2. © 2009 The McGraw-Hill Companies, Inc. All rights reserved 15-1 Health Insurance Billing Procedures PowerPoint® presentation to accompany: Medical Assisting Third Edition Booth, Whicker, Wyman, Pugh, Thompson

3. © 2009 The McGraw-Hill Companies, Inc. All rights reserved 15-2 Learning Outcomes 15.1 Define Medicare and Medicaid. 15.2 Discuss TRICARE and CHAMPVA health-care benefits programs. 15.3 Distinguish between HMOs and PPOs. 15.4 Explain how to manage a workers’ compensation case.

4. © 2009 The McGraw-Hill Companies, Inc. All rights reserved 15-3 Learning Outcomes (cont.) 15.5 List the basic steps of the health insurance claim process. 15.6 Describe your role in insurance claims processing. 15.7 Apply rules related to the coordination of benefits. 15.8 Describe the health-care claim preparation process.

5. © 2009 The McGraw-Hill Companies, Inc. All rights reserved 15-4 Learning Outcomes (cont.) 15.9 Explain how payers set fees. 15.10 Complete a Centers for Medicare and Medicaid Service (CMS-1500) claim form. 15.11 Identify three ways to transmit electronic claims.

6. © 2009 The McGraw-Hill Companies, Inc. All rights reserved 15-5 Introduction  Health care claims = reimbursement Accuracy = maximum appropriate payment  Medical assistant Prepare claims Review insurance coverage Explain fees Estimate charges for payers Prepare claims

7. © 2009 The McGraw-Hill Companies, Inc. All rights reserved 15-6 Basic Insurance Terminology  Medical insurance – written contract between a policy holder and a health plan  First Party – the patient or policy holder  Premium – the amount of money paid by the policy holder to the insurance carrier  Second Party – the physician who provides medical services

8. © 2009 The McGraw-Hill Companies, Inc. All rights reserved 15-7 Basic Insurance Terminology (cont.)  Benefits – Payment by the insurance carrier for medical services provided  Third-party payer – the health plan that agrees to carry the risk of paying for services  Deductible – a fixed dollar amount paid or met once a year before third-party payers begin to cover expenses

9. © 2009 The McGraw-Hill Companies, Inc. All rights reserved 15-8  Coinsurance – a fixed percentage of coverage charges after the deductible is met  Co-payment – a small fee that is collected at the time of the visit  Exclusions – uncovered expenses  Formulary – a list of approved drugs Basic Insurance Terminology (cont.)

10. © 2009 The McGraw-Hill Companies, Inc. All rights reserved 15-9  Elective procedure – one not required to sustain life  Pre-authorization – approval in advance for a specific procedure  Liability insurance – covers injuries caused by the insured or on their property  Disability insurance – insurance that is activated when the insured is injured or disabled Basic Insurance Terminology (cont.)

11. © 2009 The McGraw-Hill Companies, Inc. All rights reserved 15-10 Apply Your Knowledge What is the difference between first party, second party, and third-party payer? ANSWER: The first party is the patient or owner of the policy; the second party is the physician or facility the provides services, and the third-party payer is the insurance company that agrees to carry the risk of paying for approved services. Good Job!

12. © 2009 The McGraw-Hill Companies, Inc. All rights reserved 15-11 Types of Health Plans  Insurance companies Rules about benefits and procedures  Manuals, printed or online  Representatives to assist  Sources of health plans Group policies – through employer Individual plans Government plans

13. © 2009 The McGraw-Hill Companies, Inc. All rights reserved 15-12 Types of Health Plans  Oldest and most expensive type of plan  Covers costs of select medical services  Amount charged for services determined by the physician Fee-for- Service Plans

14. © 2009 The McGraw-Hill Companies, Inc. All rights reserved 15-13 Types of Health Plans  Controls both the financing and delivery of health care to policy holders  Both policy holders and physicians (participating physicians) are enrolled by the Managed Care Organizations (MCOs)  MCOs pay physicians in two ways Contracted fees Capitated fees – fixed amount per month to provide contracted services to patients enrolled in the plan Managed Care Plans

15. © 2009 The McGraw-Hill Companies, Inc. All rights reserved 15-14  Preferred Provider Organization (PPO) A network of providers to perform services to plan members Physicians in the plan agree to charge discounted fees  Health Maintenance Organization (HMO) Physicians who contract with HMOs are often paid a capitated rate Patients pay premiums and a small co-payment for each office visit Types of Health Plans (cont.)

16. © 2009 The McGraw-Hill Companies, Inc. All rights reserved 15-15  The largest federal program that provides health care to citizens aged 65 and older  Managed by the Centers for Medicare and Medicaid Services (CMS)  Part A Hospital insurance available to anyone receiving social security benefits No premium unless ineligible for social security benefits Types of Health Plans: Medicare

17. © 2009 The McGraw-Hill Companies, Inc. All rights reserved 15-16 Types of Health Plans: Medicare (cont.)  Part B Covers physician services, outpatient services, and many other services Available to United States citizens and permanent residents 65 and older Participants must pay a premium

18. © 2009 The McGraw-Hill Companies, Inc. All rights reserved 15-17  Fee-for-Service: The Original Medicare Plan Allows the beneficiary to choose any licensed physician certified by Medicare An annual deductible fee Medicare pays 80 percent and the patient pays 20 percent  Medigap plan – secondary insurance Types of Health Plans: Medicare Plans

19. © 2009 The McGraw-Hill Companies, Inc. All rights reserved 15-18  Medicare + Choice Plans Medicare Managed Care Plans  Monthly premium and copayment, but no deductible  Care managed by primary care physician (PCP)  Referrals from PCP for additional services outside network Types of Health Plans: Medicare Plans (cont.)

20. © 2009 The McGraw-Hill Companies, Inc. All rights reserved 15-19 Medicare Preferred Provider Organization Plans (PPOs)  No PCP or referrals for services  Costs less to use physicians within network Medicare Private Fee-for-Service Plans  Can use any provider or facility as long as it is approved by Medicare  Operated by private insurance companies  May or may not require a copayment  Physicians can bill patients for amount not covered by the plan Types of Health Plans: Medicare Plans (cont.)

21. © 2009 The McGraw-Hill Companies, Inc. All rights reserved 15-20  A health-benefit program designed for: Low-income Blind Disabled patients Temporary assistance to needy families Foster children Children born with disabilities  Not an insurance program Types of Health Plans: Medicaid

22. © 2009 The McGraw-Hill Companies, Inc. All rights reserved 15-21 Types of Health Plans: Medicaid (cont.)  Funded by the federal and state governments  Provides assistance such as: Physician services Emergency services Laboratory and x-rays Skilled nursing facility (SNF) care Vaccines Early diagnostic screening and treatment for minors

23. © 2009 The McGraw-Hill Companies, Inc. All rights reserved 15-22 Types of Health Plans: Medicaid (cont.) Medicaid Accepting Assignment Medi/Medi Physicians agreeing to treat Medicaid patients also agree to the set amount for reimbursements Older or disabled patients unable to pay the difference between the bill and the Medicaid payment may qualify for both Medicaid and Medicare

24. © 2009 The McGraw-Hill Companies, Inc. All rights reserved 15-23  Comply with state guidelines Verify Medicaid eligibility Ensure that the physician signs all claims Authorization must be received in advance for medical services except in an emergency Verify deadlines for claim submissions Treat Medicaid patients with the same professionalism and courtesy that you extend to other patients Types of Health Plans: Medicaid (cont.)

25. © 2009 The McGraw-Hill Companies, Inc. All rights reserved 15-24 Types of Health Plans (cont.)  Department of Defense  Families of uniformed personnel and retirees  TRICARE for Life Medicare-eligible military retirees 65 and older  Dependent spouses and children of veterans with disabilities  Surviving spouses and dependent children of veterans who died in the line of duty or from service-connected disabilities

26. © 2009 The McGraw-Hill Companies, Inc. All rights reserved 15-25  Blue Cross and Blue Shield A nationwide federation of nonprofit and for- profit service organizations that provide prepaid health-care services to subscribers Specific plans for BCBS can vary greatly because each local organization operates under its own state laws Types of Health Plans (cont.)

27. © 2009 The McGraw-Hill Companies, Inc. All rights reserved 15-26  Covers accidents or diseases incurred in the workplace  By federal law, employers must purchase a minimum amount of workers’ compensation insurance Coverage Includes Basic medical treatment Weekly or monthly amount paid to patient while not employed Rehabilitation costs Types of Health Plans: Workers’ Compensation Verify coverage before accepting patient.

28. © 2009 The McGraw-Hill Companies, Inc. All rights reserved 15-27 Apply Your Knowledge A 72-year-old disabled patient is being treated at an office that accepts Medicaid. The total office visit is $165, but Medicaid will only reimburse a set fee of $125. In this situation, what is the most likely solution? a.Bill the patient for the balance due. b.Expect the balance to be paid at the time of service. c.This patient probably has a secondary employer health insurance plan. d.This patient may qualify for the Medi/Medi coverage. ANSWER:

29. © 2009 The McGraw-Hill Companies, Inc. All rights reserved 15-28 The Claims Process: An Overview  Obtains patient information  Determines diagnosis and fees based on services provided  Records patient payments  Prepares health-care claims  Reviews the insurer’s processing of the claim Services Provided by the Physician’s Office

30. © 2009 The McGraw-Hill Companies, Inc. All rights reserved 15-29 The Claims Process: An Overview (cont.)  Gathering and reporting patient information  Verifying patient’s insurance coverage  Recording procedures and services performed  Filing insurance claims and billing patients  Reviewing and recording payments Tasks Supported by using a Billing Program

31. © 2009 The McGraw-Hill Companies, Inc. All rights reserved 15-30 The Claims Process: Obtaining Patient Information  Insurance information Current employer Employer address and telephone number Insurance carrier and date of coverage Insurance group plan Insurance identification number Name of subscriber or insured  Personal information Name Home address Telephone number Date of birth Social security number Emergency contact person

32. © 2009 The McGraw-Hill Companies, Inc. All rights reserved 15-31  Release signatures Form to release insurance information to insurance carrier Form for assignment of benefits  Verify eligibility Check effective date of coverage The Claims Process: Obtaining Patient Information (cont.)

33. © 2009 The McGraw-Hill Companies, Inc. All rights reserved 15-32  Coordination of benefits Legal clauses to prevent duplication of payment Primary or main insurance plan pays first Secondary or supplemental plan pays the deductible and co- payment The Birthday Rule If a husband and wife both have a family insurance plan, the insurance plan of the person born first becomes the primary payer. The Claims Process: Obtaining Patient Information (cont.)

34. © 2009 The McGraw-Hill Companies, Inc. All rights reserved 15-33  Physician’s services Examines patient Documents symptoms, diagnosis, and treatment plan in medical record  Medical coding Translates the medical terminology into codes for reimbursement The Claims Process: Delivering Services

35. © 2009 The McGraw-Hill Companies, Inc. All rights reserved 15-34  Referrals to other services The medical assistant  Secure authorization from the insurance company for additional services  Arrange an appointment for referred services The Claims Process: Delivering Services (cont.)

36. © 2009 The McGraw-Hill Companies, Inc. All rights reserved 15-35 The Claims Process: Preparing the Health-Care Claim  Filing the insurance claim Once prepared, the physician reviews the claim Usually transmitted to payer electronically  Time limits Vary by company and state Medicare and Medicaid

37. © 2009 The McGraw-Hill Companies, Inc. All rights reserved 15-36 Insurance claims are reviewed for:  Medical necessity  Allowable benefits  Payment and remittance advice The Claims Process: Insurer’s Processing and Payment

38. © 2009 The McGraw-Hill Companies, Inc. All rights reserved 15-37  Remittance advice (RA) Sent with payment to patient and physician Also known as explanation of benefits (EOB)  Information the RA Form Insured name and identification number Name of beneficiary Claim number Date, place, and type of service Amount billed and amount allowed Amount of copayment and payments made Notation of any services not covered The Claims Process: Insurer’s Processing and Payment (cont.)

39. © 2009 The McGraw-Hill Companies, Inc. All rights reserved 15-38  Reviewing the insurer’s RA and payment Verify all information on the remittance advice (RA) line by line If a claim is rejected, check the diagnosis codes for accuracy Track all unpaid claims using either a follow-up log or computer automation The Claims Process: Insurer’s Processing and Payment (cont.)

40. © 2009 The McGraw-Hill Companies, Inc. All rights reserved 15-39 A patient had two appointments in the same week for different ailments. On Monday, the patient complains of back pain and receives a prescription for a muscle relaxant. On Wednesday, the patient complains of hair loss. When the medical assistant files the claims, she accidentally codes the first visit diagnosis (muscle spasm) with the prescribed treatment for the second visit (hair loss) which was an anti-fungal shampoo. The insurance claim is probably rejected for which of the following reasons: Medical necessity Payments Apply Your Knowledge Allowable benefits ANSWER: Very Good!

41. © 2009 The McGraw-Hill Companies, Inc. All rights reserved 15-40 Fee Schedules and Charges: Medicare Payment Systems—RBRVS A nationally uniform conversion factor The nationally uniform relative value A geographic adjustment factor The current annual Medicare Fee Schedule (MFS) is published by CMS in the Federal Register  Resource-based relative value scale (RBRVS) Payment system used by Medicare

42. © 2009 The McGraw-Hill Companies, Inc. All rights reserved 15-41 CapitationContracted Fee Schedule Fee Schedules and Charges (cont.) Payment Methods Allowed Charges

43. © 2009 The McGraw-Hill Companies, Inc. All rights reserved 15-42  Allowed charges This represents the most the payer will pay any provider for that work Other equivalent terms Fee Schedules and Charges (cont.) Maximum allowable fee Maximum charge Allowed amount Maximum charge Allowed fee Allowable charge Billing the patient for the difference between the higher usual fee and a lower allowed charge is called balance billing

44. © 2009 The McGraw-Hill Companies, Inc. All rights reserved 15-43 Fee Schedules and Charges (cont.)  Contracted fee schedule Fixed fee schedules for participating physicians Non-covered services billed to patient  Capitation The fixed prepayment for each plan member Non-covered services billed to patient

45. © 2009 The McGraw-Hill Companies, Inc. All rights reserved 15-44 Fee Schedules and Charges (cont.)  Calculating patient charges Depending on plan, patients are obligated to pay  Premiums and deductibles  Copayments and coinsurance  Excluded and over-limit services  Balance billing

46. © 2009 The McGraw-Hill Companies, Inc. All rights reserved 15-45 Communication with Patients About Charges  A practice may require patients to Sign an assignment of benefits statement or Pay in full for services at the time provided  Remind patients of financial obligation Ask patients to agree in writing to cost of procedures not covered by plan

47. © 2009 The McGraw-Hill Companies, Inc. All rights reserved 15-46 Communication with Patients About Charges (cont.) Copayments must be paid before patients leave the office Managed Care Members The patient is responsible for any amounts not covered by the insurance carrier Assigned Claims Unassigned Claims Unless other prior arrangements are made, payment is expected at the time service is delivered  Financial policy Patient responsibility for payment for services

48. © 2009 The McGraw-Hill Companies, Inc. All rights reserved 15-47 Apply Your Knowledge What do you need to consider when calculating patient charges? ANSWER: You need to consider whether the patient has met the deductible, if the patient has to pay a copayment, if the service is excluded, or if the patient is over his/her limit for services. Nice Job!

49. © 2009 The McGraw-Hill Companies, Inc. All rights reserved 15-48 Preparing and Transmitting Health-Care Claims  HIPAA claims Electronic Used predominantly X12 837 Health Care Claim - official name Information entered is called data elements Data must be entered in CAPS in valid fields No prefixes or special characters allowed

50. © 2009 The McGraw-Hill Companies, Inc. All rights reserved 15-49 Preparing and Transmitting Health-Care Claims  Paper claims A CMS-1500 paper form is used May be mailed or faxed to the third-party payer Not widely used as a result of HIPAA requirements CMS-1500 requires 33 form indicators

51. © 2009 The McGraw-Hill Companies, Inc. All rights reserved 15-50 Data Elements on HIPAA Electronic Claims  Provider information Billing provider – transmits the claim to payer Pay-to provider – practice that receives payment from insurance carrier Rendering provider – physician that treats patient  Taxonomy information Taxonomy code is a 10-digit number representing the physician specialty Physicians select codes to match education, license, or certification

52. © 2009 The McGraw-Hill Companies, Inc. All rights reserved 15-51  HIPAA national identifiers Established for  Employers  Health-care providers  Health plans  Patients Identifiers are numbers of predetermined length and structure like social security numbers Data Elements on HIPAA Electronic Claims (cont.)

53. © 2009 The McGraw-Hill Companies, Inc. All rights reserved 15-52 Preparing and Transmitting Health-Care Claims (cont.) Transmission of Electronic Claims Three major methods of transmitting claims electronically Direct transmission to the payer Using a clearinghouse Direct data entry Offices and payers exchange information directly by electronic data interchange (EDI) Translates nonstandard data into standard format. Clearinghouse cannot create or modify data Internet-based service that loads data elements directly into the health plan’s computer

54. © 2009 The McGraw-Hill Companies, Inc. All rights reserved 15-53 Preparing and Transmitting Health-Care Claims (cont.)  Generate clean claims by avoiding common errors  Payer name and/or identifier or invalid subscriber’s birth date  Part of the name or identifier of the referring provider  Service facility name and address information  Information about secondary insurance plans  Medicare or benefits assignment indicator

55. © 2009 The McGraw-Hill Companies, Inc. All rights reserved 15-54 Preparing and Transmitting Health-Care Claims (cont.)  Claims security The HIPAA rules  Standards for protecting individually identifiable health information when maintained or transmitted electronically Common security measures  Access control, passwords, and log files  Backup copies  Security policies to handle violations

56. © 2009 The McGraw-Hill Companies, Inc. All rights reserved 15-55 A medical assistant has two part-time positions, one for a pediatrician and the other for a surgeon. When completing the X12 837, which of the following would be a major difference? a.Provider information b.Taxonomy information c.HIPAA identifiers Apply Your Knowledge The taxonomy information would be very different because the physician preparation and licensing are very different. ANSWER:

57. © 2009 The McGraw-Hill Companies, Inc. All rights reserved 15-56 In Summary  Medical assistant Handles patients’ questions about plans and claims Reviews patients’ insurance coverage Explains physician’s fees Estimates  Charges covered by payer  Charges patient must cover Prepares complete and accurate health-care claims

58. © 2009 The McGraw-Hill Companies, Inc. All rights reserved 15-57 I am always doing that which I can not do, in order that I may learn how to do it. ~ Pablo Picasso