15-1
Health Insurance Billing Procedures
PowerPoint® presentation to accompany:
Medical Assisting
Third Edition
Booth, Whicker, Wyman, Pugh, Thompson
© 2009 The McGraw-Hill Companies, Inc. All rights reserved
15-2
Learning Outcomes
15.1 Define Medicare and Medicaid.
15.2 Discuss TRICARE and CHAMPVA health-care
benefits programs.
15.3 Distinguish between HMOs and PPOs.
15.4 Explain how to manage a workers’ compensation
case.
© 2009 The McGraw-Hill Companies, Inc. All rights reserved
15-3
Learning Outcomes (cont.)
15.5 List the basic steps of the health insurance claim
process.
15.6 Describe your role in insurance claims processing.
15.7 Apply rules related to the coordination of benefits.
15.8 Describe the health-care claim preparation process.
© 2009 The McGraw-Hill Companies, Inc. All rights reserved
15-4
Learning Outcomes (cont.)
15.9 Explain how payers set fees.
15.10 Complete a Centers for Medicare and Medicaid
Service (CMS-1500) claim form.
15.11 Identify three ways to transmit electronic
claims.
© 2009 The McGraw-Hill Companies, Inc. All rights reserved
15-5
Introduction

Health care claims = reimbursement


Accuracy = maximum appropriate payment
Medical assistant





Prepare claims
Review insurance coverage
Explain fees
Estimate charges for payers
Prepare claims
© 2009 The McGraw-Hill Companies, Inc. All rights reserved
15-6
Basic Insurance Terminology

Medical insurance – written contract between a
policy holder and a health plan

First Party – the patient or policy holder

Premium – the amount of money paid by the policy
holder to the insurance carrier

Second Party – the physician who provides medical
services
© 2009 The McGraw-Hill Companies, Inc. All rights reserved
15-7
Basic Insurance Terminology (cont.)

Benefits – Payment by the insurance carrier for
medical services provided

Third-party payer – the health plan that agrees to
carry the risk of paying for services

Deductible – a fixed dollar amount paid or met once
a year before third-party payers begin to cover
expenses
© 2009 The McGraw-Hill Companies, Inc. All rights reserved
15-8
Basic Insurance Terminology (cont.)

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 – a list of approved drugs
© 2009 The McGraw-Hill Companies, Inc. All rights reserved
15-9
Basic Insurance Terminology (cont.)

Elective procedure – one not required to sustain life

Pre-authorization – approval in advance for a
specific procedure

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
© 2009 The McGraw-Hill Companies, Inc. All rights reserved
15-10
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 the
provides services, and the third-party payer is the insurance
company that agrees to carry the risk of paying for approved
services.
Good Job!
© 2009 The McGraw-Hill Companies, Inc. All rights reserved
15-11
Types of Health Plans

Insurance companies

Rules about benefits and
procedures



Manuals, printed or online
Representatives to assist
Sources of health plans



Group policies – through
employer
Individual plans
Government plans
© 2009 The McGraw-Hill Companies, Inc. All rights reserved
15-12
Types of Health Plans
Fee-forService
Plans

Oldest and most expensive type of plan

Covers costs of select medical services

Amount charged for services determined by
the physician
© 2009 The McGraw-Hill Companies, Inc. All rights reserved
15-13
Types of Health Plans
Managed
Care
Plans

Controls both the financing and
delivery of health care to policy holders

Both policy holders and physicians (participating
physicians) are enrolled by the Managed Care
Organizations (MCOs)

MCOs pay physicians in two ways


Contracted fees
Capitated fees – fixed amount per month to provide
contracted services to patients enrolled in the plan
© 2009 The McGraw-Hill Companies, Inc. All rights reserved
15-14
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 for each
office visit
© 2009 The McGraw-Hill Companies, Inc. All rights reserved
15-15
Types of Health Plans: Medicare

The largest federal program that provides health care 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
No premium unless ineligible for social security benefits
© 2009 The McGraw-Hill Companies, Inc. All rights reserved
15-16
Types of Health Plans: Medicare (cont.)

Part B

Covers physician services,
outpatient services, and many
other services

Available to United States
citizens and permanent residents
65 and older

Participants must pay a premium
© 2009 The McGraw-Hill Companies, Inc. All rights reserved
15-17
Types of Health Plans: Medicare Plans

Fee-for-Service: The Original Medicare Plan

Allows the beneficiary to choose any licensed
physician certified by Medicare

An annual deductible fee

Medicare pays 80 percent and the patient pays 20
percent

Medigap plan – secondary insurance
© 2009 The McGraw-Hill Companies, Inc. All rights reserved
15-18
Types of Health Plans:
Medicare Plans (cont.)

Medicare + Choice Plans

Medicare Managed Care Plans

Monthly premium and copayment, but no deductible

Care managed by primary care physician (PCP)

Referrals from PCP for additional services outside
network
© 2009 The McGraw-Hill Companies, Inc. All rights reserved
15-19
Types of Health Plans: Medicare Plans (cont.)

Medicare Preferred Provider Organization Plans
(PPOs)



No PCP or referrals for services
Costs less to use physicians within network
Medicare Private Fee-for-Service Plans




Can use any provider or facility as long as it is
approved by Medicare
Operated by private insurance companies
May or may not require a copayment
Physicians can bill patients for amount not covered by
the plan
© 2009 The McGraw-Hill Companies, Inc. All rights reserved
15-20
Types of Health Plans: 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
© 2009 The McGraw-Hill Companies, Inc. All rights reserved
15-21
Types of Health Plans: Medicaid (cont.)

Funded by the federal and state governments

Provides assistance such as:






Physician services
Emergency services
Laboratory and x-rays
Skilled nursing facility (SNF) care
Vaccines
Early diagnostic screening and treatment for minors
© 2009 The McGraw-Hill Companies, Inc. All rights reserved
15-22
Types of Health Plans: Medicaid (cont.)
Medi/Medi
Accepting
Assignment
Physicians
agreeing to treat
Medicaid
patients also
agree to the set
amount for
reimbursements
Medicaid
Older or disabled
patients unable to
pay the difference
between the bill
and the Medicaid
payment may
qualify for both
Medicaid and
Medicare
© 2009 The McGraw-Hill Companies, Inc. All rights reserved
15-23
Types of Health Plans: Medicaid (cont.)

Comply with state guidelines

Verify Medicaid eligibility

Ensure that the physician signs all claims

Authorization must be received in advance for medical
services except in an emergency

Verify deadlines for claim submissions

Treat Medicaid patients with the same professionalism and
courtesy that you extend to other patients
© 2009 The McGraw-Hill Companies, Inc. All rights reserved
15-24
Types of Health Plans (cont.)

Department of Defense

Families of uniformed
personnel and retirees

TRICARE for Life

Medicare-eligible
military retirees 65 and
older

Dependent spouses and
children of veterans
with disabilities

Surviving spouses and
dependent children of
veterans who died in
the line of duty or from
service-connected
disabilities
© 2009 The McGraw-Hill Companies, Inc. All rights reserved
15-25
Types of Health Plans (cont.)

Blue Cross and Blue Shield

A nationwide federation of nonprofit and forprofit service organizations that provide prepaid
health-care services to subscribers

Specific plans for BCBS can vary greatly because
each local organization operates under its own
state laws
© 2009 The McGraw-Hill Companies, Inc. All rights reserved
15-26
Types of Health Plans:
Workers’ Compensation
 Covers accidents or diseases incurred in the
workplace
 By federal law, employers must 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
Verify coverage before accepting patient.
© 2009 The McGraw-Hill Companies, Inc. All rights reserved
15-27
Apply Your Knowledge
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?
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.
© 2009 The McGraw-Hill Companies, Inc. All rights reserved
15-28
The Claims Process: An Overview
Services Provided by the Physician’s Office





Obtains patient information
Determines diagnosis and fees based on
services provided
Records patient payments
Prepares health-care claims
Reviews the insurer’s processing of the claim
© 2009 The McGraw-Hill Companies, Inc. All rights reserved
15-29
The Claims Process: An Overview (cont.)
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
© 2009 The McGraw-Hill Companies, Inc. All rights reserved
15-30
The Claims Process:
Obtaining Patient Information

Insurance information

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
Personal information

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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
© 2009 The McGraw-Hill Companies, Inc. All rights reserved
15-31
The Claims Process:
Obtaining Patient Information (cont.)

Release signatures



Form to release insurance
information to insurance
carrier
Form for assignment of
benefits
Verify eligibility

Check effective date of coverage
© 2009 The McGraw-Hill Companies, Inc. All rights reserved
15-32
The Claims Process:
Obtaining Patient Information (cont.)

Coordination of benefits

Legal clauses to prevent
duplication of payment

Primary or main
insurance plan pays first

Secondary or
supplemental plan pays
the deductible and copayment
The Birthday Rule
If a husband and wife both
have a family insurance plan,
the insurance plan of the
person born first becomes the
primary payer.
© 2009 The McGraw-Hill Companies, Inc. All rights reserved
15-33
The Claims Process: Delivering Services

Physician’s services



Examines patient
Documents symptoms, diagnosis, and treatment
plan in medical record
Medical coding

Translates the medical terminology into codes for
reimbursement
© 2009 The McGraw-Hill Companies, Inc. All rights reserved
15-34
The Claims Process:
Delivering Services (cont.)

Referrals to other services

The medical assistant


Secure authorization from
the insurance company for
additional services
Arrange an appointment for
referred services
© 2009 The McGraw-Hill Companies, Inc. All rights reserved
15-35
The Claims Process:
Preparing the Health-Care Claim

Filing the insurance claim



Once prepared, the physician
reviews the claim
Usually transmitted to payer
electronically
Time limits


Vary by company and state
Medicare and Medicaid
© 2009 The McGraw-Hill Companies, Inc. All rights reserved
15-36
The Claims Process:
Insurer’s Processing and Payment
Insurance claims are reviewed for:
 Medical necessity
 Allowable benefits
 Payment and remittance
advice
© 2009 The McGraw-Hill Companies, Inc. All rights reserved
15-37
The Claims Process:
Insurer’s Processing and Payment (cont.)

Remittance advice (RA)



Sent with payment to patient and physician
Also known as explanation of benefits (EOB)
Information the 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 copayment and payments made
Notation of any services not covered
© 2009 The McGraw-Hill Companies, Inc. All rights reserved
15-38
The Claims Process:
Insurer’s Processing and Payment (cont.)

Reviewing the insurer’s RA 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
© 2009 The McGraw-Hill Companies, Inc. All rights reserved
15-39
Apply Your Knowledge
A patient had two appointments in 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
probably rejected for which of the following reasons:
ANSWER:
Allowable benefits
Very Good!
Medical necessity
Payments
© 2009 The McGraw-Hill Companies, Inc. All rights reserved
15-40
Fee Schedules and Charges:
Medicare Payment Systems—RBRVS

Resource-based relative value scale (RBRVS)

Payment system used by Medicare
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
© 2009 The McGraw-Hill Companies, Inc. All rights reserved
15-41
Fee Schedules and Charges (cont.)
Payment Methods
Allowed
Charges
Capitation
Contracted
Fee Schedule
© 2009 The McGraw-Hill Companies, Inc. All rights reserved
15-42
Fee Schedules and Charges (cont.)

Allowed charges


This represents the most the payer will pay any provider
for that work
Other equivalent terms
Maximum allowable fee
Allowable charge
Maximum 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
© 2009 The McGraw-Hill Companies, Inc. All rights reserved
15-43
Fee Schedules and Charges (cont.)

Contracted fee schedule



Fixed fee schedules for
participating physicians
Non-covered services billed
to patient
Capitation


The fixed prepayment for each
plan member
Non-covered services billed to
patient
© 2009 The McGraw-Hill Companies, Inc. All rights reserved
15-44
Fee Schedules and Charges (cont.)

Calculating patient charges

Depending on plan, patients
are obligated to pay




Premiums and deductibles
Copayments and
coinsurance
Excluded and over-limit
services
Balance billing
© 2009 The McGraw-Hill Companies, Inc. All rights reserved
15-45
Communication with Patients
About Charges

A practice may
require patients to


Sign an assignment
of benefits statement
or
Pay in full for
services at the time
provided

Remind patients of
financial obligation

Ask patients to
agree in writing to
cost of procedures
not covered by plan
© 2009 The McGraw-Hill Companies, Inc. All rights reserved
15-46
Communication with Patients
About Charges (cont.)

Financial policy

Patient responsibility for payment for services
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 Copayments must be paid before patients leave
Members
the office
© 2009 The McGraw-Hill Companies, Inc. All rights reserved
15-47
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, if the service is excluded, or if
the patient is over his/her limit for services.
Nice Job!
© 2009 The McGraw-Hill Companies, Inc. All rights reserved
15-48
Preparing and Transmitting
Health-Care Claims

HIPAA claims






Electronic
Used predominantly
X12 837 Health Care Claim - official name
Information entered is called data elements
Data must be entered in CAPS in valid fields
No prefixes or special characters allowed
© 2009 The McGraw-Hill Companies, Inc. All rights reserved
15-49
Preparing and Transmitting
Health-Care Claims

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 requires 33 form indicators
© 2009 The McGraw-Hill Companies, Inc. All rights reserved
15-50
Data Elements on HIPAA
Electronic Claims

Provider information




Billing provider – transmits the claim to payer
Pay-to provider – practice that receives payment from
insurance carrier
Rendering provider – physician that treats patient
Taxonomy information


Taxonomy code is a 10-digit number representing the
physician specialty
Physicians select codes to match education, license, or
certification
© 2009 The McGraw-Hill Companies, Inc. All rights reserved
15-51
Data Elements on HIPAA
Electronic Claims (cont.)

HIPAA national identifiers

Established for





Employers
Health-care providers
Health plans
Patients
Identifiers are numbers of predetermined length
and structure like social security numbers
© 2009 The McGraw-Hill Companies, Inc. All rights reserved
15-52
Preparing and Transmitting
Health-Care Claims (cont.)
Transmission of Electronic Claims
Three major methods of transmitting
claims electronically
Internet-based
service
that
loadsexchange
data
Offices
payers
Translates nonstandard
data
intoand
Using a
Direct transmission
elements
directly
into thedirectly
health by electronic
information
standard format.
Clearinghouse
clearinghouse
to the payer
plan’s
computer
data
cannot create
or modify
data interchange (EDI)
Direct data entry
© 2009 The McGraw-Hill Companies, Inc. All rights reserved
15-53
Preparing and Transmitting
Health-Care Claims (cont.)
 Generate clean
claims by avoiding
common errors
 Payer name and/or identifier or




invalid subscriber’s birth date
Part of the name or identifier of
the referring provider
Service facility name and address
information
Information about secondary
insurance plans
Medicare or benefits assignment
indicator
© 2009 The McGraw-Hill Companies, Inc. All rights reserved
15-54
Preparing and Transmitting
Health-Care Claims (cont.)

Claims security

The HIPAA rules


Standards for protecting individually identifiable health
information when maintained or transmitted
electronically
Common security measures



Access control, passwords, and log files
Backup copies
Security policies to handle violations
© 2009 The McGraw-Hill Companies, Inc. All rights reserved
15-55
Apply Your Knowledge
A medical assistant has two part-time positions, one for
a pediatrician and the other for a surgeon. When
completing the X12 837, which of the following would
be a major difference?
ANSWER:
a. Provider information
b. Taxonomy information
c. HIPAA identifiers
The taxonomy information
would be very different
because the physician
preparation and licensing are
very different.
© 2009 The McGraw-Hill Companies, Inc. All rights reserved
15-56
In Summary

Medical assistant




Handles patients’ questions about plans and claims
Reviews patients’ insurance coverage
Explains physician’s fees
Estimates



Charges covered by payer
Charges patient must cover
Prepares complete and accurate health-care claims
© 2009 The McGraw-Hill Companies, Inc. All rights reserved
15-57
I am always doing
that which I can not
do, in order that I
may learn how to
do it.
~
Pablo Picasso
© 2009 The McGraw-Hill Companies, Inc. All rights reserved