1. Introduction to the Revenue Cycle
CHAPTER 1
Introduction to the Revenue Cycle

2. Chapter 1 Introduction to the Revenue Cycle
See the ten-step Revenue Cycle figure (at the beginning of the chapter).
This chapter focuses on the following steps:
Preregister patients
Establish financial responsibility
Check in patients
Review coding compliance
Review billing compliance
Check out patients
Prepare and transmit claims
Monitor payer adjudication
Generate patient statements
Follow up payments and collections

3. Learning Outcomes (1)
When you finish this chapter, you will be able to:
1.1 Identify three ways that medical insurance specialists help ensure the financial success of physician practices.
1.2 Differentiate between covered and noncovered services under medical insurance policies.
1.3 Compare indemnity and managed care approaches to health plan organization.
1.4 Discuss three examples of cost containment employed by health maintenance organizations.
1.5 Explain how a preferred provider organization works.

4. Learning Outcomes (2)
When you finish this chapter, you will be able to:
1.6 Describe the two elements that are combined in a consumer-driven health plan.
1.7 Define the three major types of medical insurance payers.
1.8 Explain the ten steps in the revenue cycle.
1.9 Analyze how professionalism, ethics, and etiquette contribute to career success.
1.10 Evaluate the importance of professional certification for career advancement.

5. Key Terms (1) accounts payable (AP) accounts receivable (A/R)
adjudication
benefits
capitation
cash flow
certification
coinsurance
compliance
consumer-driven health plan (CDHP)
copayment
covered services
deductible
diagnosis code
electronic health record (EHR)
ethics
etiquette
excluded services
fee-for-service
healthcare claim
health information technology (HIT)
health maintenance organization (HMO)

6. Key Terms (2) health plan indemnity plan managed care
managed care organization (MCO)
medical coder
medical insurance
medical insurance specialist
medical necessity
network
noncovered services
out-of-network
out-of-pocket
participation
patient ledger
payer
per member per month (PMPM)
PM/EHR
policyholder
practice management program (PMP)
preauthorization

7. Key Terms (3) preferred provider organization (PPO) premium
preventive medical services
primary care physician (PCP)
procedure code
professionalism
provider
referral
revenue cycle
schedule of benefits
self-funded (self-insured) health plan
third-party payer

8. 1.1 Working in the Medical Insurance Field (1)
Major trend in healthcare industry is shift of payment responsibility to patients
Many rewarding career paths in the healthcare field require knowledge of medical insurance, reimbursement options, and EHR (electronic health record) systems
Figure 1.1: Rapidly growing employment possibilities in healthcare administrative area:
Health Information Technicians
Medical Assistants
Medical Administrative Support

9. 1.1 Working in the Medical Insurance Field (2)
Financial success of a healthcare facility depends on revenue cycle management to maintain a balance of cash flow through management of accounts receivable and accounts payable
Medical insurance specialists
carefully follow procedures
understand teamwork
communicate effectively
use health information technology
NOTE: This is a new slide.

10. 1.1 Working in the Medical Insurance Field (3)
Health information technology (HIT) incorporates practice management programs (PMPs) and electronic health records (EHRs)
Practice management programs (PMPs) streamline scheduling, billing, and financial management
Electronic health record (EHR)
clinical patient health information (diagnosis, etc.)
rapidly being adopted
many are integrated with PMPs (PM/EHR)
Entering data accurately is IMPORTANT!

11. 1.2 Medical Insurance Basics (1)
Medical insurance is a written policy stating terms of an agreement between a policyholder (an individual) and a health plan (an insurance company)
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 insuring or paying for healthcare on behalf of beneficiaries

12. 1.2 Medical Insurance Basics (2)
Insurance policies contain a schedule of benefits that summarizes payments that may be made for medically necessary 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

13. 1.2 Medical Insurance Basics (3)
Covered services may include primary care, emergency care, medical specialists’ services, and surgery
Preventive medical services include physical examinations, pediatric and adolescent immunizations, prenatal care, and routine screening procedures

14. 1.2 Medical Insurance Basics (4)
Noncovered services are those not included in a plan’s benefits
Excluded services may include:
Dental services, eye care, employment-related injuries, cosmetic procedures, or experimental/investigational procedures
Other specific items such as prescription drugs

15. 1.2 Medical Insurance Basics (5)
Group or individual policies available with varying restrictions and pricing
Other types of health-related insurance available
Disability insurance
Automotive insurance related to injuries
Workers’ compensation (determined by state law)

16. 1.3 Healthcare Plans (1)
An indemnity plan provides protection against loss
Physicians send the healthcare claim—a formal insurance claim reporting data about the patient and services provided—to the payer on behalf of the patient
Patients pay a premium—the periodic payment required to keep the policy in effect

17. 1.3 Healthcare Plans (2)
Most policies have a deductible—the amount the insured pays for covered services before benefits begin
Coinsurance is the percentage of each claim paid by the insured
Some patients must pay out-of-pocket expenses prior to benefits
Fee-for-service is a retroactive charging method based on each service performed

18. 1.3 Healthcare Plans (3)
Managed care offers a more restricted choice of providers and treatments in exchange for lower premiums, deductibles, and other charges
Managed care organizations (MCOs) establish links between provider, patient, and payer
Participation allows provider to contract with health plan to gain more patients and lower fees

19. 1.4 Health Maintenance Organizations (1)
A health maintenance organization (HMO) combines coverage of medical costs and delivery of healthcare for a prepaid premium
Capitation is a fixed prepayment to a provider for all medically necessary contracted services provided to each plan member
Per member per month (PMPM) is the capitated rate

20. 1.4 Health Maintenance Organizations (2)
A network is a group of providers having participation agreements with a health plan
Visits to out-of-network providers are not covered except for emergencies
HMOs often require preauthorization before the patient receives services
When HMO member sees a provider, he or she pays a specified charge called a copayment
HMO members may be required to choose a primary care physician (PCP) to direct all aspects of their care

21. 1.4 Health Maintenance Organizations (3)
Referral is transfer of patient care from one physician to another
Point-of-service (POS) plans allow visits to specialists in the plan’s network without a referral at one level of charge
POS plans also permit patients to receive medical services from non-network providers at a higher level of charge
Exclusive provider organizations (EPO) do not cover care outside of network and do not require referrals to specialists

22. 1.5 Preferred Provider Organizations
A preferred provider organization (PPO) is an MCO where a network of providers supplies discounted treatment for plan members
Most popular type of health plan
Creates a network of physicians, hospitals, and other providers with negotiated discounts
May require preauthorization
Controls use of services
Requires payment of a premium and often of a copayment for visits

23. 1.6 Consumer-Driven Health Plans
A consumer-driven health plan (CDHP) combines a high-deductible health plan with a medical savings plan
The health plan is usually a PPO with a high deductible and low premiums
The savings account is used to pay medical bills before the deductible has been met
Increases patient awareness of healthcare costs

24. 1.7 Medical Insurance Payers
Three major types of medical insurance payers:
Private payers—dominated by large insurance companies
Self-funded (self-insured) health plans—organizations paying for health insurance directly by setting up a fund from which to pay
Government-sponsored healthcare programs—includes Medicare, Medicaid, TRICARE, and CHAMPVA

25. 1.8 The Revenue Cycle (1)
A medical insurance specialist is a staff member who handles billing, checks insurance, and processes payments
To complete their duties, medical insurance specialists follow a 10-step revenue cycle
Series of steps leading to maximum, appropriate, timely payment

26. 1.8 The Revenue Cycle (2) Step 1 – Preregister patients
Step 2 – Establish financial responsibility
Step 3 – Check in patients
Step 4 – Review coding compliance
A medical coder has specialized training to handle diagnostic and procedural coding
The patient’s primary illness is assigned a diagnosis code
Each procedure the physician performs is assigned a procedure code
Transactions are entered in a patient ledger—a record of a patient’s financial transactions

27. 1.8 The Revenue Cycle (3) Step 5 – Review billing compliance
Compliance = actions that satisfy official requirements
Step 6 – Check out patients
Step 7 – Prepare and transmit claims
Step 8 – Monitor payer adjudication
Accounts receivable (A/R) is the monies owed to a medical practice
Adjudication is the process of examining claims and determining benefits
Step 9 – Generate patient statements
Step 10 – Follow up payments and collections

28. 1.9 Achieving Success (1)
Professionalism is acting for the good of the public and of the medical practice
Medical ethics are standards of behavior requiring truthfulness, honesty, and integrity
Etiquette is made up of the standards of professional behavior

29. 1.9 Achieving Success (2) Requirements for success Attributes
Knowledge of medical language and coding
Communication skills
Attention to detail
Flexibility
Health information technology skills
Honesty and integrity
Ability to work as a team member
Attributes
Appearance
Attendance
Initiative
Courtesy

30. 1.10 Moving Ahead
Continuing education required for certification so lifelong learning is needed
Certification is recognition of a superior level of skill by an official professional organization
Provides evidence to prospective employers that the applicant has demonstrated a superior level of skill on a national test
*end of presentation*