Financial Management: Insurance and Billing Functions

chaptersix Financial Management: Insurance and Billing Functions

Learning Outcomes • When you finish this chapter, you will be able to: • 6.1 Illustrate the need for a claims management process. • 6.2 List the information contained in a Superbill. • 6.3Apply procedures to update a patient’s account in PrimeSUITE. • 6.4Demonstrate coding using ICD-9-CM and CPT codes in PrimeSUITE. • 6.5 Examine the correlation between documentation and code assignment.

Learning Outcomes (cont) • 6.6 Describe Accountable Care Organizations. • 6.7 Describe the information contained ina remittance advice or explanation of benefits. • 6.8 Apply procedures to manage accounts receivable in PrimeSUITE. • 6.9 Demonstrate the need for a compliance plan.

Key Terms • Abuse • Accountable Care Organization (ACO) • Accounts payable • Accounts receivable • Affordable Care Act(ACA) • Co-payment (co-pay) • Compliance plan • Deductible • Evaluation and Management (E&M) • Explanation of Benefits (EOB) • Fee schedule • Fraud • Healthcare Common • Procedure Coding System • (HCPCS) • Insurance plan • Insurance verification • Managed care plan • Medical necessity • Remittance advice (RA) • Subscriber • Transactions

6.1 Claims Management – Why and How • Every patient seen in a healthcare facility is charged for the care they receive. • A well run practice has efficient handling of accounts receivable and accounts payable. • A written claims management process is necessary. • This process includes written policies. • How much is charged per service (fee schedule) • Timing of filing claims • Follow-up on unpaid claims, and collections procedures • Must all be in writing

Claims Management – Why and How (cont) • The use of practice management (PM) software greatly improves the efficiency of a claims process. • Allows accurate capturing of charges • Submits automatic reminders • Offers a variety of reporting options • Provides automatic follow-up of each account • Remember that each patient is only entered once in the practice’s database of patients, but each patient may have more than one encounter (visit) attached to that master entry. • Each visit has an account attached to it, and therefore, the claims process must be fulfilled for each of those accounts.

Claims Management – Why and How (cont) • The patient’s account for each visit begins when the patient makes the appointment. • The healthcare professional asks for expected source of payment at that time. • If the patient is going to be paying out of pocket (no insurance), the payment policies of the office are discussed with the patient. • Physicians contract with managed care plans to provide care at a pre-determined rate. • If the patient is covered by insurance, insurance verification is completed by the office staff, usually before the patient arrives for his appointment, so that the office is reasonably sure that the patient is covered and that payment will come from some source.

Claims Management – Why and How (cont) • Verifying insurance • Contact the insurance carrier. • Receive validation of coverage for that patient. • Receive co-pay amount (due from patient at the time of the visit). • Verify that visit and services ordered are covered by insurance and find out whether or not the patient has met his deductible (the amount he must pay for his healthcare for that year). • When the visit is complete, the patient checks out (in a hospital this is called discharge).

6.2 Use of an Encounter Form • A document that is often used in medical offices to capture the diagnoses and services or procedures performed, either as a hard copy piece of paper or as computer generated by the PM system, is known as a an encounter form or Superbill. • The information on the encounter form will be transferred to the claim form known as the CMS-1500 and used to bill an outpatient encounter. • An encounter is synonymous with a visit.

Use of an Encounter Form (cont) • A hard-copy encounter form includes the following information, though it may contain more elements than those listed below: • Name and address of the medical practice • National Provider Identification number (NPI) • Patient’s name • Patient’s chart number • Date and time of visit • CPT codes for common procedures performed in that office • Diagnosis narrative (as written by the care provider) • ICD-10-CM codes corresponding to each written diagnosis (varies by office)

Use of an Encounter form (cont) • Each CPT code must “map” to a diagnosis code because the diagnosis code shows medical necessity (the fact that there is a medical reason to perform that procedure).

6.3 The Claims Process Using PrimeSUITE • The patient first makes an appointment. • Once the patient arrives, if the patient has insurance, a co-payment is collected, otherwise known as the co-pay. • In managed care plans, in particular, this is the portion of the bill that is the responsibility of the patient and is due at the time of the office visit. • One of the benefits of using PM software is the alerts that are generated. • An alert is a reminder to do something. • These alerts are generated based on the patient’s insurance plan. • Many offices refuse to see patients who do not pay their co-pay at the time of the visit.

6.4 Diagnosis and Procedure Coding Using PrimeSUITE • Care providers diagnose patients using medical terms, for instance a myocardial infarction (heart attack). • They also perform tests, such as an EKG, to make a diagnosis. • Therapeutic procedures (those that are done to alleviate symptoms or correct a condition) are done as well; an example of this would be suturing of a laceration. • Supplies are necessary to complete procedures or for treatment purposes. For instance, a suture kit is used to suture a laceration.

Diagnosis and Procedure Coding Using PrimeSUITE (cont) • The care provider documents the diagnoses, procedures, or services in words. • Those words have to be converted to a numeric form in order to file claims to insurance companies and to keep statistics of the conditions treated and procedures performed at the office or facility. • Diagnosis coding • As of October 1, 2014, the coding system used to convert written diagnoses into numeric form is the International Classification of Diseases, 10th revision, Clinical Modification, better known as ICD-10-CM. • Prior to October 1, 2014, the coding system used was the International Classification of Diseases, 9th revision, Clinical Modification, better known as ICD-9-CM.

Diagnosis and Procedure Coding Using PrimeSUITE (cont) • ICD-9-CM had been used since 1979. • Reasons for needing a new system: • ICD-9 is outdated. • ICD-9 lacks the specificity necessary. • There is little to no space for expansion, since codes are just 5 digits in length maximum. • World Health Organization (WHO) has endorsed ICD-10.

Diagnosis and Procedure Coding Using PrimeSUITE (cont) • Reasons for not converting earlier • High cost of conversion • High cost and time involved with training staff • Questions about whether or not ICD-10 would meet the needs of the U.S. healthcare system • Fact that in the U.S. coding is done for statistical purposes as well as for reimbursement

Diagnosis and Procedure Coding Using PrimeSUITE (cont) • A yearly update each October (and sometimes April) occurs when new codes are added, codes are changed in some way, and obsolete codes are omitted. • ICD-10-CM is used in physicians’ offices to code diagnoses only. • In a hospital setting, it is used to code diagnoses and procedures and is called ICD-10-CM/PCS. • Patients may have one diagnosis code or many for each encounter. • Any diagnoses that were diagnosed, treated, or required nursing or care provider attention should be coded.

Diagnosis and Procedure Coding Using PrimeSUITE (cont) • The first listed diagnosis is most closely related to the reason the patient was seen for that encounter (the chief complaint).

Diagnosis and Procedure Coding Using PrimeSUITE (cont) The second code set is Current Procedural Terminology, or CPT • It is Level 1 of the Healthcare Common Procedure Coding System, known as HCPCS. • In the physician’s office setting, CPT codes are used to code procedures or services given to a patient. • In a hospital setting, they are used for outpatient coding (emergency room, outpatient diagnostic testing, or ambulatory surgery, for example). • HCPCS Level 2 codes are codes used to show tangible items such as suture kits, ambulance services, orthoticdevices (cane, splint, etc.). • They are used in any healthcare setting.

6.5 The Relationship between Documentation and Coding • Services rendered to a patient—whether it is the face-to-face time with the physician, treatment, or diagnostic tests and procedures— cannot be billed to insurance unless they are medically necessary. • The documentation in the record must support the need for any and all services and procedures. • Performing services that are not necessary or coding services that were not actually performed constitutes insurance (including Medicare and Medicaid) fraud. • Fraud • Misrepresentation or omission made knowingly and intentionally • Not a result of a mistake or accident • Takes advantage of a patient, an insurance company, or Medicare or Medicaid

6.6 Accountable Care Organizations (ACO) • Most widely used reimbursement model was fee-for-service (physician charges for each service, and insurance company pays). • Under ACO model there must be proof that care is of high quality, that it is coordinated among care providers, and that patient input is encouraged. • Reduction in duplicate testing is expected as is more efficient use of health services.

Accountable Care Organizations (cont) Accountable Care Organizations are formal networks of physicians, hospitals, and other healthcare providers working together to provide high quality care.

Accountable Care Organizations (cont) ACOs may be: • Medicare’s model • Medicare Shared Savings program • Advance Payment Model • Private (commercial) model • The “group” includes physicians, hospitals, other healthcare providers and commercial insurance carriers.

Accountable Care Organizations (cont) Key points about ACOs • Participation is voluntary. • Structured data in the form of codes and clinical data found in the EHR is necessary for measurement. • All care providers and facilities belonging to a particular ACO must use an EHR to be able to share health records (thus reducing duplication and unnecessary testing). • Approximately 30 quality measures will be monitored related to: patient’s experience, care coordination, and patient safety. • The higher the quality of care, the higher the shared savings by the ACO.

6.7 Accounts Receivable – Getting Paid • Accounts payable is money going out – paying the bills. • Accounts receivable is money coming in. • It is imperative that what is billed for is paid for, and that there is an accurate accounting of all transactions. • Transactions are the posting of charges and the payment of claims. • Insurance companies submit payments to care providers and hospitals electronically, by check, or by automatic deposit into the bank account of the office.

Accounts Receivable – Getting Paid (cont) • The insurance company submits the payment with a detailed accounting of the claims for which payment is being made. • The document that accompanies the payment is called a remittance advice (RA). • It may also be called an explanation of benefits (EOB). • The term remittance advice is used to describe the document that accompanies payment to the provider. • The EOB is generally the form the subscriber (the primary person covered by the insurance) receives to notify him/her of what was billed, what was paid, and what is owed by him/her.

Accounts Receivable – Getting Paid (cont) • Insurance companies typically include this information on the form: • Provider’s name and National Provider Identification (NPI) number • Patient’s name • Claim number • Medical record number • Date(s) of service • Claim status (open, denied, more information needed, paid, etc.) • Electronic Transaction Number (if RA and payment sent via electronic means) • Service Detail • Each CPT code billed (as submitted on the claim form) • Amount charged for each code • Allowed amount (the amount the insurance carrier has agreed to pay) for each code • Co-pay paid by patient • Adjusted amount (difference between what was charged and the allowed amount)

Accounts Receivable – Getting Paid (cont) • Recap of charges and payments may include: • Total reported charges amount • Charges not covered amount • Charges denied amount • Covered charge amount

6.8 Managing Accounts Receivable in PrimeSUITE • The management of patient accounts – from charging patients for services to tracking accounts receivable and collections – begins by setting up the parameters of each insurance carrier and each plan within the insurance. • The plan refers to the extent of coverage offered. • There may be more than 20 plans. • Plans differ regarding: • Co-pay requirement • Extent of coverage • Whether or not services are covered at all • Rules regarding filing of claims

Managing Accounts Receivable in PrimeSUITE (cont) • Setting up software: • Administrative staff member works with an installation specialist from the software company to build libraries that are used to perform functions within the different applications • May require accounts receivable, patient chart, etc.

Managing Accounts Receivable in PrimeSUITE (cont) • Common libraries include: • Insurance company library—includes all of the insurance companies and the individual plans that are represented by the patients in the practice • ICD-9-CM, CPT, and HCPCS Level 2 code tables • Fee Schedule—Listed by CPT code and done for Medicare, group insurance, and by individual contracts for managed care plans; charge for each service is documented in a fee schedule • Reports—in particular, aging reports (length of time a claim has remained unpaid) • Alerts—reminders to the office staff related to the billing functions

Managing Accounts Receivable in PrimeSUITE (cont) • Advantages include: • Healthcare professional can see exactly what is happening with a claim or claims at any given time in the process. • Greater billing accuracy is an advantage of using PM software, and there is less chance of lost charges like: • CPT codes known as an Evaluation & Management (E&M) codes • E&M codes are CPT codes that reflect the professional services rendered to a patient • Once the claim has been filed and payment has been sent to the office, the payment is posted to the patient’s record for that particular date of service.

6.9 Compliance • Each insurance type has rules and regulations related to the coding, billing, and collection of healthcare claims. • Intentionally or unintentionally not following those rules and regulations can result in allegations of fraud or, at the very least, abuse. • Abusive coding and billing practices are inconsistent with typical coding and billing practice. • Either can be done intentionally or unintentionally and is still considered fraud or abuse. • Being found guilty of either can result in monetary fines or, in the worst-case scenario, sanction from insurance plans.

Compliance (cont) • If a care provider is sanctioned from Medicare, that means that he is forbidden to accept Medicare patients into his practice. • For federal programs, the Office of Inspector General (OIG) investigates suspected cases of fraud. • In order to defend the practice in the event of a visit from the OIG, a compliance plan (a formal, written document which describes how the hospital or physician’s practice ensures rules, regulations, and standards are being adhered to) should be in place in every medical office and hospital.

Compliance (cont) • If the OIG does audit your practice, showing that you have a compliance plan and that it is followed will be an advantage. • The requirements of a compliance plan are: • Audits and monitoring work performed by the office staff • Developing and implementing standards of practice to be followed by office staff (including care providers) that are uniformly and consistently applied • Appointment of a compliance officer • Train new staff immediately after hire in office policies and procedures and offer periodic in-services to all staff (including care providers).

Compliance (cont) • After an audit: • Fix any problems that are found. • Investigate reason for problems, and re-train staff as necessary. • Encourage staff to bring any compliance issues to the office administration. • Enforce the office’s policies and procedures and don’t make exceptions.

Summary • Everyone must understand the rationale of all policies. • Everyone needs to practice all policies for proper reimbursement and to remain in compliance for all audits. • Healthcare professionals need to understand relevant aspects of billing and coding of medical procedures and diagnoses.

Summary • Setting up PM software can help with accuracy and consistency in medical records as well as billing. • Insurance plans may differ in coverage. • Documentation must be accurate. • There is the potential for fraud if documentation or coding is in error. • Compliance plans can help eliminate potential errors and legal issues.

Financial Management: Insurance and Billing Functions