1. 17
Insurance and Billing

2. Learning Outcomes (cont.)
17.1 Define the basic terms used by the insurance industry.
17.2 Compare fee-for- service plans, HMOs, and PPOs.
17.3 Outline the key requirements for coverage by the Medicare, Medicaid, TRICARE and CHAMPVA programs.
17.4 Describe allowed charge, contracted fee, capitation and formula for RBRVS.

3. Learning Outcomes (cont.)
17.5 Outline the tasks performed to obtain the information required to produce an insurance claim.
17.6 Produce a clean CMS-1500 health insurance claim form.
17.7 Explain the methods used to submit an insurance claim electronically.
17.8 Recall the information found on every payer’s remittance advice.

4. Introduction Health care claims Medical assistant
Reimbursement for services
Accuracy = maximum appropriate payment
Medical assistant
Prepare claims
Review insurance coverage
Explain fees
Estimate charges
Understand payment explanation
Calculate the patient’s financial responsibility
Insurance claims are a critical part of the reimbursement process. It is important that claims be accurate so that medical practices receive the maximum appropriate payment for the services they provide.
The medical assistant may:
Prepare healthcare claims
Review each patient’s insurance coverage
Explain the physician’s fees
Estimate what services are covered by payers
Prepare the claims to be submitted for these charges
Understand the payment explanation when it is returned with the payment from the payer
Calculate the patient’s financial responsibility for the treatment and care not covered by the insurance carrier.

5. Basic Insurance Terminology
Medical insurance
Policy holder
Premium
Benefits
Dependents
Lifetime maximum benefits
Learning Outcome: Define the basic terms used by the insurance industry.
Medical insurance, also known as health insurance, is a written contract in the form of a policy between a policyholder and a health plan.
Policyholder – the insured, the member, or the subscriber.
Premium – the charge for keeping the insurance policy in effect.
Benefits – payments for medical services for a specified time period.
The policy may cover dependents of the policyholder.
Lifetime maximum benefit – a total sum the health plan will pay out over the patient’s lifetime.

6. Basic Insurance Terminology (cont.)
Three participants in an insurance contract:
First party ~ patient
Second party ~ healthcare provider
Third-party payer ~ health plan
Learning Outcome: Define the basic terms used by the insurance industry.
A patient-physician contract is created when a physician agrees to treat a patient who is legally responsible for paying for services.
First party – the patient or policyholder
Second Party – the physician who provides medical services
Third-party payer – the health plan that agrees to carry the risk of paying for services

7. Basic Insurance Terminology (cont.)
Deductible ~ met annually
Coinsurance ~ fixed percentage
Copayment
Managed care plans
Preferred provider
Exclusions
Formulary
Learning Outcome: Define the basic terms used by the insurance industry.
Depending on the type of health plan, the patient may pay:
Deductible – a fixed dollar amount that must be paid or “met” once a year, in addition to the premium, before the third-party payer begins to cover medical expenses.
Coinsurance – a fixed percentage of covered charges after the deductible is met.
The health plan’s percentage of the charge followed by the insured’s percentage, such as
Copayment – a fixed fee collected at the time of the visit.
Managed care plans
The health plan pays an agreed-upon contracted payment for the charges with any balance being adjusted off by the service provider per its preferred provider contract with the health plan.
Exclusions – expenses not covered by insured’s contract.
Formulary - a list of approved drugs (if a prescription drug benefit is offered)
If a nonformulary medication is prescribed, the patient is responsible for most or all of the prescription’s cost.

8. Basic Insurance Terminology (cont.)
Elective procedure
Preauthorization ~ medically necessary
Predetermination
Learning Outcome: Define the basic terms used by the insurance industry.
Elective procedure – “planned” procedures that are done at the convenience of the physician or surgeon and patient
Preauthorization, or precertification – the process of contacting the insurance plan to see if the proposed procedure is a covered service under the patient’s insurance plan.
If the insurance plan agrees the procedure is medically necessary, they will issue a prior authorization number approving the need for the service or procedure. This does not guarantee payment.
Predetermination - the insurance plan informs the physician of the maximum amount they will pay for the procedure to be performed.

9. Good Job! 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 that provides services, and the third-party payer is the insurance company that agrees to carry the risk of paying for approved services.
Learning Outcome: Define the basic terms used by the insurance industry.
Good Job!

10. Private Health Plans
Insurance companies ~ rules about benefits and procedures
Sources of health plans
Group policies
Individual plans
Government plans
National Provider Identifier (NPI)
Learning Outcomes: 17.2 Compare fee-for-service plans, HMOs, and PPOs.
Insurance companies have rules about benefits and procedures.
Printed and/ or online manuals for reference.
Websites and toll-free numbers available for providers to answer questions.
If you call with a question
Get the name and extension number of the representative you speak with and document the call.
You may be given a call reference number in case a similar issue arises later
Keep all of this information with the patient’s financial or insurance record for reference
Every physician and provider who submits a claim to an insurance carrier must now use a specific provider number, known as a National Provider Identifier (NPI), from the Centers for Medicare and Medicaid Services (CMS)

11. Private Health Plans (cont.)
Healthcare Legislation
Extend insurance coverage to all Americans
Ban on
Lifetime limits
Denial of coverage for pre-existing conditions
Policy cancellations for illness
Children on family policy until 26 years old
Learning Outcomes: 17.2 Compare fee-for-service plans, HMOs, and PPOs.
This new law will take several years to fully phase in with 2014 as the goal.

12. Fee-for-Service and Managed Care Plans
Policy lists covered medical services
Amount charged for services is controlled by the physician
Amount paid for services is controlled by the insurance carrier
Learning Outcomes: 17.2 Compare fee-for-service plans, HMOs, and PPOs.
Fee-for-service plans, the oldest and most expensive type, repay policyholders for healthcare costs due to illnesses and accidents.

13. Fee-for-Service and Managed Care Plans (cont.)
Managed Care Plans (MCOs)
Controls both the financing and delivery of healthcare
Enrolls
Policy holders
Participating physicians
MCOs pay physicians in two ways
Capitation
Contracted fees
Learning Outcomes: 17.2 Compare fee-for-service plans, HMOs, and PPOs.
Controlling both financing and delivery of healthcare allows MCOs to control all aspects of the care provided to their members, the providers, the fees those providers may charge the MCO; and the copayment for the patient.
Physicians who enroll with managed care plans are called participating physicians.
Physician contracts with MCOs stipulate
Physician fees
Physician credentials
Responsibilities to the patient and MCO
Capitation – a fixed prepayment
In most plans, the PCP is reimbursed using the capitation method, which includes a fixed amount per patient regardless of whether she sees that patient multiple times during the month or not at all.
Additional contracted fees are paid for other services provided such as labs and immunizations.
Specialists are paid in a negotiated fee-for-service manner.

14. Managed Care Plans (cont.)
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 are often paid a capitated rate
Patients pay premiums and a copayment for each office visit
Learning Outcomes: 17.2 Compare fee-for-service plans, HMOs, and PPOs.
PPO: Patients may also use physicians not in the network, but are responsible for paying a higher percentage of the charges.
HMO
No payment is required for covered services other than premiums and copayment.
Does not pay for care from a provider who is not in the health plan.
Patients also must pay for excluded services.

15. Commercial Payers Blue Cross Blue Shield Private Commercial Carriers
Rules and regulations vary
Covered services and fees vary
Liability insurance
Disability insurance
Learning Outcomes: 17.2 Compare fee-for-service plans, HMOs, and PPOs.
BCBS
A nationwide federation of nonprofit and for-profit service organizations that provide prepaid healthcare services to BCBS subscribers.
Each state’s organization operates under its own state laws, and covered services and benefits for BCBS plans can vary greatly from state to state and plan to plan.
Private Commercial Carriers – rules and regulations among the carriers vary as much as the covered services and the fees allowed for those covered services.
Liability insurance covers injuries caused by the insured or that occurred on the insured’s property.
Disability insurance
Activated when the insured is injured or disabled for non-work-related reasons.
Not health insurance and does not cover medical expense
Assist with the insured’s normal daily expenses
Short-term policies and long-term policies

16. Apply Your Knowledge Right! Matching: E B A G C F D ANSWER:
Fee-for-Service
Participating physician
PPO
HMO
BCBS
Liability insurance
Disability insurance
nationwide federation of organizations
enroll with managed care plans
repay policyholders for healthcare costs
does not cover medical expenses
network of providers who care for subscribers
covers injuries caused by the insured
subscribers pay premiums and a copayment but no other fees for covered services B A G
Learning Outcomes: 17.2 Compare fee-for-service plans, HMOs, and PPOs. C F D
Right!

17. Government Plans Health care Retirees Low-income and disadvantaged
Active or retired military personnel and their families
Learning Outcomes: Outline the key requirements for coverage by the Medicare, Medicaid, TRICARE and CHAMPVA programs.
Maintain many of the features of managed care plans.

18. Medicare The largest federal program
Managed by the Centers for Medicare and Medicaid Services (CMS)
Medicare Part A
Hospital insurance
Financed by Federal Insurance Contributions Act (FICA) tax
Covers anyone with Social Security benefits
Learning Outcome: Outline the key requirements for coverage by the Medicare, Medicaid, TRICARE and CHAMPVA programs.
Patients under the age of 65 who are blind or widowed or who have serious long-term disabilities, such as chronic joint pain or kidney failure are also eligible for Medicare.
Part A – the hospital benefit and pays most of the costs for the following:
Patients who are admitted as inpatients for up to the 90-day benefit period. The initial benefit period is 60 days where, after the deductible, hospital coverage is at 100%. Then the patient enters into a 30-day period called coinsurance days.
A patient who has been admitted to a skilled nursing facility (SNF) after inpatient hospitalization. Coverage is for no more than 100 days in each benefit period.
A patient who is receiving medical care at home.
A patient receiving hospice care either at home or in a hospice facility.
A patient who requires psychiatric treatment up to 190 days (currently) for patient’s lifetime.
A patient who requires respite care.
Individuals aged 65 or older who are not eligible for Social Security benefits may enroll in Part A, but they must pay premiums for the coverage.

19. Medicare (cont.) Medicare Part B Medicare health insurance card
Covers outpatient services
Voluntary program
Participants pay a premium
Medicare health insurance card
Medicare number
Indicates eligibility
Learning Outcome: Outline the key requirements for coverage by the Medicare, Medicaid, TRICARE and CHAMPVA programs.
Part B – covers a portion (usually 80%) of the allowed charges for a wide range of outpatient procedures and supplies.
Individuals entitled to Part A benefits automatically qualify for Part B benefits. U.S. citizens and permanent residents over the age of 65 are also eligible.
Part B is a voluntary program. Individuals must enroll for Part B because coverage is not automatic. The premium is based on the beneficiary’s income.
Medicare enrollee receives a health insurance card with a number assigned by CMS. The number is followed by a suffix indicating how the beneficiary is eligible for Medicare.
Suffix “A” is attached to the patient’s own social security number
Suffix “B” is attached to the social security number of the spouse who is eligible because of her spouse’s contributions.
Suffix “D” is attached to the social security number of a spouse who is deceased. This benefit type was commonly known as “widow’s benefits.
Table 17-2 Comparison of Medicare A and B Premiums, Deductibles, and Benefits.

20. Medicare (cont.) Part C – 1997 Part D – prescription drug plan
Provides choices in types of plans
Medicare Advantage plans
Part D – prescription drug plan
Learning Outcome: Outline the key requirements for coverage by the Medicare, Medicaid, TRICARE and CHAMPVA programs.
Medicare Part C
Medicare Advantage plans include PPOs, HMOs, private fee-for-service (PFFS) plans, special needs plans, and Medicare medical savings account plans (MSA).
Medicare Part D – prescription drug plan

21. Medicare (cont.)
Medicare plan options
Fee-for-Service: The Original Medicare Plan
An annual deductible
After deductible, the patient pays 20 percent
Medigap plan – secondary insurance
Medicare Administrative Contractor (MAC) Jurisdictions
Learning Outcome: Outline the key requirements for coverage by the Medicare, Medicaid, TRICARE and CHAMPVA programs.
Providers who accept the Medicare-allowed charge as payment in full are known as those who “accept assignment.” and cannot charge the patient more than this allowed charge.
Individuals enrolled in the Original Medicare B Plan often buy additional insurance called a Medigap plan.
Reimburse the patient’s part B deductible and pick up the 20% of the Medicare-allowed charge
Offered by private insurance companies
Regulated by state and federal law
Coverage varies; a set of core benefits is common to all Medigap plans
In 2009, CMS changed how claims were processed through Medicare contracting reform. Medicare Administrative Contractor (MAC) Jurisdictions were created for claims processing.
Refer to Table 17-3 Medicare MAC Jurisdictions for Medical Claims.

22. Medicare (cont.) Medicare Managed Care Plans
Medicare Preferred Provider Organization Plans (PPOs)
Medicare Private Fee-for-Service Plans
Learning Outcome: Outline the key requirements for coverage by the Medicare, Medicaid, TRICARE and CHAMPVA programs.
Medicare Managed Care Plans
Monthly premium and small copayment; no deductible
Require the patient to use specific network of providers
Offer coverage for services not reimbursed in Original Medicare Plan
Requires a PCP who manages patient’s medical care through referrals
Medicare PPOs
Patients pay less to use doctors in network, but may go outside the network for additional costs.
PCP is not required
Referrals are not required
Medicare Private Fee-for-Service Plan
Operated by private insurance company that contracts with Medicare
Patients may choose any Medicare-approved provider
Physicians can bill patients for amount of charge not covered by plan

23. Medicare Plans (cont.) Recovery Audit Contractor (RAC) Program
Designed to guard the Medicare Trust Fund
Identify improper payments
Learning Outcome: Outline the key requirements for coverage by the Medicare, Medicaid, TRICARE and CHAMPVA programs
In 2008, CMS announced aggressive new steps to find and prevent waste, fraud, and abuse in Medicare.
Contracts have been awarded to four permanent RACS which are designed to guard the Medicare Trust Fund by fighting fraud, waste and abuse in the Medicare program.
The goal is to identify improper payments made on claims of healthcare services.
Overpayments can occur when healthcare providers submit claims that do not meet Medicare’s coding or medical necessity policies.
Underpayments can occur when healthcare providers submit claims for a simple procedure, but the medical record reveals that a more complicated procedure was actually performed.
Underpayment
Overpayment

24. Medicaid Health cost assistance program not an insurance program
Federal funds for mandated services
States – additional optional services
Accepting assignment
Dual coverage
Learning Outcome: Outline the key requirements for coverage by the Medicare, Medicaid, TRICARE and CHAMPVA programs
Medicaid, also run by CMS, is a health-benefit program designed for low-income, blind, or disabled patients; needy families; foster children; and children born with birth defects.
The federal government provides funds to all 50 states to administer Medicaid for mandated services and each state adds its own funds for additional optional services.
Accepting assignment
Physician who treats Medicaid patients must accept the established Medicaid payment for covered services as payment in full.
The physician can bill the patient for services Medicaid does not cover.
Medicaid is known as the payer of last resort, meaning that if both a private insurance plan and Medicaid cover a patient, the private plan must be billed before Medicaid.
Dual coverage
Elderly or disabled patients who have Medicare but cannot pay the difference between the charges submitted and the Medicare payment qualify.
Not billed for a balance unless a non-covered service is provided (and the patient is notified in advance in writing of this fact), or Medicare/Medicaid states that the patient may be billed

25. Medicaid (cont.) State guidelines Verify Medicaid eligibility
Ensure that the physician signs all claims
Preauthorization required except in an emergency
Verify deadlines for claim submissions
Treat Medicaid patients with professionalism and courtesy
Learning Outcomes: Outline the key requirements for coverage by the Medicare, Medicaid, TRICARE and CHAMPVA programs.
Medicaid benefits can and often do vary greatly from state to state. Eligibility is based on how much income the patient reported for the previous month. It is important to understand the Medicaid guidelines in your state.
Ensure the physician signs all claims, unless claims are submitted electronically (the physician’s signature is kept on file). Send the completed and signed claims to appropriate entity.
Unless the patient has a medical emergency, Medicaid often requires authorization before services are performed.

26. TRICARE and CHAMPVA TRICARE CHAMPVA Healthcare benefit
Eligibility – enrollment in the Defense Enrollment Eligibility Reporting System (DEERS)
CHAMPVA
Civilian Health and Medical Program of the Veterans Administration
Eligibility determined by the VA
Learning Outcome: Outline the key requirements for coverage by the Medicare, Medicaid, TRICARE and CHAMPVA programs
The U.S. government provides healthcare benefits to families of current military personnel, retired military personnel, and veterans through the TRICARE and CHAMPVA programs.
TRICARE – not a health insurance plan but a healthcare benefit for families of uniformed personnel and retirees. Run by the Department of Defense.
Choices for TRICARE health-care benefits
TRICARE Prime – health maintenance organization
TRICARE Extra – managed care network of health-care providers that families can use on a case-by-case basis without required enrollment
TRICARE Standard – fee-for-service plan
TRICARE for Life – for individuals 65 and older who also qualify for Medicare
CHAMPVA – Civilian Health and Medical Program of the Veterans Administration
Families of veterans with total, permanent, service-connected disabilities
Surviving spouses and dependent children of veterans who died in the line of duty or as a result of service-connected disabilities.
TRICARE- and CHAMPVA- providers have the option of deciding whether to accept patients on a case-by-case basis. Make sure you know the policy of the physicians

27. State Children’s Health Plan (SCHIP)
Enacted in 1997 and reauthorized in 2009
State-provided health coverage for uninsured children in families that do not qualify for Medicaid
Learning Outcome: Outline the key requirements for coverage by the Medicare, .Medicaid, TRICARE and CHAMPVA programs.
SCHIP
Allows states to provide health coverage to children in families whose incomes are too high to qualify for Medicaid but too low to afford private insurance.
Requirements vary by state.
Check your state’s requirements for this plan through their website.

28. Workers’ Compensation
Covers employment-related accidents or illnesses
Laws vary by state
Verify with employer before treating and obtain a case number
Records management
Learning Outcome: Outline the key requirements for coverage by the Medicare, Medicaid, TRICARE and CHAMPVA programs.
Workers compensation insurance covers employment-related accidents or diseases.
Laws vary from state to state, but in most states, this insurance includes these benefits:
Basic medical treatment
A weekly amount paid to the patient for a temporary disability
A weekly or monthly sum paid to the patient for a permanent disability
Rehabilitation costs to restore an employee’s ability to work again
Death benefits for survivors
Not all medical practices accept workers’ compensation cases.
Prior to treating a patient who states her care is related to a work-related illness or injury, call the employer to verify this information.
The Employer’s First Report of Illness or Injury must be received or the insurance carrier will not open a case.
Records management
Records management of workers’ compensation varies by state.
If your practice sees a patient privately and then for a workers’ compensation claim, be sure to keep the records separate. The employer and insurer have the right to see any and all treatment and applicable financial records related to the workers’ compensation claim without patient consent.

29. Apply Your Knowledge
A 72-year-old disabled patient is being treated at an office that accepts Medicare. The total office visit is $165, but Medicare Part B will only reimburse a set fee of $90. In this situation, what is the most likely solution?
Correct!
ANSWER:
Learning Outcome: Outline the key requirements for coverage by the Medicare, Medicaid, TRICARE and CHAMPVA programs
Bill the patient for the balance due.
Expect the balance to be paid at the time of service.
This patient probably has a secondary employer health insurance plan.
This patient may qualify for the Medi/Medi coverage.

30. Fee Schedules and Charges
Resource-based relative value scale (RBRVS)
Formula uses:
Nationally uniform relative value unit (RVU)
Geographic adjustment factor (GAF)
Nationally uniform conversion factor (CF)
CMS updates annually
Learning Outcome: 17.4 Describe allowed charge, contracted fee, capitation and formula for RBRVS.
Fee schedule: A list of the practice’s usual fees for procedures and services charged to most of the patients most of the time under typical conditions.
RBRVS – payment system used by Medicare. The RBRVS establishes the relative value units for services, replacing the providers’ usual fees with amounts each service really costs to provide.
Third-party payers set the fees they are willing to pay providers and base their fees on the amounts Medicare allows because the Medicare method of fee setting takes into account important factors other than only the usual fees
Basis for nationally uniform relative value unit (RVU)
Physician’s work
Practice cost (overhead)
Cost of malpractice insurance
Geographic adjustment factor (GAF): Adjusts relative value to reflect a geographical area’s relative costs, such as office rent.
Nationally uniform conversion factor – used to make adjustments according to changes in the cost-of-living index.
RBRVS fees less than usual fees.

31. Payment Methods Allowed charges
The maximum amount the payer will pay a provider
Equivalent terms
Balance billing
Adjustment
Learning Outcome: 17.4 Describe allowed charge, contracted fee, capitation and formula for RBRVS.
Equivalent terms – maximum allowable fee, maximum charge, allowed amount, allowed fee, or allowable charge.
The plan’s contract with the provider governs whether the provider is permitted to bill a patient for the part of a usual charge the payer does not cover.
Billing a patient for the difference between a higher usual fee and a lower allowed charge is called balance billing.
Under most contracts, participating providers may not bill the patient for the difference. Instead, the provider must write off the difference. The common term for this write-off is adjustment.

32. Payment Methods (cont.)
Contracted fee schedule – fixed fee schedules
Capitation – fixed prepayment
Calculating patient charges – may include
Deductibles
Copayments
Coinsurance
Excluded and over-limit services
Balance billing
Learning Outcome: 17.4 Describe allowed charge, contracted fee, capitation and formula for RBRVS.
Contracted Fee Schedule
The plan’s terms determine what percentage of the charges the patient owes and what percentage the payer covers.
Participating providers can typically bill patients their usual charges for procedures and services not covered by the plan.
Capitation
The fixed prepayment for each plan member is determined by the managed care plan.
The patient is often responsible for a fixed copayment.
A noncovered service can be billed to the patient using the physician’s usual rate.
The patient should sign a waiver of liability prior to receiving any noncovered procedure, acknowledging that he will be responsible for any noncovered charges, and the expected amount.
Calculating Patient Charges
All payers require patients to pay for excluded services.
In managed care plans that set limits on the annual usage of covered services, patients are responsible for usage beyond the allowed number.

33. Communication with Patients About Charges
Remind patients of financial obligation
Notify office financial policy
Post
Information packet
Notify of uncovered services
Learning Outcome: 17.4 Describe allowed charge, contracted fee, capitation and formula for RBRVS.
Patients generally sign an assignment of benefits statement. The provider agrees to prepare healthcare claims for patients, to receive payments directly from the payers, and to accept a payer’s allowed charge.
Nonparticipating providers may require that the patient either (1) assign benefits directly to the practice or (2) pay in full at the time of services.
Patients should always be reminded of their financial obligations under their plans, including claim denials, according to practice procedures. The policy should explain what is required of the patient and when payment is due.
Notify patients in advance of the probable cost of procedures that are not going to be covered by their plan.
The Advance Beneficiary Notice of Noncoverage or ABN (CMS-R-131)
A notice given to medicare beneficiaries to convey that medicare is not likely to provide coverage in a specific case.
Must be delivered far enough in advance that the beneficiary or representative has time to consider the options and make an informed choice.
AbNS are not required in emergency or urgent care situations.

34. Nice Job! 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 or coinsurance, if the service is excluded, or if the patient is over his/her limit for services.
Learning Outcome: 17.4 Describe allowed charge, contracted fee, capitation and formula for RBRVS.
Nice Job!

35. The Claims Process: An Overview
Physician’s office
Obtains patient information
Delivers services and determines diagnosis and fees
Records payments; prepares and submits healthcare claims
Reviews the processing of a claim
Learning Outcome: Outline the tasks performed to obtain the information required to produce an insurance claim.
The physician’s office performs the following services:
Obtains patient information
Delivers services to the patient and determines the diagnosis and fee
Records charges and codes, records payment from the patient, and prepares and submits the healthcare claim
Reviews the insurer’s processing of the claim, remittance advice, and payment.

36. The Claims Process: An Overview (cont.)
Electronic billing programs
Streamlines process
Creating claims
Follow-up
Bills sent to patient
Electronic data exchange (EDI)
Learning Outcome: Outline the tasks performed to obtain the information required to produce an insurance claim.
Electronic medical billing programs support administrative tasks:
Gathering and recording patient information
Verifying patients’ insurance coverage
Recording procedures and services performed
Recording applicable diagnosis and codes for each procedure performed
Filing insurance claims and billing patients
Reviewing and recording payments
Billing programs streamline the important process of creating and following up on healthcare claims sent to payers and bills sent to patients.
Using electronic data interchange (EDI), similar to the technology behind ATMs, information is sent quickly and securely between the medical practice and the insurance carrier.

37. Obtaining Patient Information
Basic
Contact information
DOB
SSN
Emergency contact
Insurance
Employer information
Insurance carrier information
Release signatures
To insurance carrier
Assignment of benefits
Learning Outcome: Outline the tasks performed to obtain the information required to produce an insurance claim.
Basic Facts
Patient Name (be sure to get the correct spelling of the patient’s legal name)
Current home address and home telephone number
Date of birth (month, day, and the four digits of the year)
Social Security number
Next of kin or person to contact in case of an emergency
Insurance information
Current employer (may be more than one), employer address and telephone number
Insurance carrier and effective date of coverage
Insurance group plan number
Insurance identification number
Name of subscriber or insured
Obtain the following release signatures:
Authorizing release of information to the insurance carrier
Assignment of benefits

38. Obtaining Patient Information (cont.)
Eligibility for services
Scan or copy card
Signed release
Check effective date of coverage
Preauthorization
Phone or online
Authorization number
Learning Outcome: Outline the tasks performed to obtain the information required to produce an insurance claim.
Eligibility for services
Copy or scan the front and back of the patient’s insurance card
Obtain the release signatures for inclusion in the patient’s financial record
Verify the effective date of insurance coverage
Obtaining Prior Authorization
When calling or completing online you will need:
Patient’s insurance group number and ID number, the name, address, phone number, and date of birth
The subscriber’s name and birth date and the relationship between the patient and the subscriber.
Name and CPT (procedure) code of the planned procedure, and the diagnosis and ICD (diagnosis) code as the reason for the procedure to document medical necessity.
Carefully write down the authorization number and place it in the patient’s chart for further reference. Keep this authorization in the patient’s record as proof of receipt.
Refer to Procedure 17-2 Submitting a Request for Prior Authorization

39. Obtaining Patient Information (cont.)
Coordination of benefits
Prevents duplication of payment
Primary insurance plan pays first
Secondary plan pays the deductible and copayment
Birthday Rule
The insurance plan of the person born first becomes the primary payer.
Learning Outcome: Outline the tasks performed to obtain the information required to produce an insurance claim.
Coordination of Benefits
Legal clauses in insurance policies that prevent payment duplication by restricting insurance company payments to no more than 100% of the covered benefits’ cost.
The birthday rule is used to determine the primary plan for dependents who are covered by two or more medical plans.
Be sure to check with your state’s insurance commission to see if the birthday rule applies in your state.
It states that the insurance policy of the policyholder whose birthday comes first in the calendar year is the primary payer for all dependents.
Refer to Table 17-4 Guidelines for Determining Primary Insurance Coverage.

40. Delivering Services to the Patient
Physician’s services
Documents visit in medical record
Completes superbill or charge slip
Medical coding
Compare superbill to medical record
Translate procedures on charge slip
Learning Outcome: Outline the tasks performed to obtain the information required to produce an insurance claim.
Any services the physician or other healthcare team members deliver to the patient in the office must be entered into the patient record.
Physician
Notes the patient’s symptoms, diagnosis, treatment plan and follow-up visit in the medical record.
Writes the diagnosis, treatment, and sometimes the fee on an encounter form (superbill) or charge slip.
Medical Coding
Superbills preprinted with common procedures and procedure codes.
Compare superbill to medical record to verify that the procedure checked off on the form was actually completed to ensure the patient is not charged for a procedure that did not take place
Be sure the appropriate diagnosis code(s) are checked off proving medical necessity for the procedures performed.
If your office uses a charge slip instead of a superbill, you will need to translate the procedures listed on the charge slip into charge codes for the insurance carrier.

41. Delivering Services to the Patient (cont.)
Referrals and Authorizations
Obtain authorization number
Enter into billing program
Patient checkout
Learning Outcome: Outline the tasks performed to obtain the information required to produce an insurance claim.
Contact the insurance company
Explain the reason for the procedure(s)
Obtain an authorization number
Enter this authorization number in the billing program for inclusion on claims related to this procedure.
To arrange an appointment for required services
Verify that the insurance plan allows the specialist requested.
Obtain a referral if needed
Patient check out
When the patient brings you the superbill, you may perform one or more of the following procedures
Prepare and transmit a healthcare claim directly to the insurance company.
Accept payment from the patient for the full amount. The patient will submit a claim to the insurance carrier for reimbursement. (Not often done.)
Accept an insurance copayment or coinsurance from the patient and credit the account appropriately.

42. Apply Your Knowledge
Prior to submitting an insurance claim, what do you need to do?
ANSWER: You should have verified eligibility and obtained the patients signature on appropriate releases. You need to be sure you have the correct patient and insurance information to correctly complete the claim form. You should compare the superbill to the medical record. If a charge slip is used, you will need to determine the correct codes
Learning Outcome: Outline the tasks performed to obtain the information required to produce an insurance claim.
Excellent!

43. Preparing and Transmitting the Healthcare Claim
Filing Limits
Vary from company to company
Start with date of service
Electronic Claims transmission – X Health Care Claim
Learning Outcome: Produce a clean CMS-1500 health insurance claim form.
Healthcare claims are a critical communication. Processing claims is a major task in most offices.
Filing Limits
Claims must be considered “clean” or free of errors.
Date of service is the first item the insurance carrier is going to review.
Time limits for filing claims vary but all start with date of service.
Claims are generally transmitted within a few business days after the date of service.
X Health Care Claim.
The electronic claim transaction is the HIPAA Healthcare Claim or Equivalent Encounter Information.
Medicare mandated the X transaction for all Medicare claims except from very small practices.
“5010 claim” – the current format for electronic claims submission
Because most insurance carriers accept electronic claims and the process for submitting electronic claims has become more streamlined and cost efficient, even smaller offices are submitting electronic claims, which are generally paid in 1-2 weeks.

44. Electronic Claim Transmission
Preparing electronic claims
Information entered – data elements
Data must be entered in CAPS in valid fields
No prefixes or special characters allowed
Use only valid data
Learning Outcome: Produce a clean CMS-1500 health insurance claim form.
The claim is completed when the services, charges, and payments as detailed on the superbill (encounter form) are keyed into the billing claims software program.
Once all the claims for the day are prepared, or at a specified time each day, the software program is programmed to prepare claims for editing (“scrubbing”) and transmission.
When entering data in medical billing programs:
Enter data in all capital letters
Do not use prefixes for people’s names, such as Mr., Ms., or Dr.
Unless required by a particular insurance carrier, do not use special characters like hyphens, commas, or apostrophes
Use only valid data in all fields; avoid words such as “same”

45. Electronic Claim Transmission (cont.)
Data elements – major sections
Provider – taxonomy code
Subscriber (policyholder)
Patient (subscriber or another person) and payer
Claim details
Services
Other standard transactions include
Claim status
Payment status
Learning Outcome: Produce a clean CMS-1500 health insurance claim form.
The X transaction requires that all data elements be correct. Most billing programs or claim transmission programs automatically reformat data into the correct formats.
Some data elements are considered situational and are required only when a certain condition applies.
One of the required provider elements is the provider taxonomy code, a 10-digit number representing a physician’s medical specialty. Payment for some services is impacted by the particular specialty of the doctor performing them and by payers’ contracts.
The HIPAA Electronic Health Care Transactions and Code Sets (TCS) mandate means that all health plans are required to accept the standard claim. Be sure to follow each payer’s specifications when submitting claims.
Other standard transactions also support the claim process and information exchanged between medical offices and health plans. Each electronic transaction has both a title and a number. Each number begins with X12, the number of the EDI format, followed by a unique number that stands for the transaction.

46. Paper Claim Completion
CMS-1500 (CMS-1505) paper form
May be mailed or faxed to the third-party payer
Not widely used
CMS-1505 requires 33 form locators
Learning Outcome: Produce a clean CMS-1500 health insurance claim form.
The patient’s demographic and billing information is usually updated at the patient’s office visit and entered into the office medical billing program which is instructed to print the data on a CMS-1500 paper form (often called the CMS-1505 because of the form’s 2005 update)
This claim may be mailed or faxed to the third-party payer.
Because of the HIPAA mandate regarding electronic claims submission, the paper claim is not widely used. But it contains information similar to the X
The CMS-1505 contains 33 form locators, which are numbered blocks..
Refer to Procedure 17-3 Completing the CMS-1505 Claim Form

47. Paper Claim Completion (cont.)
Block 1 – 13: patient and insurance information
Block 1
Block 1a
Block 14 – 22: provider information
Block 14
Block 15 x XX
Learning Outcome: Produce a clean CMS-1500 health insurance claim form.
The CMS-1505 contains 33 form locators, which are numbered blocks.
Blocks 1–13 refer to the patient information and the patient and guarantor insurance coverage information.
Blocks 14–33 contain information about the provider and the transaction information, including the patient’s diagnoses, procedures, and charges.
Refer to text for completion of blocks 1 – 13: patient and insurance information.
Refer to text for completion of blocks 14 – 33: provider information.
Although the basic information required to complete the CMS-1505 claim is the same for every provider and insurance plan, instructions for completing the claim form vary among insurance carriers. Follow the individual carrier’s instructions carefully to obtain a clean claim with every submission.
Refer to Procedure 17-3 Completing the CMS-1505 Claim Form
Refer to CONNECT to see a video about Completing the CMS Form . IN

48. Good Answer! Apply Your Knowledge
What are the major data element sections required by the X transaction?
ANSWER: They are
Provider
Subscriber
Patient and payer
Claim details
Services
Good Answer!
Learning Outcome: Produce a clean CMS-1500 health insurance claim form.

49. Transmitting Electronic Claims
Three methods
Transmitting claims directly
Using a clearinghouse
Using 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
Learning Outcomes: Explain the methods used to submit an insurance claim electronically.
Electronic health records make health claim filing to be more efficient since as many of these programs streamline the overall claims process. Information is pulled from the patient record automatically.
Direct transmission to payer – information is transmitted using electronic data interchange (EDI)
Clearinghouse
Takes nonstandard formats and translates them into standard format.
May “scrub” the claims “clean” prior to submission to ensure each claim meets coding and payer claim standards
Apply software checks to claims they receive and transmit back reports of errors or missing information to the provider so claims can be corrected
Direct data entry
Internet-based service provided by some payers
The elements are loaded directly in the health plans’ computer.
Data elements must meet the HIPAA standards
Disadvantage – each claim must be hand-keyed into the system each time the patient is seen.

50. Generating Clean Claims
Carefully check claim before submission
Missing or incomplete information
Invalid information
Rejected claims
Provide missing information
Submit new claim
Learning Outcomes: Explain the methods used to submit an insurance claim electronically.
It is often simple errors that prevent you from generating “clean” claims.
Carefully check claims for common errors before transmission or printing.
Refer to Table 17-6 Common Errors Preventing Clean Claims
Make sure you have access to the insurance carrier’s most recent claim submission manual.
Claim Rejections
Provide the missing or corrected information
Submit a new claim with corrected information
Do note that most errors are errors of omission and if claims are checked carefully prior to submission, most errors can be caught, resulting in clean claims the first time around.

51. Claims Security The HIPAA rules Common security measures
Access control, passwords, and log files
Backup copies
Security policies
Learning Outcomes: Explain the methods used to submit an insurance claim electronically.
HIPAA rules set standards for protecting individually identifiable health information when it is maintained or transmitted electronically
Security measures to protect the confidentiality, integrity, and availability of PHI:
Access control, passwords, and log files to keep intruders out
Backup systems to replace items in case of damage to the computer
Security policies to handle violations that may occur

52. Bravo! Apply Your Knowledge
What are the three methods for electronic transmission of insurance claims?
ANSWER:
Direct transmission to insurance carrier using EDI
Using a clearinghouse that translated information into standard formats and “scrub” claims prior to submission
Direct data entry into the insurance carrier’s system
Learning Outcomes: Explain the methods used to submit an insurance claim electronically.
Bravo!

53. Insurer’s Processing and Payment
Claims Register
Created by billing program or clearinghouse
Track submitted claims
Review for medical necessity
Review for allowable benefits
Learning Outcome: Recall the information found on every payer’s remittance advice.
The billing program or the clearinghouse will create a log of transmitted claims to allow you to track the progress of the submitted charges. Refer to Procedure 17-4 Tracking Insurance Claims Submissions
Your transmitted claim for payment will undergo a number of reviews by the insurer many of which occur electronically.
Review for Medical Necessity – determines if the procedures provided and the accompanying diagnoses are compatible and whether the treatment is medically necessary.
Review for Allowable Benefits
Compares the fees the physician has charged with the benefits provided by the patient’s health insurance policy.
Determines the amount of deductible and/or coinsurance the patient owes.

54. Payment and Remittance Advice
With payment of a claim – Remittance advice (RA)
Amount billed
Amount allowed
Amount of patient liability
Amount paid
Services not covered
Learning Outcome: Recall the information found on every payer’s remittance advice.
After reviewing and accepting the claim, the insurer pays a benefit.
The insurer sends a remittance advice (RA), or explanation of payment (EOP) sometimes called an explanation of benefits (EOB). The RA or the EOP explains the medical claim.
The RA or EOP form gives the following information:
Name of the insured and identification number
Patient name
Claim number
Date of service, place of service, and procedure code for service provided
Amount billed by the practice
Amount allowed
Amount of patient liability
Amount paid
A notation of any services not covered and an explanation of why they were not covered

55. Reviewing the Insurer’s RA and Payment
Review line by line
If correct, make appropriate entry in claims log
If unpaid or different than records
Trace
Place a query
If rejected ~ review claim for accuracy
Learning Outcome: Recall the information found on every payer’s remittance advice.
Verify all information on the RA, line by line, using your records for each patient represented on the RA.
If all numbers on the RA agree with your records, you can make the appropriate entries in the insurance tracking log for claims paid.
If you do not hear from a payer about a claim or the payment does not appear to match your records, you will need to trace the claim or place a query with the insurance company.
When a claim is rejected or denied, the RA states the reason. You will need to review the claim, examining all procedural and diagnosis codes for accuracy, and compare it with the patient’s insurance information.
You may need to contact the insurance company by telephone to find out how to resolve the claim problem and then submit a corrected claim to obtain payment.

56. Apply Your Knowledge Very Good!
When reviewing the RA, you note that several claims were rejected and one was not paid. What should you do?
ANSWER: You need to review the rejected claims to be sure all information was correct. Either resubmit with corrected information or submit a new claim, depending on the carrier’s policy. You would have to call the insurance company to trace the claim that was not paid.
Learning Outcome: Recall the information found on every payer’s remittance advice.
Very Good!

57. In Summary
17.1 There are a variety of terms used by insurance companies, knowledgeable medical assistants, medical billers, and coders.
17.2 Fee-for-service plans are traditional plans where the insurance plan pays for a percentage of the charges.
HMOs are prepaid plans that pay the providers either by capitation or by contracted fee-for-service
A PPO is a managed care plan that establishes a network of providers to perform services for plan members..
17.1 The following are terms used by insurance companies, knowledgeable medical assistants, medical billers, and coders: premium, benefit, lifetime maximum, deductible, coinsurance, copayment, exclusions, formulary, elective procedure, precertification, and preauthorization.
17.2 Fee-for-service plans are traditional plans where after a yearly deductible is met, the insurance plan pays for a percentage of the charges and the patient is responsible for the other percentage (often 80% insurance plan and 20% patient).
HMOs are prepaid plans that pay the providers either by capitation or by contracted fee-for-service with patients choosing a PCP, seeing preferred providers, and paying a fixed per visit copay.
A PPO is a managed care plan that establishes a network of providers to perform services for plan members. Members may seek out-of-network care, but their costs will be higher.

58. In Summary (cont.)
17.3 Medicare provides health insurance for citizens aged 65 and older as well as certain categories of others.
Medicaid is a health benefit plan for low-income and certain others with disabilities.
TRICARE is a healthcare benefit for families of uniformed personnel and retirees .
CHAMPVA covers the expenses of the families of veterans with total, permanent, service-connected disabilities as well as expenses for survivors of veterans who died in the line of duty or from service- connected disabilities
17.3 Medicare provides health insurance for citizens aged 65 and older as well as for certain disabled workers, disabled widows of workers, and patients with long-term disability related to chronic kidney disease on dialysis and end-stage renal disease requiring transplant.
Medicaid is a health benefit plan for low-income, blind, or disabled patients; needy families; foster children; and children born with birth defects.
TRICARE is a healthcare benefit for families of uniformed personnel and retirees from the uniformed services.
CHAMPVA covers the expenses of the families of veterans with total, permanent, service-connected disabilities as well as expenses for surviving spouses and dependent children of veterans who died in the line of duty or as a result of service-connected disabilities.

59. In Summary (cont.)
17.4 An allowed charge is the maximum dollar amount an insurance carrier will base its reimbursement on. A contracted fee is negotiated between the MCO and the provider. Capitation is a fixed prepayment paid to the PCP. RBRVS stands for resource-based relative value scale. Its formula is RVU X GAF X CF.
17.5 The claims process includes: obtaining patient information; delivering services to the patient and determining the diagnosis and fee; recording charges and codes; documenting payment from the patient; and preparing the healthcare claims.
17.4 An allowed charge is the maximum dollar amount an insurance carrier will base its reimbursement on—it is also the maximum amount a participating provider is allowed to collect.
A contracted fee is a negotiated fee between the MCO and the
provider.
Capitation is a fixed prepayment paid to the PCP in most plans.
RBRVS stands for resource-based relative value scale. Its formula is RVU 3 GAF 3 CF.

60. In Summary (cont.)
17.6 The student should be able to produce a legible, clean, and acceptable CMS-1505 claim form.
17.7 The three methods used to submit claims electronically are: a directly to the payer’s website; the use of a clearinghouse; and the use of direct data entry or DDE.
17.8 Although the format may vary from payer to payer, all RAs (EOBs) contain similar information.
17.6 Using the step-by-step instructions within the chapter and Procedure 17–3, and given a completed encounter form (superbill) with all necessary information, the student should produce a legible, clean, and acceptable CMS-1505 claim form.
17.7 The three methods used to submit claims electronically are:
a claims submission directly to the payer’s website via an electronic data interchange;
the use of a clearinghouse to “scrub” and submit claims to the payer for the provider;
direct data entry or DDE.
17.8 Although the format may vary from payer to payer, all RAs (EOBs) contain the following information:
name of the insured and identification number;
patient name; claim number, date of service,
place of service, and code for the service provided;
amount billed and amount allowed;
amount of subscriber liability;
amount paid;
a notation of any services not covered and an explanation of why they were not covered.
Refer to CONNECT to see activities about Setting up a Doctor’s PIN Numbers, Verifying a Patient’s Insurance Coverage , Creating a Patient Referral form and Creating a Routing Slip for Billing .

61. End of Chapter 17
I am always doing that which I can not do, in order that I may learn how to do it.
~ Pablo Picasso