1. Processing an Insurance Claim
Chapter 4
Processing
an Insurance Claim

2. Processing an Insurance Claim
CMS-1500 claim is used to report professional and technical services.
Information from the superbill, patient record, or chart is then transferred to the CMS-1500 claim.

3. Processing an Insurance Claim
CMS-1500 claim
Requires responses pertaining to patient’s condition and if related to employment, auto, or any other accident; additional insurance coverage; or use of an outside laboratory and whether or not the provider accepts assignment.

4. Accepting Assignment
When provider agrees to what the insurance company allows and/or approves as payment

5. Accepting Assignment
Patient is responsible for copayment and coinsurance amounts.
“SIGNATURE ON FILE” can be used as a substitute for patient’s signature, as long as the real signature is on file.

6. Accepting Assignment Claim is proofread and double checked.
Any supporting documents are copied from patient’s chart and attached to the claim.

7. Assignment of Benefits
Patient or insured authorizes the payer to reimburse the provider directly.

8. Accounts Receivable Management
Assists providers in the collection of appropriate reimbursement for services rendered
Insurance verification and eligibility
Patient and family counseling about insurance and payment issues
Patient and family assistance with obtaining community resources

9. Accounts Receivable Management (cont.)
Preauthorization of services
Capturing charges and posting payments
Billing and claims submission
Account follow-up and payment resolution

10. Managing New Patients
Office policies and procedures (paying copayments, appointment rescheduling)
Should be explained and posted at receptionist desk
Determine whether appropriate office has been contacted
Then preregister new patients

11. Managing New Patients
Patient must complete a patient registration form upon arrival.
Make photocopy (front and back) of patient’s insurance card
File in patient’s financial record.

12. Medicare Insurance Card
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13. Managing New Patients Contact payer
Confirm patient’s insurance information located on back of insurance card.
Collect copayment.
Verify information with patient or subscriber
Make changes.
Enter information using computer entry software.

14. Primary versus Secondary Insurance
Primary insurance is a plan that is responsible for payment of a claim first.
After payment by the primary insurer, the secondary insurer is billed.

15. Primary versus Secondary Insurance
Children of divorced parents
Custodial parent’s policy is primary, custodial stepparent’s policy is secondary, noncustodial parent’s policy is tertiary (exception for court orders).

16. Primary versus Secondary Insurance
Child living with both parents, if both have insurance
Birthday rule – The policyholder whose birth month and day occur earlier in the calendar year holds the primary policy for dependents.
Gender rule – Some self-funded plans state the father is primary.

17. Primary versus Secondary Insurance
Create a new medical record for the patient.
Generate patient’s encounter form.
– Encounter form is a financial record that documents treated diagnoses and services.

18. Managing Established Patients
Schedule a return appointment when patient is checking out or when patient calls office.
Verify all registration information.
Collect copayment.
Generate encounter form for patient’s current visit.

19. Managing Office Insurance Finances
CPT and HCPCS level II (national) codes are assigned to procedures.
Enter charges for services and/or procedures.
Post charges to the patient’s account.

20. Screen from Patient Account Record
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21. Managing Office Insurance Finances (cont.)
Complete insurance claim.
Post payments to patient’s account.
Attach documents that support the claim.
Obtain provider’s signature on claim if processed manually
Physicians who contract with government or managed care plans are considered to have valid signatures on file.

22. Managing Office Insurance Finances (cont.)
File copies of the claim and attachments in the practice’s insurance files.
Log completed claims in an insurance registry.
Send claims by mail or electronically.

23. Life Cycle of an Insurance Claim
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24. Claims Submission
Electronic or manual transmission of claims data to insurance payers or clearinghouses
Public or private entity that processes or facilitates the processing of nonstandard data elements into standard data elements
Convert standard transactions (e.g., electronic remittance advice) received from payers to nonstandard formats

25. Electronic Claims Submission
Electronic data interchange – EDI
Computer-to-computer transfer of data between providers and third-party payers (or providers and healthcare clearinghouses) in a data format agreed upon by sending and receiving parties.

26. Electronic Claims Submission
Reduces payment turnaround time by shortening payment cycle.
Reduces claims submission error rates to 1 or 2 percent.
Audit by clearinghouse results in clean claims.
Contains all required data elements needed to process and pay the claim.

27. Electronic Claims Submission
HIPAA-mandated national standards are used for the electronic exchange.
Covered entities are required to use the standards when conducting any defined transactions.

28. Covered Entities
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29. Claims Attachments Medical evaluation for payment
Past payment audit or review
Quality control to ensure access to care and quality of care

30. Claims Processing
Sorting claims upon submission to collect and verify information about the patient and provider

31. Claims Adjudication
Claim is compared to payer edits and patient’s health plan benefits to verify
Required information is available to process the claim.
Claim is not a duplicate.
Payer rules and procedures have been followed.
Procedures performed or services provided are covered benefits.

32. Claims Adjudication
Common data file is an abstract of all recent claims filed on each patient.
Determines whether the patient is receiving concurrent care for the same condition by more than one provider.
Identifies services related to recent hospitalizations, surgeries, and so on.
Allowed charge is the maximum amount an insurer will pay for a service.

33. Claims Adjudication
Deductible is the total amount of covered medical expenses a policyholder must pay each year out of pocket before the insurance company is obligated to pay any benefits.
Coinsurance is the percentage that the patient pays for covered services after the deductible has been met and the copayment has been paid.

34. Payment of a Claim
Once adjudication is complete, the claim is paid or denied.
EOB is sent to the patient/policyholder.
Remittance advice is sent to the provider.
Prompt payment laws provide specific timeframes in which claims must be paid.

35. Maintaining Claim Files
CMS requires claims and copies of attachments to be kept for six years.
Source document qualifies (superbill, encounter form, etc.) along with summary of electronic claims received by insurance company.

36. Maintaining Claim Files
Open claims
Closed claims
Remittance advice files
Unassigned claims

37. Tracking Claims Submissions
Effective claims tracking requires the following activities
Maintain a paper or electronic copy of each submitted claim.
Log information about claims submitted in a paper-based insurance claims registry or use medical practice management software.
Review remittance advice to ensure that accurate reimbursement was received.

38. Tracking Claims Submissions
Noncovered service rejections
Do not resubmit.
Bill patient.
Rejections for errors
Correct errors, review entire claim, and resubmit.

39. Appealing Denied Claims
Remittance advice indicates that the payment was denied for reasons other than a processing error.

40. Steps to Appeal Denial
• Step 1: Procedure or services should be reviewed from original documents for diagnostic supporting documentation.
Research procedure and patient documentation when denied for “medical necessity.”

41. Steps to Appeal Denial (cont.)
• Step 2: Determine if condition is pre-existing.
If incorrect diagnosis code was submitted on original claim
Correct claim and resubmit.

42. Steps to Appeal Denial (cont.)
• Step 3: Noncovered benefit
Determine if treatment submitted was excluded.
If incorrect procedure code was submitted
Correct claim, resubmit, and attach copy of medical record documentation to support code change.

43. Steps to Appeal Denial (cont.)
• Step 4: Termination of coverage
Contact patient.
Determine current coverage.
Perform authorization prior to service.
If this was performed, then submit with authorization number.

44. Steps to Appeal Denial (cont.)
• Step 5: Failure to obtain preauthorization requests is a costly error for practice.
Retrospective review of claims is more difficult or sometimes impossible to obtain.

45. Steps to Appeal Denial (cont.)
• Step 6: Out-of-network providers
Write letter of appeal explaining why treatment was sought outside the provider network.

46. Steps to Appeal Denial (cont.)
• Step 7: Provide letter of appeal explaining why higher level of care was required.
Copies of patient’s chart may be needed for review by insurance adjudicator.

47. Credit and Collections
Review delinquent claims and prevention.
Verify health insurance cards.
Determine each patient’s coverage.
Electronically submit a clean claim.

48. Credit and Collections (cont.)
Contact payer to verify received claim.
Review records to determine if claim is paid, denied, or pending.
Submit supporting documents.

49. Claim Submission Problems, Descriptions, and Resolutions
Coding errors
Delinquent
Denied
Lost

50. Claim Submission Problems, Descriptions, and Resolutions (cont.)
Overpayment
Payment errors
Pending
Suspense
Rejected