1. Medical Assisting Chapter 15
PowerPoint® to accompany
Medical Assisting Chapter 15
Second Edition
Ramutkowski • Booth • Pugh • Thompson • Whicker
Chapter 15
Copyright © The McGraw-Hill Companies, Inc. Permission required for reproduction or display.

2. Processing Health Care Claims
Objectives
15-1 List the basic steps of the health insurance claim process.
15-2 Describe your role in insurance claims processing.
15-3 Explain how payers set fees.
15-4 Define Medicare and Medicaid.
15-5 Discuss TRICARE and CHAMPVA healthcare benefits programs.
15-6 Distinguish between HMOs and PPOs.

3. Processing Healthcare Claims
Objectives (cont.)
15-7 Explain how to manage a workers’ compensation case.
15-8 Apply rules related to coordination of benefits.
15-9 Describe the healthcare claim preparation process.
Complete a Centers for Medicare and Medicaid service (CMS-1500) claim form.
15-11 Identify three ways to transmit electronic claims.

4. Basic Insurance Terminology
Medical insurance (health insurance) is a written contract policy between a policy holder and a health plan.
Terms To Know
First Party
The patient policy holder.
premium
Amount of money paid by the policy holder to the insurance carrier.
Second Party
The physician who provides medical services.
benefits
Medical services provided.
Third Party
The health plan.

5. Basic Insurance Terminology (cont.)
Deductible - a fixed dollar amount that must be paid or met once a year before third-party payers begin to cover expenses.
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 - an approved list of drugs.

6. Basic Insurance Terminology (cont.)
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.

7. Types of Health Plans
Managed Care
Plans
Controls both the financing and delivery of healthcare to policy holders.
Both policy holders and physicians (participating physicians) are enrolled by the Managed Care Organizations (MCOs).
In a capitated managed care plan, providers are paid a fixed amount regardless of the number of times the patient is seen by the physician.
Fee For Service
Plans
Oldest and most expensive type of plan
Covers costs of select medical services
Amount services determined by the physician

8. Types of Health 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 who contract with HMOs are often paid a capitated rate.
Patients pay premiums and a small co-payment, often $10.

9. Types of Health Plans (cont.)
Medicare is the largest federal program that provides healthcare 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.
Part B
Covers physician services, outpatient services, and many other services.
Available to persons 65 and older that are US citizens
A premium must be paid by all unlike Part A.

10. Types of Health Plans (cont.)
Types of Medicare Plans
Fee-for-Service: The Original Medicare Plan
Allows the beneficiary to choose any licensed physician certified by Medicare.
A deductible was charged then Medicare paid 80 percent and the patient paid 20 percent.
Medicare + Choice Plans
Allows patients to sign up for one of three plans:
Medicare Managed Care Plans
Medicare Preferred Provider Organization Plans (PPOs)
Medicare Private Fee-for-Service Plans

11. Types of Health Plans (cont.)
Medicare Managed Care Plans
Medical care is managed by a primary care physician (PCP)
A small co-payment for each visit is required but no deductibles
Some plans allow services from providers outside the network
Medicare Preferred Provider Organization Plan
Medicare Private Fee-For-Service Plan
Operated by a private insurance company
Co-payment may be required
Physicians can bill patients for amount not covered by the plan
Patients do not need a PCP
No referrals are required
Costs less to use referrals
within the network

12. Types of Health Plans (cont.) Medicaid
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
Funded by the federal and state government
Provides assistance such as:
 Physician services  Emergency services
 Laboratory and x-rays  SNF care  Vaccines
 Early diagnostic screening and treatment for minors

13. Types of Health Plans (cont.) Medicaid
Accepting Assignment
Medicaid
Medi/Medi
Older or disabled patients unable to pay the difference between the bill and the Medicaid payment may qualify for both Medicaid and Medicare.
Physicians agreeing to treat Medicaid patients also agree to the set reimbursements.

14. Types of Health Plans (cont.) Medicaid
State Guidelines
Medicaid cards are issued monthly, so always ask the patient for a current card.
Ensure that the physician signs all claims.
Authorization must be received in advance for medical services.
Verify deadlines for claim submissions.
Treat Medicaid patients with the same professionalism and courtesy that you extend to other patients.

15. Types of Health Plans (cont.) Tricare and Champva
Run by the Defense Department
Healthcare benefit for families of uniformed personnel and retirees
TRICARE for Life is offered to persons 65 and older that are eligible for both TRICARE and Medicare.
Covers the expenses of dependent spouses and children of veterans with disabilities
Also covers surviving spouses and dependent children of veterans who died in the line of duty or from service-connected disabilities

16. Types of Health Plans (cont.) Blue Cross and Blue Shield
A nationwide federation of nonprofit and for-profit service organizations that provide prepaid healthcare services to subscribers.
Specific plans for BCBS can vary greatly because each local organization operates under its own state laws.

17. Apply Your Knowledge - Answer
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?
Bill the patient for the balance due.
Expect the balance to be paid at the time of service
This patient more than likely has a secondary employer health insurance plan.
This patient may qualify for the Medi/Medi coverage.

18. Workers’ Compensation
Insurance covering accidents or diseases incurred in the workplace.
Federal law requires that employers 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

19. The Claims Process: An Overview
Services Provided by
the Physician’s Office
Tasks Supported by using
a Billing Program
Obtain patient information
Determine diagnosis and fees based on services provided
Records patient payments
Prepares healthcare claims
Reviews the insurer’s processing of the claim
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

20. Obtaining Patient Information
Personal Information
Name
Home address
Telephone number
Date of birth
Social security number
Emergency contact person
Release Signatures
Current employer
Employer address and telephone number
Insurance carrier and date of coverage
Insurance group plan
Insurance identification number
Name of subscriber or insured
Form to release insurance information to insurance carrier
Form for assignment of benefits

21. Coordination of Benefits
The Birthday Rule
Legal clauses that prevent duplication of payment.
Primary or main insurance plan pays first, and then the secondary or supplemental plan pays the deductible and co-payment.
If a husband and wife both have a family insurance plan, the insurance plan of the person born first will become the primary payer.

22. Coordination of Benefits (cont.)
Physician’s Services
The physician writes the diagnosis and treatment
The medical assistant translates the medical terminology into codes for reimbursement
Referrals to Other Services
The medical assistant may also be requested to secure authorization from the insurance company for additional services.

23. Insurer’s Processing and Payment
Insurance claims are reviewed for:
Medical Necessity
Allowable Benefits
Payment and Explanation of Benefits

24. Payment and Remittance Advice
Information found on the Remittance Advice (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 co-payment and payments made
Notation of any services not covered

25. Reviewing the Insurer’s Remittance Advice 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.

26. Apply Your Knowledge - Answer
A patient has visited the medical office on two separate occasions within 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 rejected more than likely for which of the following reasons:
Allowable benefits
Medical necessity
Payments

27. Fee Schedules and Charges
Medicare Payment System: RBRVS
The payment system used by Medicare is called the resource based relative value scale (RBRVS).
Three Parts to an RBRVS Fee:
The nationally uniform relative value
A geographic adjustment factor
A nationally uniform conversion factor
The current annual Medicare Fee Schedule (MFS) is published by CMS in the Federal Register.

28. Fee Schedules and Charges (cont.)
Payment Methods
Capitation
Allowed
Charges
Contracted
Fee Schedule

29. Fee Schedules and Charges (cont.)
Allowed Charges
This represents the most the payer will pay any provider for that work.
Other equivalent terms are:
Maximum allowable fee
Maximum charge
Allowable charge
Allowed amount
Allowed fee
Maximum charge
Billing the patient for the difference between the higher usual fee and a lower allowed charge is called balance billing.

30. Fee Schedules and Charges (cont.)
Contracted Fee Schedule
Fixed fee schedules are established particularly with PPOs and participating physicians.
Participating providers can bill patients for procedures and services not covered by the plan.
Capitation
The fixed prepayment for each plan member.
Calculating Patient Charges
All payers require patients to pay for non-covered services.

31. Communication with Patients About Charges
Some practices may require that the patient sign an assignment of benefits statement or that they pay in full for services at the time they are rendered.
The policies should explain what is required of the patient and when payment is due.
Unless other prior arrangements are made, payment is expected at the time service is delivered.
Unassigned Claims
The patient is responsible for any amounts not covered by the insurance carrier.
Assigned Claims
Managed Care Members
Co-payments must be paid before patients leave the office.

32. Preparing and Transmitting Healthcare Claims
HIPAA Claims
Electronic and predominately used
Information entered is called data elements
X Health Care Claim is the official name
Data must be entered in CAPS in only valid fields
No prefixes allowed
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 require 33 form indicators

33. Preparing and Transmitting Healthcare Claims (cont.)
Transmission of Electronic Claims
There are three major methods of transmitting
claims electronically:
Direct transmission
to the payer
Using a
clearing house
Direct data entry

34. Preparing and Transmitting Healthcare Claims (cont.)
Generating Clean Claims requires preventing common errors such as:
Missing...
Payer name and/or identifier
Or invalid subscriber’s birth date
Part of the name or identifier of
the referring provider
Service facility name, address information
Information about secondary
insurance plans
Medicare or benefits
assignment indicator

35. Preparing and Transmitting Healthcare Claims (cont.)
Claims Security
The HIPAA rules set standards for protecting individually identifiable health information when maintained or transmitted electronically.
Common security measures used consists of:
Access control, passwords, and log files to keep intruders out
Backups (saved copies of files)
Security policies to handle violations that do occur

36. Tips for the Office/Data Elements for HIPAA Electronic Claims
Reporting
 ProviderInformation
Pay-to provider (the office)
Rendering provider (the physician)
The billing provider is the entity that transmits the claim to the payer.
 Taxonomy Information
A taxonomy code is a 10-digit number representing the physician specialty.
This code matches the physician’s :
 license  certification
 education
 HIPAA National Identifiers
Identifiers are numbers of predetermined length and structure like social security numbers.
National identifiers must
be established for:
 Employers  Health plans
Healthcare providers
 Patients

37. Apply Your Knowledge - Answer
The taxonomy information would be very different since the physician preparations and licensing is very different.
- Answer
A medical assistant has two part-time positions. One for a pediatrician and the other position is for a surgeon. When completing the X12 837, which of the following would be a major difference:
Taxonomy information
HIPAA identifiers

38. END OF CHAPTER
End of Chapter