1. Recap from Chapter 2
Compliance means to meet the federal and state regulations, recommendations, and expectations of organizations that pay for healthcare services
There are two provisions under HIPAA
Title I Insurance Reform
Title II Administrative Simplification

2. Recap from Chapter 2
There are many terms within the field of medical insurance with which you will need to become familiar
The Privacy Rule covers patient confidentiality and disclosure of protected health information
The HIPAA Security Rule contains three safeguards for protecting patient information: administrative, technical, and physical
Fraud is intentionally submitting false information, whereas abuse is performing in a way that is inconsistent with accepted medical or business practices

3. Recap from Chapter 2 Authorization versus Consent
Authorization – a patient’s formal, written permission to use or disclose personally identifiable health information for purposes other than treatment, payment, or healthcare operations (TPO)
Consent – verbal or written agreement that give approval to some action, situation, or statement
How do we know when we need authorization?
Turn to Workbook Assignment 2-4 Critical Thinking Consent vs Authorization

4. Basics of Health Insurance
Chapter 3
MA215 Medical Insurance

5. Chapter 3 Objectives Introduction to Health Insurance
Types of Health Insurance Coverage
Insurance Claim Submission and Follow Up
Today my goal is to get you familiar with the four concepts of a valid insurance contract, and be able to explain the difference between an implied and express physician-patient contract.
We will also discuss important federal, state, and private health insurance plans in general terms.
We will also define some common insurance terms.
You will be able to list four actions to prevent problems when given signature authorization for insurance claims.
This chapter also includes an explanation on handling insurance claims in the physician’s office to obtain payment and minimize rejection by insurance carriers.

6. INTRODUCTION TO HEALTH INSURANCE

7. History of Health Insurance
Insurance is one of the world’s largest businesses
Health insurance offsets the costs of illness and/or injury
Escalating medical costs have limited insurance coverage options
Patients may have more than one insurance policy to defray health care costs
Health insurance is a contract between the patient and third-party payer or government entity
Managed care organizations, MCO’s, gained popularity in the 1980’s to help control the rising costs of healthcare in the US
Patients can have more than one insurance plan

8. Health Benefit Exchanges
Patient Protection and Affordable Care Act
Health Care and Education Reconciliation Act of 2010
State-based American Health Benefit Exchanges and Small Business Health Options (SHOP)
Clearinghouses will allow individuals to compare coverage and prices
Individuals can purchase through clearinghouses to take advantage of federal subsidies
Under the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010, state-based American Health Benefit Exchanges and Small Business Health Option Program Exchanges will be established and must open on 1/1/2014
The exchanges will be a central clearinghouse in which an individual can compare prices and select plans from different tiers of coverage
Plans can be purchased through the clearinghouse to take advantage of federal subsidies
Individuals who receive coverage through an employer will continue to select purchase plans as they do now
Individuals and small businesses of up to 100 employees can purchase qualified coverage; states can allow businesses with more than 100 employees to purchase coverage in 2017

9. Implied/Expressed Contracts
Implied contract
When a person becomes a patient in a practice, that patient enters into an implied contract with the provider
Implied because no formal exchange takes place between patient and provider, either verbally or in writing
Ex: the patient agrees to pay their medical bills in exchange for services
Expressed contract:
A contract in which the patient and the provider agree on certain terms or conditions before the care takes place, either verbally or in writing
Ex: the patient agrees to pay their financial responsibility in advance of a surgical procedure
A physician and his staff must be aware of the physician’s obligation to each patient, and his liability in regard to service, and the patient’s obligation to the physician. The physician-patient contract begins when the physician accepts the patient and agrees to treat him, either by implied or expressed agreement.
If a patient is unconscious when treatment is rendered, is the contract implied or expressed? (Implied)
Patients with private medical insurance – the contract is between the patient and the physician, and the patient is responsible for the entire bill; the insurance is meant to help offset the expense. BUT, PPO plans – the patient may not be liable if the physician doesn’t follow his contract with the payer – IE timely filing, authorizations, notifications, etc.
Guarantor – an individual who promises to pay the medical bill by signing a form agreeing to pay, or who accepts treatment, which constitutes an expressed promise . Special cases: minors, emancipated minors, divorce, foster care
EMANCIPATED MINOR – younger than 18, lives independently, totally self-supporting, is married or divorced, in the military, college students living away from home
What is an emancipated minor? (A person younger than 18 year old who lives independently, is totally self-supporting, and possesses decision-making rights)
Insurance specialists need to understand the managed care organization plan requirements
In cases of employment, disability, and worker’s compensation cases, the relationship then becomes the physician and insurance carrier, not the physician and the patient

10. The Insurance Policy
Major Medical: extended benefits contract to offset large medical expenses caused by prolonged illness or serious injury
Insured: individual or organization protected in case of loss under terms of the insurance policy – also known as the
Subscriber
Member
Policyholder
Recipient
Basic health insurance coverage includes benefits for hospital, surgical, and other medical expenses
The insured in group policies include the employer and employees; insured is also known as subscriber, member, policyholder, sponsor (Tricare), recipient (Medicaid), beneficiary (Medicare). The subscriber does not have to also be the guarantor.
Dependents are considered to be spouse, children, domestic partners, parents, or family members
“Applicant” is the person applying for insurance coverage
“Contract” is a legally enforceable agreement
Under the health care reform legislation of 2010, health plans must allow employees to keep their children on their plans until the children are 26

11. Policy Terms – Patient Responsibility
Premium: monthly, quarterly, or annual fee to keep insurance active
Deductible: annual financial responsibility that must be met before the health care plan begins to pay for services
Coinsurance: patient’s financial responsibility, based on a percentage of the allowed amount
Copayment: patient’s financial responsibility, usually a set dollar amount for services provided
Premium – money paid to keep insurance active
Grace period - period before a policy is cancelled for non-payment of premiums
Deductible – money paid out each year before insurance benefits kick in. The higher the deductible, the lower the cost of the policy
Copay – set dollar amount for office visit
Coinsurance – percentage of allowable amount for each office visit; may or may not be subject to ded
You shouldn’t waive copayments because the provider has agreed to accept copayments as part of the insurance contract
Deductibles and copayments are usually collected at the time of service, with the exception of Medicare
Accidents: some policies cover accidents from day one, while others have a waiting/elimination period before accident coverage starts

12. Coordination of Benefits
Patient has more than one insurance policy
One or both policies may have a coordination of benefits clause
Requires insurance companies to coordinate the reimbursement of benefits to determine who are the primary and secondary carriers
Prevents duplication or overlapping of payment for the same expenses
Birthday Law
For dependent children covered under both Mom and Dad’s insurance policies
Not all insurance payers coordinate benefits with other insurance payers
The Birthday Law: for dependent children, the primary carrier is the parent whose birthday comes first in the calendar year
Any other examples?
PPACA – under 26, married individual with coverage under both spouse and parent insurance
Grandchildren where mother is dependent on parent policy
DENIAL: OHI Other Health Insurance Primary
EOB from other payer is required to process claim
OHI information is requested from the patient/insured

13. General Policy Limitations
Exclusion: injury or illness that is not covered by the insurance policy
Attempted suicide
Military service
On-the-job injuries
Fertility coverage
Pregnancy
Preexisting conditions
Exclusions:
Exclusions depend on the policy itself. Some group policies have exclusions, and many individual policies have exclusions that are normally covered under a group policy. For example, SHP does not pay for routine care, or for birth control or maternity care for dependent children.
What happens when an insurance policy states that a procedure or service is not covered when state law says it is a mandated benefit? (the service will be covered by the state, i.e. reconstructive breast surgery after a mastectomy)
Preexisting conditions are conditions that existed before the insurance policy began, ie diabetes, hypertension
Under the health care reform legislation of 2010, insurance companies cannot deny coverage to children with preexisting medical conditions. In 2014, insurers are barred from denying coverage to those with preexisting medical conditions or from charging them more, or charging more to women
What are waivers or riders? (Attachment that modifies clauses or provisions within the policy)

14. Financial Clearance Requirements for Financial Clearance
Eligibility & Benefits – verifying coverage, deductible, coinsurance, copay, and out-of-pocket maximum
Precertification – verifying whether a service or procedure is covered under a patient’s policy
Preauthorization – obtaining approval in advance for a service or procedure
Predetermination – calculating the patient’s financial responsibility and the insurance responsibility
Eligibility and benefits – verifying coverage, what the deductible, coinsurance, or copay will be for a given service
Precertification – discovering whether a treatment, surgery, hospitalization, test is covered under a patient’s policy; Refer to Figure 3-2 in Textbook for a sample of a precertification form - An excellent way to be sure that all necessary information is at hand when calling for precertification; most insurance policies require precertification before surgical procedures, tests, or hospitalization
Preauthorization – relates to whether a procedure is covered, whether the insurance company considers it medically necessary, and obtaining preauthorization number from the insurance
Predetermination – discovering how the deductible, copay, and/or coinsurance will apply and how the insurance will pay and how much the patient will pay; Refer to Figure 3-2 for a sample of a predetermination form - Used to find out the maximum dollar amount covered for surgery, consulting services, postop care, etc

15. TYPES OF HEALTH INSURANCE COVERAGE

16. Types of Health Insurance Coverage (p 65-66)
Civilian Health and Medical Program for the Dept of Veteran’s Affairs (CHAMPVA)
Competitive Medical Plan (CMP)
Disability Income Insurance
Exclusive Provider Organization (EPO)
Foundation of Medical Care (FMC)
Health Maintenance Organization (HMO)
Independent or Individual Practice Association (IPA)
Maternal and Child Health Program (MCHP)
Also referred to as 3rd-party payers, including government plans, private insurance, managed care contracts, and workers compensation
Refer to pp of the textbook for a description of each type of health insurance plan – ask students for descriptions

17. Types of Health Insurance Coverage, cont’d
Medicaid (MCD)
Medicare (M or MCR)
Medicare/Medicaid
Point-of-Service Plan (POS)
Preferred Provider Organization (PPO)
TRICARE
Unemployment Compensation Disability (UCD)
Veteran’s Affairs Outpatient Clinic (VA)
Workers Compensation Insurance (WC)

18. INSURANCE CLAIM SUBMISSION AND FOLLOW UP

19. Basic Methods of Processing Insurance Claims
Paper claim
Electronic claim
Contracting with an outside service bureau
Direct data entry
Some office do a combination of all methods to submit claims
Electronic billing is becoming more common due to HIPAA regulations for claim submission
Smaller offices may still complete claims manually

20. Basic Steps in Handling an Insurance Claim
FIGURE 3-5A Revenue cycle overview showing the basic steps in processing an insurance claim in a physician’s office, to the third-party payer, and after payment is received
Phase I Steps 1-7 Establishing the patient
Phase II Steps 8-9 Treating the patient, services coded, charges entered, patient payments posted
Phase III Steps Submitting and tracking the insurance claim
Phase IV Steps Claim processed, paid, and reimbursement/EOB/ERA received, posted to account, and deposited; pt billed for cost-share/deductible
Have the class discuss each step in the claims handling process described in Fig. 3-5A.
FIGURE 3-5 A, Revenue cycle overview showing the basic steps in processing an insurance claim in a physician’s office, to the third-party payer, and after payment is received.
Copyright © 2012, 2010, 2008, 2006, 2004, 2002, 1999, 1997, 1995, 1989, 1981, 1977 by Saunders, an imprint of Elsevier Inc. All rights reserved.

21. Insurance Card Students can refer to Fig. 3-8 for the insurance card.
Both sides of the patient’s insurance card must be kept in the patient’s file.
The insurance card should be checked on each visit to confirm coverage and to verify there has been no change in carrier.

22. Patient Signature Release
FIGURE 3-10 Section 13 from the health insurance claim form CMS-1500 (08-05), illustrating authorization for assignment of benefits.
Fig. 3-10
When is this used? (When a patient assigns medical benefits to the physician, so the physician can be reimbursed for services provided to the patient
What is an assignment of benefits? (The transfer of legal rights from the patient to the provider, so the provider can collect the amount payable under an insurance contract)
Explain the difference between a participating provider (par) and a nonparticipating provider (nonpar). (A participating provider has a contractual obligation with an insurance plan to render care to eligible beneficiaries, bill the payer directly, and accept the allowed amount; a nonparticipating provider is a physician without a contractual obligation.)
Discuss the different assignment of benefit factors for private carriers, managed care plans, Medicaid, Medicare, TRICARE, and Workers’ Compensation. (See Glossary, under “Assignment.”)
Copyright © 2012, 2010, 2008, 2006, 2004, 2002, 1999, 1997, 1995, 1989, 1981, 1977 by Saunders, an imprint of Elsevier Inc. All rights reserved.

23. Encounter Form (Superbill, Router)
Attached to the patient’s medical record during an office visit
Combines a bill, insurance form, and routing document
Can also be a computerized multipurpose billing form to input charges and diagnoses into a patient’s account
Students can refer to Fig for the encounter form.
What specific information is included on the form? (Patient’s name, date, previous balance due, procedural and diagnostic codes for provided service(s), date for follow-up appointment, balance due, insurance carrier, total fee charged, referrals, etc.)
The patient should always be given a copy of the superbill at the end of the visit so that he or she is informed of the services performed and billed.
The patient should be encouraged to compare his or her explanation of benefits (EOB) to the superbill. This will assure the patient that all services were billed correctly
What are the benefits of an encounter form? (All the information about the patient encounter is included on one form.)
Copyright © 2012, 2010, 2008, 2006, 2004, 2002, 1999, 1997, 1995, 1989, 1981, 1977 by Saunders, an imprint of Elsevier Inc. All rights reserved.

24. Financial Statement (Ledger Card)
Students can refer to Fig for the financial accounting record.
What information is included on the financial statement (ledger card)? (Provider information, account number, patient name/address/contact information, insurance company, policy number, itemized fees for services, running balance of amount owed on account, insurance claim submission date, payment from insurance company, any adjustments, any patient payments)
Step-by-step instructions for completing a ledger card are included in the procedure on page 85 of the textbook.
FIGURE 3-14 Financial accounting record illustrating posting of professional service descriptions, fees, payments, adjustments, and balance due.
Copyright © 2012, 2010, 2008, 2006, 2004, 2002, 1999, 1997, 1995, 1989, 1981, 1977 by Saunders, an imprint of Elsevier Inc. All rights reserved.

25. Minimum Information Required on CMS-1500 Claim Form
What was done (services & procedures using CPT, HCPCS codes)
Why was it done? (ICD9 codes)
When was it performed? (DOS)
Where was it received? (POS)
Who did it? (provider name and ID number)
Used for hospital, surgical, and medical patients, all claims in which benefits are assigned to the physician, and special procedures such as minor surgery or extensive testing
What determines the length of time limits for filing insurance claims? (commercial carrier, federal or state program, whether claim is for illness or accident)
When can financial losses occur due to delay in filing claim? (if patient has a long-term illness, if several physicians treat the patient)

26. Insurance Claim Follow-Up
Aging Report
Used to obtain total A/R amount
Shows a snapshot of how much money is due from each patient
Also known as a “tickler file” or “tracking report”
What is a tickler file? (a file that contains information about pending claims that require follow up)
Process for depositing a payment: checks and cash should be deposited in the bank, using a deposit slip. Funds may also be transferred directly from the payer to the provider using EFT/direct deposit. Should have a tracking system in place for electronic payments
Even after a payment is received from the payer, the patient may need to be billed for any remaining charges

27. Activity Workbook Assignment 3-5
An identification card provides much of the information needed to establish a patient’s insurance coverage. You have photocopied the front and back sides of three patient’s cards and placed copies in their patient records, returning the originals to the patients. Answer the questions by abstracting or obtaining the data from the cards.
10 minutes

28. Homework Workbook Assignment 3-1 Review Questions
Workbook Assignment 3-6 Abstract Data from an Insurance Identification Card
Workbook Assignment 3-7 Abstract Data from an Insurance Identification Card
Read Chapter 4 Medical Documentation and the Electronic Health Record