HEALTH CARECLAIMPREPARATION AND TRANSMISSION

Chapter 6

Chapter 6 2

Health Care ClaimPreparation and TransmissionPreparation and Transmission

Learning Objectives Describe the process of using medical billing process of using medical billing

programsprograms to prepare health care claims. Briefly describe the information contained in the

five major sectionsfive major sections of the HIPAA claim. Discuss the importance and use of claim control claim control

numbersnumbers and line item control numbersline item control numbers. Identify the three major methodsthree major methods of electronic electronic

claim transmission.claim transmission.

Chapter 6 3

Key Terms Audit-edit claim

response Billing provider Birthday rule Claim attachment Claim control number CMS-1500 claim form Coordination of benefits

(COB) Database

Data element Destination payer Edit Electronic data

interchange (EDI) HIPAA claim HIPAA Electronic

Health Care Transaction andCode Sets (TCS)

HIPAA Security Rule

Chapter 6 4

Key Terms (cont’d)

Line item control number

National Patient ID National Payer ID National Provider

Identifier (NPI) Password Pay-to provider Place of service (POS)

code

Primary insurance Secondary insurance Referring physician Rendering provider Subscriber Taxonomy code Transactions Verification report

Chapter 6 5

Claim Preparation Using Medical Billing ProgramsMedical Billing Programs

Computerized billing and claims Most medical practices use software programssoftware programs to

prepare claims The program’s databases are set up with data about:

Physicians Diagnosis and Procedure Codes Fee Schedules Insurance Carriers (payers)

Chapter 6 6

Claim Preparation Using Medical Billing ProgramsMedical Billing Programs (cont’d)

To prepare a claimTo prepare a claim, a medical insurance specialist: RecordsRecords the patient’s informationthe patient’s information, including

primary insurance plan Records the services, Records the services, charges,charges, and and paymentspayments

based on the patient’s encounter form Creates and Creates and transmitstransmits the claimsthe claims to the

appropriate payer

Chapter 6 7

RecordingPatients’ InformationPatients’ Information

Patient Information Forms Data from new new or updatedupdated forms is entered into

program New records are created for new patients

When a patient is covered by more than one Group Plan, the Medical Insurance Specialist must determine which plan is primary and which is secondary.

Chapter 6 8

RecordingPatient’s Information

Primary Insurance (Payer) is a Health Plan that pays benefits first when a patient is covered by more than one Group Plan.

Secondary Insurance (Payer) is a Health Plan that pays benefits after the Primary Plan, when a patient is covered by more than one Group Plan.

Chapter 6 9

RecordingPatient’s InformationPatient’s Information

Dependent Child(ren) – the primary plan is determined by the Birthday Rule.Birthday Rule.

The Rule states that the parent whose day of birth is earlier in the calendar year is Primary.

Chapter 6 10

Coordination of BenefitsBenefits Coordination of BenefitsBenefits (COB) is a provision which

establishes the order in which insurance plans pay claims when an individual has coverage under more than one plan.

The insurance industry has developed a consistent and orderly way to determine which plan pays its full benefits and which plan pays a reduced amount (if any), which when added together equal more than a single plan's benefit, but not more than the total amount of the allowable charges incurred.

It is intended that individuals do not profit when having coverage under more than one plan, and that Members and/or providers receive the appropriate amount of reimbursement for medical services.

Chapter 6 11

Coordination of BenefitsBenefits

Coordination of Benefits (COB) applies when: Both spouses cover their family through their employers Both spouses are covered by the same insurance

carrier but work for different employers. Member is Federal Medicare eligible Member is retired from one job and actively employed

elsewhere Member is injured in an automobile accident Member is injured on the job The primary subscriber has more than one employer

Chapter 6 12

Coordination of BenefitsBenefits

The following criteria is used to determine the order of benefits: The subscriber's active employee plan is

primaryprimary over their spouse's coverage Active employee coverage is primaryprimary over

inactive (or retiree) employee coverage If the Member has two policies that are both

active, the policy that has been active the longest is primaryprimary.

Chapter 6 13

Coordination of BenefitsBenefits Birthday RuleBirthday Rule

Birthday Rule: Birthday Rule: When a dependent child dependent child is covered under both parents' health plans, the plan of the parent whose birthday falls earlier in the calendar year pays first.

When a newborn is covered for the first 31 days (enrolled or not enrolled), the plan of the parent whose birthday falls earlier in the calendar year pays first.

Chapter 6 14

Coordination of BenefitsBenefits Birthday RuleBirthday Rule

Only the month and the day are considered, not the parents' years of birth.

FOR EXAMPLE: FOR EXAMPLE: If the mother's birthday month is March and the father's

birthday month is June, then the mother's health plan is primary primary

If both parents have the same birthday, then the plan which covered the parent longer is primaryprimary over the plan which covered the parent for a shorter time.

Chapter 6 15

Coordination of BenefitsBenefits

The Provider is responsible for supplying information about the Secondary Insurance & coverage to the Primary Payer The Providers must also include this

information in the Insurance Claim Form.

Chapter 6 16

Coordination of BenefitsBenefits– (cont.)

When the RA (remittance advice) is received the Medical Insurance Specialist prepares another Claim Form for the Secondary Plan. The claim reports:

The Amount the first Insurance Policy paid The Patient Balance, if any

After both carriers have made payments, any unpaid bills are submitted to the patient (depending on deductible, coinsurance, PAR, non-PAR, etc)

Chapter 6 17

Recording Services,Charges, & Payments for Patients’ Encounterfor Patients’ Encounter

Patient’s Encounter Form DiagnosiDiagnosis and Procedure CodesProcedure Codes Charges Charges for Services and Procedures Patient PaymentPayment Information

Patient’s Insurance CoverageInsurance Coverage for visit is selected

Patient’s ProviderProvider for visit is entered into the system

Chapter 6 18

Creating & Transmitting Claims To PayersClaims To Payers

Electronic Claim Files Medical insurance specialist instructs program to

create claims for appropriate payer Program Program draws on databases to

create claim files FilesFiles may then be printed, but

most are submitted electronicallyelectronicallyto payer

Chapter 6 19

Accuracy & Security IssuesMedical Billing ProgramsMedical Billing Programs

The Major Databases in Billing Programs are: ProviderProvider – The provider database has information

about the physician(s), medical office, the practice name, phone number, etc.

Patient/GuarantorPatient/Guarantor – The database where each patient information form is storedstored, such as name, address, phone, birth date, social security number, etc.

Chapter 6 20

Accuracy & Security IssuesMedical Billing ProgramsMedical Billing Programs

The Major Databases in Billing Programs are: Insurance CarrierInsurance Carrier – This database contains the

names, addresses, plan types, and other data about the major health plans used by the practice’s patients.

Diagnosis Codes Diagnosis Codes – This database contain the ICD-9 Codes that indicate the reason a service is provided.

The Codes stored are those most frequently used by the Practice.

Chapter 6 21

Accuracy & Security IssuesMedical Billing ProgramsMedical Billing Programs

The Major Databases in Billing Programs are: Procedure Codes Procedure Codes – The Procedure Code database

contains the data needed to create charges. The CPT Codes most often used by the practice are

selected for this database. Transactions Transactions – This database stores information

about each patient’s visit, charges and the related diagnoses and procedures, as well as received and outstanding payments.

Chapter 6 22

Tips for accurate Data Entry Do not use prefixesprefixes for names (avoid Mr., Ms., etc.) Do not use special charactersuse special characters (hyphens, commas,

etc.) Use only valid dataonly valid data in all fields (avoid words such

as same) Enter the required number of charactersEnter the required number of characters for each

data element, but do not worry about the format—most programs reformat data correctly

Data Entry in Computer BillingComputer Billing

Chapter 6 23

Data Security

HIPAA Security Rule Sets standards for protecting PHIprotecting PHI when it is when it is

maintained or transmitted electronicallymaintained or transmitted electronically PHI:PHI: Protected Health Information Office’s Database files contain PHI PHI

Chapter 6 24

Data Security Security Measures in a Medical Office

Access control and passwordsAccess control and passwords Users are given IDs IDs & Passwords Passwords that will permit them to

use the files that they have been granted access. Backup Files

The process of copying files to another medium so that they will be preserved in case the originals are not longer available.

Security policy A Process must be in place to train staff train staff on protecting

PHI PHI when electronically stored and/or sentsent..

Chapter 6 25

Types of ClaimsClaims HIPAA (Health Insurance Portability & Accountability Act of 1996)

Claim Electronic transaction called the 837 claim837 claim

Paper Claim CMS-1500 CMS-1500 claim form (formerly the HCFA-1500

claim form)

Chapter 6 26

Types of ClaimsClaims (cont’d)

HIPAA claim Follows requirements of the HIPAA Electronic

Health Care Transaction and Code Sets (TCS)(TCS) Must be sent as an electronic file with required format CMS mandates use of this form for all Medicare claimsmandates use of this form for all Medicare claims Required or preferred by most other payers as well

Paper Claim May be used for Medicare claims by very small practices very small practices

only only Still accepted by most payers

Chapter 6 27

Preparing HIPAA Claims The HIPAA Claim has Five Major

Sections1 Provider information

2 Subscriber and patient information

3 Payer information

4 Claim details

5 Services

Chapter 6 28

Provider Information

Includes Addresses and NPIs (National Providers (National Providers

Identifier)Identifier) of: Billing provider—organizationorganization or person person transmitting the

claim to payer May be the medical practicemedical practice or an outside organizationan outside organization (billing

service or clearinghouse hired by the practice) Pay-to provider—organization or person receiving payment

If billing provider and pay-to provider are the same, not necessary to report pay-to provider

Chapter 6 29

Provider Information (cont’d)

NPINPI National Provider Identifier

Ten-digit number PIN (Provider Identification Number UPIN (Unique Provider Identification Number)

Recent HIPAA rule: Until assigned, tax identification numbertax identification number or other other

identifieridentifier can be used in place of NPINPI

Chapter 6 30

Taxonomy Code Taxonomy Code – is a ten-digit number

that stands for a physician’s medical specialty.

Example: Example: 207NP0225X for 207NP0225X for Pediatric DermatologyPediatric Dermatology

Chapter 6 31

Subscriber/Patient InformationInformation

Subscriber Policyholder or Guarantor

May be the patient,patient, but if not, patient information also required

Data Elements: Subscriber’s name, health plan number, policy number

and plan name, claim filing indicator code (shows type of plan, such as HMO)

Chapter 6 32

Subscriber/Patient Information Information (cont’d)

Relationship to Patient If the subscriber is the patient, selectsubscriber is the patient, select “self”“self” When the subscriber and patient are subscriber and patient are

different, selectdifferent, select the correct relationship the correct relationship from list of optionsfrom list of options

Software stores corresponding code

Chapter 6 33

Subscriber/Patient Information Information (cont’d)

Patient Information Data Elements:

Name, address, gender, date of birth, primary identifier (such as a health plan member ID—to be replaced soon by National Patient ID under HIPAA)

Possibly secondary identifier (such as SSN)

Chapter 6 34

Payer InformationInformation

Destination payer Payer receiving the claim Data Elements:

Payer’s name and ID (to be replaced with National Payer ID when legislated)

Assignment-of-benefits code

Chapter 6 35

Claim Information Details of the claim

Data elements: Claim control number, for tracking

Assigned by the medical insurance specialistmedical insurance specialist Maximum of 20 characters20 characters; can incorporate account

number but should not be the same Total charges and patient payment, if any Place of service (POS) code;Place of service (POS) code; diagnosis codes diagnosis codes RenderingRendering or referring provider datareferring provider data, if any

Chapter 6 36

Service Line Information Service Line Information – List the

Services performed for patient Each service is listed on separate lineseparate line Data elementsData elements for each service:

Line item control number, for tracking payments from insurance carrier

Date of service Procedure code Diagnosis code links Charge

Chapter 6 37

TransmittingHIPAA ClaimsHIPAA Claims

Electronic Data Interchange (EDI)(EDI) HIPAA requires particular format for

transmission Called X12X12 transmission Patients’ PHIPHI must be secure and private, when

claims are sent Claim Attachments

HIPAA electronic standard underway At present, may be paper or electronicpaper or electronic

Chapter 6 38

Methods ofSending ClaimsSending Claims

Three MajorThree Major methods for sending electronic claims Clearinghouse Direct Transmission Direct Data Entry (DDE)

Most medical offices use Clearinghouses Clearinghouses for HIPAA EDI Format

Chapter 6 39

Methods ofSending Claims Sending Claims (cont’d)

ClearinghouseClearinghouse Acts as an intermediary

between provider and payer

Reformats Reformats data from provider to a formto a form accepted by the payer

Charges feeCharges fee for service

Performs editsPerforms edits Checks claim for missing or missing or

incorrect dataincorrect data Creates audit/edit report for

provider Lists errorsLists errors and sends sends

claim backclaim back for correction (dirty claims)

Chapter 6 40

Methods ofSending ClaimsSending Claims

Three MajorThree Major methods for sending electronic claims – Cont.

Direct Transmission - Provider & Payer receive payment directly.

Direct Data Entry (DDE) - Office uses the Internet-based Service connected to the payer where data elements are keyed.

Chapter 6 41

PreparingPaper Claims

CMS-1500 (HCFA-1500) claim form Paper claim containing 33 33 form locators

Form locators 1-131-13 Patient and patient’s

insurance coverage

Form locators 14-3314-33 Provider and transactions

data (diagnoses, procedures,charges)

Claim is printed and sentto payer

Chapter 6 42

Quiz Matching

837

NPI

POS code

CMS-1500

Paper claim form

Ten-digit number

Another name for the HIPAA claim

A number that shows where a patient received services

Chapter 6 43

Critical Thinking Name one advantage advantage and one

disadvantagedisadvantage of electronic claims.

AdvantagesAdvantages such as: lower costs, reduced rejection, faster payment, access to status reports.

DisadvantagesDisadvantages such as: initial expense, security, disruption due to power failure or equipment problems, unable to include attachments.