Medical assisting Administrative and clinical procedures (5e) Chapter 17 Insurance and billing

In this chapter you will learn: Define Medicare and Medicaid, discuss TRICARE and CHAMPVA healthcare benefits programs, distinguish between HMOs and PPOs, explain how to manage a workers’ compensation case, explain how payers set fees, complete a Centers for Medicare and Medicaid Service (CMS1500) claim form, identify three ways to transmit electronic claims.

Insurance and

Billing

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.

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

• Health care claims

– Reimbursement for services

– Accuracy = maximum appropriate payment

– Understand payment explanation

– Calculate the patient’s financial responsibility

Basic Insurance Terminology

Basic Insurance Terminology (cont.)

• Three participants in an insurance

contract:

– First party ~ patient

– Second party ~ healthcare provider

– Third-party payer ~ health plan

Basic Insurance Terminology (cont.)

• Deductible ~ met annually

• Coinsurance ~ fixed percentage

Basic Insurance Terminology (cont.)

• Elective procedure

• Preauthorization ~ medically necessary

• Predetermination

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.

Private Health Plans

• Insurance companies ~ rules about

benefits and procedures

• Sources of health plans

Private Health Plans (cont.)

• Healthcare Legislation - 2010

– 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

Fee-for-Service and Managed Care Plans

• Fee-for-service

– Policy lists covered medical services

– Amount charged for services is controlled by

the physician – Amount paid for services is controlled by the

insurance carrier

• Managed Care Plans (MCOs)

– Controls both the financing and delivery of

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

Commercial Payers

• Blue Cross Blue Shield

• Private Commercial Carriers

– Rules and regulations vary

– Covered services and fees vary

• Liability insurance

• Disability insurance

Apply Your Knowledge

covers injuries caused by the insured subscribers pay premiums and a

copayment but no other fees for covered services

A B

C

D

E

F G

Government Plans

• Health care

– Retirees

– Low-income and disadvantaged

– Active or retired military

personnel and their families

• 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

Medicare (cont.)

• Medicare Part B

– Covers outpatient services

– Voluntary program

– Participants pay a premium

• Medicare health insurance card

– Medicare number

– Indicates eligibility

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

Medicare (cont.)

• Medicare Managed Care Plans

• Medicare Preferred Provider Organization

Plans (PPOs)

• Medicare Private Fee-for-Service Plans

Medicare Plans (cont.)

• Recovery Audit Contractor (RAC) Program

– Designed to guard the Medicare Trust Fund

– Identify improper payments

Underpayment Overpayment

• Health cost assistance program not an

insurance program

• Federal funds for mandated services

• States – additional optional services

• Accepting assignment

• Dual coverage

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

TRICARE and CHAMPVA

• TRICARE

– 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

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

Workers’ Compensation

• Covers employment-related accidents or illnesses

• Laws vary by state

• Verify with employer before treating and obtain a case number

• Records management

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?

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.

ANSWER:

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

Payment Methods

• Allowed charges

– The maximum amount the payer will pay a

provider – Equivalent terms

– Balance billing

– Adjustment

Payment Methods (cont.)

• Contracted fee schedule – fixed fee schedules

• Capitation – fixed prepayment

• Calculating patient charges – may include

Communication with Patients About Charges

• Remind patients of financial obligation

• Notify office financial policy

– Post

– Information packet

• Notify of uncovered services

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.

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

The Claims Process: An Overview (cont.)

• Electronic billing programs

– Streamlines process

• Creating claims

• Follow-up

• Bills sent to patient

– Electronic data exchange (EDI)

Obtaining Patient Information

information

• Release signatures

– To insurance carrier – Assignment of benefits

Obtaining Patient Information (cont.)

• Eligibility for services

– Scan or copy card

Obtaining Patient Information (cont.)

The insurance plan of the person born first becomes

the primary payer

Birthday Rule

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

Delivering Services to the Patient (cont.)

• Referrals and Authorizations

– Obtain authorization number

– Enter into billing program

• Patient checkout

Prior to submitting an insurance claim, what do you

need to do?

Apply Your Knowledge

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

Healthcare Claim

• Filing Limits

– Vary from company

to company – Start with date of service

• Electronic Claims transmission – X12 837

Health Care Claim

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

Electronic Claim Transmission (cont.)

• Data elements – major sections

– Provider – taxonomy code

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

Paper Claim Completion (cont.)

Apply Your Knowledge

What are the major data element sections

required by the X12 837 transaction?

ANSWER: They are

Transmitting Electronic Claims

clearinghouse Using direct data entry

Using direct data

Clearinghouse cannot create or modify data

Internet-based service that loads data

elements directly into the health plan’s

computer

Generating Clean Claims

• Carefully check claim before submission

– Missing or incomplete information

– Invalid information

• Rejected claims

– Provide missing information

– Submit new claim

Claims Security

• The HIPAA rules

• Common security measures

– Access control, passwords, and log files

– Backup copies

– Security policies

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

Insurer’s Processing and Payment

• Claims Register

– Created by billing program or clearinghouse

– Track submitted claims

• Review for medical necessity

• Review for allowable benefits

Payment and Remittance Advice

• With payment of a claim – Remittance

Reviewing the Insurer’s RA and Payment

• Review line by line

– If correct, make appropriate entry in claims

When reviewing the RA, you note that several claims were

rejected and one was not paid What should you do?

Apply Your Knowledge

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.

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

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

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

preparing the healthcare claims.

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

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.

I am always doing that which I can

not do, in order that I may learn how to do it.

~ Pablo Picasso

End of Chapter 17