US Healthcare Revenue Cycle

Management – Training
Manual
 US Healthcare Revenue Cycle Management – Training Manual

Contents
I. GENERIC HEALTHCARE RCM TRAINING - 11 DAY PROGRAM .......................................................... 5
Objectives ..................................................................................................................................................... 6
A. BPO/OUTSOURCING.......................................................................................................................... 7
B. Overview of US Healthcare System ...................................................................................................... 7
C. Healthcare in US and INDIA .................................................................................................................. 8
D. PATIENT, PROVIDER AND PAYER RELATIONSHIP .............................................................................. 8
E. Generic Healthcare Terminology .......................................................................................................... 9
Provider – Someone who provides the health care service or treatment to a patient in the US is called
‘Healthcare Service Provider’ or only ‘Provider.’ E.g. Doctor, Hospitals, Pathology lab, etc.................... 9
Insurance Carrier ................................................................................................................................... 9
Health Insurance ................................................................................................................................... 9
Premium .............................................................................................................................................. 10
Subscriber ........................................................................................................................................... 10
EOB ...................................................................................................................................................... 10
F. Medical Billing & Healthcare Revenue Cycle Management ................................................................ 10
1. PATIENT REGISTRATION .................................................................................................................. 11
2. PATIENT ENCOUNTER: .................................................................................................................... 12
3. MEDICAL TRANSCRIPTION .............................................................................................................. 12
4. MEDICAL CODING ........................................................................................................................... 12
5. CHARGE CAPTURE / ENTRY ............................................................................................................. 13
6. CLAIM SUBMISSION /GENERATION ................................................................................................ 13
PAYMENT POSTING / CASH POSTING ................................................................................................. 18
 ACCOUNTS RECEIVABLE .............................................................................................................. 18
DENIAL MANAGEMENT ....................................................................................................................... 19
Objectives ................................................................................................................................................... 19
A. BILLING TERMINOLOGIES .................................................................................................................... 21
BILLED AMOUNT: .................................................................................................................................... 21
ALLOWED AMOUNT: ............................................................................................................................... 21
PAID AMOUNT: ....................................................................................................................................... 21

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CONTRACTUAL ADJUSMENT ................................................................................................................... 21

WRITE-OFF .............................................................................................................................................. 21
BALANCE BILLING .................................................................................................................................... 21
OUT OF POCKET EXPENSES ..................................................................................................................... 21
 DEDUCTIBLE ................................................................................................................................ 21
 CO-INSURANCE ........................................................................................................................... 22
 CO-PAYMENT .............................................................................................................................. 22
IN-NETWORK PROVIDERS ....................................................................................................................... 22
OUT-OF NETWORK PROVIDERS .............................................................................................................. 22
PRIORAUTHORIZATION / PRE-CERTIFICATION........................................................................................ 23
REFERRAL AUTHORIZATION .................................................................................................................... 24
RETRO AUTHORIZATION ......................................................................................................................... 25
MEDICAL NECESSITY ............................................................................................................................... 26
PRE-EXISTING CONDITION AND WAITING PERIOD ................................................................................. 26
PROVIDER ID NUMBERS .......................................................................................................................... 26
ADVANCE BENEFICIARY NOTICE : ABN.................................................................................................... 27
WAIVER OF LIABILITY .............................................................................................................................. 27
CLIA- CLINICAL LABORATORY IMPROVEMENT AMENDMENT ................................................................ 27
PROVIDER REIMBURSEMENT METHODS: ............................................................................................... 27
 CAPITATION................................................................................................................................. 27
 FEE FOR SERVICE (FFS ................................................................................................................. 28
USUAL AND CUSTOMARY RATE (UCR) ................................................................................................ 28
LIMITING CHARGE ................................................................................................................................... 28
EFT Payment: ELECTRONIC FUND TRANSFER ......................................................................................... 29
TIMELY FILING LIMIT ............................................................................................................................... 29
APPEALS LIMIT ........................................................................................................................................ 29
B. EOB CALCULATIONS ............................................................................................................................ 29
Objective : ................................................................................................................................................... 31
1. MEDICAL CODING ........................................................................................................................... 31
2. Procedure Codes ............................................................................................................................. 33

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3. Diagnosis Codes .............................................................................................................................. 36

4. Modifiers ......................................................................................................................................... 44
CPT MODIFIERS: .................................................................................................................................. 44
Level II - HCPCS Alpha-Numeric Modifiers .......................................................................................... 48
5. Bundled CPT .................................................................................................................................... 50
6. Up coding ........................................................................................................................................ 50
7. Down Coding: .................................................................................................................................. 50
8. Medical Specialties.......................................................................................................................... 51
Objective : ................................................................................................................................................... 54
1. HEALTH INSURANCE AND POLICY ................................................................................................... 54
2. Group Insurance vs. Individual Insurance: ...................................................................................... 55
3. Introduction to Indemnity and MCO .............................................................................................. 58
Traditional Indemnity.......................................................................................................................... 59
4. Managed Care Plans ....................................................................................................................... 60
HMO-HEALTH MAINTENANCE ORGANISATION .................................................................................. 60
POS-POINT OF SERVICE ....................................................................................................................... 62
PPO-PREFERRED PROVIDER ORGANISATION ...................................................................................... 65
EPO- EXCLUSIVE PROVIDER ORGANISATION ...................................................................................... 66
5. Types of Physician Groups in HMO ................................................................................................. 66
Physician Hospital Organization (PHO) ............................................................................................... 67
Independent Practice Association (IPA) .............................................................................................. 67
6. Federal Insurance............................................................................................................................ 68
Medicare ............................................................................................................................................. 69
Medigap .............................................................................................................................................. 71
Medicaid ............................................................................................................................................. 74
CHAMPUS / Commercial Insurance .................................................................................................... 76
Individual Plans ................................................................................................................................... 77
Group plans ......................................................................................................................................... 77
BCBS .................................................................................................................................................... 78
Liability insurance ................................................................................................................................... 78
Objective: ................................................................................................................................................ 82

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PAYMENT POSTING OVERVIEW : ( illustrated with samples from that process ) ................................... 88

I. GENERIC HEALTHCARE RCM TRAINING - 11 DAY PROGRAM

1. Introduction to US healthcare system –DAY 1/DAY 2

i. BPO/Outsourcing
ii. Overview of US Healthcare system
iii. Healthcare in US and India
iv. Patient, Provider and Payer relationship
v. Generic Healthcare Terminologies
vi. Medical Billing Process –Revenue Cycle management
vii. Significance of Demographic entry / Charge capture and Payment posting

2. ASSESSMENT 1 / RETESTS– DAY 3

3. Billing Terminologies and EOB calculations – DAYS 4/5

4. Medical Coding and Medical Specialties- DAY 6

5. ASSESSMENT 2 /RETESTS – DAY 7

6. Insurance classification and concepts – DAYS 8/9

7. Final Assessments / Retests/Feedback / Batch allocation – DAYS 10/ 11

II. PROCESS SPECIFIC TRAINING – 6 DAY PROGRAM

 CHARGE POSTING / PAYMENT POSTING OVERVIEW/CLIENT UPDATES/PROCESS SPECIFICS

 SIMULATED PROCESS TRAINING ON THE PARTICULAR SOFTWARE

III. HIPAA COMPLIANCE TRAINING

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DAY 1/ DAY 2: Introduction to US Healthcare

Objectives
At the end of this session you will be able to understand:

 BPO/Outsourcing
 Overview of US Healthcare system
 Healthcare in US and India
 Patient, Provider and Payer relationship
 Generic Healthcare Terminologies
 Healthcare Revenue Cycle Management & Medical Billing
 Significance of Demographic entry / Charge capture and Payment posting

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A. BPO/OUTSOURCING
BPO means Business Process Outsourcing. Here Business is outsourced from Developed countries like US
to Developing countries like India for Data processing. There are 2 types of outsourcing such as :
Offshore and inshore outsourcing. Reventics healthcare is an offshore outsourced Billing company.

OFFSHORE OUTSOURCING: Offshore outsourcing to India is one of the most popular management
practices today. Though it is generally spurred by the cost reduction factor, this is just one of the reasons
one should consider offshore outsourcing. Most parties who outsource are unaware that Indian Service
Providers do not just offer cost effective solutions, but also give value addition by improving productivity
and quality.

Why India:

• Liberalized policies
• Constantly improving infrastructure
• Qualified personnel
• Political stability
• Economic viability

RAW Data before Processing

Finished data

B. Overview of US Healthcare System

 Health care industry in the US is completely different from the healthcare setup in India. People
in the US believe in the “Prevention” model rather than the “Cure” model.
 The average life span of an individual in US is around 75 years and it is still in the increasing
trend with advancement in disease management techniques.

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 According to a very recent survey, almost 86% of the US population has a health insurance plan
to help them share the medical expense.
 The Medical Insurance Industry alone consumes about 18% of the US Gross Domestic Product
(GDP).
 The entire Healthcare system revolves around 3 P’s: Patient, Provider and Payer relationship.

C. Healthcare in US and INDIA

INDIA U.S.A.

1. Developing Country 1. Developed Country

2. Non-awareness 2. Awareness
3. Medical expenses are less compared to 3. Medical expenses are too costly.
U.S.
4. Very few companies provides medical 4. Many companies provides medical
insurance policy insurance policy
5. To avoid delay in treatment advance 5. No Advance payment done by patients
payment done by the patients.
6. Treatment cost is then claimed by the 6. The treatment cost is Claimed by the
Insured later. Provider
7. No Standard format 7. Standardized formats to submit medical
bills
8. Financial transactions are managed by 8. Financial transactions are managed by
the individual. the providers/physicians.

D. PATIENT, PROVIDER AND PAYER RELATIONSHIP

The three entities in healthcare industry can be denoted as the as the three “P”s of the healthcare
industry.
 Patient – Also called as Client; Subscribers; Members; Policy Holders; Beneficiaries; Enrollees;
Employees; Dependents; Insured
 Provider – Doctors; Hospitals; SNF; Hospice; DME Suppliers; Home Health Agencies; Rehab
Centers; Pharmacy
 Payer – Insurance; Carriers; Insurer

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E. Generic Healthcare Terminology

Provider – Someone who provides the health care service or treatment to a patient in the US is
called ‘Healthcare Service Provider’ or only ‘Provider.’ E.g. Doctor, Hospitals, Pathology lab, etc.

Family
doctor
PCP Gatekeeper
Reffering
Physician
physician
Rendering
Specialist
physician Acute Care
General & Chronic
Hospital Care Primary care
General
Hospitals Hospital Secondary
Hospitals Types of care
Provider
Laboratory care Tertiary care
Provider Research Specialized
Centres Hospital
Diagnostic Care Inpatient
Centres extended In
Rehablitatio hospital Outpatient
n Centres
Ambulatory
Surgical Emergency
Skilled
Centre
Nursing
Facility
Home
health

Insurance Carrier
 Insurance carriers are the organizations/companies/institutions which Provide Health
Insurance to the people staying in US.
 Health Insurance companies in the US are called ‘Carriers’ or Payers‘’; since they carry the
risk of healthcare cost reimbursement to policy holders.

Health Insurance

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 Insurance is defined as the contract between the Insurance provider (Insurer) and the
Subscriber which will cover the medical expenses of subscriber and the dependants covered
under the policy.
 It is also defined as a contract between two parties, whereby one party called Insurer
undertakes the risk/loss of Subscriber’s medical expenses in exchange of a Premium.

Premium - The periodic payment to an insurance company or a health care plan for health care
Coverage is a premium

Subscriber
 An individual who buys an insurance policy (either through employer or other means) is
called a ‘Subscriber’ or ‘Enrollee’ or ‘Certificate Holder.’
 The Insured is the term used to designate the person who represents the family unit in
relation to the insurance program. This may be the employee, whose employment makes
this coverage possible. This person may also be known as the enrollee, certificate holder,
policyholder or subscriber i.e. an insured is the person who takes an insurance policy to
cover the risks that the person might incur.

EOB:
 This is a document that is sent across as a communication of decision from the insurance to
the Provider’s billing office stating whether the Claim submitted is paid or denied.
 It is called by several names such as Provider vouchers / ERA-Electronic Remittance Advice /
Statement of benefits / etc…

F. Medical Billing & Healthcare Revenue Cycle Management

Medical Billing is “Managing of the provider’s financial transactions to help him collect the money from
the patient/insurance owes because of the service rendered”.

Revenue Cycle Management is a comprehensive process that manages claims processing, payment and
revenue generation by gathering personal and treatment data of Patient to ensure confidentiality

It entails technology to keep track of the claims process at every point of its time, so the healthcare
provider doing the billing can follow the process and address any issues, allowing for a steady stream of
revenue.

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The process includes keeping track of claims in the system, making sure payments are collected and
addressing denied claims, which can cause up to 90 percent of missed revenue opportunity.

RCM encompasses everything from determining patient insurance eligibility and collecting co-pays to
properly coding claims using ICD-9/ICD-10. Time management and efficiency play large elements in
RCM.

Hence, while the term Medical Billing may be restricted to some of the major components of the health
care industry, RCM is a sum composite of all the processes that are in involved in managing the
provider’s revenue to ensure that he gets reimbursed appropriately and in a timely manner.

The steps below describe each step in RCM and some components may not be necessary in certain
settings while in others some additional subcomponents may be added to enhance the process
workflow.

Following are the basic steps of RCM:-

1) Patient Registration / Patient Demographic Entry
2) Patient Encounter with the physician
3) Medical Transcription
4) Medical Coding
5) Charge Capture
6) Claims Generation & Submission
7) Cash Posting/Payment Posting
8) Accounts Receivables
9) Denial Management

1. PATIENT REGISTRATION
 The process of registration involves creating or updating an electronic record of the patient in
the provider's software system.
 A patient record needs to be created (or updated) so that charges can be applied to the
treatment rendered or services provided and the billing of claims to the insurance carrier can be
initiated. Registration is done at the provider’s office or the billing office after the appointment
when the front office executive procures a copy of the insurance cards and an authorization on
the AOB, ROI and the charge slip from the patient.
 The patient details that the provider's office receives during scheduling are verified by virtue of
photo ID and/or insurance card.
 Some provider’s may initiate the process of registration right after appointment scheduling.
There the process is termed as pre-registration.

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 It is only after the patient presents himself for the visit that his insurance card is photocopied
and demographic details are correctly captured and entered/updated in the provider software
system.

Details that are captured during Registration are as under:

 Patient details- Demographic details

 Insurance details with the Insurance card copy
 Guarantor details – Promissory Note
 Employer details – Group Id
 AOB – Assignment of Benefits
 ROI – Release of information

2. PATIENT ENCOUNTER:
This is the process wherein the patient meets the Physician for a particular service/treatment

3. MEDICAL TRANSCRIPTION
 Transcription was one of the premiere businesses to be outsourced to India. Transcription is the
process of converting audio files to typed records. Usually to conserve time, providers dictate
medical data using a Dictaphone during encounter and save it in the form of wave files (voice
files), which are then transcribed by a qualified medical transcriptionist into text files.
 The purpose of transcribed medical data is, a) To be used for claim reimbursement from carriers
and b) To provide legible medical information on the patient which can be coded by a medical
coder using standard codes for the purpose of claim submission. However not all providers find
the need for transcription services as they use charge tickets for their coding needs.

4. MEDICAL CODING
 Coding is a very important and critical function in the entire Medical Billing cycle. In Coding
function, initially professional Coders interpret Medical Records or the transcribed data/text
and convert them to standard codes accepted by all insurances across US.
 Thus, in coding, the medical coders after interpreting the Medical record and getting the
Diagnosis (nature of illness/injury info) and procedure/service (treatment info), encode the
same into STANDARDIZED CODES. Codes given by the coders can be broadly classified into
two types, Procedure & Diagnosis:

Procedure Codes – Represents the Procedure/treatment or service done to the patient.

Diagnosis Codes – Represents the Nature of Illness / Injury details.

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5. CHARGE CAPTURE / ENTRY

 The process of capturing coded medical record of a patient into his account in the provider's
software system is called as charge capture.
 Super bill (also called charge slip or routing form) is the financial record source document used
by health care providers and other personnel to record the patient’s treated diagnoses and the
services rendered to the patient during the visit. Charge capture starts at the provider’s office or
the billing office after the patient encounter. It is essential in Revenue Cycle Management since
it is necessary to enter charges on the claim forms for reimbursement from the insurance
companies.
 The process of charge capture involves entering the charges along with the provider details,
DOS, referring provider and such details into the patient's account by pulling up the patient
record in the provider's system.
Note: All these functions are carried out in order to generate what is called as the Claim form.

6. CLAIM SUBMISSION /GENERATION

 These functions are carried out in order to generate what is called as the Claim form – A
Medical Bill that is sent as a mode of communication between the Billing office and the
Insurance.

Let us try and understand how a claim form is generated and how the process of billing
submission works:

Claims: A Claim is a document / a pre defined template with patient & visit details that would be
sent across by the provider to the Insurance. The purpose of filing this claim to the insurance is
to get payment from the insurance for the services rendered to the Patient by the Provider.

Types of Claims Forms

1. CMS-1500
 This was earlier called as HCFA – 1450
 This claim form is mainly used to bill PHYSICIAN/PROFESSIONAL charges

2. UB-04
 This was earlier called as HCFA – 1450
 This claim form is mainly used to bill HOSPITAL/TECHNICAL charges

CMS stands for – Center for Medicare and Medicaid services,

UB stands for - Universal Billing or Uniform Billing
HCFA stands for Health Care Financing Administration

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Modes of sending Claims Forms

1. Electronic Claims
i. Claims forms submitted electronically via a CPU, tape disk, digital fax etc.
ii. Different Formats used for electronic claims are:
2. Paper Claim:
iii. Claims forms submitted on paper including optically scanned claims that are
converted to electronic form by the Insurance Carrier.
iv. The forms used are: CMS1500, or UB-04.

Billing
Claims Compan
y

Re- Clearing
submission house

Check, Remittance
Advice. EOB sent Insurance Company
to physician Or
TPA

Check written 1A
Scanning & Image
Claims Claims
Creation
Pended Rejected 1B
Claims (info reqd)
Approved Electronic
Data Field Image Claims
3A 3B 3C
Validation Repository

2
Data entered into health plan
Administration system
Claims Adjudication 3

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Submission of these claims forms is also done by clearing house of a billing company/provider.

Clearing House:

 The Electronic claims like paper claims cannot be sent to the insurance straight and needs
to be sent through an intermediary organization called the “Clearing house”. This acts as a
link between the Provider and the Payer and checks for all errors / formatting checks
pertaining to the E – claims.

The Functions of the Clearing house are as follows:

Preliminary Screening
Conversion to Insurance specific formats
Dispatching

While performing all these functions, the Clearing house sends a Periodic report called as the
“Scrubber Report”. This Report contains details of all claims received from the Billing office such
as the number of claims dropped, claims forwarded to the payers and claims received from the
provider’s billing office.

Claims Adjudication:-

It is the process in which an insurance company decided whether to pay, hold or deny the payment to
the Provider. In its true sense this process is not a part of the RCM cycle although decisions of this step
impact the RCM cycle tremendously because this process is directly related to the provider’s payment.

Communication of Decision:
This is the final step in any claims processing cycle wherein the decision as to whether the claim is paid,
held or denied is communicated to the provider using a document called the EOB – EXPLANATION OF
BENEFITS.
EOB could be called by several names such as Remittance advice, Statement of account, Provider
voucher, Statement of Benefits etc.
Like how a CLAIM is used to communicate the Treatment and the charges with other details to the
insurance likewise the EOB is used to as a mode of communication from the payer to the provider. It is a
statement letter used by the payer to give information to the provider about the results of adjudication
on the claim they sent.

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Few examples of EOBs are:-

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3. PAYMENT POSTING / CASH POSTING

 Cash Posting is a process of posting payment details as received from the insurance
company (in the form of an EOB or an electronic remittance advice-ERA) and the patient.
 It is done in order to maintain a record of the payments received and also to work on the
denials/pending claims if any and the necessary follow-up.
 After the insurance company responds to the claim in the form of an EOB, the results
either payments or denials are entered in the provider's software system for the individual
patients using their account number mentioned on the EOB. So also, the payments
received from the patients are entered in the payments account.
 Cash posting is usually done in the billing office however patient payments, for instance,
copayments may be entered at the provider's office or at the billing office at the time of
visit.
 After processing any claim, an insurance company will either send a check or electronically
transfer funds (EFT) to the provider’s bank account as payment for services along with a
statement of payment called EOB.
 This EOB as discussed earlier explains in depth the details of payments against specific
DOS (Dates of Service) and the corresponding medical codes. The payments with the other
insurance details like check number and date of the check & treatment details from the
EOB are entered against the DOS into the respective patient account. In case of denials
only the EOB is sent and the same is recorded as such. On the basis of the EOB the
payments are transferred to the patient if need be. Once the details are captured by the
Payment Posting team; the denial/pending claims information is sent to the Accounts
Receivables department for further follow up.

 ACCOUNTS RECEIVABLE
 Accounts Receivables stands for the outstanding amount that is pending/not yet come in for a
provider for the services he has rendered in the past. It is a measurement of charges not yet
collected. The purpose of AR team is to collect partly/underpaid pending or denied claims. The
key to accounts receivables is follow-up which can be of two kinds; Insurance follow up which is
to collect payment from the insurance company and Patient follow up which is to collect on the
patient's responsibility.
 The process of AR begins on receipt of a denial or incorrectly/underpaid claim. It follows
payment/cash posting and is usually done from the billing office. It is done by analyzing the
reason for denial/underpayment and following up with the carrier/patient telephonically. The
cases where the patient doesn’t respond to the calls made/statements sent by the provider
after constant attempts; the account is then called as bad debt account and is moved to
collections (collection agency for recovery).

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DENIAL MANAGEMENT
 Denial Management is the process of analysis by which all the denials are managed at the billing
office.
 They analyze the reasons for denials; set trends; do analysis and recommend the measures to be
taken to avoid future denials caused due to errors committed at provider’s end.
 It is very imperative that all the departments at provider office do an accurate job while
submitting the claims for processing in such a way that there are no rejections for any incorrect
or additional information (patient details; provider details; coding; charge capture; claim
generation & submission).
 This department also do trend analysis for every kind of denial and suggest corrective measures
to avoid as many errors as possible in future with the different kinds of specifications set for
different industry payers.

DAY 3: ASSESSMENT 1 /RETESTS

DAY 4/5: BILLING TERMINOLOGIES /EOB calculations

Objectives
At the end of this session you will be able to understand:

1. BILLING TERMINOLOGIES ( as listed below in the table)

2. BILLING CALCULATIONS

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Billed amount / allowed amount/contractual adjustment/Write

OFF / Balance Billing

Out of pocket expenses - Deductibles /Coinsurance /Co-

payments

In Network & Out of Network Providers / Differences

AUTHORIZATIONS - Prior auth/ precertification , Referral

auth/Retro auth /UTILIZATION REVIEW

Medical Necessity / Pre-existing condition /waiting period

PROVIDER ID #'s : PIN /UPIN / NPI

ADVANCE BENEFICIARY NOTICE - ABN / WAIVER OF LAIBILITY /

CLIA

COORDINATION OF BENEFITS - COB

OFFSET / REFUND

PROVIDER REIMBURSEMENTS - FEE FOR SERVICE (FFS) and

CAPITATION

Usual and customary rates (UCR) /Limiting charge / EFT

payments

TIMELY FILING LIMITS/ APPEAL LIMITS

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A. BILLING TERMINOLOGIES

BILLED AMOUNT:
This is the amount charged by a physician for a particular service/treatment that was provided to the
patient.

ALLOWED AMOUNT:
This is an amount that Insurance approves for a particular service/treatment that was provided to the
patient. This amount is determined according to the contract between Physician-Insurance Carrier and
Insurance carrier-Patient’s Policy.

PAID AMOUNT:
This is the actual final amount paid by the Insurance carrier after applying Coinsurance / Co-payment /
Deductible / Contractual Adjustment.

CONTRACTUAL ADJUSMENT
The difference between billed amount and allowed amount is called as contractual adjustment. The
provider should not collect this amount from the patient. This has to be adjusted off as the Physician is
participated/contracted with Insurance carrier.

WRITE-OFF
When the provider decides not to bill patient for the difference amount between the Billed & Allowed
amount, he will adjust off the same from his books of accounts. This adjusted amount is called as Write-
off.

The other w-offs adjusted off by the Physicians are Small Balance write off, Bad-debt, Bad-address.

BALANCE BILLING
Amount that is being billed to the Patient after Insurance carrier makes the payment.

OUT OF POCKET EXPENSES: COINSURANCE / COPAY / DEDUCTIBLE

 DEDUCTIBLE
A deductible is a contractual amount that the patient is supposed to pay before the Insurance
carrier starts paying on any claim. The amount of deductible varies per patient and per insurance
policy.

Purpose of Deductible:

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1. To avoid the exploitation of the policy by the patients.

2. Cost sharing: Deductible and Premium are inversely proportional to each other.

 CO-INSURANCE
It is the amount paid the by Patient or Secondary Insurance after Primary Insurance pays on the
major portion of the allowed amount. This amount is based on the patient’s policy that he is buying
from Insurance.

Example:

For Medicare, Co-Insurance is 20% of Allowed Amount as Medicare only pays 80% of the Allowed
Amount.

 CO-PAYMENT
Co-payment or co-pay is a fixed fee that Patient needs to pay upfront before getting the treatment.
This amount is based on the patient’s policy that he is buying from Insurance.

Example:

Whenever a Patient visits a specialist, he may need to pay a certain amount ($25.00, $50.00,
$100.00 etc). This amount is based on the patient’s policy that he is buying from Insurance.

IN-NETWORK PROVIDERS
Your insurer has identified a group of providers who are “in-network” and has contracted with these
providers on your behalf to get services at “discounted” rates.

OUT-OF NETWORK PROVIDERS

Refers to providers who are not directly contracted with an individual’s insurer to provide services at a
pre-determined rate. Most insurers maintain a capitated contract with the providers commonly used by
their insured.

Par Providers Non-Par Providers

Accept the allowed amount in full Do not accept the allowed in full

Higher provider reimbursement Lesser provider reimbursement

More patients less patients

Cannot bill the patients for the Can bill the patients for the
Contractual adjustment Contractual adjustment

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PRIORAUTHORIZATION / PRE-CERTIFICATION
The Insurance Companies would require the providers to take an approval or permission before
rendering certain services which are generally of high cost. This is to ensure the efficiency,
appropriateness and medical necessity of the service rendered. Not all services require Prior
Authorization. The Insurance Company gives a number as an acknowledgment for the approval and that
number is called as Prior Authorization Number

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REFERRAL AUTHORIZATION
The process of a provider referring or directing the patient to another provider is called as Referral.
Here, the process of the PCP – Primary Care Physician directing the patient to a specialist for further
course of treatment is called Referral Authorization. During this process a number is issued by the PCP
to authorize the specialist visit and that number is called as RAN – Referral Authorization Number.

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RETRO AUTHORIZATION
In case the provider fails to get a Prior Authorization due to some unavoidable circumstance, he / she
can inform the same to the Insurance Company after rendering the service within certain duration. If the
reason for not taking Prior Authorization is valid, the Insurance Company may still approve the service
and this process is called as Retro Authorization.

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MEDICAL NECESSITY
Those services determined by Medicare to be: consistent with symptoms or diagnosis and treatment of
the insured's condition, disease, ailment or injury; appropriate with regard to standards of good medical
practice; provided not primarily for the convenience of the insured, the hospital or the physician; and
the most appropriate level of service that can be safely provided.

PRE-EXISTING CONDITION AND WAITING PERIOD

Any medical condition that has been diagnosed or treated prior to a patient having current health
insurance. Pre-existing conditions may not be covered for some specified amount of time as defined in
the patient’s health insurance contract.

The insurance would fix a time span called as the “ Waiting Period” or the Pre-existing condition
Exclusionary Period for every Pre-existing condition during which all the services rendered by the
provider for that Pre-existing condition would be excluded and has to be paid by the patient.

PROVIDER ID NUMBERS

 NPI (National Provider Identifier) - It is a number issued by the CMS to all providers in US. This is a unique

number which can be used with any Insurance Company. This is a replacement for PIN.

 PIN (Provider Identification Number) - This is a number given by the Insurance companies providers that

are contracted. The provider’s record in the insurance companies system is retrieved using this number.

 TIN (Tax Identification Number) - is allotted by IRS (Internal Revenue Service) for the purpose of filing

taxes. TIN is allotted either to an individual or to a group of physicians (or business practices). TIN is

mandatory for claim submission and consideration of claim for payment.

 UPIN (Unique Physician Identification Number) - This is an identification number given by Medicare to all

its participating providers. It is a six alpha numeric number

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ADVANCE BENEFICIARY NOTICE: ABN

An ABN is a written notice from Medicare Provider, given to patient before receiving certain items or
services, notifying the patient:
 Medicare may deny payment for that specific procedure or treatment.
 The patient will be personally responsible for full payment if Medicare denies payment.

WAIVER OF LIABILITY
This is a similar document as ABN but is used not by Medicare but by all other insurances

CLIA- CLINICAL LABORATORY IMPROVEMENT AMENDMENT

Congress passed the Clinical Laboratory Improvement Amendments (CLIA) in 1988. It establishes quality
standards for all laboratories testing to ensure the accuracy, reliability and timeliness of patient test
results.
CLIA Number are used while reimbursement of Lab Charges.

OFFSET
When an insurance company had paid in excess or made a wrong payment to a provider earlier, the
insurance company will deduct this excess / wrong payment amount in the subsequent payment made
to the provider. This is called as Offset.

REFUND
When an insurance company pays in excess to the provider, the provider can return back the amount to
the carrier in the form of a REFUND as a check or any other mode of payment.

PROVIDER REIMBURSEMENT METHODS:

 CAPITATION
This term can have many meanings. Capitation represents a set dollar limit that is paid to a
provider by an insurance company for treating their members. This set dollar limit can be based
on a monthly dollar amount, a per patient dollar amount or a per claim dollar amount.

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 FEE FOR SERVICE (FFS)

Also known as indemnity insurance, FFS is a type of health coverage that typically allows a
patient to go to any doctor or provider without permission. This usually operates in a claim by
claim basis.

USUAL AND CUSTOMARY RATE (UCR)

Usual, customary and reasonable is the maximum amount the insurer will consider eligible for
reimbursement under a health insurance plan. This amount is determined based on a review of the
prevailing charges made by peer physicians for a particular health service within a specific community or
geographical area. Commonly UCR is set at a certain percentage of all charges made by providers of
th th
similar services or supply, most often at the 80 -90 percentile. Therefore, if 10% of physicians within a
specific geography charge more than $80 for an office visit and 90% charge $80 or less, the maximum
covered amount would be $80 for an office visit.

LIMITING CHARGE
The limiting charge places a limit on how much Non-participating Medicare physicians (who do not
accept Medicare assignment) can charge their patients. The limiting charge is 115% of Medicare allowed
amount. Neither you nor the Plan is liable for more than the Medicare limiting charge. Physicians who
do not accept Medicare assignment are required by law to accept the limiting charge as payment in full.
You are responsible for any difference between Medicare's payment and the limiting charge. You are
not responsible for any difference between the limiting charge and the physician's charge.

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EFT Payment: ELECTRONIC FUND TRANSFER

EFT / EDI Payment will be carried out especially for Medicare Payments. We will run the payment batch
through a tape in our system. EFT#, Check Amount and Check Date are the mandatory requirements for
an EFT payment to be run in tape.

TIMELY FILING LIMIT

The time frame that Payor gives to the provider to submit the claims and get reimbursed. Timely filing
limit starts from date of service in case of outpatient claims and from date of discharge in case of
inpatient claims.

APPEALS LIMIT
The time frame that the insurance company gives to the provider to submit the claims and get
reimbursed after the claim has been denied. Appeals limit starts from date of denial.

B. EOB CALCULATIONS

 Billed Amount - Allowed Amount = Contractual Adjustment

 Billed Amount- Contractual Adjustment = Allowed Amount
 Allowed Amount + Contractual Adjustment = Billed Amount
 Insurance Company Payment + Patient Responsibility = Allowed Amount
 Insurance Company Payment + Contractual Adjustment + Patient
Responsibility = Billed Amount
 Copayment + Deductible + Co insurance = Patient total Responsibility.

Calculation for Non – Participating provider’s EOB calculation

 Patient Responsibility = Copayment + deductible + Co insurance + Balance

Bill

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Problem 1

Total Amount Charged : $652.96; Deductible/Co-pay : $50.00

Negotiated Savings : $208.95; Total Payable Amount @90% : $354.61

• What is the Allowed Amount? ____________r

• What is the Patient Responsibility? ____________
• What is the Contractual Adjustment? ____________

Problem 2

Submitted Charges : 1,850.00; Co-ins/Deductible: 150.00

Allowed Amount : 1,100.00; Payment Amount: 950.00

• What is the Patient Responsibility? ____________

• What is the Contractual Adjustment? ____________

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DAY 6 : MEDICAL CODING AND

MEDICAL SPECIALITIES
Objective :
Since the batch is going to be trained for Charge Entry knowing the Coding basics is very essential hence at the end

of the session

 Medical Coding and its Significance

 Procedure Codes
 Diagnosis Codes
 Modifiers
 Bundled CPT codes
 Upcoding / Down coding
 Practical Use of Encoder-Pro / sample analysis/ case studies
 Medical Specialties
1. MEDICAL CODING:
This is defined as the process of assigning pre-defined codes to the procedure and diagnosis rendered by
the provider

Classification of Medical Codes

In order to put into a common language the thousands of terms, procedures, services, diagnoses etc.
that exist, some type of standardization needed to be created.

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MEDICAL CODING FLOW CHART

Diagnosis

Procedure Modifier

Medical
Coding

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HCPCS ICD-9-CM CPT & HCPCs

Diagnosis
Procedure

Modifier
Healthcare Common International Classification Modifier is 2 digit Numeric,
Procedural Coding System of Diseases - 9 revision- Alpha-numeric and
3 Levels of HCPCs clinical modification Alphabetic
*Level I - CPT ICD code is 3, 4 or 5 digit
numeric or alphanumeric Types of Modifier:
- Current Procedural
Terminology All codes have at least *CPT - Numeric
three digits (called a
- CPT code is 5-digit category) 470 *HCPCs -Alphanumeric
numeric
Most have expand into
subcategories 471.1 Categories of Modifier:
*Level II -Federal HCPCS Fifth digits to allow more *Pricing Modifier
- HCPCS code is 5 digit specificity 474.02
*Informative Modifier
alpha-numeric (Prefix A-V A decimal point is used to
followed by 4digit) separate the basic three-
digit category code from its
subcategory & sub -
*Level III - Local HCPCS. classification.
- These codes are currently
not in use
3 Volumes
- Volumes 1 & 2 used by
facilities and practitioners’
offices
- Volume 3 used only by
facilities
•Supplementary
Classifications
- V codes
- E codes

2. Procedure Codes
They are codes that the provider uses to communicate to the insurer about the treatment rendered
to the patient. These procedures can be coded in 3 levels of specificity; the levels that can be adopted
are called:

 CPT (Current Procedural Terminology)

 HCPCS (Healthcare Common Procedure Coding System)

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 Codes that are specific to the respective insurance company

HCPCS is an acronym for HCFA HealthCare Common Procedural Coding System. It contains 3 levels
of codes.

Level 1 HCPCS codes

These are CPT (Current Procedural Terminology) that is used primarily by physicians and are billed
on HCFA 1500 forms. Current Procedural Terminology (CPT) is a coding system developed by the
American Medical Association (AMA) in 1966, to convert the medical, surgical and diagnostic services
rendered by the healthcare providers into five-digit numeric codes. The CPT code enables the providers
to communicate both effectively and efficiently to third-party payers about the procedures and services
provided to the patients. The providers are reimbursed based on the codes submitted for the
procedures and services rendered. Since the practice of medicine is ever changing, the CPT manual also
needs to be updated accordingly. It is updated annually to reflect technologic advances and editorial
revisions. It is very important to use the most current CPT manual available to provide quality data and
ensure appropriate reimbursement.

Level 2 HCPCS (Federal HCPCS)

These codes are simply referred to as HCPCS codes and are used primarily by physicians but also
DME vendors and Home Health Agencies etc. They are used for products and services that are not
addressed in CPT such as Injectable drugs, wheelchairs, oxygen, dental and orthodontic services, etc.

The CPTs does not contain all the codes needed to report medical services and supplies, hence CMS
developed the second level of codes - HCPCS. The codes begin with a single letter (A - V) followed by
four numeric digits. They are grouped by the type of service or supply they represent and are updated
annually by CMS with input from private insurance companies. Level II codes are required for reporting
most medical services and supplies provided to Medicare and Medicaid patients and by most private
payers. These codes are maintained by the HCPCS National Panel. The National Panel is comprised of
representatives from the Blue Cross/Blue Shield Association (BCBSA), the Health Insurance Association

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of America (HIAA) and CMS. The Panel is responsible for making decisions about additions, revisions and
deletions to these codes.

Level 3 HCPCS (Local HCPCS)

These are local codes which are assigned and used by Medicare and Medicaid providers. These are
used for practices not currently addressed in Level 1 or 2 codes. The third level contains codes assigned
and maintained by individual state carriers. Like Level II, these codes begin with a letter (W - Z) followed
by four numeric digits, but the most notable difference is that these codes are not common to all
carriers. Individual carriers assign these codes to procedures of their own discretion. But the carriers
must send written notification to the physicians and suppliers in their area when these local codes are
required. These codes are currently not in use.

CPT Code Classification:

Note : CPT code classification manual prepared by the training team would be used as a reference
manual to identify medical records/charge sheets specific to the CPT code category.

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op Nature of Treatment Code Category

1. Evaluation & Management 99201 to 99499

2. Surgery 10040 to 69990

3. Anesthesiology 00100 to 01999

99100 to 99140

4. Radiology 70010 to 79999

(Including Nuclear Medicine & Diagnostic Ultrasound)

5. Pathology & Laboratory 80049 to 89399

6. Medicine 90281 to 99199

3. Diagnosis Codes
ICD-10 is the 10th revision of the International Statistical Classification of Diseases and Related Health
Problems (ICD), a medical classification list by the World Health Organization (WHO). It contains codes
for diseases, signs and symptoms, abnormal findings, complaints, social circumstances, and external
causes of injury or diseases.[1]

The code set allows more than 14,400 different codes and permits the tracking of many new
diagnoses. The codes can be expanded to over 16,000 codes by using optional sub-classifications.[2]

The International version of ICD should not be confused with national modifications of ICD that
frequently include much more detail, and sometimes have separate sections for procedures. The US ICD-
10 Clinical Modification (ICD-10-CM), for instance, has some 68,000 codes.[6] The US also has the ICD-10
Procedure Coding System (ICD-10-PCS),[7] a coding system that contains 76,000 procedure codes that is
not used by other countries.

Work on ICD-10 began in 1983 and was completed in 1992.[1]

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o 2.1 Brazil
o 2.2 Canada
o 2.3 China
o 2.4 Czech Republic
o 2.5 France
o 2.6 Germany
o 2.7 Korea
o 2.8 Netherlands
o 2.9 Russia
o 2.10 South Africa
o 2.11 Sweden
o 2.12 Thailand
o 2.13 United Kingdom
o 2.14 United States

The US has used ICD-10-CM since October 1, 2015.[23] This national variant of ICD-10 was provided

by the Centers for Medicare and Medicaid Services (CMS) and the National Center for Health Statistics

(NCHS), and the use of ICD-10-CM codes are now mandated for all inpatient medical reporting

requirements. There are over 70,000 ICD-10-CM codes, which is up from around 14,000 ICD-9-CM

codes.[23]

SIMILARITIES AND DIFFERENCES BETWEEN ICD-9-CM AND ICD-10-CM

ICD-10-CM uses 3–7 alpha and numeric digits and full code titles, but the format is very much the same
as ICD-9-CM (for example, ICD-10-CM has the same hierarchical structure as ICD-9-CM).
The 7th character in ICD-10-CM is used in several chapters (for example, the Obstetrics, Injury,
Musculoskeletal, and External Cause chapters). It has a different meaning depending on the section
where it is used (for example, in the Injury and External Cause sections, the 7th character classifies an
initial encounter, subsequent encounter, or sequelae (late effect)).
Primarily, changes in ICD-10-CM are in its organization and structure, code composition, and level of
detail.
ICD-9-CM Diagnoses Codes:
Are 3–5 digits
The first digit is alpha (E or V) or numeric (alpha characters are not case sensitive)
Digits 2–5 are numeric
A decimal is used after the third character

Examples:
496 – Chronic airway obstruction, not elsewhere classified (NEC)
511.9 – Unspecified pleural effusion
V02.61 – Hepatitis B carrier

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ICD-10-CM Diagnosis Codes:

Are 3–7 digits
Digit 1 is alpha
Digit 2 is numeric
Digits 3–7 are alpha or numeric (alpha characters are not case sensitive)
A decimal is used after the third character

Examples:
A78 – Q fever
A69.21 – Meningitis due to Lyme disease
S52.131A – Displaced fracture of neck of right radius, initial encounter for closed fracture

NEW FEATURES IN ICD-10-CM

ICD-10-CM includes these new features:
1) Laterality (Left, Right, Bilateral)
Examples:
C50.511 – Malignant neoplasm of lower-outer quadrant of right female breast
H16.013 – Central corneal ulcer, bilateral
L89.012 – Pressure ulcer of right elbow, stage II

2) Combination Codes For Certain Conditions and Common Associated Symptoms and Manifestations
Examples:
K57.21 – Diverticulitis of large intestine with perforation and abscess with bleeding
E11.341 – Type 2 diabetes mellitus with severe nonproliferative diabetic retinopathy with macular
edema
I25.110 – Atherosclerotic heart disease of native coronary artery with unstable angina pectoris

3) Combination Codes for Poisonings and Their Associated External Cause

Example:
T42.3x2S – Poisoning by barbiturates, intentional self-harm, sequela

4) Obstetric Codes Identify Trimester Instead of Episode of Care

Example:
O26.02 – Excessive weight gain in pregnancy, second trimester

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5) Character “x” is Used as a 5th Character Placeholder in Certain 6 Character Codes to Allow for Future
Expansion and to Fill in Other Empty Characters (For Example, Character 5 and/or 6) When a Code That
is Less Than 6 Characters in Length Requires a 7th Character
Examples:
T46.1x5A – Adverse effect of calcium-channel blockers, initial encounter
T15.02xD – Foreign body in cornea, left eye, subsequent encounter

6) Two Types of Excludes Notes

Excludes 1 – Indicates that the code excluded should never be used with the code where the note is
located (do not report both codes)

Example:
Q03 – Congenital hydrocephalus

Excludes 1: Acquired hydrocephalus (G91.-)

Excludes 2 – Indicates that the condition excluded is not part of the condition represented by the code
but a patient may have both conditions at the same time, in which case both codes may be assigned
together (both codes can be reported to capture both conditions)

Example:
L27.2 – Dermatitis due to ingested food

Excludes 2: Dermatitis due to food in contact with skin (L23.6, L24.6, L25.4)
7) Inclusion of Clinical Concepts That Do Not Exist in ICD-9-CM (For Example, Under dosing, Blood Type,
Blood Alcohol Level)
Examples:
T45.526D – Underdosing of antithrombotic drugs, subsequent encounter
Z67.40 – Type O blood, Rh positive
Y90.6 – Blood alcohol level of 120 – 199 mg/100 ml

8) A Number of Codes Are Significantly Expanded (For Example, Injuries, Diabetes, Substance Abuse,
Postoperative Complications)
Examples:
E10.610 – Type 1 diabetes mellitus with diabetic neuropathic arthropathy
F10.182 – Alcohol abuse with alcohol-induced sleep disorder
T82.02xA – Displacement of heart valve prosthesis, initial encounter

9) Codes for Postoperative Complications Are Expanded and a Distinction is Made Between Intraoperative
Complications and Postprocedural Disorders
Examples:
D78.01 – Intraoperative hemorrhage and hematoma of spleen complicating a procedure on the spleen
D78.21 – Postprocedural hemorrhage and hematoma of spleen following a procedure on the spleen

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ADDITIONAL CHANGES IN ICD-10-CM

ICD-10-CM includes these additional changes:
Injuries are grouped by anatomical site rather than by type of injury
Category restructuring and code reorganization occur in a number of ICD-10-CM chapters, resulting in
the classification of certain diseases and disorders that are different from ICD-9-CM
Certain diseases are reclassified to different chapters or sections to reflect current medical knowledge
New code definitions (for example, definition of acute myocardial infarction is now 4 weeks rather than
8 weeks)
The codes corresponding to ICD-9-CM V codes (Factors Influencing Health Status and Contact with
Health Services) and E codes (External Causes of Injury and Poisoning) are incorporated into the main
classification (in ICD-9-CM they were separated into supplementary classifications)

Page

Benefits of ICD-10

ICD-10-CM incorporates much greater clinical detail and specificity than ICD-9-CM. Terminology and
disease classification are updated to be consistent with current clinical practice. The modern
classification system provides much better data needed for:
Measuring the quality, safety, and efficacy of care
Reducing the need for attachments to explain the patient’s condition
Designing payment systems and processing claims for reimbursement
Conducting research, epidemiological studies, and clinical trials
Setting health policy
Operational and strategic planning
Designing health care delivery systems
Monitoring resource use
Improving clinical, financial, and administrative performance
Preventing and detecting health care fraud and abuse

Tracking public health and risks

Chapt Blocks Title

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er
A00–
I Certain infectious and parasitic diseases
B99
C00–
II Neoplasms
D48
D50– Diseases of the blood and blood-forming organs and certain disorders involving
III
D89 the immune mechanism
E00–
IV Endocrine, nutritional and metabolic diseases
E90
F00–
V Mental and behavioural disorders
F99
G00–
VI Diseases of the nervous system
G99
H00–
VII Diseases of the eye and adnexa
H59
H60–
VIII Diseases of the ear and mastoid process
H95
IX I00–I99 Diseases of the circulatory system
X J00–J99 Diseases of the respiratory system
K00–
XI Diseases of the digestive system
K93
L00–
XII Diseases of the skin and subcutaneous tissue
L99
M00–
XIII Diseases of the musculoskeletal system and connective tissue
M99
N00–
XIV Diseases of the genitourinary system
N99
O00–
XV Pregnancy, childbirth and the puerperium
O99
P00–
XVI Certain conditions originating in the perinatal period
P96
Q00–
XVII Congenital malformations, deformations and chromosomal abnormalities
Q99
R00– Symptoms, signs and abnormal clinical and laboratory findings, not elsewhere
XVIII
R99 classified
S00–
XIX Injury, poisoning and certain other consequences of external causes
T98
V01–
XX External causes of morbidity and mortality
Y98
Z00–
XXI Factors influencing health status and contact with health services
Z99
U00–
XXII Codes for special purposes
U99

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4. Modifiers

Modifiers are codes that are adopted by the physician to reaffirm to the carrier that the procedure
performed was altered or modified due to certain unavoidable circumstances. Modifiers are of two
types, CPT and HCPCS modifiers. Formats of both are as follows:

CPT Modifier : Format : 2 Digits

HCPCS Modifier: Format : 1 Alphabet followed by a number (or) 2

digits numeric

CPT MODIFIERS:

o 21-Prolonged E&M service

The physician seeing a diabetic patient and he is providing highest level of E&M service (99313). In
this case, the physician meets the patient's family to discuss about the treatment plan and future care
and he is taking total time of 55 minutes. But the normal amount of time to be spent for 99313 is 35
minutes. But he has spent extra 20 minutes for providing that E&M service. Hence this E&M service is
considered as prolonged E&M service and the modifier 21 would be added to the code 99313.

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E.g.: Correct coding: 99313-21

o 22-Unusual Procedural Service

If a patient is admitted for a surgery (ex: Gastrectomy, total, 43620) and the surgery is carried out.
During the surgery, the blood loss is very high for this particular patient. Hence prolonged homeostasis
(stopping the blood loss) is done. In this case, the service provided is more than normally provided for
that particular surgery. Hence time involved in that surgery is greater than the usual time required for
that surgery. In this case, modifier 22 is used with this particular surgery code (43620) to denote that
this procedure is prolonged due to unusual circumstances. E.g.: Correct coding: 43620-22

o 23-Unusual Anesthesia
A child has fallen on to the glass and the glass pieces to be removed from the patient hand. For this
procedure, it doesn't actually require general anesthesia. But the child is panic, unmanageable and it
doesn't cooperate for the surgery, then general anesthesia should be given to carry out that surgery. In
this condition, modifier 23 appended to the anesthesia code.

E.g.: Correct coding: 01810-23

o 24-Unrelated E&M service

During the postoperative period by the same physician. If the patient has undergone a surgery
(Appendectomy), and now he is in his postoperative period. Now he has developed common cold and
cough. This cold and cough is not related to the condition (Appendicitis) for which the surgery was
carried out and E&M service (99212) is provided by the same surgeon for cold and cough during his
postoperative visit. In this condition, The E&M service provided is accompanied by modifier 24 to
denote that it is an unrelated E&M service during the postoperative period by the same physician.

E.g.: Correct coding: 99212-24

o 25-Significant, separately identifiable E&M service by the same physician on the same day of
a procedure
A patient is seen for the re-evaluation of the hypertension, and the physician provides E&M service
(99214) for the hypertension. But the patient states another problem that he is having hearing trouble.

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Then the physician examines his ear and finds out there is extensive amount of earwax. The physician
provides a surgical service of removing the earwax. Both the E&M and wax removal has been done on
the same day and there is no relation between the earwax removal and the re-evaluation of
hypertension. Hence the E&M service provided should be appended with modifier 25 to denote that as
a significant, separately identifiable E&M service on the same day of another procedure (wax removal,
69210). E.g.: Correct coding: 99214-25, 69210

o 26-Professional Component
A patient is injured in his left knee. The patient is seen by the radiologist for possible fracture in the
knee. The radiologist orders two views, x-ray of the left knee (73560) and he supervises and interprets
the radiology examination. To bill only for the physician component other than technical component,
modifier 26 is appended to the 73560. E.g.: Correct coding: 73560-26

o 47-Anesthesia by surgeon
If a surgeon is performing a surgery (carpal tunnel release), in which if the surgeon is personally
administering the regional or general anesthesia, modifier -47- would be appended to CPT code 64721.

E.g.: Correct coding: 64721-47

o 50-Bilateral procedure
A patient presents with bilateral knee pain. He is seen by the radiologist and the radiologist orders
three views bilateral knee exam. In this case, modifier -50- is appended to the CPT code 73562 since
73562 is a unilateral code and the exam is done on both knees.

E.g.: Correct coding: 73562-50

o 51-Multiple procedures
A patient presents to the ED department for multiple lacerations after walking into a glass door. He
is having lacerations on his forearm and eyelid. The physician performs the repair of the lacerations on
forearm (13120) and eyelid (12051). Since, these procedures are done at the same session; modifier -51-
is appended to the minor procedure i.e., 12051.

E.g.: Correct coding: 13120, 12051-51

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o 52- Reduced services

A patient presents with foot ulcers due to diabetes. The physician starts initial assessment, takes a
comprehensive history, but before he can complete the E&M service, the patient becomes adamant
about leaving facility and leaves with her family against medical advice. In this case, the service was not
completed and it is a reduced service. Hence modifier -52- is appended to the E&M service (99303). E.g.:
Correct coding: 99303-52

o 54-Surgical care only

Patient presents for heart valve replacement (33410) and the cardiac surgeon provides only the
intra-operative portion of the surgery. In this case, modifier 54 would be added to 33410 to denote that
only intra-operative portion of the surgery was provided by this surgeon.

E.g.: Correct coding: 33410-54

o 57-Decision for surgery

A patient presents with wrist pain after falling at home. The Physicians confirms the fracture of the
wrist through x-ray. He performs the E&M service (99283) to assess the patient and rule out any
additional fractures. Following E&M service, He decides to perform the surgery and he performs the
surgery for wrist fracture (25530). In this case, modifier 57 would be appended to 99283 since this E&M
service resulted in a major surgery for the wrist fracture. If the E&M service results in a minor surgery (0-
10 follow-up days) and if the surgery is done on the same day of the E&M service, modifier 25 would be
added to the E&M service.

E.g.: Correct coding: 99283-57, 25530

o 59-Distinct Procedural Service

A patient presented for the removal of skin tags (a skin abnormality)(11200) from his back. At the
same session, the physician noted two small lesions (not skin tags) on the patient’s neck area. Biopsies
(tissue samples)(11100) were taken of each lesion, as each appeared different in its shape and size. In
this case, modifier 59 would be appended to 11100 to denote that this is independent procedure from
11200 since the anatomic sites and the type of procedures are different from each other.

E.g.: Correct coding: 11200, 11100-59

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o 62-Two surgeons
When insertion of a pacemaker is performed by a surgeon and a cardiologist, both physicians should
use 33206 with addition of a 62 modifier to indicate that co surgery was performed.

E.g.: Correct coding: 33206-62

o 66-Surgical Team
If a surgical team involving three surgeons is performing a complex surgery such as 63087(Vertebral
corpectomy), then each physician should report 63087 with modifier 66 appended to it.

Correct coding: 63087-66

o 80-Assistant surgeon
A patient is presenting for bypass surgery and during this surgery an assistant surgeon takes part in
the entire surgery, then the primary physician has to submit the CPT code 33510 and the assistant
surgeon has to report his services using same CPT code 33510 with modifier 80 appended to that.

E.g.: Correct coding: 33510, 33510-80

Level II - HCPCS Alpha-Numeric Modifiers

AA- Anesthesia services performed by anesthesiologist.

AS- Physician Assistant, Nurse Practitioner, or Clinical Nurse Specialist services for assistant
at surgery.

CC- Procedure code changed. [This modifier is used when the submitted procedure code is
changed either for administrative reasons or because an incorrect code was filed.]

LT- Left Side. (Used to identify procedures performed on the left side of the body.)

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QS- Monitored anesthesia care service.

QT- Recording and storage on a tape by an analog tape recorder.

QX- CRNA service with medical direction by a physician.

QY- Anesthesiologist medically directs one CRNA.

CRNA service without medical direction by a physician.

QZ-

RC- Right coronary artery.

RT- Right Side (used to identify procedures performed on the right side of the body).

SF- Second opinion ordered by a Professional Review Organization (PRO) per Section 9401, P.L.
99-272 (100% reimbursement - no Medicare deductible or coinsurance).

SG- Ambulatory Surgical Center (ASC) facility service.

TC- Technical Component. Under certain circumstances, a charge may be made for the
technical component alone. Under those circumstances adding modifier TC to the usual
procedure number identifies the technical component charge. Note: The TC modifier
should not be appended to procedure codes that represent the technical component
(example: 93005).
* Denotes modifiers which are valid for the first modifier field only.

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5. Bundled CPT

It is not necessary that every CPT code should denote only a single treatment procedure. Where a
number of related procedures are to be performed on a patient in order to address the disease then a
single CPT code may be used to communicate the entire procedure. The cases where a single CPT code
signifies a group of procedures performed is called Bundling. These may be one of the common reasons
for denials; hence care should be taken to see whether we are entering procedures that can be bundled
as an unbundled procedure.

Let us take the case of billing for an appendectomy. The procedures involved would be:

 Incision
 Surgery
 Suturing

The above mentioned procedures all have independent CPTs but when the provider is sending out a
claim to an insurance company then it gets clubbed under a single CPT. In case the provider bills each of
the procedures separately then the insurance company would reject the claim for want of a bundled
code.

6. Up coding:

The fraudulent service with which a higher dollar value CPT is used to claim more money from

insurance than the original CPT is called as Up coding.

7. Down Coding:

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The fraudulent service with which a lower dollar value CPT is coded to get the reimbursements from the

payer is called as Down coding.

8. Medical Specialties
Note : Sample analysis of some of the Medical records will be done while covering this topic using the

Medical record sample manual prepared by the training team.

There are various branches / specialties in the field of Medicine. A Clear understanding of these Medical
specialties & their significance is ultimately necessary.

Orthopedics- A branch of medicine concerned with the correction or prevention of skeletal Deformities.

Ophthalmology - A branch of medical science dealing with the structure, functions, and diseases of the
eye

Podiatry - The medical care and treatment of the human foot

Geriatrics - A branch of medicine that deals with the Problems and diseases of old age and aging People

Pediatrics - A branch of medicine dealing with the development, care, and diseases of children

Orthodontics - A branch of dentistry dealing with Irregularities of the teeth and their Correction (By
means of braces)

Nephrology - A medical specialty concerned with the Structure, functions & diseases of kidneys.

Rehabilitation - The process of restoring an individual (as a convict or drug addict) to a useful and
constructive place in society especially through some form of vocational, correctional, or therapeutic
retraining.

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Gastroenterology - A branch of medicine concerned with the structure, functions, diseases and pathology of
the stomach and intestines.

Surgery - Branch of medicine concerned with diseases and conditions requiring an operative procedure.

Emergency Room (ER) - A hospital room or area staffed and equipped for the reception and treatment
of persons with conditions (as illness or trauma) requiring immediate medical care.

Radiology - A branch of medicine concerned with the use of radiant energy (as X rays or ultrasound) in
the diagnosis and treatment of disease

Physical Therapy - The treatment of disease by physical and mechanical means (as massage, regulated exercise,
water, light, heat and electricity). It is also called as physiotherapy

Occupational Therapy - Therapy by means of an activity. More creative activities are prescribed for its
effect in promoting recovery or rehabilitation

Speech Therapy - Therapeutic treatment of speech defects. This therapy is mainly recommended for
people who suffer from lisping and stuttering i.e., for those speak with involuntary disruption or
blocking of speech (as by spasmodic repetition or prolongation of vocal sounds)

Psychiatry - A branch of medicine that deals with the science and practice of treating mental, emotional,
or behavioral disorders.

Neurology - The scientific study of the nervous system especially with respect to its structure, functions, and
abnormalities

Cardiology - The study of heart, its action and diseases.

Anesthesiology - Branch of medical science dealing with anesthesia and anesthetics. It involves loss of
sensation and usually of consciousness without loss of vital functions artificially produced by the administration of
one or more agents that block the passage of pain impulses along nerve pathways to the brain

Pathology - The study of the essential nature of diseases and especially the structural and functional
changes produced by them. The anatomic and physiological deviation from the normal that constitute
disease or characterize a particular disease is studied.

Internal Medicine - A branch of medicine that deals with the diagnosis and treatment of non surgical diseases

Obstetrics - It is a branch of medical science that deals with birth and also its antecedents and sequel.

Gynecology - It is the branch of medicine that deals with the diseases and routine physical care of the
reproductive system of women.

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Chiropractic Services - A system of therapy, which holds that disease, results from a lack of normal nerve
function and which employs manipulation and specific adjustment of body structures (as the spinal
column).

Family Practice - A medical practice or specialty that provides continuing general medical care for the
individual and family. Also termed as Family Medicine

Emergency Medicine - This branch of medicine encompasses the decision making and action necessary
to prevent death or any further disability for patients in health crises, as well as health promotion and
injury prevention efforts.

Environmental Medicine - This branch involves research into the health effects of environmental
pollution.

Acupuncture - Chinese practice of puncturing the body with needles at specific points to cure diseases
or to provide local anesthesia for relieving pain in surgery.

Audiology - A branch of medicine dealing with hearing and therapy of individuals having impaired
hearing.

Optometry - The profession concerned with the examination of the eyes and related structures to
determine the presence of vision problems and eye disorders and with the prescription and adaptation
of lenses and other optical aids or the use of visual training for maximum visual efficiency.

Oral Surgery - The branch of dentistry concerned with the diagnosis and surgical and adjunctive
treatment of diseases, injuries, and deformities of the oral and maxillofacial region

Endoscopy - Examination of the interior of a canal or hollow viscus by means of a special instrument,
such as an endoscope.
Nuclear Medicine -A branch of medicine dealing with the use of radioactive materials in the diagnosis
and treatment of disease.

Preventive Medicine - A branch of medical science dealing with methods (as vaccination) of preventing
the occurrence of disease.

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DAY 7 : ASSESSMENT 2/ RETESTS

DAY 8/9 : INSURANCE
CLASSFICATION / CONCEPTS
Objective :

Note : DAY 5 would start with the ASSESSMENT 2 and then the following topics would be covered

At the end of this training you will be able clearly understand the following :

 What is health insurance and policy

 Group Insurance vs. Individual Insurance
 Classification of Insurance – Indemnity and Managed care plans
 Types of MCO Plans
 Types of Physician groups such as IPA ‘s and PHO’s
 Federal insurances – MEDICARE / MEDICAID/CHAMPUS /CHAMPVA
 Commercial Insurance –BCBS
 Liability Insurance –Worker’s compensation/Auto accident

1. HEALTH INSURANCE AND POLICY

“Health insurance is a contract between a patient and an insurance company. This contract covers the
risk of any losses against future illness or injury for the insured.” The person giving the assurance is
called the insurer (insurance company) and the person who receives the protection is called the insured
(policy holder). Simply put, health insurance is protection against any medical costs. A health insurance

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policy is a contract between an insurer and an individual or group, in which the insurer agrees to provide
specified health insurance at an agreed-upon price (the premium) to the insured. There are very much
possibilities that this coverage is not just given to the subscriber but also to his dependants. For e.g. a
policy may not just cover a husband but also the spouse; children; parents etc. These policies are taken
up by the subscribers either individually or through groups. Group Insurance is a single insurance policy
that covers a specific group of people. Examples of groups include employees of a company, members of
a professional organization, or alumni of a college. Many group policies include dependants of the group
members too.

2. Group Insurance vs. Individual Insurance:

It is very important for a subscriber to know about kind of coverage that will be provided by the
Insurance organizations. While there are lots of different ways to get health insurance, it is good for a
subscriber to know what benefits he may be eligible for before he starts his Health insurance search.

Most of the Americans get their health insurances through their employers (EGHP: Employer Group
Health Plan). These health plans are subject to state and federal law. According to National Coalition on
Health Care, in 2005 round 83% of employees in the US were covered by their employers health group
plans because of better rates(as it depends on number of employees in a firm: SGHP: Small Group
Health Plan/LGHP: Large Group Health Plan). The insurances offered under group plans include health,
dental, vision, life, accidental death & dismemberment, short term disability, long term disability,
prescription drugs, long term care and dependent care. More established employer groups may get
better rates than new ones because the insurer has more claims history to rely on. The insurance
company sees it as good risk for group plans because they will probably end up paying out very little for
many people in the group while collecting premiums from everyone. Most group policies guarantee to
accept any member of the group as the purpose of a group plan is to spread the risk of claims over wider
group of people. We will always have a mix of healthy people to some with illness. Normally this also
translates into premiums that are much lower than those found in individual health insurance plans and
are at same price for everyone in the group regardless of their health. Also sharing of the part of
premium by the Employer makes it even better for an employee to bear.

The Individual health plans on the other hand are subject to state laws and differ from state to state.
These are bought by the individuals for themselves and their dependents. Because the family is being

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insured, this type of insurance costs more. Individual plans are used by those who are not working with
an employer or are self employed. Also the scope of coverage is more in group health plans than
individual ones because the groups get good deals of plans from the Insurance companies. OOPs incase
of group plans are less than the individual plans. An individual may purchase an individual plan
separately to increase the coverage given by his employer; the two policies just might give him all the
coverage. In group policies, the choice of service is however limited to what was offered and agreed by
the employer. For individual plans, under the process of underwriting the physical examination report
helps an underwriter to decide policy details whereas in group plan this may not necessarily be a
mandate for the employees. The group health plan is uniform for all the employees of a firm and cannot
be changed as per individual discretion where as the individuals can upgrade or change their plans as
and when required.

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Health Insurance Classification flow chart

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INSURANCE

Health Liability

Individu Worker Auto

Commerc Federal

Group

Traditional / Managed Medica Medica Tric SC FEHB

Indemnity Plan Care Plan re id are HIP P

-Basic - Part Prim

Coverage HMO A e

-Major -PPO Part Extra

Medical B
-POS

3. Introduction to Indemnity and MCO

Health care in America has dramatically changed from what it was used to be and what it is now.
Twenty-five years ago, most people in the United States had Traditional/Indemnity insurance coverage.
A person with indemnity insurance could go to any doctor, hospital, or other provider (which would bill

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for each service given), and the patient would pay part of the bill & claim later from the Insurance.
Today however, more than half of all Americans who have health insurance are enrolled in some kind of
a managed care plan, an organized way of both providing services and paying for them. The cost of
treatment is well shared between the Insurance and the patient now. Different types of managed care
plans work differently and include Preferred Provider Organizations (PPOs), Health Maintenance
Organizations (HMOs), and Point-Of-Service (POS) plans.

Let us understand what traditional indemnity plans consist of.

Traditional Indemnity
Indemnity Plan or Fee for Service (FFS) plans gives options of basic coverage, major medical or
comprehensive coverage to an individual/group. With an indemnity plan (or fee-for-service), a person
can use any medical provider (Dr/Hospital) and the patient or the doctor (very rarely) sends the bill to
the insurance company using their reimbursement forms, which pays part of it. There are certain
requirements before the reimbursement stage, full deductible has to be paid; they focus on treating
health problems but not preventing them(These plans don’t usually cover annual Check Ups); FFS plans
may also limit the number of days for stay in hospital and still receive coverage. Usually, there is a
deductible such as $200-$250 to pay each year before the insurance starts paying. Once the person
meets the deductible, most indemnity plans pay a percentage of what they consider the "Usual and
Customary" charge for covered services. They generally pays 80% of the Usual and Customary costs and
the patient pays the other 20 percent, which is known as coinsurance. If the provider charges more than
the Usual and Customary rates, the patient will have to pay both the coinsurance and the difference.
The plan will pay for charges for medical tests and prescriptions as well as from doctors and hospitals.

Managed Care Organization as the name suggests is “management of patient care and provider’s
reimbursement.” It is a contract between the insurance and providers where the insurance carrier
agrees to pay for the services rendered until & unless the provider provides cost-effective and efficient
services to the patients. While some managed care plans can bear a close resemblance to an FFS plan,
the focus of managed care is on preventive health care. The idea is that by allowing coverage for Check
Ups and other preventive services, doctors can identify potentially serious illness early. MCPs use
networks of selected doctors, hospitals or clinics and other health care providers that have contracted

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with the plan to provide comprehensive health services to a member at reduced group rate. Because of
this managed care plans are more affordable than FFS plans of similar coverage. In addition, by
centralizing billing and administrative functions, networks can also lower their overhead costs with a
larger group of audience to cater services to in benefit of faster processing of claims from the payers.
This is other word referred to a 3P program where in the Provider, Patient and the third Party
administrator plays an important role.

Features of Managed Care:

o The liability of the insured is always a prefixed amount (TOS Payment).

o Insured is provided with a network of Providers
o Referral Authorization Number plays an important role
o Focus on preventive medicine is high

4. Managed Care Plans

There are methods through which the insurances involve them in administering the Healthcare
service reimbursed to the insured. Depending upon the methods the classification can be made into the
following categories:

o HMO - Health Maintenance Organization

o POS – Point of Service

o PPO – Preferred Provider Organization

o EPO – Exclusive Provider Organization

HMO-HEALTH MAINTENANCE ORGANISATION

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HEALTH MAINTENANCE
P ORGANISTAION - HMO
A
T RAN
PCP SPECIALIST
I
E
N NOT
COVERED
OUT OF NETWORK
T
EXCEPTION - EMERGENCY

HMOs are the oldest form of managed care plan for individuals. HMO’s coverage includes
access to Primary care Physician, Emergency Care, Specialists and Hospitalization when needed. These
plans are usually cheaper than the other MCPs but yet they give least amount of control over choosing
any health care provider. There are usually no deductibles, but small co-pay for each office visit ($10-
$25). The subscriber is supposed to select his PCP as one of the only doctors present in the network of
the HMO organization. This PCP will only be the in charge of coordinating this subscriber’s medical care.
In case the patient needs to visit a specialist, the PCP has to be the first point of contact and once a
referral is obtained from the PCP then only the patient can meet the specialist. The Specialist seen must
also be working within the HMO network, otherwise the whole cost for the specialist care would turn
out to be patient’s responsibility. The referral number given by a PCP to the patient to visit the specialist
is called as RAN (Referral Authorization Number); this number shall be mentioned on the claim that a
specialist submits to the HMO for reimbursement.
HMOs will always give patients a list of doctors from which they have to choose a primary care
doctor for themselves. This PCP coordinates the patient's first level of care, which means that generally
the patient must contact the PCP for all his first/initial health related concerns and then if need be

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referred to a specialist. Because of this the PCPs are also referred to as ‘Gatekeepers’ in HMO. The
referrals may be in network or out of network however the in network referrals reimbursements are
shared by the insurance in contrary to out of network where the patient bears the cost. The PCPs are
compensated in HMOs through a reimbursement method called as Capitation. It is also called as ‘Per
Member per Month’, method wherein the PCP is paid monthly a bulk amount for the number of
members visiting him. He will have to render the services to all the members despite of number of visits
made by them; even in case of no member visit; the PCP gets his capitated share from the insurance.
For HMO plans, the policy members also make monthly payments to HMO and there is a small
copayment with no deductible. In an HMO, members are covered only for services obtained from in-
network providers, unless an emergency forces the member to seek out-of-network treatment but in
case of emergency insurance company should be informed within 24 hours. The policy members are
charged with fixed and predictable monthly pre- payments and modest copayments.

Advantages of HMOs
Low out-of-pocket costs as deductible almost gets omitted
Focus on wellness and preventive care than treatments
Typically no lifetime maximum/payout (meaning the HMO will continue to cover the patient as long
as he is a member).

Disadvantages of HMOs
Fewer Choices for Specialized Care
Difficult to get specialized care without first meeting the PCP
Care from non-HMO providers generally not covered

POS-POINT OF SERVICE

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POINT OF SERVICE - POS

P
A OPTS
RAN
T A PCP PCP SPECIALIST
I
E OPTS OONP OUT OF NETWORK
N COVERED – BUT
LESSER
REIMBURSEMENT
T OONP – Out Of Network Physician

With the restrictions that came in buying an HMO plan, the individuals were given another plan
to select: Point of Service. A Point-of-service health plan allows the covered person to decide about
receiving the service from network provider or a OON provider i.e. at the point of service the patient
decides to visit either a HMO network provider with PCP being the first point of contact or a out of
network provider; depending on the medical treatment he is looking forward to and his preferences.
There are different levels of benefit and reimbursements associated with the use of network providers
and out of network providers. This is considered to be one of the most flexible & expensive plan for
individuals.

POS can be obtained in the following ways:-

An HMO may allow members to obtain limited services from non-participating providers.

An HMO may provide non-participating benefits through a supplemental major medical policy.

A preferred provider by the patient may be seen to provide both participating and non-participating
levels of coverage and access.

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So in other words, if a person sees anyone in network physician it works like an

HMO plan, there will be small co pay & no deductible & if a person decides to see any out of network
physician then this plan acts like a Preferred Provider plan for individual with a higher copayment and
deductible hence increased OOPs.

Advantages of POS plans

Flexibility in choosing the provider and the plan at the time of service
Minimum out-of-pocket as compared to other plans
No "PCP" for out-of-network care

Disadvantages of POS plans:

Substantial out-of-pocket for out-of-network providers

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PPO-PREFERRED PROVIDER ORGANISATION

E PREFERRED PROVIDER
ORGAINSATION - PPO
M
P
NO PCP
L DISCOUNT PPO
O
Y COVERED – BUT OUT OF NETWORK
LESSER
E REIMBURSEMENT
E
Preferred Provider Organization (PPO): A PPO is a form of managed care for group plans. A PPO has
arrangements with doctors, hospitals, and other providers of care who have agreed to accept lower fees
from the insurer for their services. As a result, the patient's cost sharing should be lower than if the
patient goes outside the network. In addition to the PPO doctors making referrals, plan members can
refer themselves to other doctors, including ones outside the plan.
Rather than prepaying for
medical care, PPO members pay for services as they are rendered. The PPO sponsor (employer or
insurance company) generally reimburses the member for the cost of the treatment, less any co-
payment percentage. In some cases, the physician may submit the bill directly to the insurance company
for payment and get paid for it while the member pays his copayment. PPO plans usually have a
deductible and a copayment. If one chooses to go outside of the network he has to pay for the
difference

Advantages of PPOs Disadvantages of PPOs

Choice of healthcare provider Increased paperwork and expenses than HMOs

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Limited out-of-pocket costs Higher cost sharing for using out-of-network providers

EPO- EXCLUSIVE PROVIDER ORGANISATION

E EXCLUSIVE PROVIDER
ORGAINSATION - EPO
M
P
NO PCP
L DISCOUNT PPO
O
Y NOT
OUT OF NETWORK
E COVERED

An Exclusive Provider Organization (EPO) is a variation of a PPO. EPOs contract with providers on a
discounted basis, but enrollees must receive care within the network. EPOs, like PPOs, provides no
penalty to providers if the patient opts to obtain care outside the network. Instead, the enrollee
assumes responsibility for out-of-network costs and hence this works like an HMO for a group.

Advantages of EPOs Disadvantages of EPOs

Low out-of-pocket costs Restricted access to providers
Focus on wellness and preventive care than treatments No coverage in case of OON

5. Types of Physician Groups in HMO

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Certain private physician practices and hospitals come together to form groups to aid in the
management and administration of healthcare.

Physician Hospital Organization (PHO)

A hospital and a physician organization, or a physician group creates a Physician Hospital

Organization. A PHO is created to assist the Managed Care Organization contracting on behalf of the
parties. The best PHO’s include a physician organization that has its own structure, providing a means
for reviewing pertinent issues both internal and external, such as contracts, payer disputes, or physician
monitoring.

Independent Practice Association (IPA)

An Independent Practice Association consists of physicians who have not combined their assets and
liabilities and are not practicing in a truly integrated fashion. They maintain their separate practices and
participate in the IPA as a means to contract with HMOs or other health plans. Providers may also see
patients who are not enrolled in HMO plans. Where IPAs primarily contract with the HMO to provide
services to the HMO members, the HMO model typically is called the IPA model HMO.

IPA’s are developed in two ways.- Providers may market themselves as an IPA group and perform
their own administrative functions, or payers (Insurance co.) may develop an IPA from a panel of
contracted providers.

Depending on the types available today, Insurances can be classified as:-

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6. Federal Insurance

Federal Plans (Indemnity plans) also called Public plans are promoted either by the Federal or the
State government. They are always rolled out for specifically identified section of the society.

OI

DHHS

SSA
RRB
HCFA (Now

called as CMS)

Some of the plans that are under this category are:

o Medicare /Railroad Medicare

o Medicaid
o CHAMPUS /CHAMPVA

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Medicare
Medicare is a federal insurance, which primarily takes care of the healthcare needs of people who
are aged 65 years and above. It came into existence from the year 1965. It is managed by CMS (formerly
known as HCFA). Guidelines of Medicare are uniform in all the 50 states.

Medicare Eligibility Guidelines

a) Individuals who are 65 years and above

b) Adults who are permanently disabled or disability for more than 2 years

c) Individuals suffering from End-Stage Renal Disease (ESRD)

Medicare ID – Medicare ID consists of 9 numeric digits (individual's SSN) followed by an alpha suffix.

There are 4 types of Medicare plans.

i. Medicare Part A
ii. Medicare Part B

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iii. Medicare Part C

iv. Medicare Part D

Medicare Part A (Hospital Insurance -HI):- Medicare Part A coverage is for Hospitals Insurance (HI) and
other related types of care.

Medicare Part A coverage extends to the following costs:

o Inpatient hospital care

o Medicare certified hospitals

o Inpatient care in Skilled nursing facility

o Hospice

o Home healthcare

The only type of "nursing home" care Medicare helps pay for is Skilled Nursing Facility (SNF) care.

Home healthcare

If a patient is confined to their home and requires skilled care for an illness or injury, Medicare can pay
for care provided by a home health agency.

Hospice care

An organization, which is primarily designed to provide pain relief, symptom management and
supportive services for the terminally ill (last stages of their life) and their families can also be covered
under Medicare

Note:-

Medicare Part A can be brought by a person less than 65 years of age after paying the premium. It
becomes premium free if and have paid FICA (Federal Insurance Contributions Act) taxes or Railroad
Retirement taxes and gained 40 credits (10 years of work).

Medicare Part B: Supplemental Medical Insurance (SMI)

Medicare Part B coverage is for Physician services and other related types of care.

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o Physician services :

(Meaning: the professional services of physicians, including surgery, Consultation, home, office
and institutional services.)

o Outpatient hospital services

o Diagnostic tests

o Clinical lab. Services

o Outpatient physical therapy

o Speech therapy services

o Ambulance transportation

o Rural health clinic services

Medicare does not pay for most services like prescription drugs, examinations for prescribing or fitting
eyeglasses or hearing aids, hearing aids, or routine eye exams. In most cases, Medicare covers screening
mammograms once every two years. Pap smears are covered once every three years.

Medigap

Medigap is the health insurance that private insurance companies sell to help fill gaps in the Original
Medicare Plan. Medigap policies are also known as “Medicare Supplement Insurance “(MSI).
Medigap policies pay most - if not all - of the costs for coinsurance under the Original Medicare Plan.
These policies may also cover the Original Medicare Plan Deductibles. Some policies include extra
benefits to help pay more of those things that Medicare doesn't cover, like prescription drugs. To
determine if Medicare is the primary payer, providers must ask the beneficiary about any additional
health insurance coverage that he or she may have. To obtain the most updated information,
providers should ask about any other health insurance coverage at each patient visit.

Medigap Plans: Examples

o AARP

o American Pioneer

o Empire Health Choice

o Premera Blue Cross

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o Bankers

o Group Health Incorporated

a. MSP RULES : Medicare Secondary Payer Rules

Medicare Secondary Payer” is the term used by Medicare when Medicare is not responsible for
paying a claim first. When Medicare began on July 1, 1966, it was the primary payer for all beneficiaries,
except for those who received benefits from the Federal Black Lung Program and Workers’
Compensation (WC) and for those who receive all covered health care services through the Veterans
Health Administration (VHA) programs. Beginning in 1980, changes to Medicare laws increased the
number of coverage and benefit programs that are primary to Medicare.

Table 1 lists some common situations when Medicare may be the primary or secondary payer for a
patient’s claims:

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Table 1: MSP rules

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Medicaid

Medicaid is a Federal Insurance that is run by the states. The Medicaid guidelines hence differ from one
state to another. Medicaid is basically a 'poor man’s policy' that came into existence in the year 1965
along with Medicare. Medicaid can never be a primary insurance when the Patient has some other
insurance with him.

Important to note: Medicaid is available to US Citizens, refugees and certain lawfully admitted
aliens. Also, every Medicaid member must have a valid SSN.

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Tricare

•Uniformed Service membersIncludes active duty and retired members of the: U.S. Army, U.S. Air
Force, U.S. Navy, U.S. Marine Corps, U.S. Coast Guard, the Commissioned Corps of the U.S. Public
Health Service and the Commissioned Corps of the National Oceanic and Atmospheric Association.
and their families,

•National Guard/Reserve membersIncludes members of the: •Army National Guard

•Army Reserve

•Navy Reserve

•Marine Corps Reserve

•Air National Guard

•Air Force Reserve

•U.S. Coast Guard Reserve

and their families,

•Survivors,

•Former spouses,

•Medal of Honor recipients and their families, and

•Others registered in the Defense Enrollment Eligibility Reporting System (DEERS).

Types of Beneficiaries

1.Sponsors—active duty, retired and Guard/Reserve members.

2.Family members—spouses and children who are registered in DEERS

CHAMPUS / Commercial Insurance

CHAMPVA stands for Civilian Health and Medical Program of the Veterans Administration.

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Commercial Carriers are those that are administered by private bodies hence they are also called
private insurances. There are thousands of commercial insurance companies in US. BCBS, Aetna, Cigna,
Humana, United Health Care are some of the major US commercial carriers.

Private insurance plans can again be of two types

o Individual Plans or
o Group Health plans (EGHP, LGHP & SGHP)

Individual Plans
Individual health insurance covers the medical expenses of only one person or family. Unlike group
insurance, individual insurance is directly purchased from the insurance company.

Individual insurance is somewhat more risky for insurers than group insurance, since group insurance
allows the insurer to spread risk over a larger number of people. For this reason, individual insurance is
generally more difficult to obtain, and more costly than group insurance

Group plans
Many employers offer group health insurance as part of their employee benefits package. Other groups
that may offer insurance coverage include churches, clubs, trade associations, chambers of commerce,
and special-interest groups. Under a group health insurance arrangement; the insurance company
agrees to insure all members of the group, regardless of current physical condition or health history. The
only condition is that the group members must apply for insurance within a specified eligibility period.

Let’s take BCBS as an example of a major commercial carrier in the US

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BCBS

Blue Cross Blue Shield is the most prominent commercial insurance company in US. However calling
it an insurance company is a misnomer since 39 independent healthcare providers fall under the
umbrella of Blue Cross Blue Shield. It is stated that one out of every three members is a BCBS member.
Blue Cross covers the Hospital Claims & Blue Shield covers the Physician Claims.

BCBS ID: BCBS policy ID begins with a 3-digit Alphabetic Prefix followed by numeric digits.

Liability insurance

These are plans that provide the subscriber coverage against the risk stated on the policy. It is not a
health hazard that is insured but any other liability that might occur in time. In the billing scenario, the
subscribers get registered for liability because it helps them cover any healthcare cost that they may
incur due to the incidence of that particular risk.

These insurances will not have any priority till the risk insured has caused has resulted into the
healthcare encounter.

Liability Insurance can be classified into the following categories based on the risk covered:

o General Liability Insurance

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o Auto Accidents Insurance

o Worker's Compensation Insurance

NDC - National Drug Code FDA – Food and Drug Administration

THIS DATA ELEMENT IS USED TO IDENTIFY THE ORIGINAL 10- OR 11- CHARACTER FORMAT OF THE
NATIONAL DRUG CODE (NDC) AND THE TYPE OF CODE, SUCH AS NDC, UNIVERSAL PRODUCT CODE -
(UPC) OR HEALTH RELATED ITEM (HRI). NDCs AND HRIs ARE 10- OR 11-DIGIT CODES USED TO IDENTIFY
DRUG PRODUCTS. NON-PRESCRIPTION DRUG PRODUCTS MAY ALSO HAVE SEPARATE UPCs. IN GENERAL,
THE 11-DIGIT NDC IS STRUCTURED AS FOLLOWS:
- LABELER CODE - 5 NUMERIC CHARACTERS
- PRODUCT CODE - 4 CHARACTERS (CAN BE ALPHANUMERIC)
- PACKAGE CODE - 2 CHARACTERS (CAN BE ALPHANUMERIC)
THE FIRST 4 OR 5 DIGITS (LABELER CODE) OF THE NDC OR HRI (DEPENDING ON FORMAT) ARE
ASSIGNED BY THE FOOD AND DRUG ADMINISTRATION TO IDENTIFY THE MANUFACTURER. THE LAST 5
OR 6 CHARACTERS ARE ASSIGNED BY THE MANUFACTURERS TO IDENTIFY THEIR PRODUCT AND
PACKAGING DESIGNATIONS. IF A COMPANY IS ASSIGNED A 4-DIGIT LABELER CODE, THEY USE A 4-4-2
FORMAT FORTHEIR DRUG PRODUCTS. THOSE ASSIGNED A 5-DIGIT LABELER CODE USE EITHER A 5-3-2, 5-
4-1 OR 5-4-2 FORMAT

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Example NDC

For example, the NDC for a 100-count bottle of Prozac 20 mg is 0777-3105-02. The
first segment of numbers identifies the labeler. In this case, the labeler code "00777" is
for Dista Products Company, the labeler of Prozac. The second segment, the product
code, identifies the specific strength, dosage form (i.e, capsule, tablet, liquid) and
formulation of a drug for a specific manufacturer. In our case, "3105" identifies that this
dosage form is a capsule. The third segment is the package code, and it identifies
package sizes and types. Our example shows that the package code "02" for this bottle
of Prozac identifies that 100 capsules are in the bottle. The FDA maintains a searchable
database of all NDC codes on their

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DAY 10/11 : FINAL ASSESSMENT /

RETESTS/ REVIEW /FEEDBACK
/BATCH ALLOCATION

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LEVEL II TRAINING: PROCESS

SPECIFIC TRAINING (6 DAYS)

Objective:

At the end of this level of training you will be able to practically learn the following:

 CHARGE POSTING / PAYMENT POSTING OVERVIEW /CLIENT UPDATES/PROCESS SPECIFICS

 SIMULATED PROCESS TRAINING ON THE PARTICULAR SOFTWARE

 SAMPLE ANALYSIS

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The process of capturing coded medical record of a patient into his account in the provider's system is
called as charge capture. The charges (or procedure codes) may be present on a form called ‘super bill’
wherein the provider circles the diagnosis or procedures rendered or they may be submitted by the
coding team (if coding is involved). The basic document for charge entry is the Charge Sheet or Super bill
or the medical record giving basic information of codes required for charge entry.

Super bill (also called charge slip or routing form) is the financial record source document used by
health care providers and other personnel to record the patient’s treated diagnoses and the services
rendered to the patient during the visit.

Charge capture is done at the provider’s office or the billing office after the patient encounter. It is
essential in Revenue Cycle Management since it is necessary to enter charges on the claim forms for
reimbursement from the insurance companies.

The process involves entering the charges along with the provider details, DOS, referring provider
and such details into the patient's account by pulling up the patient record in the provider's system.

There are certain details that will be required for charge capture by a billing office.

a) Accounting Date: A date fixed according to schedule by the billing office based on which the
entries are made. This may be a daily schedule and should be opened and closed every day.

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b) Batch # : A number fixed again as per the requirement of the project.

c) Patient Account #: The number allocated to the patient during registration. This helps to retrieve
the other patient information collected on or before encounter.

d) Facility ID: Name of the hospital where service was rendered. The name of the hospital or
facility shall be stored in the master file of the billing office for reference.

e) Doctor ID: The doctor who performed the service; the doctors particulars will be stored in a file
specific for doctor details.

f) Ref Dr Id: The referring doctor’s id which might be stored in the file with referring doctor’s
details.

g) PCP Id( Optional): In some facilities PCP Id acts as a vital link in obtaining information for
insurance processing.

h) Place of Service (POS): To mention the correct place of service for inpatient, outpatient, office
consultation, emergency room, ambulatory surgical center etc.

Co Service Location
de
11 Office
12 Home
21 Inpatient Hospital
22 Outpatient Hospital
23 Emergency Room – Hospital
24 Ambulatory Surgical Center
25 Birthing Center
26 Military Treatment Facility
31 Skilled Nursing Facility
32 Nursing Facility
33 Custodial Care Facility
34 Hospice
41 Ambulance – Land
42 Ambulance – Air or Water
50 Federally Qualified Health Center
51 Inpatient Psychiatric Facility
52 Psychiatric Facility Partial Hospitalization
53 Community Mental Health Center
54 Intermediate Care Facility/ Mentally Retarded
55 Residential Substance Abuse Treatment Facility

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56 Psychiatric Residential Treatment Center

60 Mass Immunization Center
61 Comprehensive Inpatient Rehabilitation Facility
62 Comprehensive Outpatient Rehabilitation Facility
65 End Stage Renal Disease Treatment Facility
71 State or Local Public Health Clinic
72 Rural Health Clinic
81 Independent Laboratory
99 Other Unlisted Facility

i) Type of service (TOS): To mention the correct type of service given while rendering the medical
care.

Cod Types of Service

e
1 MEDICAL CARE AND INJECTIONS

2 SURGERY AND MATERNITY

3 CONSULTATION

4 DIAGNOSTIC X-RAY - TOTAL COMPONENT

5 DIAGNOSTIC LABORATORY - TOTAL COMPONENT

6 RADIATION THERAPY

7 ANESTHESIA

8 SURGICAL ASSISTANCE

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9 OTHER MEDICAL, such as prosthetic devices, orthotic supplies,

10 Medical supplies, ambulance services

11 BLOOD CHARGES

12 USED DME

13 DME (PURCHASE)

14 ASC FACILITY

15 RENAL SUPPLIES IN THE HOME

16 ALTERNATE METHOD DIALYSIS PAYMENT

17 CRD EQUIPMENT

18 PRE-ADMISSION TESTING

19 DME (RENTAL)

20 PNEUMONIA VACCINE

21 SECOND SURGICAL OPINION

22 THIRD SURGICAL OPINION

j) Admit Date, Discharge Date, Injury Date: Though these are not the compulsory fields it is
desirable to provide this information. Injury date is must for Workers compensation claims.

k) Referral #, Prior Authorization #: For cases which require prior authorization or the referral # to
be stated

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l) From Dates of service, To Dates of Service: Date of service is the date on which the service was
rendered to the patient, this may be one date or range of dates.

m) Procedure: To key in the CPT/ASA/HCPCS codes for the procedure performed.

n) Modifier: We shall enter all appropriate modifier codes

o) Diagnosis: To enter the ICD9 CM codes in here, we cannot enter more than 4 different ICD-9
codes in a ticket since CMS 1500 form has the capacity of 4 codes to be entered only.

p) Units: They are along with the procedure codes; normally they come up automatically once the
procedure codes are entered.

Note: All these functions are carried out in order to generate what is called as the Claim form –
Medical Bill that is sent as a mode of communication between the Billing office and the Insurance.
Session.

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Codes are already assigned

and the appropriate treatment

is just ticked off by the physician

Contents of the Charge ticket while rendering the treatment. –

o Patient's Name
o Date of Birth & SSN
o Medical Record Number
o Patient Account Number
o Name of Facility
o Place of Service
o Date(s) & Time of Service
o Procedure Codes
o Diagnosis Codes

PAYMENT POSTING OVERVIEW : ( illustrated with samples from that process )

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EOB
It is a statement / document sent by the insurance company to a participant in a health plan, listing
services, amounts paid by the plan and details of balance billing if any.Other Names of EOB: Statement
of Benefits; Explanation of Payments & Notice of Payment

o Name & Address of Insurance

o Provider's Name
o Provider's Number
o Patient Name
o Patient Account Number
o Policy ID Number
o Date(s) of Service
o Claim Number
o Date of Birth of patient
o Procedure Code
o Diagnosis Code
o Modifiers
o Place of Service
o Number of Service or Units
o Type of Service
o Billed Amount
o Allowed Amount
o Paid Amount
o Deductibles
o Coinsurance
o Group Number
o Check/Electronic Fund Transfer Number
o ICN/TCN - Internal/Transaction Control Number
o Denial Codes

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Billed Allowed
CPT
amount amount
code – Patient

responsibility

Date of Remark code –

service denial code with

the reason

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Insurance

name and

Provider

name and

** Thank you **

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