1. HEALTH CARE CLAIM PREPARATION AND TRANSMISSION
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HEALTH CARE CLAIM PREPARATION AND TRANSMISSION

2. Health Care Claim Preparation and Transmission
Learning Objectives
Describe the process of using medical billing programs to prepare health care claims.
Briefly describe the information contained in the five major sections of the HIPAA claim.
Discuss the importance and use of claim control numbers and line item control numbers.
Identify the three major methods of electronic claim transmission.
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3. Key Terms Audit-edit claim response Billing provider Birthday rule
Claim attachment
Claim control number
CMS-1500 claim form
Coordination of benefits (COB)
Database
Data element
Destination payer
Edit
Electronic data interchange (EDI)
HIPAA claim
HIPAA Electronic Health Care Transaction and Code Sets (TCS)
HIPAA Security Rule
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4. Key Terms (cont’d) Line item control number National Patient ID
National Payer ID
National Provider Identifier (NPI)
Password
Pay-to provider
Place of service (POS) code
Primary insurance
Secondary insurance
Referring physician
Rendering provider
Subscriber
Taxonomy code
Transactions
Verification report
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5. Claim Preparation Using Medical Billing Programs
Computerized billing and claims
Most medical practices use software programs to prepare claims
The program’s databases are set up with data about:
Physicians
Diagnosis and Procedure Codes
Fee Schedules
Insurance Carriers (payers)
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6. Claim Preparation Using Medical Billing Programs (cont’d)
To prepare a claim, a medical insurance specialist:
Records the patient’s information, including primary insurance plan
Records the services, charges, and payments based on the patient’s encounter form
Creates and transmits the claims to the appropriate payer
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7. Recording Patients’ Information
Patient Information Forms
Data from new or updated forms is entered into program
New records are created for new patients
When a patient is covered by more than one Group Plan, the Medical Insurance Specialist must determine which plan is primary and which is secondary.
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8. Recording Patient’s Information
Primary Insurance (Payer) is a Health Plan that pays benefits first when a patient is covered by more than one Group Plan.
Secondary Insurance (Payer) is a Health Plan that pays benefits after the Primary Plan, when a patient is covered by more than one Group Plan.
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9. Recording Patient’s Information
Dependent Child(ren) – the primary plan is determined by the Birthday Rule.
The Rule states that the parent whose day of birth is earlier in the calendar year is Primary.
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10. Coordination of Benefits
Coordination of Benefits (COB) is a provision which establishes the order in which insurance plans pay claims when an individual has coverage under more than one plan.
The insurance industry has developed a consistent and orderly way to determine which plan pays its full benefits and which plan pays a reduced amount (if any), which when added together equal more than a single plan's benefit, but not more than the total amount of the allowable charges incurred.
It is intended that individuals do not profit when having coverage under more than one plan, and that Members and/or providers receive the appropriate amount of reimbursement for medical services.
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11. Coordination of Benefits
Coordination of Benefits (COB) applies when:
Both spouses cover their family through their employers
Both spouses are covered by the same insurance carrier but work for different employers.
Member is Federal Medicare eligible
Member is retired from one job and actively employed elsewhere
Member is injured in an automobile accident
Member is injured on the job
The primary subscriber has more than one employer
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12. Coordination of Benefits
The following criteria is used to determine the order of benefits:
The subscriber's active employee plan is primary over their spouse's coverage
Active employee coverage is primary over inactive (or retiree) employee coverage
If the Member has two policies that are both active, the policy that has been active the longest is primary.
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13. Coordination of Benefits Birthday Rule
Birthday Rule: When a dependent child is covered under both parents' health plans, the plan of the parent whose birthday falls earlier in the calendar year pays first.
When a newborn is covered for the first 31 days (enrolled or not enrolled), the plan of the parent whose birthday falls earlier in the calendar year pays first.
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14. Coordination of Benefits Birthday Rule
Only the month and the day are considered, not the parents' years of birth.
FOR EXAMPLE:
If the mother's birthday month is March and the father's birthday month is June, then the mother's health plan is primary
If both parents have the same birthday, then the plan which covered the parent longer is primary over the plan which covered the parent for a shorter time.
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15. Coordination of Benefits
The Provider is responsible for supplying information about the Secondary Insurance & coverage to the Primary Payer
The Providers must also include this information in the Insurance Claim Form.
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16. Coordination of Benefits– (cont.)
When the RA (remittance advice) is received the Medical Insurance Specialist prepares another Claim Form for the Secondary Plan. The claim reports:
The Amount the first Insurance Policy paid
The Patient Balance, if any
After both carriers have made payments, any unpaid bills are submitted to the patient (depending on deductible, coinsurance, PAR, non-PAR, etc)
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17. Recording Services, Charges, & Payments for Patients’ Encounter
Patient’s Encounter Form
Diagnosis and Procedure Codes
Charges for Services and Procedures
Patient Payment Information
Patient’s Insurance Coverage for visit is selected
Patient’s Provider for visit is entered into the system
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18. Creating & Transmitting Claims To Payers
Electronic Claim Files
Medical insurance specialist instructs program to create claims for appropriate payer
Program draws on databases to create claim files
Files may then be printed, but most are submitted electronically to payer
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19. Accuracy & Security Issues Medical Billing Programs
The Major Databases in Billing Programs are:
Provider – The provider database has information about the physician(s), medical office, the practice name, phone number, etc.
Patient/Guarantor – The database where each patient information form is stored, such as name, address, phone, birth date, social security number, etc.
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20. Accuracy & Security Issues Medical Billing Programs
The Major Databases in Billing Programs are:
Insurance Carrier – This database contains the names, addresses, plan types, and other data about the major health plans used by the practice’s patients.
Diagnosis Codes – This database contain the ICD-9 Codes that indicate the reason a service is provided.
The Codes stored are those most frequently used by the Practice.
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21. Accuracy & Security Issues Medical Billing Programs
The Major Databases in Billing Programs are:
Procedure Codes – The Procedure Code database contains the data needed to create charges.
The CPT Codes most often used by the practice are selected for this database.
Transactions – This database stores information about each patient’s visit, charges and the related diagnoses and procedures, as well as received and outstanding payments.
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22. Data Entry in Computer Billing
Tips for accurate Data Entry
Do not use prefixes for names (avoid Mr., Ms., etc.)
Do not use special characters (hyphens, commas, etc.)
Use only valid data in all fields (avoid words such as same)
Enter the required number of characters for each data element, but do not worry about the format—most programs reformat data correctly
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23. Data Security HIPAA Security Rule
Sets standards for protecting PHI when it is maintained or transmitted electronically
PHI: Protected Health Information
Office’s Database files contain PHI
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24. Data Security Security Measures in a Medical Office
Access control and passwords
Users are given IDs & Passwords that will permit them to use the files that they have been granted access.
Backup Files
The process of copying files to another medium so that they will be preserved in case the originals are not longer available.
Security policy
A Process must be in place to train staff on protecting PHI when electronically stored and/or sent.
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25. Types of Claims
HIPAA (Health Insurance Portability & Accountability Act of 1996) Claim
Electronic transaction called the 837 claim
Paper Claim
CMS-1500 claim form (formerly the HCFA-1500 claim form)
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26. Types of Claims (cont’d)
HIPAA claim
Follows requirements of the HIPAA Electronic
Health Care Transaction and Code Sets (TCS)
Must be sent as an electronic file with required format
CMS mandates use of this form for all Medicare claims
Required or preferred by most other payers as well
Paper Claim
May be used for Medicare claims by very small practices only
Still accepted by most payers
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27. Preparing HIPAA Claims
The HIPAA Claim has Five Major Sections
1 Provider information
2 Subscriber and patient information
3 Payer information
4 Claim details
5 Services
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28. Provider Information
Includes Addresses and NPIs (National Providers Identifier) of:
Billing provider—organization or person transmitting the claim to payer
May be the medical practice or an outside organization (billing service or clearinghouse hired by the practice)
Pay-to provider—organization or person receiving payment
If billing provider and pay-to provider are the same, not necessary to report pay-to provider
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29. Provider Information (cont’d)
NPI
National Provider Identifier
Ten-digit number
PIN (Provider Identification Number
UPIN (Unique Provider Identification Number)
Recent HIPAA rule:
Until assigned, tax identification number or other identifier can be used in place of NPI
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30. Taxonomy Code
Taxonomy Code – is a ten-digit number that stands for a physician’s medical specialty.
Example:
207NP0225X for Pediatric Dermatology
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31. Subscriber/Patient Information
Policyholder or Guarantor
May be the patient, but if not, patient information also required
Data Elements:
Subscriber’s name, health plan number, policy number and plan name, claim filing indicator code (shows type of plan, such as HMO)
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32. Subscriber/Patient Information (cont’d)
Relationship to Patient
If the subscriber is the patient, select “self”
When the subscriber and patient are different, select the correct relationship from list of options
Software stores corresponding code
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33. Subscriber/Patient Information (cont’d)
Data Elements:
Name, address, gender, date of birth, primary identifier (such as a health plan member ID—to be replaced soon by National Patient ID under HIPAA)
Possibly secondary identifier (such as SSN)
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34. Payer Information Destination payer Payer receiving the claim
Data Elements:
Payer’s name and ID (to be replaced with National Payer ID when legislated)
Assignment-of-benefits code
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35. Claim Information Details of the claim Data elements:
Claim control number, for tracking
Assigned by the medical insurance specialist
Maximum of 20 characters; can incorporate account number but should not be the same
Total charges and patient payment, if any
Place of service (POS) code; diagnosis codes
Rendering or referring provider data, if any
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36. Service Line Information
Service Line Information – List the Services performed for patient
Each service is listed on separate line
Data elements for each service:
Line item control number, for tracking payments from insurance carrier
Date of service
Procedure code
Diagnosis code links
Charge
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37. Transmitting HIPAA Claims
Electronic Data Interchange (EDI)
HIPAA requires particular format for transmission
Called X12 transmission
Patients’ PHI must be secure and private, when claims are sent
Claim Attachments
HIPAA electronic standard underway
At present, may be paper or electronic
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38. Methods of Sending Claims
Three Major methods for sending electronic claims
Clearinghouse
Direct Transmission
Direct Data Entry (DDE)
Most medical offices use Clearinghouses for HIPAA EDI Format
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39. Methods of Sending Claims (cont’d)
Clearinghouse
Acts as an intermediary between provider and payer
Reformats data from provider to a form accepted by the payer
Charges fee for service
Performs edits
Checks claim for missing or incorrect data
Creates audit/edit report for provider
Lists errors and sends claim back for correction (dirty claims)
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40. Methods of Sending Claims
Three Major methods for sending electronic claims – Cont.
Direct Transmission - Provider & Payer receive payment directly.
Direct Data Entry (DDE) - Office uses the Internet-based Service connected to the payer where data elements are keyed.
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41. Preparing Paper Claims
CMS-1500 (HCFA-1500) claim form
Paper claim containing 33 form locators
Form locators 1-13
Patient and patient’s insurance coverage
Form locators 14-33
Provider and transactions data (diagnoses, procedures, charges)
Claim is printed and sent to payer
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42. Quiz Matching Paper claim form Ten-digit number 837 NPI
POS code
CMS-1500
Paper claim form
Ten-digit number
Another name for the HIPAA claim
A number that shows where a patient received services
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43. Critical Thinking
Name one advantage and one disadvantage of electronic claims.
Advantages such as: lower costs, reduced rejection, faster payment, access to status reports.
Disadvantages such as: initial expense, security, disruption due to power failure or equipment problems, unable to include attachments.
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