Chapter 4: Revenue Management: Insurance Claims, Denied Claims and Appeals, and Credit and Collections

ANSI ASC X12N

an electronic format standard that uses a variable-length file format to process transactions for institutional, professional, dental, and drug claims

Accounts Receivable Aging Report

shows the status(by date) of outstanding claims from each payer, as well as payments due from patients

Allowed Charges

the maximum amount the payer will reimburse for each procedure or service, according to the patient’s policy

Appeal

documented as a letter and signed by the provider, to explain why a claim should be reconsidered for payment

Claims Adjudication

comparing a claim to payer edits and the patient’s health plan benefits to verify that required information is available to process the claim, the claim is not a duplicate, payer rules and procedures have been followed, and procedures performed and services provided are covered benefits

Bad Debt

accounts receivable that cannot be collected by the provider or a collection agency

Claims Adjustment Reason Codes(CARC)

reason for denied claim as reported on the remittance advice or explanation of benefits

Beneficiary

the person eligible to receive heath care benefits

Claims Attachment

medical report substantiating a medical condition

Claims Management

completion, submission, and follow-up of claims for procedures and services provided

Claims Processing

sorting claims upon submission to collect and verify information about the patient and provider

Claims Submission

the transmission of claims data(electronically or manually) to payers or clearinghouses for processing

Clean Claim

a correctly completed standardized claim(e.g., CMS-1500 claim)

Closed Claims

claims for which all processing, including appeals, has been completed

Common Data File

summary abstract report of all recent claims filed on each patient

Clearinghouse

agency or organization that collects, processes, and distributes health care claims after editing and validating them to ensure that they are error-free, reformatting them to the payer’s specifications, and submitting them electronically to the appropriate payer for further processing to generate reimbursement to the provider

Consumer Credit Protection Act of 1968

was considered landmark legislation because it launched truth-in-lending disclosures that required creditors to communicate the cost of borrowing money in a common language so that consumers could figure out the charges, compare costs, and shop for the best credit deal

Delinquent Account

see past due account

Coordination of Benefits(COB)

provision in group health insurance policies that prevents multiple insurers from paying benefits covered by other policies; also specifies that coverage will be provided in a specific sequence when more than one policy covers the claim

Delinquent Claims

claim usually more than 120 days past due; some practices establish time frames that are less than or more than 120 days past due

Covered Entities

private-sector health plans (excluding certain small self-administered health plans), managed care organizations, ERISA-covered health benefit plans (Employee Retirement Income Security Act of 1974), and government health plans (including Medicare, Medicaid, Military Health System for active duty and civilian personnel; Veterans Health Administration, and Indian Health Service programs); all health care clearinghouses; and all health care providers that choose to submit or receive transactions electronically

Delinquent Claim Cycle

advances through various aging periods(30 days, 60 days, 90 days, and so on), with practices typically focusing internal recovery efforts on older delinquent accounts(e.g., 120 days or more)

Downcoding

assigning lower-level codes than documented in the record

Electronic Flat File Format

series of fixed-length records(e.g., 25 spaces for patient’s name) submitted to payers to bill for health care services

Electronic Funds Transfer(EFT)

system by which payers electronically deposit funds to the provider’s(bank) account

Electronic Data Interchange(EDI)

computer-to-computer exchange of data between provider and payer

Denied Claims

claim returned to the provider by payers due to coding errors, missing information, and patient coverage issues

Electronic Funds Transfer Act

established the rights, liabilities, and responsibilities of participants in electronic funds transfer systems

Electronic Remittance Advice(ERA)

remittance advice that is submitted by the third-party payer to the provider electronically and contains the same information as a paper-based remittance advice; providers receive the ERA more quickly

Electronic Healthcare Network Accreditation Commission(EHNAC)

organization that accredits clearinghouse

Electronic Media Claim

see electronic flat file format

Explanation of Benefits(EOB)

document sent to the patient by the third-party payer to provide details about the results of claims processing, such as provider charge, payer fee scheduled, payment made by the payer, and patient financial responsibility

• the Medicare EOB is called Medicare Summary Notice or MSN

Equal Credit Opportunity Act

prohibits discrimination on the basis of race, color, religion, national origin, sex, marital status, age, receipt of public assistance, or good faith exercise of any rights under the Consumer Credit Protection Act

Fair Credit and Charge Card Disclosure Act

amended the Truth in Lending Act, requiring credit and charge card issuers to provide certain disclosures in direct mail, telephone, and other applications and solicitations for open-end credit and charge accounts and under other circumstances; this law applies to providers that accept credit cards

Fair Debt Collection Practices Act(FDCPA)

specifies what a collection source may and may not do when pursuing payment of past due accounts

Fair Credit Billing Act

federal law passes in 1975 that helps consumers resolve billing issues with card issuers; protects important credit rights, including rights to dispute billing errors, unauthorized use of an account, and charges for unsatisfactory goods and services; cardholders cannot be held liable for more than $50 of fraudulent charges made to a credit card

Fair Credit Reporting Act

protects information collected by consumer reporting agencies such as credit bureaus, medical information companies, and tenant screening services; organizations that provide information to consumer reporting agencies also have specific legal obligations, including the duty to investigate disputed information

Financial Services Modernization Act(FSMA)

prohibits sharing of medical information among health insurers and other financial institutions for use in making credit decisions; also allows banks to merge with investment and insurance houses, which allows them to make a profit no matter what the status of the economy, because people usually house their money in one of the options; also called Gramm-Leach-Bliley-Act

Non-covered Benefit

any procedure or service reported on a claim that is not included on the payer’s master benefit list, resulting in denial of the claim; also called non-covered procedure or uncovered benefit

Litigation

legal action to recover a debt; usually a last resort for a medical practice

Medicare Remittance Advice

an electronic remittance advice(ERA) or standard paper remit(SPR) sent to providers by Medicare administrative contractors, which contain details about claims adjudication and contains information about payments, deductibles and copayments, adjustments, denials, missing or incorrect data, refunds, and claims withheld due to Medicare Secondary Payer(MSP) or penalty situations

Gramm-Leach-Bliley Act

see Financial Services Modernization Act

Fragmentation

see unbundling

Open Claims

submitted to the payer, but processing is not complete

Remit

see remittance advice

Outsource

contract out

Pre-existing Condition

any medical condition that was diagnosed and/or treated within a specified period of time immediately preceding the enrollee’s effective data of coverage

Past-due Account

one that has not been paid within a certain time frame(e.g., 120 days); also called delinquent account

Peer Review

appeal process that involves review of any medical reviewer(e.g., nurse) or medical director(e.g., physician), and if an appeal is escalated, an independent external reviewer(e.g., physician with same specialty as provider) may assess the appeal

Remittance Advice

electronic remittance advice(ERA) or standard paper remit(SPR) sent to providers by third-party payers that contains details about claims adjudication, including information about payments, deductibles and copayments, adjustments, denials, missing or incorrect data, refunds, and claims withheld due to secondary payer, third-party liability, or penalty situations

• Medicare administrative contractors send providers a Medicare Remittance Advice

Remittance Advice Remark Codes(RARC)

additional explanation of reasons for denied claims

Skip Tracking

see skip tracing

Source Document

the routing slip, charge slip, encounter form, or superbill from which the insurance claim was generated

Skip Tracing

practice of locating patients to obtain payment of a bad debt; uses credit reports, databases, criminal background checks, and other methods

Truth in Lending Act

see Consumer Credit Protection Act of 1968

Suspense

pending

Unauthorized Services

services that are provided to a patient without proper preauthorization or that are not covered by a current preauthorization

Unassigned Claims

generated for providers who do not accept assignment; organized by year

Two-party Check

check made out to both patient and provider

Unbundling

submitting multiple CPT codes when one code should be submitted

Value-added Network(VAN)

clearinghouse that involves value-added vendors, such as banks, in the processing of claims; using a VAN is more efficient and less expensive for providers than managing their own systems to send any receive transactions directly from numerous entities