Medical Billing and Health Insurance

HIPAA Provides

1) Protection against plans that limit coverage for preexisting conditions.

2) Protection for discrimination against employees and dependents based on health status.

3) Opportunities to enroll in a new plan under certain circumstances.

4) The right to purchase individual coverage if no group health plan is avaible.

Healthy People Initiative

1) Healthy People 2000: Released on January 25th, 2000, this program grew out of a set of initiatives from the original Healthy People 2000 program that focused on preventable health threats. Preventable health threats are those illnesses that can be prevented before they occur by routine physical examinations and immunizations.

Healthy People 2010

This initative was the nation's prevention agenda for improving public health. This program focused on two goals:

1. Increasing the quality and length of a healthy life for all individuals, as well as helping all people regardless of age to increase both their life expectancy and quality of life.

2. Eliminating health disparities among different population sectors.

Eliminating health disparities means that the program hopes to provide some type of coverage to all people, regardless of differences in race, ethnicity, religion, job status, and socioeconomic status. The program was to focus on funding and accomplishment of goals.

Healthy People 2020

Healthy People 2020 has four overarching goals:

1. Attaining health-quality, longer lives free of preventable diseases, disability, injury, and premature death.

2. Achieving health equity, eliminating disparities, and improving the health of all groups.

3. Creating social and physical environments that promote good health for all.

4. Promoting quality of life, healthy development, and healthy behaviors across all life stages.

Reimbursement

The way healthcare providers are paid for providing medical services.

Healthcare Providers

~ Doctors

~ Hospitals

~ Healthcare facilities

Medical Coding

The process of assigning codes to certain pieces of information in the health record.

Preventable Health Threats

Illnesses that can be prevented before they occur by routine physical examinations and immunizations.

Fee Schedule

A fee schedule is a list of maximum charges for a healthcare service provider under a fee-for-service basis.

Episode-of-care (EOC) Reimbursement

One payment is made to compensate providers to a patient for a specific period of time. Reimbursement based on episodes of care has been supported as a way to decrease the overall cost of medical care while at the same time increasing quality of care and reimbursement. The payments made in episode-of-care reimbursement are called bundled payments-payments covering several services that are lumped together.

Episode-of-care reimbursement methods include:

~Capitation

~ Global payments

Capitation

Episodic-care reimbursement that might be calculated per member per month (PMPM).

Per Member Per Month (PMPM)/Patient Per Month (PPPM)

Describes how capitated premiums are calculated. The term premiums, in this case, refers to the price of insurance protection for a specified period of time.

Global Payments

Are another example of episode-of-care reimbursement methodologies. Global payments are made to the provider in one lump sum for all services given to a patient for a specific illness or disease. Two types of global payments are global surgery payments and Medicare Ambulatory surgery payments; both of these payment types are based on a classification system.

Ambulatory Payment Classification

Formerly called ambulatory patient groups (APGs.). APCs are based on outpatient procedures performed and replace the previous fee-for-service payment method for outpatient services. The terms ambulatory and outpatient are used synonymous to define healthcare that doesn't require hospitalization. ASCs are state-licenced suppliers of healthcare services that are certified by Medicare. ASCs use the APC and outpatient prospective payment system (OPPS) for reimbursement classifications.

Ambulatory Surgery Center (ASC)

State-licensed, Medicare-certified supplier of surgical healthcare services.

Precertification

Type of prospective review involving obtaining approval for services before treatment.

Discharge Planning

Type of retrospective review used to determine a patient's needs post-treatment.

Utilization Management

Process that evaluates the necessity and appropriateness of healthcare services.

Third-Party Payers

Responsible for providing an insurance arrangement that provides benefits in the form of healthcare service.

Fee-For-Service Reimbursement

Healthcare provider receives reimbursement based on the amount they charge for service.

Covered Medical Expenses

Medical Expenses that are listed in the benefits section of the insurance policy as being reimbursable by the insurance company.

Charge Master

A list of healthcare supplies and services with specific charges assigned for each supply and service.

Types of Medical Coding

~ Outpatient

~ Inpatient

Many coders start as outpatient coders and later transition to inpatient coding. The CPC-A exam only certification examination covers only outpatient coding.

Inpatient Coder Codes

Admitting Diagnosis:

- The illness or trauma that brought the patient to the hospital.

Case Mix:

- A method that groups patients based on a specific set of characteristics(such as principal diagnosis and procedures and resources being used). A hospital's case-mix index (CMI) measures the type and level of inpatient resource consumption. The higher the case-mix index, the more resources have been used by patients in the hospital. Case-mix index is determined by the following formula.

Relative Weight of DRG x Number of Discharges for that DRG = Total Weight for a Specific DRG

Sum of All DRG / Sum of Total Patient Discharges = Case-Mix Index

Cost Per Patient

Many hospitals use case-mix index to determine cost per patient. The base for CMI is 1.00. The higher the CMI, the higher the reimbursement per patient. Lower CMI may mean the hospital is losing money during that time period.

Comorbidities

Additional illnesses present at the time of the patient's admission to the hospital, often complicating treatment or prolonging the patient's stay in the hospital. Commodities are coded as additional diagnoses and reported on the claim form. Under the DRG system, some comorbidities increase the reimbursement from the insurance company.

DRGS (Diagnosis-Related Groups)

An impatient reimbursement and classification system based on a formula that uses the patient's age, gender, admitting diagnosis, ICD-10-CM diagnosis, procedure codes, and discharge status.

AP-DRG (All Patient-DRG): Classification system created to classify non-Medicare patient populations.

MS-DRG (Medicare Severity-DRG): An update of the DRG system implemented in 2007 by CMS.

DRG/MS-DRG Grouper

A computer software program used by a coder to assign the appropriate DRG to a group of diagnosis and procedure codes. There are a variety of DRG groupers offered for purchase by different software venders.

MCC (Major Complicating Conditions)

A new severity level under the new MS-DRG classification system, MCCS often change the reimbursement for MS-DRGs.

Principal Diagnosis

The diagnosis, after examination and study, determined to be the cause of the patient's admision to the hospital. The admitting diagnosis isn't necessarily the same as the principal diagnosis.

Ex: A patient may be admitted to the hospital with chest pain (admitting diagnosis), but after testing, the patient may be found to have a myocardial infarction (heart attack), which is the principal diagnosis.

Principal Procedure

The procedure preformed that most closely relates to the patient's principal diagnosis.

DRGs

Are classification groups of diseases, illnesses, and injuries.

Remember that prospective payment systems reimburse based on an expected cost for specific illness or treatment. DRGs are the way that these expected costs are calculated.

Because related diseases and treatments often utilize a similar amount of resources, a classification system was developed to aid in reimbursement assignment. There are hundreds of DRGs that are grouped into one 25 MCDs, or Major Diagnostic Categories, based on the patient's principal diagnosis. MDCs are categorized as either medical or surgical cases.

DRG Reimbursement Formula

DRG Relative Weight x Hospital Standard Fee = Reimbursement Amount

MS-DRG/ Medicare Severity DRGs

The CMS implemented a new prospective payment classification system to account for the differences in patient mix affecting hospital reimbursement.

There are still 25 MDCs, but there are added MS-DRGs. The MS-DRG system developed three levels of severity for each DRG:

~ Diagnosis with major complicating condition (MCC)

~ Diagnosis with complicating condition (CC)

~ Diagnosis without complicating condition

Under the MS-DRG system, CCs are now based on the number of resources that were utilized instead of on length of stay. This meant that many of the CCs that previously changed or increased reimbursement rates were removed from the formula.

Process for Coding and Reimbursement

1) A patient is discharged from the hospital.

2) The coder reviews the patient's medical record and documents all relevant diagnoses and procedures.

3) The computer program translates the names of the diagnoses and procedures into the corresponding numerical codes.

4) The diagnosis codes, procedure codes, and MS-DRG are then reported on a claim form.

5) The claim form is sent to the insurance company for reimbursement.

6) The reimbursement is then sent from the insurance company to the hospital.

Admitting Diagnosis

The illness or trauma that brought the patient to the hospital.

Case Mix

A method that groups patients based on a specific set of characteristics, including principal diagnosis, procedures, and/or resources being used.

Facility Fee

When a patient visits a hospital, the physicians are paid separately from the hospital. When a patient receives hospital care, the hospital is reimbursed one amount. Physicians who treat the patient receive a separate amount for the services that they provided. Service fees include costs such as medical consultation and surgery. When the prospective payment system and DRGs are used for inpatient services, physicians' offices use the RBRVS system.

RBRVS System

~ Amount of work a physician does to treat a patient (RVUw, or relative value units [work}).

~ Expenses associated with the treatment (RVUpe, or relative value units [practice expenses]).

~ Professional liability assessed for that treatment (RVUm, or relative value units [malpractice costs])

The CMS publishes the RVUs, or relative value units, as part of the Medicare fee Schedule (MFS) each year in a publication called the Federal Register. The list helps physicians understand what's reimbursed under Medicare.

Resource Utilization Groups (RUGs)

The RUG system works by using SNF patient (or resident) assessment data and then assigns one of the RUGs for reimbursement calculation reported by HCPCS codes.

*Remember that HCPCS—or Healthcare Common Procedure Coding System—codes are used to track information and reimbursement procedures.

Resident Assessment Validation and Entry (RAVEN)

It's a computerized system developed by the CMS that helps to import and export the data in the specific format required by the CMS.

Outpatient Prospective Payment System (OPPS)

The OPPS pays hospital-specific, predetermined rates for outpatient services based on national payment rates weighted by factors such as location of the healthcare facility.

Payment Status Indicators (PSIs)

Created by Medicare to make providers and payers aware of the services and procedures covered under OPPS.

Home Health Agency (HHA)

A certified facility approved by a health plan to provide services under a contract.

Oasis/ Outcome and Assessment Information Set

Is a data set used in home healthcare for patient assessments to help monitor and improve the outcomes, or the end results, of care.

Oasis is important for:

~ Patient assessment and care planning

~ Case-mix and statistical reports

~ Performance improvement

HAVEN/ Home Assessment Validation and Entry

A data-entry system that helps collect, store, and transmit data needed for home healthcare evaluation. Home healthcare agencies are required to collect OASIS data and report survey information to their particular state's Department of Health Services survey agent.

Home Health Resource Groups (HHRGs)

Paid based on predetermined base payment rates. Home healthcare services were previously paid on a reasonable cost basis at the time of service.

Office of the Inspector General (OIG)

To assure that data reported by HHC agencies is accurate and complete.

Ambulance Fee Schedule

Covers seven categories:

1. Basic Life Support

2. Basic life support (emergency)

3. Advanced life support (Level 1)

4. Advanced life support (Level 1, emergency)

5. Advanced life support (Level 2)

6) Specialty care transport

7. Paramedic intercept

Inpatient Rehabilitation Services

Services provided to hospitalized patients to help them improve their ability to function independently, most often after some disability or trauma.

Inpatient Rehabilitation Facilities (IRFs)

Provide healthcare services with a concentration on patient rehabilitation. Often offer physical therapy and occupational therapy.

National Uniform Claim Committee (NUCC)

Created to develop a standardized data set to be used by the noninstitutional healthcare services. The NUCC transmits claim and encounter information to and from all third-party payers. The committee, which is chaired by the AMA and partnered with the CMS, also includes payers, providers, standard setting organizations, and state and federal regulators.

CMS-1500

Also known as the UCF-1500, is the Centers for Medicare and Medicaid Services professional, universal health claim form. The CMS-1500 is used by providers of outpatient health services to bill their fees to health carriers (or third-party payers) and is sometimes referred to as the AMA (American Medical Association) form.

CMS-1450

Also known as the UB-04, or the Uniform Bill (formerly UB-92). It's the institutional claim form used by hospitals to recieve payment from third-party payers.

National Uniform Billing Committee (NUBC)

Formed in 1975 by the American Hospital Association (AHA) to develop a single billing form and standard data set that could be used nationwide by institutional providers and payers for handling healthcare claims. The committee was made up of institutional providers and payers who handled claim forms.

Medicare Modernization Act of 2003

A Medicare contracting reform (MCR) was initiated. This means that the CMS will no longer utilize fiscal intermediaries or Medicare carriers, but will rely instead on the duties of Medicare Administration Contractors (MACs) with the hopes of modernizing and improving the previous system.

Electronic Data Interchange (EDI)

Involves the electronic transmission (that is, from one computer system to another) of orders, invoices, and remittance information between businesses. In the healthcare field, EDI is used to exchange medical information and process bills, claims, and transactions.

Electronic Claim

A claim via the internet.

Explanation of Benefits (EOB)

Statement sent to a participant in a health plan as well as the healthcare provider that lists services, amounts paid by the plan, and total amount billed to the patient.

Accounts Receivable (AR)

Payments that hospitals receive from third-party payers for providing healthcare.

Coordination of Benefits (COB)

Also known as crossover, group policy provision that helps determine the primary carrier in situations in which an insured party is covered by more than one policy, thus preventing the insured from receiving claims over-payments.

Fiscal Intermediary (FI)

Insurance companies contracted by the government to process claims for government insurance programs, such as Medicare Parts A and B.

Remittance Advice

Communication from third-party payer to payee that provides a detailed accounting of payments and healthcare services provided.

Revenue Codes

UB-92 payment codes for healthcare services or items.

Medical Carrriers

Private companies that have a contract with Medicare to process Medicare Part B bills for physicians and medical suppliers.

National Correct Coding Initiative (NCCI)

Implemented by the CMS to correct procedural coding problems on government claims. The goal was to reduce Medicare Part B claims expenditures by detecting inappropriate out-patient coding methods. The NCCI also developed to address concerns with unbundling, or the process of reporting multiple codes to increase reimbursement from the payer, when one code would have been sufficient.

Coding Policy Manual for Medicare Services (Coding Policy Manual)

The manual is updated to prevent errors in payment due to incorrect code combinations.

Audit

Reveals any discrepancies in the elements examined and identify areas for corrective actions.

Audit Trails

Information maintained on coding reviews and the actions needed for improvement, are vital in demonstrating that the information is being properly reviewed and corrected.

Consultants

Professionals contracted from another company to perform a review of processes.

Coding Compliance

Accurate and complete assignment of ICD-10-CM and CPT/HCPCS outpatient codes.

Outpatient Code Editor

Set of logical rules in computer programs to determine appropriateness of combined codes.

Upcoding

Assigned codes that aren't supported by the information in the patient's health record.

Unbundling

Codes that are normally assigned as a set are broken into separate codes for the purpose of obtaining higher reimbursement of healthcare services.

Dr. Smith's medical office group and the hospital in which the doctor is affiliated are both examples of?

Providers

Which system is used to bill for services delivered in a skilled nursing facility?

RUGs

Which of the following is a reason that an insurance claim may be denied?

Excessive length of hospital stay.

Prepaid Health Plans

Called prepaid medical plans are contracts that cover specific medical expenses for individuals or groups. Early healthcare policies generally covered income loss and specific illnesses.

Medical Insurance

Covers specific medical expenses. However, in the healthcare industry, the term health insurance now covers all aspects of medical insurance as well.

Health Insurance

Means protection against the following:

~ Income losses for illness or injury (accident insurance)

~ Disability income

~ Accidental death or dismemberment (loss of limbs)

~ Sickness insurance

~ Medical expense insurance

Reasons People Don't Seek Healthcare if They Don't Have Insurance?

~ Medicare and Medicaid financial restraints on reimbursement have resulted in many private hospitals no longer offering free(or charitable) healthcare.

~ Public hospitals that do provide charitable healthcare experience increased strain such as overcrowding and long waits. This further contributes to the uninsured population's reluctance to seek medical care.

~ Uninsured individuals delay receiving treatment as long as possible, increasing costs associated with prolonged healthcare services once they do enter a healthcare facility.

Commercial Insurance Companies

Seperated into two catergories:

~ Private or individual provides healthcare coverage for the policy holder and the policyholder's family. Private insurance holders pay premiums, or regular, pre-established amounts. The insurance company uses the money collected to pay claims submitted by those who have purchased insurance.

~Employer-based, or group, insurance provides coverage to a group of people (such as employees). Group insurance policies generally cost less than private plans and provide a wider range of benefits because the cost is spread across more people and therefore can be offered at a lower rate.

Blue Cross and Blue Shield (BC/BS)

Plans are historically important in healthcare reimbursement. Blue Cross and Blue Shield were the first prepaid health plans in the United States.

Largest privately underwritten health insurance contract in the world, enrolling more than half of all US federal employees, retirees, and dependents.

Underwritting

Is the process whereby an insurer reviews applications submitted for insurance coverage and decides whether to accept or reject all or part of the coverage requested.

What are Insurers Responsibilities?

~ Reviewing applications submitted for insurance coverage.

~ Deciding whether to accept or reject all or part of the coverage requested.

~ Fixing the terms of coverage.

Coinsurance

Provision stating that the insured and the insurer will share all losses covered by the policy in a proportion agreed upon in advance; for example, and 80-20 policy means that the insurer pays 80 percent of and the insured pays 20 percent of expenses.

Copayment

An arrangement in which the covered person pays a specified amount for various services and the health care provider pays the remainder. The covered person usually must pay his or her share when the service is rendered. Copayment is similar to coinsurance, except that coinsurance is usually a percentage of certain charges, whereas the copayment is a fixed dollar amount.

Deductible

Portion of an insured loss paid by the insured before he or she is entitled to benefits from the insurer; for example, a person may be required to meet a $200 deductible before receiving the insurance benefits.

Group Health Insurance

Health insurance provided to a group, most often a group of employees, providing coverage in the form of lump-sum payment or periodic payments to compensate for income losses due to bodily injury, sickness, or disease as well as medical expenses.

Insured

Party to an insurance arrangement who is secured against losses and provided benefits or services; this term is preferred to terms such as policyholder and policy owner.

Insurer

Party to an insurance arrangement who undertakes to indemnify for losses, provide benefits, or render services. The term insurer is preferred to company or carrier. Also known as third-party payer.

Major Medical Insurance

A type of insurance that provides benefits up to a high limit for most types of medical expenses incurred, subject to a large deductible. These policies usually pay covered expenses whether an individual is in or out of the hospital.

Out-of-Pocket Expenses

Amount not covered by insurance that the covered (or insured) person must pay out of his or her own pocket, such as coinsurance and deductible (also known as out-of-pocket costs).

Provider

Any individual or group of individuals that provide a health care service (such as physicians or hospitals).

Fee-for-Service

The method by which a physician or provider bills for each service or visit instead of on a prepaid (that is, all-inclusive) basis. This was the initial way that patients received treatment, for which they usually pay cash.

Managed Care

A system of healthcare where the goal is to deliver quality, cost-effective healthcare through monitoring and recommending utilization and cost of services.

Prospective Payment System (PPS)

A system wherein reimbursement is made to the provider based on a predetermined reimbursement level rather than on actual charges after the services have been provided.

Retrospective Payment System

A system wherein reimbursement is made to providers after healthcare services have been given.

Usual, Customary, and Reasonable Charges (UCR)

Charges for healthcare services that are based on the physician's "usual" charge for the service, which is the "customary" amount that other physicians in the area charge, and a "reasonable" amount for the service performed.

Prepaid Health Plan

Contract that covers specific medical expenses for individuals or groups.