Medical Billing and Reimbursement Essentials

The Step-by-Step Medical Billing Process

• Initial Patient Contact and Scheduling

  • Collect comprehensive patient information at the time the patient calls to schedule an appointment.
  • When the patient arrives for the appointment, make a photocopy or scan of both sides of the patient's insurance card and a government-issued picture Identification (ID).

• Verification of Coverage

  • Verify the patient’s eligibility, which involves confirming that the patient’s contract with the insurance company is currently active.
  • Review specific patient benefits and identify any exclusions for certain procedures and services before treatment begins.

• Coding and Submission

  • After medical services are rendered, code the diagnoses and procedures performed.
  • Complete the CMS-1500 Health Insurance Claim Form and submit it electronically to the insurance company to request reimbursement.
  • Review the electronic claims submission report immediately to ensure all details are correct.
  • Adhere to the timely filing requirements, which vary among different health insurance carriers.

• Payment Posting and Patient Billing

  • Post payments to the patient’s account using the Explanation of Benefits (EOB) or Medicare’s Remittance Advice (RA).
  • Identify and document every line item that was paid, reduced, or denied.
  • Ensure each payment for a specific procedure line item is posted accurately in the patient’s account records.
  • Mail statements to patients who still have an outstanding balance after the insurance company’s payment has been processed and applied.

Patient Records and Managed Care Procedures

• The Patient Billing Record

  • It is routine practice to ask for all pertinent insurance information during the first appointment call.
  • A significant portion of this data is collected on the patient registration or intake form.
  • A medical release of information form, signed by the patient, must be maintained on file.

• Managed Care Organizations (MCOs)

  • Medical assistants must establish and follow specific office procedures for applying MCO policies.
  • Failure to follow these protocols may result in MCOs refusing to pay for medical services.

• Precertification and Preauthorization

  • Precertification is the process of proving to the insurance company that a requested service is medically necessary.
  • To initiate this, call the provider services phone number found on the back of the patient’s health insurance ID card.
  • Provide the insurance company with the specific procedures/services requested and the associated diagnoses.
  • Document the outcome of the call in the patient’s health record.
  • Obtaining precertification does not guarantee that the insurance company will pay for the services.

• Referral Types

  • Regular referral: Usually takes $3$ to $10$ working days for approval.
  • Urgent referral: Usually processed within $24$ hours.
  • STAT referral: Reserved for emergencies; can often be approved online immediately.

Electronic Claims Submission and the CMS-1500 Form

• Electronic Data Interchange (EDI)

  • Electronic claims are transmitted over the Internet from the provider to the health insurance company through EDI.
  • Accurate data is essential for the success of these transmissions.

• Submission Methods

  • Direct Billing: A process where an insurance carrier allows a provider to submit claims directly to the carrier electronically.
  • Clearinghouse Submissions: A clearinghouse acts as an intermediary, receiving claims from the healthcare facility, checking them for errors, and forwarding them to the insurance company.

• Structure of the CMS-1500 Form

  • The CMS-1500 is the standard health insurance claim form accepted by all insurance companies.
  • The form consists of $33$ distinct blocks.
  • Section $1$: Carrier Block: Located at the top of the form, containing the address of the insurance carrier.
  • Section $2$: Patient/Insured Section: Includes Boxes $1$ through $13$, focusing on patient and policyholder information.
  • Section $3$: Physician/Supplier Section: Includes Boxes $14$ through $33$, focusing on the healthcare provider and the services rendered.

Detailed Breakdown of CMS-1500 Sections and Blocks

• Section $1$: Carrier Coverage

  • Block $1$: Indicate the type of health insurance coverage (e.g., Medicare, Medicaid, TRICARE) by placing an "X" in the appropriate box.

• Section $2$: Patient and Insured Information (Blocks $1a$ to $13$)

  • **Blocks $1a$, $4$, $7$, and $11(a-d)$: Required insured individual information includes health plan ID number, name, address, policy group number, birth date, gender, employer’s name, insurance plan name, and whether secondary health benefit plans exist.
  • **Blocks $2$, $3$, $5$, $6$, $8$, and $10$: Required patient information includes name, birth date, gender, address, relationship to the insured, and patient status. It must also indicate if the condition is related to employment, an auto accident, or another type of accident.
  • Block $9$: Used for recording secondary insurance information, including the other insured person’s name, policy or group number, gender, employer, and plan name.
  • Block $12$ and $13$: These blocks require the signature of the patient or authorized person (Block $12$) and the insured or authorized person (Block $13$).

• Section $3a$: Physician or Supplier Information (Blocks $14$ to $23$)

  • Block $14$: Records the current illness, injury, or pregnancy.
  • Block $15$: If the patient had a similar condition previously, enter the date of onset for that earlier condition.
  • Block $16$: Dates in this block help determine long- or short-term employee benefits.
  • Blocks $17$ and $17b$: Enter the name of the referring provider in Block $17$ and their National Provider Identifier (NPI) in Block $17b$.
  • Block $18$: Enter hospitalization dates related to current services.
  • Block $19$: Reserved for additional claim information designated by the National Uniform Claim Committee (NUCC).
  • Block $20$: Includes charges for outside laboratory services.
  • Block $21$: Records the ICD-10-CM diagnosis code(s), with the primary diagnosis in the first field.
  • Block $22$: For resubmission codes and/or original reference numbers.
  • Block $23$: For the prior authorization number.

• Section $3b$: Service and Billing Details (Blocks $24$ to $33$)

  • Block $24A$: Date of service.
  • Block $24B$: Place of Service (POS) code.
  • Block $24C$: Indicates if the service involved an emergency.
  • Block $24D$: Reporting codes for services and procedures performed.
  • Block $24E$: Diagnosis pointer used to link the service to a diagnosis code in Block $21$.
  • Block $24F$: The specific dollar amount charged for each service line.
  • Block $24G$: The number of units or days corresponding to the service.
  • Block $24H$: Identifies Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) or family planning services.
  • Block $24I$: ID qualifier, used if the number in Block $24J$ is not an NPI.
  • Block $24J$: The NPI of the rendering provider.
  • Block $25$: Federal tax ID number (Social Security Number or Employer Identification Number).
  • Block $26$: Patient’s account number assigned by the provider.
  • Block $27$: Indicates if the provider accepts assignment of benefits.
  • Block $28$: Total amount billed for all services on the claim.
  • Block $29$: Total amount already received from the patient or other payers.
  • Block $30$: Balance remaining; currently reserved for NUCC use.
  • Block $31$: Signature of the physician or supplier verifying accuracy.
  • Block $32$: Address of the service facility.
  • Block $33$: Address and phone number of the billing provider. Block $33a$ repeats the NPI provided in Block $24J$.

Preventing Fraud and Abuse in Coding

• Definitions

  • Fraud: Knowingly and willfully attempting to execute a scheme to defraud a healthcare benefit program or obtain money/property through false pretenses or promises.
  • Abuse: Actions contrary to ethical standards that result in unintended overpayment to a healthcare provider.
  • The Intent Factor: The presence of "intent" is the primary differentiator between fraud and abuse.

• Legal Consequences

  • Violations can lead to nonpayment of claims, Civil Monetary Penalties (CMPs), exclusion from payer programs, criminal liability, civil liability, and imprisonment in extreme cases.
  • The Federal Register publishes the updates on these charges and regulations.

Guidelines for Claim Review and Accuracy

• Pre-submission Checklist

  • Proofread the form thoroughly and ensure all necessary attachments are included.
  • Verify that names, addresses, ID numbers, and group numbers match the identification card exactly.
  • Confirm patient birth dates and genders match the medical record.
  • In Block $11$, enter "NONE" if the payer is Medicare.
  • Ensure Block $12$ includes a handwritten signature or "SOF" (Signature on File) to authorize release of information.
  • Double-check that diagonal codes are present and accurately coded.
  • Verify the Employer Identification Number (EIN) or Social Security Number (SSN) in Block $25$.
  • Mark an "X" in the "YES" box of Block $27$ if the provider is a participating (PAR) provider.

• Claims Management Technology

  • Software billing programs often include "claims scrubbers" to identify errors before submission.
  • A "clean claim" is one that is submitted without any errors.
  • Common reasons for denial include technical errors and insurance policy coverage issues.

Post-Submission Monitoring and Explanation of Benefits (EOB)

• Checking Claim Status

  • Medical billers must track every claim. A report is typically sent from the third-party payer through the clearinghouse a few days after submission.
  • To check status, the biller needs the insured subscriber’s member number, patient name, patient birth date, and the date of service.

• Interpreting the EOB

  • The EOB is document sent by the insurance company to the provider, usually accompanied by a check.
  • The medical assistant must verify the EOB applies to the correct patient and matches the figures on the original CMS-1500 form.
  • Post the payment and make adjustments line by line.
  • Review Remark codes/legends for additional information regarding why a claim might be pending or denied; follow up on these immediately.

• Handling Rejected and Denied Claims

  • Rejected Claims: Result from errors that must be corrected and resubmitted electronically as soon as possible.
  • Denied Claims: Often related to technical errors or coverage issues.
  • Medical Necessity Denials: If denied for lack of medical necessity, providers should send an appeal letter and additional supporting documentation (e.g., medical, laboratory, operative reports, or history and physical findings).

Financial Responsibility and Patient-Centered Care

• Patient Financial Obligations

  • Copayment: A fixed amount paid by the patient at the time of service.
  • Deductible: A contracted annual amount the guarantor must pay before insurance coverage begins. Costs are typically lower if patients use participating providers.
  • Co-insurance: A provision where the policyholder and insurance company share costs according to a specified ratio.
  • Allowed Amount: Also known as a "fee schedule," this represents the maximum amount a carrier will pay for a service based on provider contracts.

• The Guarantor

  • The guarantor is the individual ultimately responsible for the medical bill.
  • Medical assistants should obtain the guarantor's signature on an agreement to pay for services.

• Patient-Centered Medical Home (PCMH)

  • The PCMH is a holistic model of patient care involving multiple team members.
  • Providers and medical assistants work together to provide primary care with the goal of improving outcomes and reducing total costs.

• Ethics and Patient Coaching

  • Medical assistants should use patience and sensitivity when discussing financial obligations with patients.
  • Patients should never be harassed; instead, the practice should offer various payment methods.
  • The MA should "coach" the patient by explaining technical insurance issues in simple terms and encouraging them to read their policy to understand its limitations.
  • Patients should be encouraged to contact insurance companies directly to question rejections they do not understand.