Medical Insurance

1. Medical Insurance Hospital Billing and Reimbursement Chapter 16

2. Learning Outcomes After studying this chapter, you should be able to: Distinguish between inpatient and outpatient hospital services. List the major steps relating to hospital billing and reimbursement. Describe two differences in coding diagnoses for hospital inpatient cases and physician services.

3. Learning Outcomes (Continued) Describe the classification system used for coding hospital procedures. Describe the factors that affect the rate that Medicare pays for inpatient services. Discuss the important items that are reported on the hospital health care claim.

4. Key Terms • At-home recovery care • Attending physician • Case mix index • Charge master • CMS-1450 • Comorbidities • Complications Admitting diagnosis (ADX) Ambulatory care Ambulatory patient Classification (APC) Ambulatory surgical center (ASC) Ambulatory surgical unit (ASU)

5. Key Terms (Continued) • Home health care • Hospice care • Inpatient • Inpatient Prospective Payment System (IPPS) • Master patient index • Observation services Diagnosis-related groups (DRGs) 837I Emergency Grouper Health information management (HIM) Home health agency (HHA)

6. Key Terms (Continued) • Skilled nursing facility (SNF) • UB-92 • UB-04 • Uniform Hospital Discharge Data Set (UHDDS) Outpatient Prospective Payment System (OPPS) Principal diagnosis (PDX) Principal procedure Registration

7. Hospital Billing • Medical insurance specialists should be aware of coding and billing systems used in hospital settings to understand • possible physician/hospital financial arrangements • impact of staff privileges • patients’ total medical expenses for inpatient stays and surgical procedures

8. Health Care Facilities: Inpatient vs. Outpatient Facilities are equipped for patients to stay overnight • Inpatient • Outpatient Facilities or services not requiring an overnight hospital stay

9. Inpatient vs. Outpatient Facilities include: • General hospitals • Specialized hospitals • Skilled nursing facilities • Long-term care facilities • Hospital emergency departments • Inpatient • Outpatient

10. Inpatient vs. Outpatient • Inpatient • Outpatient • Facilities/services include: • Ambulatory surgical • centers or units • Home health agencies • Hospice • Hospital outpatient • departments

11. Hospital Claim Processing Three major steps for insurance processing in a patient’s hospital stay: • Admission • Treatment • Discharge Under HIPAA, hospitals must present patients with a copy of their privacy practices at admission.

12. Hospital Claim Processing • Admission • Treatment • Discharge • Patient record is created or updated • Insurance information verified • Obtain consent for release of information to payers

13. Hospital Claim Processing • Admission • Treatment • Discharge • Collect advance payments, as appropriate • Patient’s treatment and transfer among various hospital departments is tracked • Charges are generated

14. Hospital Claim Processing • Admission • Treatment • Discharge • Discharge or transfer to another facility • Patient record is compiled • Claims and/or bills are created • Payment is followed-up

15. Outpatient Main diagnosis is called the primary diagnosis Primary diagnosis is the main reason patient sought treatment Rule out diagnoses are not used Inpatient Main diagnosis is called the principal diagnosis Principal diagnosis is established after study in a hospital setting Rule out diagnoses are acceptable – usually as an admitting diagnosis Inpatient vs. Outpatient Diagnostic Coding For admitting diagnoses

16. Inpatient Diagnosis Coding Comorbidities and Complications • Shown in patient medical records as CC • May list multiple CCs on claim • Comorbidities (co-existing conditions) are other conditions that affect a patient’s stay or course of treatment • Complications develop from the treatment or as a result of surgery

17. Outpatient CPT is used for procedural coding ICD-9-CM, volumes 1 and 2, are used to code diagnoses Inpatient Volume 3 of the ICD-9-CM is used for procedural coding The 3rd or 4th digits of the codes are assigned based on the principal diagnosis Inpatient vs. Outpatient Procedural Coding

18. Payers and Payment Methods Medicare and Hospital Billing • Medicare pays for inpatient services under its Inpatient Prospective Payment System (IPPS) • The IPPS bases payment on diagnostic-related groups (DRGs)

19. Medicare and Hospital Billing • Each hospital negotiates a rate for each DRG with CMS, based on • Its geographical location • Labor and supply costs • Teaching costs

20. Medicare and Hospital Billing Quality Improvement Organizations (QIOs) • Composed of physicians and other health care experts under contract with CMS to review Medicare and Medicaid claims for appropriateness of stay and care

21. Medicare and Hospital Billing Quality Improvement Organizations (QIOs) • Formerly called Peer Review Organizations, established at time of DRGs • Also function as resources for investigating patients’ complaints about quality of care

22. Claims and Follow-up • Hospitals must file Medicare Part A claims using the HIPAA 837I Health Care Claim • In some cases, the paper claim calledUB-04 is also accepted by payers Uniform billing 2004; also known as CMS-1450

23. 837I Health Care Claim • “I” stands for “Institutional” (physicians’ claim is called 837P for “Professional”) • EDI format, similar to the 837 claim

24. 837I Health Care Claim • Contains sections for • Billing and pay-to provider • Subscriber and patient • Payer • Claim details • Service level details