PowerPoint® to accompany
Medical Assisting
Chapter 15
Second Edition
Ramutkowski • Booth • Pugh • Thompson • Whicker
Copyright © The McGraw-Hill Companies, Inc. Permission required for reproduction or display.
1
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.
2
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.
15-10 Complete a Centers for Medicare and
Medicaid service (CMS-1500) claim form.
15-11 Identify three ways to transmit electronic
claims.
3
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.
4
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.
5
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.
6
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.
• Oldest and most expensive type of plan
• Covers costs of select medical services
• Amount services determined by the physician
Fee For Service
Plans
7
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.
8
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.
9
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
10
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
• Patients do not need a PCP
• No referrals are required
• Costs less to use referrals
within the network
Medicare Private Fee-ForService Plan
• Operated by a private insurance
company
• Co-payment may be required
• Physicians can bill patients for
amount not covered by the plan
11
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
12
Types of Health Plans (cont.)
Medicaid
Accepting
Assignment
Physicians
agreeing to treat
Medicaid
patients also
agree to the set
reimbursements.
Medi/Medi
Medicaid
Older or disabled
patients unable to
pay the difference
between the bill
and the Medicaid
payment may
qualify for both
Medicaid and
Medicare.
13
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.
14
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
15
Types of Health Plans (cont.)
Blue Cross and Blue Shield

A nationwide federation of nonprofit and forprofit 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.
16
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?
a. Bill the patient for the balance due.
b. Expect the balance to be paid at the time of service
c. This patient more than likely has a secondary employer
health insurance plan.
d. This patient may qualify for the Medi/Medi coverage.
17
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
 Rehabilitation costs
 Weekly or monthly amount paid
to patient while not employed
18
The Claims Process: An Overview
Services Provided by
the Physician’s Office
• 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
Tasks Supported by using
a Billing Program
• 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
19
Obtaining Patient Information
Personal Information
• Name
• Home address
• Telephone number
• Date of birth
• Social security number
• Emergency contact person
• Current employer
• Employer address and telephone number
• Insurance carrier and date of coverage
• Insurance group plan
• Insurance identification number
• Name of subscriber or insured
Release Signatures
• Form to release insurance
information to insurance
carrier
• Form for assignment of
benefits
20
Coordination of Benefits


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.
The Birthday Rule
If a husband and wife both
have a family insurance plan,
the insurance plan of the
person born first will become
the primary payer.
21
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.
22
Insurer’s Processing and Payment
Insurance claims are reviewed for:
 Medical Necessity
 Allowable Benefits
 Payment and
Explanation of Benefits
23
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
24
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.
25
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
26
Fee Schedules and Charges
Medicare Payment System: RBRVS
 The payment system used by Medicare is called the resource
based relative value scale (RBRVS).
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.
27
Fee Schedules and Charges (cont.)
Payment Methods
Allowed
Charges
Capitation
Contracted
Fee Schedule
28
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.
29
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.
30
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.
Unassigned
Claims
Assigned
Claims
Unless other prior arrangements are made,
payment is expected at the time service is delivered.
The patient is responsible for any amounts not
covered by the insurance carrier.
Managed Care
Members
Co-payments must be paid before patients
leave the office.
31
Preparing and Transmitting
Healthcare Claims

HIPAA Claims





Electronic and
predominately used
Information entered is
called data elements
X12 837 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
32
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
33
Preparing and Transmitting
Healthcare Claims (cont.)
 Generating Clean Claims
requires preventing
common errors such as:
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
34
assignment indicator
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
35
Tips for the Office/Data Elements
for HIPAA Electronic Claims
Reporting
 ProviderInformation
The billing provider is the entity that
transmits the claim to the payer.
Pay-to provider (the office)
Rendering provider (the physician)
 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
36
Apply Your Knowledge - 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:
a. Taxonomy information
b. HIPAA identifiers
The taxonomy information would be very different since
the physician preparations and licensing is very different.
37
END OF CHAPTER
38