HOSPITAL INSURANCE

Chapter 15

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HOSPITAL INSURANCE

Learning Objectives Compare inpatientinpatient and outpatient outpatient hospital services. List the major steps relating to hospital claims hospital claims

processing.processing. Describe two differences in coding diagnosescoding diagnoses for hospital hospital

inpatient casesinpatient cases and physician office services.physician office services. Describe the procedure codesprocedure codes used in hospital coding. Discuss the important items that are reported on the

HIPAA hospital claimHIPAA hospital claim, the 837I.837I.

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Key Terms Admitting diagnosis Ambulatory care Attending physician Charge master or

Charge ticket CMS-1450 Emergency care Health information

management (HIM)(HIM)

Inpatient Master patient index Principal diagnosis Principal procedure Prospective Payment

System (PPS)(PPS) Registration 837I837I

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Inpatient Care Patient stays overnight or longer Includes:

Inpatient hospital care Skilled nursing facilities Long-term care facilities Hospital emergency departments

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Outpatient or AmbulatoryAmbulatory Care Care

No overnight stay Includes:

Same-day surgery Care provided in patients’ homes

Home Health Agencies Skilled nursing care, physical therapy, etc.

Assistance with Activities of Daily Living (ADLs)(ADLs)

Home health aides Hospice care

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HIM Department HHealth IInformation MManagement

Organizes and maintains patient medical records Three Major Steps in a Patient’s Hospital

Stay: Admission Treatment and Charges Discharge and Billing

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Admission

Registration Process Create/update patient’s medical record Verify insurance coverage Secure consent for release of information Collect advance payments, as appropriate Emergency departments usually have separate

registration/admission

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Admission (cont’d)

Registration Process Medicare patients receive one-page printout

Entitled “An Important Message from Medicare”“An Important Message from Medicare” Explains rights as hospital patient

All patients receive copy of hospital’s privacy practices

Based on the HIPAA Privacy Rule Receipt is acknowledged with signature

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Treatment and Charges Medical record contains

Notes, ancillary documents, and correspondence from attending physician and all other physicians/providers

Patient data, including insurance information Charges for all treatments and tests; supplies

and equipment used; medication; room and board; and time spent in special facilities

Confidentiality is important - Confidentiality is important - WhyWhy

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Goal is to file a claim within 7 days of discharge

Items recorded on charge mastercharge master Similar to practice’s encounter formencounter form Hospital’s computer system tracks patient’s system tracks patient’s

servicesservices

Discharge and Billing

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Inpatient (Hospital) Coding

HIM HIM (Health information Management) Responsible for diagnostic & procedural

of patient’s medical records. Coding is done as soon as the patient is

discharged. Inpatient Coders:Inpatient Coders:

Generalists Maybe skilled as surgical coderssurgical coders or or

Medicare CodersMedicare Coders..

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Inpatient (Hospital) CodingCont. ICD-9 Volumes 1 and 2Volumes 1 and 2 used for

inpatient diagnosesdiagnoses codes codes

ICD-9 Volume 3Volume 3 used for inpatient procedureprocedure codes codes

HCPCS may be used for some claims

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HospitalDiagnosis Coding

Admitting Diagnosis Condition identified at time of admission

Principal Diagnosis Condition responsible for this admission

established after study Listed first in medical record and insurance billing

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HospitalDiagnosis Coding (cont’d)

Suspected or unconfirmed diagnosis Usually used as an admitting diagnosis Often referred to as “rule outs”“rule outs” The admitting diagnosis admitting diagnosis may not match the

principal diagnosis principal diagnosis once the patient has been treated

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HospitalDiagnosis Coding (cont’d)

ComorbiditiesComorbidities and ComplicationsComplications ComorbiditiesComorbidities (co-existing conditions) are other

conditions that affect a patient’s stay or course of treatment

ComplicationsComplications are conditions that develop as a result of surgery or treatment

Shown in patient medical record as “CC”“CC” May list up to 8 on claim

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Hospital Procedural CodingProcedural Coding

ICD-9 Volume 3 used Includes an Alphabetic IndexAlphabetic Index and a Tabular Tabular

ListList similar to those in Volumes 1 and 2

Codes are 3 or 4 digits3 or 4 digits Principal Procedure

Most closely related to the treatment of the principal diagnosis

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Medicare InpatientInpatientPayment System

Diagnosis Related GroupsDiagnosis Related Groups (DRGs) – Cost reimbursement method developed by MedicareMedicare for its prospective payment system (PPS)(PPS) for reimbursement of medical fees for a patient. DRGDRG system analyze conditions and treatment for

similar groups of patients used to establish Medical Medical feesfees for hospital inpatient services.

Under the DRGDRG classification system: GroupingsGroupings were created based on relative value of

the resources that physicians and hospitals nationally used for patients with similar conditions.

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Medicare InpatientInpatientPayment System

Cont. The Calculations

Each DRG category is based on patient characteristics (e.g., age, sex), diagnosis, and medical procedures all of which are condensed into a single DRG that applies to a specific patient.

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Medicare InpatientInpatientPayment System

Cont. Prospective Payment System (PPS)(PPS)

At the same time the DRG system was created, At the same time the DRG system was created, Medicare changed the way hospitals were paid.

Payment changed from a Payment changed from a fee-for-servicefee-for-service approach approach to to Medicare Prospective Payment System (PPS).Medicare Prospective Payment System (PPS).

Payment set ahead of time based on DRG.DRG.

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Medicare InpatientInpatientPayment System

Cont. Quality Improvement OrganizationQuality Improvement Organization

Made up of practicing physiciansphysicians and other health care health care expertsexperts contracted by CMS in each state to review Medicare & Medicaid claims for appropriateness of hospitalization and clinical care.

QIO’s QIO’s goal is to ensure that payment is made only for medically necessary services.

Set up when DRG was established, The program replaced the “Peer Review Organization”. MonitorMonitor and improve improve the usageusage and quality of carequality of care for

Medicare beneficiaries.

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Medicare OutpatientOutpatientPayment System

DRGs (Diagnosis Related Groups)

Implemented for outpatient hospital services, previously were paid on a fee-for-servicefee-for-service basis

Hospital Outpatient Prospective Payment System (PPS)Prospective Payment System (PPS) is used to pay for hospital outpatient services.

In place of DRGs, patients are grouped under an Ambulatory Patient ClassificationAmbulatory Patient Classification

Reimbursement made according to preset amounts based on the value of each APC APC (ambulatory Patient Classification).

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Private Insurers Often use standardized number of days

allowed for condition

Many private insurers have adapted the DRGDRG system for their billing

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Filing Claims Medicare Medicare Part APart A

HIPAA 837IHIPAA 837I claim is mandated by CMS Electronic claim I I in 837I stands for InstitutionalInstitutional

Paper claimPaper claim, UB-92,UB-92, is accepted under some circumstances

Uniform Billing 1992 (UB-92) form Also known as CMS-1450 CMS-1450

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The HIPAA 837I and the UB-92 Contain:

Patient data Information on insured Facility/patient type Source of admission Various conditions that

affect payment Whether Medicare is

primary payer

Principal and other diagnosis codes

Admitting diagnosis Principal procedure

code Attending and other

physician Charges

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Remittance Advice Received when paymentpayment is transmitted

to account HIM HIM (Health Information Management)(Health Information Management)

Department coordinates with Patient Patient Accounting DepartmentAccounting Department

Remittance AdviceRemittance Advice reviewed to assure payment received matches payment anticipated

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Quiz

hospital coders

comorbidities and complicationsPart A

institutional

Medicare ___________ pays for inpatient and outpatient hospital costs.

In the hospital medical record, CC refers to

_____________________________.

ICD-9 Volume 3 is used by ______________.

The II in 837I stands for ____________. An encounter form is created for hospital

services. (T/F)False, the charge master is used in

hospitals.

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Critical Thinking What is the difference between the

admitting diagnosisadmitting diagnosis and the principal principal diagnosis?diagnosis?

The admitting diagnosisadmitting diagnosis is usually the reason identified at the time of admission.

The principal diagnosisprincipal diagnosis is determined after study and is listed first in the medical record and insurance claim.