Chapter 12- Medical Insurance 101

A patient and provider handle bills for medical care in one of three common ways:

1. The insurance company might require the patient to pay the entire bill at the time of service, before the patient leaves the provider's facility. Then the patient submits a claim to the insurance company for reimbursement. 2. The patient might pay a copayment before leaving. Then the provider submits a claim to the patient's insurance company for the remainder of the bill. 3. The patient might pay nothing at the time of the visit to the provider. Following the patient's visit, the provider submits a claim to the patient's insurance company for the bill. The provider is reimbursed by the insurance company for the charges the patient's insurance policy covers. The doctor's office then sends a bill to the patient for the remaining costs that the insurance doesn't cover.

Rejected

A claim returned to a provider for a correction or change so that it can be processed properly for payment.

Denied for payment

A claim submitted to an insurance carrier for which payment has been rejected due to a technical error or medical coverage policy issues.

This is the maximum amount an insurance carrier will pay for a specific service.

Allowable charge

This is the standard claim form used to request payment for services rendered by the healthcare provider

CMS-1500

This manual contains codes that describe the procedures and services performed by the provider for outpatient services

CPT

This is a flat amount of money paid by the patient

Copayment

Adjustments

Corrections reflecting changes on a previously submitted claim. The corrections may result from overpayment or underpayment.

This is the amount of money an individual must pay before insurance benefits begin

Deductible

Amount due from patient

Depending on the insurance policy, the amount that is the difference between either (1) the total charge or (2) the allowable charge and the total amount due from all insurance carriers for services the patient's contract covers.

This form contains the most common codes performed by that doctor

Encounter form

Which document explains how much the insurance company paid and how much is not allowed?

Explanation of benefits

Codes in this manual include drugs, durable medical equipment, ambulance services and prosthetic procedures

HCPCS

With this coding system, a valid code may be between three and seven characters, with a decimal after the third character

ICD-10-CM

Independent practice association (IPA)

In the IPA model, the HMO enters into a contract with an organized group of physicians to deliver services to subscribers, but remain in their independent office settings, able to treat patients from other plans.

Medicare Advantage Plan

Medicare Part C, is a plan that Medicare-approved private companies offer.

Audit/refund transactions

Miscellaneous transactions related to cost settlements, state audits or refund checks received.

Approval

Occurs when an original claim or a previously denied claim is approved for payment.

This states that in the case of certain injuries or illnesses, the insurance carrier will pay some or all of the medical bills of the insured.

Policy

This is the process of notifying an insurance company before hospitalization, surgery or tests

Preauthorization

These are the payments from the insured person or group that are collected by the carrier

Premiums

the identification card includes:

Subscriber's name Subscriber's identification number Group name or employer Group number Preauthorization phone number

TRICARE

The Department of Defense healthcare program provides healthcare coverage for uniformed service members and their families, National Guard or Reserve members and their families, survivors, former spouses and Medal of Honor recipients and their families

deductible

The amount of money an individual must pay before insurance benefits begin is

Amount due from insurance carrier

The amount the insurance carrier will pay for the medical service.

Suspense (pending)

The claim is in review or the insurance carrier is waiting for additional information.

Allowable charge

The maximum amount an insurance carrier or program will pay for specified services when the physician is a participating provider in the program.

Coinsurance/copayment

The patient's payment of a portion of the cost at the time of receiving the medical service.

Amount paid by other carrier

The portion of covered services due from another insurance carrier if the patient is covered by more than one policy.

Deductible

The specific dollar amount that the insured must pay before a medical insurance policy or program will begin to cover healthcare costs.

Group model HMO

This HMO contracts with a multispecialty physician group practice; the HMO may or may not own or manage the group.

Staff model HMO

This HMO directly employs providers to service its members. The medical staff members are considered employees of the HMO, rather than independent practitioners. The staff model HMO is a closed-panel arrangement.

Network model HMO

This plan is similar to the group model HMO, except that the HMO contracts for services with two or more multispecialty group practices instead of just one practice.

T or F The guarantor could be referred to as the first-party

True

What is a visitation limit and who sets this limit?

Visitation limits set the number of visits to specialists that a patient may make, or the number of special treatments a patient may have. Insurance companies set visitation limits.

participating providers.

When physicians enter into contracts with specific companies

Centers for Medicare and Medicaid Services (CMS)

a branch of the U.S. Department of Health and Human Services and is the administrator for Medicaid and Medicare.

Insurance

a contract between an insurance company

Medicare

a federally administered, federally funded health insurance program for people age 65 or older, people under age 65 with certain disabilities and people of all ages with end-stage renal disease.

Medicaid

a federally mandated program that provides medical and health related services to those who cannot afford them.

copayment

a flat amount of money paid by the patient

integrated delivery system (IDS)

a network of healthcare providers and organizations that provides or arranges to provide a coordinated continuum of services to a defined population, and is willing to be clinically and fiscally accountable for the clinical outcomes and health status of the population it serves.

Exclusive Provider Organization (EPO)

a network of individual medical care providers, or groups of medical care providers, who have entered into written agreements with an insurer to provide health insurance to subscribers.

PAR

a physician who participates with Medicare

health maintenance organization (HMO)

a prepaid health plan in which individuals receive medical services from participating providers.

Medicare Part D

a program that includes prescription drug coverage.

encounter form

a superbill, is a template of commonly used codes that may be used in a specific practice that serves as a communication device between the physician and the medical billing specialist.

UB-04

also known as the CMS-1450, is the uniform claim form used in hospitals and other inpatient settings.

referral

an authorization by one physician for a patient to see another physician for a specific health problem.

self-funded insurance plan

an employer provides health or disability benefits to employees with its own funds

procedure

anything the physician does to determine a diagnosis and treat a patient.

Category II codes

are a special collection of CPT codes that providers use to track and measure performance internally.

Third party administrators (TPAs)

are intermediaries within the medical billing system who often handle claims processing for self-funded insurance plans.

When an insurance company pays for medical services, it ? either the insured or the provider.

b. reimburses

subscriber

called the insured, is the person who prepays the fee for insurance coverage

preferred provider organization (PPO)

can choose their own doctors and treatment facilities

insured.

carrier or insurer, and an individual or a group

HCPCS Level II codes

consist of five-digit, alphanumeric codes for physician and nonphysician services that the CPT manual does not cover.

Current Procedural Terminology (CPT)

contains codes that describe the procedures and services performed by the provider for outpatient services.

policy

contract states that in the case of certain injuries or illnesses, the insurance carrier will pay some or all of the medical bills of the insured.

State compensation laws

cover employers and employees within each state

Federal compensation laws

cover miners, maritime workers and civilian employees of the federal government

An error on the claim form may ? reimbursement.

delay

accident

described as an unplanned or unexpected happening causing injury or death not due to any fault of the employee.

remittance advice (RA)

explains the payment decisions to the provider

T or F Medical billing is the translation of medical record documentation of illnesses, diseases, injuries, treatments and procedures into numeric and alphanumeric characters

false

There is a hierarchy to this process

first- party second party third party

Medicare Part A

generally pays for medically necessary inpatient care in a general hospital, skilled nursing facility care, home health care, hospice care and nursing home care

Explanation of Medicare Benefits (EOMB)

hat includes the amount billed, amount approved, deductible and/or coinsurance that the patient is responsible to pay. It also indicates reductions or denials of charges.

medical insurance

health insurance or healthcare coverage, is a contract between an insurance company and the insured for medical benefits.

Medicare Part B

helps pay for a wide range of medical services and supplies not covered by Medicare Part A, such as medical expenses, clinical laboratory services, home health care, outpatient hospital treatment and blood, if medically necessary.

Category I codes

include all of the "regular" CPT codes in the six main sections of the manual. These are all five-digit numeric codes.

duplicate denial

indicates more than one claim was submitted for the same service, for the same patient, for the same date of service by the same provider

This is a contract between an individual or group and an insurance company

insurance

third-party payer

insurance company

guarantor

is someone who is responsible for an account

Private health insurance

offers a variety of healthcare plans that require the subscriber to pay premiums.

first-party

patient

premiums

payments collected from the insured, paid in advance

Who is the second-party?

physician

Point of service (POS)

plans strive to combine the best elements of both HMOs and PPOs. Point of service plans consist of participating physicians and hospitals.

second-party

provider

A patient may simply make a copayment for a visit and then the

provider bills the insurance company for the remainder of the bill.

Workers' compensation

provides coverage to employees and their dependents if the employees suffer a work-related accident causing injury, illness or death.

maximum benefit dollar limit

refers to the maximum amount of money that an insurance company will pay for claims within a specific time period.

Visitation limits

set the number of visits to specialists that a patient may make, or the number of special treatments a patient may have, such as five physical therapy sessions.

Category III codes

temporary codes

Reimbursement

the compensation or repayment for healthcare services, the process of paying a provider back for services already performed or provided.

explanation of benefits (EOB)

the document that explains the benefits that were paid, as well as the reasons why certain benefits were denied

claim form

the document that is completed and submitted to an insurance carrier to request reimbursement for services rendered. The most common insurance forms are the CMS-1500 and the UB-04.

allowable charge

the maximum amount an insurance carrier will pay for a specific service.

diagnosis

the physician's opinion about what's wrong with the patient

Preauthorization

the process of notifying the insurance company before the service. This process is also known as prior authorization, prior approval or precertification.

CMS-1500

the standard claim form used to request payment for services rendered by the healthcare provider.

Medical coding

the translation of medical record documentation of illnesses, diseases, injuries, treatments and procedures into numeric and alphanumeric characters.

Civilian Health and Medical Program of the Uniformed Services (CHAMPUS)

was established in 1966 to provide healthcare coverage for the families of members of the uniformed services. CHAMPUS was developed to control the rising costs of healthcare coverage and to standardize healthcare benefits.

prepay

you pay in advance for coverage of specified services should the need for those services arise.

The following steps can help you eliminate receiving a duplicate denial:

• Allow 30 days from the claim receipt date for the claim to process before resubmitting a subsequent claim for the same service(s) • Before submitting a new claim, check the Remittance Advice for the previously processed claim • Verify the reason the initial claim did not allow payment

The EOB generally includes:

• Patient's name and insurance policy number • Provider of services and NPI number • Date of service(s) • Date the claim was received • Services and/or procedures performed • Amount(s) filed on the claim form • Allowable charge(s) by the insurance carrier • Any disallowed amount(s) • Any deductible (if applicable) • Copayment and/or coinsurance due from or paid by the patient • Amount paid by the insurance carrier • Remarks or notes explaining why the charges were denied, requests for more information to determine coverage and benefits or the amount of adjustment because of payments from another insurance carrier

The submitted claim must still be:

• Supported by medical necessity • Filed within the timely filing requirements • Filed by the provider mentioned in the referral or authorization