe medical and surgical notes  Code diagnoses, procedures, and other items  Release of health information  Retrieval and storage medical information  Management off databases  File information

21 Copyright © 2011, 2006 by Saunders an imprint of Elsevier Inc. DEPARTMENTAL FUNCTIONS: CLINICAL Hospital departments responsible for clinical functions include:  NURSING DEPARTMENT  ANCILLARY DEPARTMENTS  Pathology/Laboratory  Radiology  Physical Rehabilitation  Respiratory Therapy  Pharmacy  OTHER CLINICAL DEPARTMENTS  Medicine  Surgery  Anesthesia  Pulmonary  Cardiology  Emergency Department (ED)

22 Copyright © 2011, 2006 by Saunders an imprint of Elsevier Inc. HOSPITAL SERVICES TECHNICAL VS. PROFESSIONAL COMPONENTS TECHNICAL COMPONENT  Technical charges represent technician, supplies, materials, equipment, and other overhead required to perform the procedure PROFESSIONAL COMPONENT  Professional charges represent fees for physician or other non-physician professional services  Hospitals may bill professional charges when the physician or other non-physician provider is an employer or under contract with the hospital

23 Copyright © 2011, 2006 by Saunders an imprint of Elsevier Inc. LEVELS FOR PROVISION OF SERVICES  OUTPATIENT Services performed at the hospital and the patient is released on the same day  Ambulatory surgery  Observation  Emergency Department  Outpatient clinic  Primary care network  INPATIENT A patient who requires care on an ongoing basis for more than 24 hours is admitted to the hospital as an inpatient.  NON-PATIENT Non-patient care is provided when Pathology/Laboratory receives a specimen for processing. The specimen is delivered to the hospital and the lab processes the specimen. The patient is not present during processing.

24 Copyright © 2011, 2006 by Saunders an imprint of Elsevier Inc. LEVELS FOR PROVISION OF SERVICES OUTPATIENT  Ambulatory surgery center (ASC)  Observation  Emergency Department  Outpatient clinic  Primary care network

25 Copyright © 2011, 2006 by Saunders an imprint of Elsevier Inc. LEVELS FOR PROVISION OF SERVICES OUTPATIENT AMBUALTORY SURGERY Is also referred to outpatient surgery because it is performed and the patient is released the same day.  Hospitals generally have an ambulatory surgery area where outpatient surgeries can be performed. Hospitals can have an ambulatory surgery area within the hospital or a freestanding ambulatory surgery center.  The hospital charges the technical component of the surgical procedure, which includes space, nursing and technical staff, supplies, instruments, drugs, equipment, and other materials required for the surgery.

26 Copyright © 2011, 2006 by Saunders an imprint of Elsevier Inc. LEVELS FOR PROVISION OF SERVICES OUTPATIENT OBSERVATION SERVICES  The attending physician monitors the patient closely for a period of 24 hours (some payers allow observation services for up to 72 hours) or more but does not see the need to admit the patient on an inpatient basis  Observation services include nursing care and normal monitoring

27 Copyright © 2011, 2006 by Saunders an imprint of Elsevier Inc. LEVELS FOR PROVISION OF SERVICES OUTPATIENT EMERGENCY DEPARTMENT  The Emergency Department (ED) or emergency room (ER) is an area in the hospital where services are provided to patients presenting with a condition or illness that requires immediate attention. The patient is treated and released the same day unless further medical care is required and the patient is admitted as an inpatient.  The ER physician performs an Evaluation and Management (E/M) service to determine a plan of treatment for the patient’s condition. Other services and procedures may be performed such as diagnostic tests or surgical procedures.

28 Copyright © 2011, 2006 by Saunders an imprint of Elsevier Inc. LEVELS FOR PROVISION OF SERVICES OUTPATIENT CLINIC OR PRIMARY CARE OFFICE  Patient care services may be provided on an outpatient basis in a hospital-based clinic or primary care office  The hospital may bill for the professional and technical component of services performed when the physician is an employee of or under contract with the hospital

29 Copyright © 2011, 2006 by Saunders an imprint of Elsevier Inc. LEVELS FOR PROVISION OF SERVICES INPATIENT  A patient who requires care on an ongoing basis for more than 24 hours is admitted to the hospital as an inpatient.  The patient can be admitted from various locations: home, clinic, nursing home, emergency room, or other facility. The attending physician determines what type of admission is required.  The inpatient admission requires assignment of a room/bed to the patient. The hospital provides 24-hour nursing care during the stay. Throughout the patient stay, various departments contribute to the patient’s care and treatment.  The attending physician determines when to discharge the patient. The discharge orders are prepared by the attending physician and the patient is discharged.

30 Copyright © 2011, 2006 by Saunders an imprint of Elsevier Inc. NON-PATIENT Non-patient care is provided when the Pathology/Laboratory department receives a specimen for processing. The specimen is processed and results are forwarded to the requesting physician. The patient is not present during the processing. LEVELS FOR PROVISION OF SERVICES