CHAPTER 17 Insurance and Billing 17 2 Learning

CHAPTER 17 Insurance and Billing

17 -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.

17 -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.

17 -4 Introduction • Health care claims – 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

17 -5 Basic Insurance Terminology • Medical insurance • Benefits • Policy holder • Dependents • Premium • Lifetime maximum benefits

17 -6 Basic Insurance Terminology (cont. ) • Three participants in an insurance contract: – First party ~ patient – Second party ~ healthcare provider – Third-party payer ~ health plan

17 -7 Basic Insurance Terminology (cont. ) • Deductible ~ met annually • Coinsurance ~ fixed percentage • Copayment – Managed care plans – Preferred provider • Exclusions • Formulary

17 -8 Basic Insurance Terminology (cont. ) • Elective procedure • Preauthorization ~ medically necessary • Predetermination

17 -9 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.

17 -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)

17 -11 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

17 -12 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

17 -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

17 -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

17 -15 Commercial Payers • Blue Cross Blue Shield • Private Commercial Carriers – Rules and regulations vary – Covered services and fees vary • Liability insurance • Disability insurance

17 -16 Apply Your Knowledge Matching: ANSWER: B. Participating physician E nationwide federation of organizations B enroll with managed care plans C. PPO A repay policyholders for healthcare A. Fee-for-Service D. HMO E. BCBS F. Liability insurance G. Disability insurance costs G does not cover medical expenses C network of providers who care for subscribers F covers injuries caused by the insured D subscribers pay premiums and a copayment but no other fees for covered services

17 -17 Government Plans • Health care – Retirees – Low-income and disadvantaged – Active or retired military personnel and their families

17 -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

17 -19 Medicare (cont. ) • Medicare Part B – Covers outpatient services – Voluntary program – Participants pay a premium • Medicare health insurance card – Medicare number – Indicates eligibility

17 -20 Medicare (cont. ) • Part C – 1997 – Provides choices in types of plans – Medicare Advantage plans • Part D – prescription drug plan

17 -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

17 -22 Medicare (cont. ) • Medicare Managed Care Plans • Medicare Preferred Provider Organization Plans (PPOs) • Medicare Private Fee-for-Service Plans

17 -23 Medicare Plans (cont. ) • Recovery Audit Contractor (RAC) Program – Designed to guard the Medicare Trust Fund – Identify improper payments Overpayment Underpayment

17 -24 Medicaid • Health cost assistance program not an insurance program • Federal funds for mandated services • States – additional optional services • Accepting assignment • Dual coverage

17 -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

17 -26 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

17 -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

17 -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

17 -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? ANSWER: 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.

17 -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

17 -31 Payment Methods • Allowed charges – The maximum amount the payer will pay a provider – Equivalent terms – Balance billing – Adjustment

17 -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

17 -33 Communication with Patients About Charges • Remind patients of financial obligation • Notify office financial policy – Post – Information packet • Notify of uncovered services

17 -34 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. Nice Job!

17 -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

17 -36 The Claims Process: An Overview • Electronic billing programs – Streamlines process • Creating claims • Follow-up • Bills sent to patient – Electronic data exchange (EDI) (cont. )

17 -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

17 -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

17 -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.

17 -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

17 -41 Delivering Services to the Patient (cont. ) • Referrals and Authorizations – Obtain authorization number – Enter into billing program • Patient checkout

17 -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

Preparing and Transmitting the Healthcare Claim • Filing Limits – Vary from company to company – Start with date of service • Electronic Claims transmission – X 12 837 Health Care Claim 17 -43

17 -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

17 -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

17 -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

17 -47 Paper Claim Completion (cont. ) Block 1 – 13: patient and insurance information Block 14 – 22: provider information Block 14 x Block 1 a IN 00011123 04 15 20 XX Block 15

17 -48 Apply Your Knowledge What are the major data element sections required by the X 12 837 transaction? ANSWER: They are • • • Provider Subscriber Patient and payer Claim details Services

17 -49 Transmitting Electronic Claims • Three methods Transmitting claims directly Offices and payers exchange information directly by electronic data interchange (EDI) Using a clearinghouse Using direct data entry 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

17 -50 Generating Clean Claims • Carefully check claim before submission – Missing or incomplete information – Invalid information • Rejected claims – Provide missing information – Submit new claim

17 -51 Claims Security • The HIPAA rules • Common security measures – Access control, passwords, and log files – Backup copies – Security policies

17 -52 Apply Your Knowledge What are 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

17 -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

17 -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

17 -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

17 -56 Apply Your Knowledge 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. Very Good!

17 -57 In Summary 17. 1 There 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 -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 serviceconnected disabilities

17 -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 -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 -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