The Health Care Revenue Cycle - Finney Learning Systems

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The Health Care Revenue Cycle How Money is Generated for the Business of Health Care Delivery

Robert A. Kaplan

BA, DC, MBA, CPAT

Finney Learning Systems, Inc. 205 West 54th Street

New York, NY 10019 (212) 757-4788

www.TheRightWay.com [email protected]

Copyright © 2009, Finney Learning Systems, Inc. All rights reserved. No part of this publication may be reproduced or distributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a database or retrieval system without the permission in writing of the publisher. Every effort has been made to supply complete and accurate information. However, Finney Learning Systems, Inc. does not guarantee the accuracy or completeness of any information and assumes no responsibility for its use. ISBN 1-56435-201-3

10 9 8 7 6 5 4 3 2 1 Publisher: Doug Finney Editor: John Upham

Page Layout: Zach Katagiri

Cover Design: Sandy Krasovec

Book Design: Kevin Cochran, Zachary Aaron

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Contents

Welcome...........................................................................................................v

Chapter 1 - Health Care Plans and Legislation The Health Care Insurance Industry. .............................................................................2 Health Care Plans........................................................................................................... 2 Figure 1: Health Care Plans..............................................................................2 Indemnity.........................................................................................................3 Managed Care Organization (MCO)................................................................ 3 Important Definitions ....................................................................................................5 Physician’s Identification Numbers ...............................................................................6 The Major Players...........................................................................................................7 Figure 2: The Major Players.............................................................................. 8 The Department of Health and Human Services (DHHS) . .............................9 The Centers for Medicare and Medicaid Services (CMS) ................................9 Medicare. .......................................................................................................10 Medicaid. ....................................................................................................... 11 Civil Monetary Penalties Law (CMP) ............................................................12 State Children’s Health Insurance Program (SCHIP).....................................12 Balanced Budget Act of 1997 (BBA). ..............................................................12 Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA). ...........................12 Deficit Reduction Act of 1984 (DEFRA)..........................................................12 Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). .....13 Omnibus Budget Reconciliation Act of 1986 (OBRA of 1986) ........................ 13 Omnibus Budget Reconciliation Act of 1989 (OBRA of 1989)......................... 13 Omnibus Budget Reconciliation Act of 1990 (OBRA of 1990)......................... 14 Operation Restore Trust of 1995 (ORT). ......................................................... 14 Other Players................................................................................................................ 14 Health Insurance Portability and Accountability Act of 1996 (HIPAA). ........15 National Electronic Data Interchange (EDI)................................................... 16 Medical Ethics; Fraud and Abuse; Professional Liability...............................18 False Claims Act (FCA)..................................................................................20 Emergency Medical Treatment and Active Labor Act (EMTALA). ................21 Patient Bill of Rights....................................................................................... 22 Quality Improvement Organizations (QIO)................................................... 22 Understanding Acronyms and Abbreviations.............................................................. 23 Test Taking and Study Strategies..................................................................................27 Beware of Pitfalls with Multiple Choice Questions........................................28 Sample Test Questions.................................................................................................. 29 Chapter 2 - Contact with Hospitals and Doctors

Patient Registration, Admission, and Financial Concerns............................................50 Figure 3: Hospital Registration. .....................................................................50 Registration.................................................................................................... 51 Responsibilities of the Registration Staff........................................................ 52 Patient’s Interaction with the Hospital........................................................... 52 Affiliated Health Coverage Protocols.............................................................53 Physician Direct Services. ..............................................................................53 The Clean Claim and the Hospital Registration Staff.....................................53 Financial Counselor. ...................................................................................... 55 Summary........................................................................................................55 Effective Patient Scheduling........................................................................... 57 Advantages of Pre-Admitting Patients. .........................................................57 Disadvantages of Pre-Admitting Patients......................................................58 The Five Control Points.................................................................................. 59 Pre-Certification ............................................................................................ 59

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Medical Case Management/Utilization Review............................................60 Important Criteria for Registering Patients with Managed Care Coverage. .. 60 Consent..........................................................................................................60 Hospital Admitting Categories.....................................................................................62 Figure 4: Hospital Admitting Categories. ...................................................... 62 Categories of Health Care Charges. ...............................................................63 Categories of Health Care Delivered to the Consumer. .................................64 Health Care Coverage in the Military...........................................................................65 Figure 5: Health Care Coverage in the Military. ............................................ 65 CHAMPVA .................................................................................................... 66 TRICARE........................................................................................................ 66 Defense Enrollment Eligibility Reporting System (DEERS)........................... 68 Continued Health Care Benefit Program (CHCBP)........................................68 Medicare Determination of Patient Eligibility .............................................................69 Medical Spell of Illness................................................................................... 69 Hospital Inpatient Benefit Days Coverage.....................................................69 Skilled Nursing Facility Coverage (SNF). ...................................................... 69 Advanced Beneficiary Notice (ABN). ............................................................ 70 Medicare Secondary Payer (MSP)/Working Aged Provision. ....................... 70 The Medical Staff and Hospital Admitting Protocols...................................................71 Patient Confidentiality: Privacy Act of 1974................................................... 72 The Patient’s Medical Record and Telephone/Verbal Communication in the Hospital...................................................................................................... 72 Patient Self-Determination Act (PSDA)..........................................................73 Figure 6: OBRA 1990. ..................................................................................... 74 The Joint Commission on Accreditation of Health Care Organizations......... 74 Census.......................................................................................................................... 76 Average Daily Census ................................................................................... 77 Percentage of Occupancy............................................................................... 77 Generally Accepted Accounting Principles (GAAP). ................................................... 78 Understanding Acronyms and Abbreviations.............................................................. 79 More Test Taking Strategies..........................................................................................81 Sample Test Questions ................................................................................................. 82

Chapter 3 - Processing Procedures UB-04 Claim Form...................................................................................................... 100 Important UB-04 Code/FL Definitions. ....................................................... 101 Completion of the #4 Form Locator in the UB-04. ....................................... 104 Common Working File. ..............................................................................................107 Medicare Processing of the UB-04 Claim Form. ......................................................... 108 Claim Form Processing Terminology........................................................... 110 Medicare Secondary Payer........................................................................... 112 MS-DRG’s.. .................................................................................................. 114 Medicare DRG Window (The 72-Hour Rule)............................................... 115 Chargemaster ............................................................................................. 116 Figure 7: Chargemaster................................................................................ 117 Medicare Deductibles, Co-Payments and Co-Insurances for 2010. ............................ 118 Electronic Billing......................................................................................................... 119 Types of Financial Statements.....................................................................................120 Abbreviations and Acronyms..................................................................................... 121 Sample Test Questions................................................................................................ 123 Chapter 4 - Claim Form for the Doctor’s Office Medicare.....................................................................................................................138 Medigap....................................................................................................... 140 Medical Unlikely Edits (MUE).....................................................................140

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National Correct Coding Initiative (NCCI).................................................. 141 Advanced Beneficiary Notice (ABN). .......................................................... 142 Comprehensive Error Rate Testing (CERT)..................................................143 Recovery Audit Contractors (RAC)..............................................................143 Ambulatory Payment Classification (APC) ................................................. 143 Medical Necessity. ....................................................................................... 145 Medical Standards of Care and Malpractice. ...............................................146 Medical Malpractice.....................................................................................146 Waiver of Liability ....................................................................................... 146 Clinical Laboratory Improvement Amendment (CLIA)............................... 148 Health Insurance Claim Number (HICN)....................................................148 Medicaid. .....................................................................................................149 Resource Based Relative Value Scale (RBRVS)............................................. 149 The CMS-1500 Claim Form ........................................................................................151 How to Complete the CMS-1500 Claim Form .............................................152 International Classification of Diseases...................................................................... 160 Figure 8: ICD................................................................................................161 Current Procedural Terminology................................................................................165 Figure 9: CPT................................................................................................ 166 Health Care Common Procedure Coding System (HCPCS)....................................... 167 Evaluation and Management Services (E/M).............................................. 167 SOAP Notes and the Patient-Oriented Medical Records (POMR) ...............169 Definitions: Types of Third Party Reimbursement and Categories . .................... of Providers.............................................................................................. 170 Abbreviations and Acronyms..................................................................................... 171 Sample Test Questions................................................................................................ 173

Chapter 5 - Doctor/Hospital Financial Matters Medical Identity Theft................................................................................................ 190 Tips for Preventing and Detecting Medical Identity Theft........................... 190 Responding to Medical Identity Theft. ........................................................191 Third Party Collection Activity................................................................................... 192 Bankruptcy................................................................................................................. 193 Figure 10: Bankruptcy..................................................................................193 Involuntary Bankruptcy............................................................................... 194 The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. . 195 Confirming Bankruptcy by the Doctor or Hospital......................................195 Notification of Bankruptcy...........................................................................195 Discharge of Debtor. ....................................................................................196 Dismissal of Bankruptcy. .............................................................................196 Collection Regulations of the Federal Government....................................................197 The Truth in Lending Act (TLA) (1969). . .....................................................197 Fair Debt Collection Practices Act (FDCPA) (1978) . .................................... 197 Fair Credit Billing Act (1975)........................................................................198 Fair Credit Reporting Act (FCRA) (1971) . ................................................... 199 Fair and Accurate Credit Transaction Act (includes SKIP)...........................199 Equal Credit Opportunity Act (ECOA) .......................................................200 Deceased Patient Notification......................................................................200 General Accounting Principles Applied to Cashier Functions.....................201 Effective Collection Policies. ........................................................................201 Statute of Limitations................................................................................... 202 Collection Calls to the Patient and Collection Policies.................................202 Third Party Collection Agencies................................................................... 202 Charity Care, Indigent Patient, and Bad Debt.............................................. 203 Judgment, Lien and Tort Liability................................................................ 203

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Courtesy Discharge...................................................................................... 203 Abbreviations and Acronyms..................................................................................... 206 Sample Test Questions................................................................................................ 207 Appendix A: CMS-1500 Form.....................................................................................221 Appendix B: UB-04 Form. ..........................................................................................222 Appendix C: Superbill................................................................................................ 223 Appendix D: Medicare Card. .....................................................................................224

Index........................................................................................................................................227

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Welcome

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Welcome to The Health Care Revenue Cycle. This is a study guide to help the student or employee acquire an understanding of how the business of health care in the United States is organized, regulated and reimbursed. By highlighting and reinforcing important administrative concepts, the student is better prepared to pass certification examinations and work efficiently in the health care industry. This study guide can be used at a multitude of health care facilities—from a doctor’s office to a hospital to an insurance claims office. It can serve as both a training manual and a reference guide. In addition to pertinent and extensive information, each chapter concludes with definitions of abbreviations and acronyms and an abundance of sample test questions. The reader will also find helpful test-taking strategies. Health care in the United States has evolved since the mid-twentieth century into a complex web of delivery systems, governmental regulations and third party payers. Therefore, it is crucial that health care organizations have the expertise and resources to master the inevitable ever changing rules and regulations. Its staff must know how money is generated for the business of health care delivery.

Chapter 1 - Health Care Plans and Legislation

Chapter 1

Health Care Plans and Legislation Chapter Topics •

The Health Care Insurance Industry



Health Care Plans



Important Definitions



Physician Identification Numbers



The Major Players (CMS, DHHS, Medicare, etc.)



Other Players (HIPAA, FCA, EMTALA, etc.)



Understanding Acronyms and Abbreviations



Test Taking and Study Strategies



Sample Multiple Choice Test Questions

After studying this chapter you will understand: •

Indemnity, MCOs: HMOs, PPOs, POSs



PINs, UPINs, PPINs, EINs, SSNs, NPIs



Department of Health and Human Services (DHHS)



Centers for Medicare and Medicaid (CMS)



Medicare and Medicaid



State Children’s Health Insurance Program (SCHIP)



Balanced Budget Act (BBA)



TEFRA and DEFRA



COBRA and OBRA



MAAC and Limiting Charge



Health Insurance Portability and Accountability Act of 1996 (HIPAA)



EDI



FCA, Department of Justice (DOJ) and Office of Inspector General (OIG)



Stark Laws, Anti-Kickback Statute, Sarbane-Oxley Act



Fraud and Abuse



Medical Ethics



Professional Liability



CMP or CMPL



EMTALA



Patient Bill of Rights

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The Health Care Insurance Industry This chapter examines organizations, and the legislation they create, that regulate how health care is provided to patients in the United States whether in a hospital, clinic, doctor’s office, nursing home, public health clinic, ambulance service or medical supply company. An examination of the types of insurance plans that pay for health care, and the coding manuals that are used to get the doctor and hospital paid, are also examined. It is crucial for the reader of this study guide to understand that Medicare (operated by the federal government) is the basis for all health care delivery, processing, and payment in the United States. Fee schedules, payment protocols, coding manuals and forms, all infrastructure associated with health care, legal ramifications concerning how the patient’s treatment needs are handled, legal prosecution of health care fraud and abuse, hospital and nursing home inspection and accreditation, etc., are all based on Medicare. All health care patients and the public, providers, nurses, hospitals, nursing homes, suppliers, insurance carriers, governmental agencies, the Department of Justice and Office of Inspector General, etc., ultimately follow Medicare’s rules and regulations.

Health Care Plans Figure 1: Health Care Plans

There are basically two types of insurance plans — Indemnity and Managed Care. It is rare today for a patient to pay cash for all his/her health care. Even when the patient does pay cash, the doctor’s office or hospital ultimately submits an insurance claim, and the patient is reimbursed directly by the carrier or Medicare.

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Indemnity This type of insurance plan protects (indemnifies) the patient against a loss of money as a result of the patient receiving medically necessary health care services. Payment to the doctor is on a fee-for-service (FFS) basis—money paid for each service provided the patient and done retroactively (after the services have been provided). The health care provider or hospital bills the insurance company directly on a claim form and gets paid according to a payment, fee or benefits schedule. The patient pays a premium (the cost of buying the insurance) every year to keep the insurance active, and also pays a deductible every year before the insurance company begins paying for medical services. If the provider or hospital is a participating provider, they signed a contract with the insurance carrier to treat their patients and accept their fee schedule as payment in full, except for deductibles, co-payments or co-insurances. If the physician is a nonparticipating provider, he has not signed a contract with the insurance carrier and the patient pays the doctor directly when services are rendered. The indemnity plan may still reimburse the patient, but the patient has to bill the insurance company directly and will probably receive a fraction of what was paid to the doctor. The patient also pays a co-insurance (usually 10% or 20%), a percentage of each claim (i.e., billing for treatment provided the patient), before the insurance company pays the remainder of the claim. In an “80/20 plan,” the most popular, the patient pays 20% of the fee schedule amount to the doctor, and the insurance company pays the remaining 80% of the fee schedule to the doctor. In a “90/10 plan,” the patient pays 10% of the fee schedule to the doctor, and the insurance company pays the remaining 90% of the fee schedule to the doctor. It is important to understand that the indemnity contract is between the insurance company and patient only. The consumer can go to any doctor, hospital, therapist, or medical supplier he chooses and the insurance company pays the bill. The more services the patient uses, the more money the doctor or hospital makes. Indemnity insurance is the most expensive form of health care plan as the provider does not share the financial risk of providing medical treatment, procedures, and supplies to the patient.

Managed Care Organization (MCO) This type of insurance plan restricts who the consumer can see for health care treatment. The doctors and hospitals and patient sign a contract with a managed care plan. The doctors and hospitals who sign an MCO contract are considered to be in network or participating providers. In return for the patient using only participating providers and hospitals, there are lower premiums, deductibles, co-insurances and co-payments compared to indemnity plans. MCO’s are the most common type of health insurance plan in the United States today. They include Health Maintenance Organizations (HMO), Point-of-Service plans (POS), and Preferred Provider Organizations (PPO). The main goal of the MCO

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The Health Care Revenue Cycle

is to ration the use of health care services and reduce the amount of money paid for those services. 1. Health Maintenance Organizations (HMO). This type of MCO is where the Primary Care Physician (PCP) acts as the gatekeeper and is given a “capitated” rate (a set amount for each member per month known as “Per Member Per Month” (PMPM). For the PMPM to be paid “prospectively” (in advance), the doctor must provide to the patient certain services such as screenings, immunizations, well-baby check-ups, mammograms for women, etc., as well as treatment that is determined to be medically necessary by the gatekeeper. However, the doctor does not get paid more for additional services and products, so there is the chance the doctor will lose money on some patients and make a profit on others. In other words, in this type of plan, the doctor and hospital share in the risk of providing medical services, and there is an incentive for the gatekeeper to restrict the patient’s access to health care services and products in order to make money. 2. Open Access Plans. Many HMOs have switched from using gatekeepers to plans in which their members can visit any specialist in the network without referrals. This is known as HMO Open Access Plan. Even if referrals are necessary, female HMO members can still see OB-GYN specialists without a referral. 3. As the gatekeeper, it is the doctor who determines what treatment is to be provided (if any), and who the patient will be referred to for more specialized services. Patients cannot simply get whatever services or products they want. They are not only limited to participating doctors and hospitals, but the gatekeeper doctor also restricts referrals to other medical specialists and pre-authorizations are required. Most commonly, the gatekeeper/doctor is a Primary Care Physician (PCP), but also can be a Gynecologist (GYN) for a woman or a pediatrician (PED) for a child. 4. Point-of-Service Plans. These are also known as open HMO’s. They operate like HMO’s, but allow the consumer to use doctors and hospitals outside the network of participating providers. There are pre-authorizations required in a POS plan and utilization of health care services is restricted. The patient pays higher premiums for a POS than an HMO for the privilege to go “out-of-network.” If the patient uses an out-of-network provider or hospital, the patient is responsible for higher deductibles, co-payments, and co-insurances. The patient is responsible for the full cost of any health care services the POS plan considers to be not covered. The out-of-network doctor or hospital is paid on a FFS basis as determined by the POS, but it is lower than reimbursement paid to in-network providers. There is no gatekeeper, which means there is no doctor assigned by the POS plan to restrict the patient’s access to other doctors, hospitals, services and products. 5. Preferred Provider Organizations (PPO). This is the most popular type of health plan. It is provided by employers and there is no gatekeeper. The doctors and hospitals contract for their medical services with the PPO directly, at a lower rate than they normally charge, in return for a large pool

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of patients who pay lower fees. The consumer can choose any health care provider or facility, even if outside the network. Like the POS, however, the patient would be responsible for higher deductibles, co-insurances and co-payments if they go “out-of-network.” The patient would still require pre-authorizations, and for health care services not covered by the PPO the patient would be responsible to cover the full cost.

Important Definitions Physician. Defined by Medicare as a Doctor of Medicine (MD), Doctor of Osteopathy (DO), Doctor of Dental Medicine (DMD), Doctor of Dental Surgery (DDS), Doctor of Podiatric Medicine (DPM), Doctor of Optometry (OD), or Doctor of Chiropractic (DC) who are legally licensed to practice (provide medical services and products to human beings) in the state in which they deliver health care services. Health Care Practitioner. These are also known as Non-Physician Practitioners (NPP). Includes Physician Assistant (PA), Certified Nurse Midwife, Psychologist (MA, MS, PhD), Nurse Practitioner (NP), Clinical Social Worker (MSW), Physical Therapist (PT), Occupational Therapist (OT), Respiratory Therapist (RT), Speech Therapist (ST), Certified Registered Nurse Anesthetist (CRNA), or Registered Nurse (RN, MSN, PhD), or other licensed health care professionals. Good Samaritan Act. Legislation that protects health care professionals from liability of any civil damages (money) as a result of rendering emergency care. For example, if a doctor provides emergency medical care to a fellow passenger while on a plane who suffered a heart attack, and the patient dies or suffers complications, the doctor would be protected under this act against legal action. New Patient. One who has not received health care services from the physician, or another physician of the same specialty in the same group practice, within the past three years. Established Patient. One who has received health care services from the physician, or another physician of the same specialty in the same group practice, within the past three years. Inpatient. A person who is admitted to the hospital with the assumption the patient will stay for 24 hours or more (overnight stay). Outpatient. A patient who receives treatment in a doctor’s office (whether outside the hospital or in a medical building associated with the hospital), hospital clinic or outpatient facility (such as a family or dermatology practice), emergency room or department (E/R), hospital same day surgery center, or ambulatory surgical center (ASC) where the patient is released within 23 hours, or a hospital admission for observation purposes only (the doctors and nurses watch the patient and do not treat the patient; this can occur in the E/R). Coding. The process of converting diagnoses, symptoms, diseases, procedures, services, and products into numbers and letters. The ICD-9-CM, HCPCS, CPT-4, CDT, and NDC manuals are used for this purpose by the medical biller and coder.

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Clearinghouse. A majority of providers and hospitals use a clearinghouse to send and receive information in correct EDI format (HIPAA approvied electronic) to third party payers. Under HIPAA, clearinghouses can accept the claim forms in non-standard formats from the provider, and translate them into standard formats utilizing ICD-9, CPT, HCPCS, CDT and NDC codes (numbers and letters), before forwarding them to third party payers. Clearinghouses must receive all required data elements from providers and hospitals, they cannot create or modify the content of these claims forms. They review the claim forms to be valid, complete, and HIPAA compliant, and if they find mistakes, they return the claims to the provider or hospital for corrections, review them again, before sending them out to Medicare, Medicaid, or commercial (private) third party payers. A medical practice or hospital may choose to use a clearinghouse to transmit all their claims, or just some of them. Once the clearinghouse has sent the claims, a verification report is sent to the provider or hospital which summaries what was sent to the payer. Later the receiver, the third party payer, will send back an electronic response showing the transmission was received from the clearinghouse and the insurance adjudication process can proceed for payment. Pre-certification. This is the process of confirming the patient’s insurance eligibility and collecting necessary information prior to the patient using the hospital or health care facility as an inpatient or outpatient. Pre-certification may also include the insurance company issuing an authorization number (through its review organization) approving the medical necessity of the services, procedures or supplies that are going to be rendered to the patient. Maximum Medical Improvement (MMI). This is where the doctor has determined the patient has reached the best clinical improvement that is possible for the diagnosis and treatment provided.

Physician’s Identification Numbers These are unique numbers (and letters) assigned to each doctor, or group of doctors, medical supplier, therapist, nurse, health care facility, etc., by insurance companies, MCO’s, Medicare, Medicaid, and IRS so the provider can be easily identified in all billing and coding situations and correspondence. Examples include the following: Provider Identification Number (PIN). A number assigned by the insurance carrier to a physician who renders services to their patients (membership). State License Number. Every physician, medical supplier, nurse, therapist, etc., must obtain this number in order to practice in each state in which they wish to render health care or provide a service or product. Unique Provider Identification Number (UPIN). A number assigned by Medicare to each physician. Performing Provider Identification Number (PPIN). Each physician has a separate PPIN for each group or office or clinic in which the physician practices. In Medicare, the group or clinic of practicing doctors gets a Group Provider Number (see below)

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as well as each doctor receives an individual eight digit (letters and numbers) PPIN assigned by Medicare. Group Provider Number. This number is used to identify a group of doctors or therapists who provide health care services. In addition, the PPIN or PIN may also be used for each individual provider in the group. However, the Group Provider Number may be the only number used when the doctor is part of a group practice in billing and coding the insurance carrier or Medicare. Social Security Number (SSN): A 9-digit number assigned to all legal United States citizens. Usually a provider of health care services would not normally use this number when billing and coding third party payers unless they do not have an EIN (see below). Employer Identification Number (EIN): This is also known as the Federal Tax Identification Number, and is issued by the Internal Revenue Service (IRS) for anyone who operates a business and/or who is an employer. This number is usually placed in the insurance billing and coding forms when the doctor or supplier is the owner of the medical practice, medical supply company, peer review organization (PRO), Nursing Referral Service, etc. National Provider Identifier (NPI). NPI is an important number that each health care provider (hospital, SNF, doctor, supplier), health plan, and clearinghouse, etc., is given by HIPAA for all their administrative and financial business within the health care industry or Medicare. The NPI is part of HIPAA’s Administrative Simplification Standard and consists of 10 numbers and letters. “Simplification Standard” means that the goal of HIPAA is to minimize confusion and assign one permanent number, the NPI, which would replace all the other physician identification numbers. This way, anyone doing business with the medical community will use their NPI as the sole reliable identifier, and all the other numbers: PIN, PPIN, UPIN, etc., will gradually be phased out. The CMS-1500 and UB-04 claim forms require the use of the NPI. The other reason the NPI is so important is that the patient can easily identify all the providers they come into contact with through the course of their treatment and through the course of their contact with the health care industry.

The Major Players The Department of Health and Human Services (DHHS) and the Centers for Medicare and Medicaid Services (CMS) are the federal government’s main administrative bodies that set standards for health care delivery in the United States. Everything from fees, manuals, regulations, forms, and health care locations in the United States, emanate from the DHHS and CMS. Medicare, a division of CMS, is the gold standard by which all insurance carriers and governmental bodies determine how to deliver, adjudicate, and reimburse health care. The major regulatory bodies and laws affecting health care include: DHHS, CMS, MEDICARE, MEDICAID, SCHIP, BBA, TEFRA, DEFRA, COBRA, OBRA and MAAC.

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Figure 2: The Major Players

The Department of Health and Human Services (DHHS or HHS) (www.hhs.gov) and The Centers for Medicare and Medicaid Services (CMS), formerly called the Health Care Financing Administration (HCFA), are the two main governing bodies responsible for health care delivery (i.e., providing health care) and reform in the United States. There are many departments within DHHS, but its principal agency for administering health care is Medicare. Medicare is the nation’s largest health care administrative body and delivery system, handling over one billion claims per year. Today, health care rules and regulations, fee schedules, payments’ systems, and delivery mechanisms, all come from Medicare. It establishes the standards for the administration of health care for the entire country, both public and private, such as public health clinics, non-profit insurance companies such as Blue Cross and Blue Shield, and private for-profit insurance carriers such as State Farm, AllState, Humana and Aetna.U.S. Healthcare.

Chapter 1 - Health Care Plans and Legislation

The Department of Health and Human Services (DHHS) DHHS supports more than 300 programs, some of which are: 1. Medicare 2. Medicaid 3. Insuring drug and food safety (for example, preventing food poisoning and adverse drug reactions)

4. Improving the health of mothers and infants (providing pre-natal and post-natal care, proper nutrition and hygiene)

5. Medical and social science research 6. Prevention of infectious diseases, immunizations 7. Safety and health care for elderly Americans including home-delivered meals

8. Child-support legal enforcement (make sure that parents financially support their dependent children)

9. Aid to Families with Dependent Children (AFDC) These numerous DHHS programs are administered through 11 divisions of DHHS which include: 1. Centers for Medicare and Medicaid Services (CMS) 2. National Institutes of Health (NIH) 3. Food and Drug Administration (FDA) 4. Centers for Disease Control and Prevention (CDC) 5. Agency for Toxic Substances and Disease Registry (ATSDR) 6. Indian Health Services (IHS) 7. Health Resources and Services Administration (HRSA) 8. Substance Abuse & Mental Health Services Administration (SAMHSA) 9. Agency for Health Care Research and Quality (AHRQ) 10. Administration for Children and Families (ACF) 11. Administration for Aging (AOA)

The Centers for Medicare and Medicaid Services (CMS) CMS, a division of DHHS, acts primarily as the buyer of health care services for Medicare (Title XVIII) and Medicaid (Title XIX) insuring that programs are properly administered by its contractors and state agencies). CMS establishes policies for payment of health care providers, acts as a researcher on the effectiveness of health care treatment, insures proper management and financing, and assesses

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the quality of health care facilities and services such as hospitals, nursing homes, insurance companies, health maintenance organizations, and federal, state, and local governmental agencies that deliver health care services to the public. CMS is also the guarantor of health care security and equal access of health care services and products to all Americans. In other words, CMS guarantees that all Americans can get medically necessary treatment regardless of whether they can pay and with no concern as to race, sex, or ethnic background. Note: See www.cms.hhs.gov to view the relationship between Medicare and Medicaid.

Medicare Medicare is a federal program (Title XVIII of the Social Security Act), which was signed into law in 1965. Medicare Parts A and B are known as the Original Medicare Plan where services are paid under a Fee-for-Service (FFS) arrangement. It is made up of four (4) parts: Part A:

Pays for inpatient hospital services, skilled nursing

facilities (SNF), home health services (HHS), hospice care and psychiatric inpatient care. Also known as

Hospital Insurance (HI). Anyone who receives Social Security benefits by working for at least 10 years (40

quarters) and paying social security taxes, or having certain types of disabilities like ESRD, automatically is enrolled in Part A by the Social Security

Administration (SSA) and does not have to pay

premiums. Those who are over 65 years of age and do not have Part A benefits can still purchase Medicare Part A coverage by paying a premium. Part B:

Pays for physician services, medical equipment

and supplies (DME-durable medical equipment), outpatient hospital services: outpatient physical

therapy, occupational therapy and speech therapy, outpatient mental health care, clinical laboratory

services (Urinalysis [UA] and Complete Blood Count [CBC]), home health care, blood, etc. Also known as

Supplementary Medical Insurance (SMI). Those who are

enrolled in Part A are automatically eligible to purchase Part B coverage (premium for 2009 is $96.40/month). Those desiring Part B coverage must enroll, coverage is not automatic. If enrollment in Part B coverage takes place more than 12 months after a person’s

initial enrollment in Part A, there is a permanent 10% increase in premium for each year the beneficiary

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failed to enroll in Part B. For example, if the

beneficiary first enrolled in Part A in 2008, and does not choose to purchase Part B coverage until 2009,

there would be a $9.64 penalty (10% X 96.40) added to each month’s premium permanently as long as Part B is purchased during the patient’s lifetime. Part C:

Originally called Medicare + Choice. Part C is

available to those beneficiaries who have Parts A

and B. Part C gives the beneficiary the option to get

Medicare Advantage Plans, e.g., Health Maintenance Organizations (HMO’s), Preferred Provider

Organizations (PPO’s), Private Fee for Service Plans, Special Needs Plans, and Medicare Medical Savings Accounts (MSA), which compete directly with the Original Medicare Plan. Part D:

Pays for prescription drugs through private insurance

plans. Part D was authorized through the Medicare

Prescription Drug, Improvement and Modernization Act of 2003 also known as the Medicare

Modernization Act or MMA. Those who have

Medicare Parts A and B are eligible (can purchase)

Part D, if they choose, through monthly premiums. The Medicare program provides services to those who are over 65 years of age, those who are disabled of any age, and those with end-stage renal disease (ESRD) who require kidney transplantation or dialysis of any age. Medicare is administered by the CMS. In cases where the patient is low income and meets certain income requirements, “dual eligibility” can be provided where Medicaid covers some of the costs of Medicare’s Part A and Part B deductibles, co-payments, and co-insurances. This way the patient has little or no out-of-pocket expenses and has medically necessary treatment covered by both Medicare and Medicaid. Medicare Parts A and B are known as the Original Medicare Plan.

Medicaid The Medicaid Program (Title XIX of the Social Security Act) is a funded and administered state-federal partnership (both the state and federal governments work together) health insurance program. It is for low-income people with children and people who are aged, blind, disabled or collecting Supplemental Security Income (SSI). Also included are low-income pregnant women with children and persons with very high medical bills. SSI includes money and food stamps from the government. States set eligibility standards (those who can get Medicaid) and establish payment rates and benefits and services (what and how much the Medicaid recipient will

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The Health Care Revenue Cycle

receive and how much the doctor and hospital will be paid for providing health services).

Civil Monetary Penalties Law (CMP or CMPL)

CMP is also known as Title XI of the Social Security Act. These are money fines that are applied to providers and hospitals who are convicted of fraud and abuse concerning Medicare, Medicaid, any insurance plan or third party payer.

State Children’s Health Insurance Program (SCHIP) State Children’s Health Insurance Program (SCHIP) (Title XXI of the Social Security Act) is a program for children whose parents have too much money to be eligible for Medicaid, but not enough to buy private insurance and are, therefore, uninsured. As of February 2009, President Obama signed into law the Children’s Health Insurance Reauthorization Act that expanded coverage for SCHIP-eligible families to include children of legal immigrants and pregnant women. Funding of the expanded SCHIP coverage would occur by increasing the federal tobacco tax. The SCHIP program differs in each state, but all states must provide the following basic services. 1. Inpatient and outpatient hospital service 2. Doctor’s medical and surgical services 3. Laboratory and x-ray services 4. Well-baby/child care

5. Immunizations (Important!)

Balanced Budget Act of 1997 (BBA) BBA, signed into law by President Clinton in August 1997, enacted the most significant changes to Medicare and Medicaid since their inception, and expanded services to SCHIP (Title XXI) through CMS. This act also established the Outpatient Prospective Payment System (OPPS) known as Ambulatory Payment Classifications (APC’s).

Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) TEFRA is a federal law affecting employers with 20 or more full or part-time employees. It requires that for employees who are senior citizens, 65 to 69 years old, the employer’s group health insurance plans (EGHP) continue to be the primary payer. Medicare will be the secondary payer. TEFRA, therefore, affords older workers the same insurance coverage as younger workers.

Deficit Reduction Act of 1984 (DEFRA) DEFRA, like TEFRA, is applicable to employer groups with 20 or more employees. DEFRA raised TEFRA’s upper age limit beyond 69 years of age for active employees, making them eligible to enroll in the same group health insurance coverage offered to younger employees. However, the spouse of an active employee remains restricted

Chapter 1 - Health Care Plans and Legislation

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to insurance coverage up to age 69 under this plan. DEFRA also froze the amounts physicians can charge for their services to 1984 rates.

Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) amended TEFRA by eliminating the upper age limit of 69 for the spouse of an employee who has group health insurance working for an employer with 20 or more employees.

Omnibus Budget Reconciliation Act of 1986 (OBRA of 1986) Do not confuse OBRA of 1986 with OBRA of 1989 or OBRA of 1990. The OBRA of 1986 made employers with 100 or more employees, with large group health plans (LGHP), the primary coverage for active employees who have Medicare, or dependents of active employees who have Medicare due to disability other than ESRD. OBRA set limits for what health care providers can charge Medicare beneficiaries, which was known as MAAC (Maximum Allowable Actual Charge). MAAC is essentially a Medicare fee schedule stating what Medicare would pay for each health care service or product. MAAC is important because every payer, whether private or public, pays for medical services and products based on what Medicare reimburses. OBRA of 1986 also requires the use of HCPCS coding on the UB-04 claim form for Medicare claims for outpatient services when rendered in Acute Care or Tertiary Care or Long-Term Care Hospitals, and Hospital-based Rural Care Clinics. Tertiary care hospitals provide a full range of medical services, are usually teaching hospitals associated with medical schools and universities, provide the highest level of trauma care for the most severe cases, and are associated with research. Examples of tertiary care hospitals include Massachusetts General Hospital associated with Harvard University, the University of Pennsylvania Hospital affiliated with University of Pennsylvania, Hershey Medical Center associated with Pennsylvania State University, etc.

Omnibus Budget Reconciliation Act of 1989 (OBRA of 1989) OBRA 1989 changed how payment is made to physicians by Medicare, and established the Resource Based Relative Value Scale (RBRVS). RBRVS is composed of three elements: 1. Relative Value Unit (RVU) is a fee schedule for every medical procedure recognized by Medicare. Each medical procedure is assigned a value based on all of the following:

• Work required. (For example, how much effort and time and expertise is needed by the doctor to perform the surgery.)

• Practice expense. (For example, what it costs the doctor to perform the surgery.)

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The Health Care Revenue Cycle

• Malpractice insurance expense (For example, neurosurgery

costs more to insure against a “medical misadventure” that an appendectomy.)

2. Medicare Volume Performance Standard (MVPS) determines how much every year Medicare will increase payment for services provided by

health care providers and facilities to patients. For example, for 2009, the

Medicare fee for performing an appendectomy was increased 10% (2008= $1500; 2009= $1650).

3. Limits the amount non-participating physicians can charge Medicare

patients, which is 115% of the Medicare fee schedule, known as the limiting charge (which replaced the MAAC [OBRA of 1986]). The limiting charge remains in effect today.

Omnibus Budget Reconciliation Act of 1990 (OBRA of 1990) As a result of OBRA of 1990, hospitals who wish to participate in Medicare and Medicaid must develop and implement programs and policies assisting the patient to make their own medical decisions, appoint a Health Care Surrogate or Durable Power of Attorney, and execute an AMD. The Patient Self Determination Act (PSDA) is also known as the Advanced Medical Directive (AMD). The PSDA gave the patient the right (in a legally binding document) to determine, in advance, what health care measures they want if they become incapacitated including a “Do Not Resuscitate” (DNR) directive, and appoint a Health Care Surrogate and a Power of Attorney to carry out their directives. The DNR allows the patient to state, in a legally binding document, what health care measures they want, or do not want, to maintain their life in case of becoming terminally ill or injured.

Operation Restore Trust of 1995 (ORT) The Operation Restore Trust of 1995 (ORT) was designed to combat fraud, waste and abuse in the five states with the highest Medicare expenses, e.g., California, Florida, New York, Texas and Illinois. These five states have received particular attention by the federal government because they have the highest rates of health care fraud, abuse and waste in the United States.

Other Players These organizations and laws complement the DHHS and CMS, as they play an integral role in the delivery of health care and establish standards for the elimination of health care fraud, abuse and waste and prosecution of offenders. They include: HIPAA, NPI, EDI, FCA, DOJ, OIG, Fraud and Abuse, Medical Ethics, Professional Liability, CMP, EMTALA, Patient Bill of Rights.

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Health Insurance Portability and Accountability Act of 1996 (HIPAA) HIPAA, a.k.a Kennedy-Kassenbaum Act, insures the portability of health insurance when employees change jobs (makes the employee capable of taking their insurance from employer to employer). In addition, it increases accountability of the health care contracts that insurance companies write for the patient, increases accountability of the health insurance carrier itself (makes them more transparent), contains broad new health care anti-fraud and anti-abuse provisions so the government can fight fraud and abuse and protect the patient from having their Personal Health Information (PHI) stolen, and improves availability of health insurance to working families and their children. HIPAA also establishes three administrative simplification provisions which are: (1) HIPAA Privacy Rule, (2) HIPAA Security Rule, and (3) HIPAA ElectronicTransaction and Code Sets Standards. Managed Care Organizations (MCO’s) are affected under HIPAA for ALL their health care related business, not just Medicare. For further information contact: http://www.cms.hhs.gov/hipaa/hipaa2. HIPAA’s key provisions include the following: 1. Guaranteed ability to get health insurance for employers with 50 or less employees. This means these employees will have the ability to purchase health care insurance regardless of their health status, age, or medical history. 2. Guaranteed renewal of insurance regardless of health status of any member of a group of insured people. This means the employee can continue to have health insurance year after year regardless of health status, age, or medical history. 3. Guaranteed access for those who lose their group health insurance due to loss of employment, or change of job to an employer without insurance. 4. If an employee had a medical condition that existed prior to getting new health insurance with a current or new employer, this medical condition cannot be used to deny coverage to employees who already had coverage. HIPAA also applies this rule to limited medical conditions treated and diagnosed within six (6) months prior to enrollment in a new insurance health plan, whether it is a current or new employer. This means the new insurance company cannot deny coverage to the employee because they had recently been diagnosed and treated for certain diseases or illnesses. 5. For self-employed individuals (people who own and operate their own businesses), tax deductions for insurance costs will increase from 30% to 80%. 6. Health Savings Accounts (HSAs), is the new name for Medical Savings Accounts (MSA’s), and remain in effect. 7. Administrative Simplification. All providers and health care plans involved in electronic health care transactions must utilize a single set of national standards and identifiers. This means those doctors and hospitals and medical suppliers who transmit their bills for payment through the

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The Health Care Revenue Cycle

computer, must use standardized codes (numbers and letters) and forms and language that everyone understands. 8. Covered Entities: Under HIPAA there are 3 types of health care organizations that are affected: (1) Health Plans, (2) Health Care Clearinghouses, and (3) Health Care Providers. 9. Health care fraud and abuse are investigated and prosecuted by the Department of Justice (DOJ) and the Office of Inspector General (OIG). 10. HIPAA regulations are enforced by the Office for Civil Rights (OCR).

National Electronic Data Interchange (EDI) EDI produced rules that made all HIPAA paperwork and financial transactions the same and understandable by everyone involved in the health care industry (just like HIPAA assigns an NPI). Manuals that have codes describing all aspects of providing and billing health care, such as ICD-9-CM, CPT-4, HCPCS, CDT, NDC, Unique Health Identifier, Security and Privacy of Health Information, Electronic Signature, and information transfer between health plans, are now the only materials used so that everyone involved in the business of health care understands what everyone else is doing. Remember, one of the major goals of HIPAA is to standardize all criteria within the entire health care industry 1. The International Classification of Diseases, 9th Revision, Clinical Modification (ICD-9-CM), is a three volume numeric and alphanumeric coding manual established by the World Health Organization (WHO) for all outpatient and inpatient conditions, symptoms, pathologies and diagnoses. The ICD-9CM is updated every year. The CMS also sponsored the production of the ICD-10-PCS, International Classification of Diseases, 10th Revision, Procedure Classification system, which will replace the ICD-9-CM, for reporting a more detailed description of health care procedures and technologies for the inpatient. The ICD-10-CM will replace the ICD-9-CM for inpatient and outpatient diagnoses and clinical conditions. 2. The ICD-9-CM consists of Volume 1, Tabular List, which is a numeric (numbers) and alphanumeric (letters and numbers) listing of all the diagnosis/pathology/condition codes, and Volume 2, The Alphabetic Index, is an alphabetic listing of everything found in Volume 1. Volume 1 also includes V codes, which are supplementary alphanumeric codes for non-pathological medical situations the patient may encounter such as innoculations, tissue transplantation, dialysis, family and patient medical history, rehabilitation, chemotherapy and radiation therapy, etc. Volume 1 also includes E codes, which are supplementary alphanumeric codes for external causes of trauma such as motor vehicle accidents (MVA’s), poisoning, terrorism, railroad/bus/ aircraft injuries, water-related trauma, sports injuries, etc. 3. The Current Procedural Terminology, 4th edition (CPT-4), is a manual of numeric and alphanumeric codes for all physician, hospital, Ambulatory Surgical Center (ASC), Skilled Nursing Facility (SNF), inpatient and outpatient medical procedures and services, and is owned by the American Medical

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Association (AMA). Place of Services code sets (POS) are also part of this manual, which specifies locations that medical services and procedures are delivered to the patient such as the doctor’s office or hospital. The CPT is also composed of modifiers and add-on codes which are coupled to the main CPT code, that further describe particular physician services in more detail, as well as “P” codes which describe the patient’s physical status (how healthy or sick they are) when a medical procedure such as anesthesia or surgery is performed. 4. The CPT is divided into three 3 categories of codes: •

Category I codes (5-digit numeric) are found in six chapters: Evaluation and Management (E/M), Anesthesiology, Surgery, Radiology, Pathology and Laboratory, and Medicine, and are for inpatient and outpatient physician procedures and services. Category I codes are the only ones that are reimbursed by the insurance companies and Medicare.



Category II codes (5 digit alphanumeric ending in the letter “F”) are for performance measurement and statistical analysis (counting things).



Category III codes (5 digit alphanumeric ending in the letter “T”) are for new and experimental medical procedures and services. In some instances when the Category III code becomes proven through research and generally accepted by the medical community, they become Category I codes.



HCPCS, which stands for the Health Care Common Procedure Coding System, was developed by the CMS (HCFA) as a 2-part or level coding system. This manual consists of a collection of codes for procedures, supplies, products and services that are rendered to Medicare and Medicaid beneficiaries, and patients with other private insurance plans.



These codes are divided into two levels: Level I, which are the same codes as the CPT-4 Category I codes, and Level II codes, which are national codes that cover ambulance services, medical supplies and products, durable medical equipment (DME), prosthetics and orthotics and some physician services not found in Level I. Although Level II codes are called national codes, in reality, all the ICD, CPT, HCPCS, CDT, and NDC codes are national codes as they are used throughout the United States.

5. The National Drug Code manual (NDC) is made up of codes for retail pharmacies and pharmaceuticals, and is maintained by the Food and Drug Administration (FDA). 6. The Current Dental Terminology manual (CDT) is made up of codes for dental services. Additional information and further clarification to assist with your understanding and test preparation can be accessed at the following websites: http://www.cms.hhs.gov/healthplans/ http://answers.hhs.gov

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The Health Care Revenue Cycle

http://www.wedi.org http://www.wpc-edi.com

Medical Ethics; Fraud and Abuse; Professional Liability Medical Ethics are standards of conduct based on moral principles. They are generally accepted as a guide for behavior towards patients, physicians, co-workers, the government, insurance companies and anyone within the health care industry. Acting within ethical behavior boundaries means carrying out one’s responsibilities with integrity, decency, respect, honesty, competence, fairness and trust, like a Boy or Girl Scout! Professional Liability refers to the legal concept that the physician and hospital are liable for their own conduct and conduct of their employees. “Respondent Superior” is the legal term meaning “Let the master answer.” In other words, the doctor and hospital are liable for the actions of their employees whether it involves billing and coding, adherence to HIPAA, treatment of the patient, fraud, abuse, etc. Fraud is defined as a deliberate deception perpetuated for unlawful or unfair gain. In other words, lying to the patient or falsifying paperwork to the insurance company to get money or assets that do not belong to the provider. Health Care Fraud includes the incorrect reporting of a diagnosis or procedure or service in order to maximize payments. It also pertains to billing for services not rendered, altering claims (changing the diagnosis and treatment) to receive payment, or unbundling and accepting kickbacks (monetary or otherwise). Fraud and abuse are investigated and prosecuted by the Office of Inspector General (OIG) and the Department of Justice (DOJ). Abuse is defined as the misuse of a person, substance, service, procedure, or financial matter so that harm is caused. Health care abuse includes the following: 1. Medically insufficient, excessive or unwarranted use of technology (surgical, diagnostic, laboratory, etc.); medically inappropriate utilization of pharmaceuticals, services, procedures and products (such as durable medical equipment [DME]). In other words, giving the patient too much (overutilization) or too little (under-utilization) surgery or medicine, or giving medical supplies to the patient that are not needed. 2. Abuse of authority or compromising patient privacy or patient confidentiality matters (violating HIPAA). In other words, not keeping the patient’s medical information from public view, purposely divulging information publicly to harm the patient or selling it to make money. 3. Improper billing and coding practices (e.g., upcoding, which is coding for a more expensive service than what was actually provided), billing Medicare instead of the primary insurer, increasing charges to Medicare beneficiaries but not other patients, or unbundling of services and procedures. Unbundling is defined as using more procedural codes (CPT and HCPCS) than is normally warranted in order to bill for medical treatment to get additional

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reimbursement from the insurance company. Bundling is defined as taking several procedural codes and combining them into one for the treatment rendered. This usually results in less money being paid to the health care provider. 4. Medically unnecessary or AMA (against medical advice) treatment of the patient. This refers to the illegal and clinically unsubstantiated transferring of the patient out of the hospital. The provider or health care facility’s duty of care to the patient has been violated. For example, a doctor or hospital might “dump” the patient on the street or at home before the patient is medically stable or because the patient cannot pay. AMA also includes the patient voluntarily leaving the hospital before treatment is completed or MMI has not been achieved, or against the doctor’s advice. Reporting Fraud and Abuse may be directed to the Medicare contractor’s (the insurance company that Medicare hired to service its customers such as Blue Cross/ Blue Shield) customer service line or fraud department by calling the contractor’s fraud hotline, or calling the OIG fraud hotline number: 1-800-HHS-TIPS, with the following information: 1. Patient’s Name 2. Date of Service (DOS) 3. Name of Provider 4. Provider’s Medicare Number 5. Explanation of alleged fraudulent or abusive activities 6. Patient’s Health Insurance Claim Number 7. Description of Service, Procedure, or Product 8. Address of Provider, and any other pertinent information Civil Monetary Penalties (Law) (CMP’s or CMPL’s) is legal punishment (monetary fines) imposed by the court when Medicare has determined that a provider or hospital has violated Medicare, Medicaid, or any health care rules and regulations, such as fraud or abuse, violation of HIPAA laws, or other administrative infractions. Title XI of the Social Security Act authorizes the imposition of CMP’s. The Office of Inspector General (OIG) has seven (7) components in its compliance plans for doctors and hospitals to avoid fraud and abuse in billing, coding and delivery of health care services, in the health care workplace. They include the following: 1. Establish written policies and procedures to check for fraud and abuse in the health care workplace. 2. Have a Compliance Officer. This is someone who is in charge of enforcing policies and procedures to check for fraud and abuse in the workplace. 3. Have effective training and education in the workplace to avoid fraud and abuse.

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The Health Care Revenue Cycle

4. Stress effective communication between all employees so that fraud and abuse can be detected and eliminated. 5. Make sure standards and disciplinary sanctions are clearly written, posted and known so that all employees are aware of how to avoid fraud and abuse. 6. Promote constant auditing and monitoring in the health care workplace to avoid fraud and abuse. 7. When fraud and abuse are detected, timely response to offenses occurs as well as corrective actions are taken.

False Claims Act (FCA) The False Claims Act (FCA), also known as the “Lincoln Act,” “Qui Tam Statute” or the “Informer Act,” imposes civil and criminal liability on any doctor or hospital or supplier that submits an abusive or fraudulent claim for payment to the United States government or to any third party payer. A health care provider that is found guilty of fraud and abuse can also be excluded from Medicare and Medicaid. Examples of fraud and abuse include kickbacks, billing for services not provided, inflating invoices, over-utilization or under-utilization, misrepresenting services and supplies and procedures provided to patients, providing services not medically necessary for financial gain, and denying patients access to quality health care. National anti-fraud and anti-abuse laws under HIPAA, and other federal regulations, are enforced by the OIG and the DOJ. The first person who brings a Qui Tam suit, is known as the relater (or “whistle-blower”). The National Health Care Anti-Fraud Association has estimated that of the $3+ trillion spent on health care in 2009, from 3 to 5 percent were lost to fraud. Additional laws relating to health care fraud and abuse control include: 1. Stark Laws, which are self-referral prohibitions, are guidelines that make it illegal for the physician, or members of their immediate family, to have financial relationships (ownership) with health care facilities which they refer their patients. For example, a doctor refers patients to a laboratory, x-ray clinic, or DME company for services or supplies that the doctor (or their family) owns or has a financial interest. Therefore, the provider (or their family) is making money every time a referral is made. There are many exceptions to the Stark legislation which allows self-referral through a variety of legally created business structures, known as “safe harbors.” 2. Anti-Kickback Statute makes it illegal for any health care provider or facility to knowingly offer or accept any gifts or money for referring patients to receive services or products paid by any government health care program like Medicare, Medicaid, SCHIP, etc. This statute includes the provider routinely not collecting co-insurances and co-payments the patient is liable. Accepting money or other forms of reward, such as vacations, property, tickets to a football game or Broadway show, dinner, gifts, etc., for referring patients to other providers is also prohibited. The doctor accepting kickbacks for sending patients to a medical supplier for DME, taking kickbacks for sending patients for x-rays, taking kickbacks for sending patients to an

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orthopedic surgeon for treatment, or giving money or gifts to lawyers for sending patients to the doctor’s office for treatment due to an mva, workerrelated injury or a slip-and-fall accident, are all prohibited. 3. The Sarbanes-Oxley Act of 2002 requires publicly traded companies, ones that are listed on the New York Stock Exchange or Nasdaq and offer stock to the public, to prove they are financially sound and their record keeping accurately reflects the activities of the company (there is no fraud or abuse). This act is important as related to the health care revenue cycle because the Sarbanes-Oxley Act applies to for-profit health care corporations such as insurance companies (State Farm, AllState, Farmer’s), medical equipment and device companies (Medtronic, Johnson & Johnson), MCO’s (Aetna U.S. Healthcare, Humana), pharmaceutical companies (Smith Kline, Merck, Schering-Plough, Johnson & Johnson), etc. Since these companies furnish services and supplies worth billions of dollars to the public, they must be operating legally, follow generally accepted accounting principles (GAAP), and be financially liquid, otherwise they could have a devastating financial effect on Medicare and other government funded health care programs. This act also includes “whistle-blower” protection so that employees in these corporations can report fraud and abuse and other wrongdoing without fear of retaliation.

Emergency Medical Treatment and Active Labor Act (EMTALA) EMTALA involves: 1. Medical Screening Examination is provided to anyone who goes to a hospital’s emergency room (ER) requesting examination and treatment for the purpose of determining whether emergency medical treatment is required. 2. Necessary Stabilizing Treatment is rendered to the patient if the hospital has determined that urgent medical treatment is needed because it is an emergency. 3. Restricting Transfers Until Stabilization. The hospital may not transfer the patient until the patient is notified of the hospital’s obligation to provide further examination and treatment, and of the risks of transfer. A physician, or “qualified medical personnel,” at the hospital certifies in writing that transferring the patient (or unborn child) is in the patient’s best interests as the treatment provided at another facility outweighs the risk of transfer. 4. The transfer is a Medically Appropriate Transfer. A medically appropriate transfer means that the transferring facility provides necessary medical treatment minimizing risks to the patient and/or unborn child and that the receiving hospital has available space and qualified medical personnel to treat the patient and has agreed to accept the transfer. 5. The Transferring Hospital sends all medical records, informed consent and certifications provided under EMTALA and any other requirements imposed by the DHHS; and the name(s) and address(es) of any on-call physician

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The Health Care Revenue Cycle

or medical personnel who have refused or failed to appear at the hospital within a reasonable time period to provide necessary emergency stabilizing treatment. 6. Transfer is executed within a safe and timely fashion through the use of: qualified medical personnel, appropriate medical transportation equipment and vehicles (ambulance), and appropriate life support measures.

Patient Bill of Rights Patient Bill of Rights was developed by the American Medical Association (AMA) guaranteeing the patient the following basic rights: 1. To receive courteous, considerate, respectful treatment in a clean and safe environment. 2. To receive appropriate medical care that the patient understands. 3. Patient receives easily understood information about their medical treatment plan and the consequences related to care. The right to get a second medical opinion. The right to get an itemized statement and explanation of charges and what financial obligations may result for the patient. What financial assistance may exist for the patient; if the facility accepts Medicare or Medicaid. 4. Continuity of care. What patient support services are available (welfare and social services).. 5. Confidentiality and Privacy. 6. Participation of the patient in their own planning of health care and execution of treatment. 7. Rights of refusal of care and the consequences of these decisions. 8. Use of grievance mechanisms.

Quality Improvement Organizations (QIO) Quality Improvement Organizations (QIO) are a network throughout the United States of multi-disciplinary experts responsible for each state, territory, and the District of Columbia, whose mission is to insure the quality, effectiveness, efficiency and cost effectiveness of health care provided to Medicare beneficiaries. The QIO reports its results to the CMS.

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Understanding Acronyms and Abbreviations The remainder of this chapter consists of acronyms, definitions, and sample questions that you might encounter if taking a test or a certification exam of the material covered in this chapter. It is recommended that the student prepare flashcards to help memorize these important concepts. There is more about flashcards in the next section. The health care industry operates using acronyms (letters that represent a treatment, organization, disease, person, etc.) or abbreviations (a shortened form of a medical term generally using letters). Sometimes a disease or medical procedure is named after a person, such as Reynaud’s Syndrome, which is the name of a vascular disease known as paroxysmal digital cyanosis; Harrington Rods, which describes a type of orthopedic surgical instrumentation; Bennett’s Fracture, which is the name of type of bone fracture; Osgood-Schlatter’s Disease, which is the name of a metabolic disease; or Bence-Jones Albuminuria, which describes a type of blood disorder. AMA

American Medical Association; Against Medical Advice

APC’s

Ambulatory Payment Classifications

AOA

Administration on Aging

ACF

Administration for Children and Families

AFDC

Aid to Families with Dependent Children

AHRQ

Agency for Health Care Research and Quality

ATSDR

Agency for Toxic Substances and Disease Registry

BBA

Balanced Budget Act of 1997

CAH

Critical Access Hospital

COBRA

Consolidated Omnibus Budget Reconciliation Act of 1985

CDC

Centers for Disease Control

CDT

Current Dental Terminology

CMP

Civil Monetary Penalties

CMPL

Civil Monetary Penalty Laws

CMS

Centers for Medicare and Medicaid Services

CMS-1500

Centers for Medicare and Medicaid Services 1500 billing and coding form

CPT-4

Current Procedural Terminology, 4th edition

DC

Doctor of Chiropractic

DDS or DMD Doctor of Dental Surgery or Doctor of Dental Medicine DEFRA

Deficit Reduction Act of 1984

DHHS

Department of Health and Human Services

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The Health Care Revenue Cycle

DNR

Do Not Resuscitate

DO

Doctor of Osteopathy (medicine)

DOJ

Department of Justice

DOS

Date of Service

DNR

Do Not Resuscitate

DPM

Doctor of Podiatric Medicine (foot doctor)

EDI

Electronic Data Interchange

EGHP

Employer Group Health Plan

EIN

Employer Identification Number

EMTALA

Emergency Medical Treatment and Active Labor Act

FCA

False Claims Act or Lincoln Act or Qui Tam Statute or Informer Act

FDA

Food and Drug Administration

FFS

Fee for Service

HI

Hospital Insurance (Medicare Part A)

HIPAA

Health Insurance Portability and Accountability Act of 1996; akaKennedy-Kassenbaum Act.

HCFA

Health Care Financing Administration (old name for the CMS)

HCPCS

Health Care Common Procedure Coding System

HHS

Home Health Services

HMO

Health Maintenance Organization

HRSA

Health Resources and Services Administration

HSA

Health Savings Account (formerly known as Medical Savings Accounts or MSA’s)

ICD-9-CM

International Classification of Diseases, 9th Revision, Clinical Modification

ICD-10-PCS

International Classification of Diseases, 10th Revision, Procedure Classification System

IHS

Indian Health Services

IRS

Internal Revenue Service

LGHP

Large Group Health Plan

MAAC

Maximum Allowable Actual Charge, now known as the Limiting Charge

MCO

Managed Care Organization

MHI

Medicare Hospital Insurance

Chapter 1 - Health Care Plans and Legislation

MMA

Medicare Modernization Act (aka-Medicare Prescription Drug, Improvement and Modernization Act of 2003)

MMI

Maximum Medical Improvement

MVPS

Medicare Volume Performance Standard

NDC

National Drug Code

NIH

National Institutes of Health

NP

Nurse Practioner

NPI

National Provider Identifier

NPP

Non-Physician Practitioner

OBRA

Omnibus Budget Reconciliation Act of 1986/1989/1990

OCR

Office for Civil Rights

OD

Doctor of Optometry (eye doctor)

OIG

Office of Inspector General

OPPS

Outpatient Prospective Payment System

ORT

Operation Restore Trust of 1995

OT

Occupational Therapist

PA

Physician Assistant

PCP

Primary Care Physician

PHI

Protected Health Information

PIN

Provider Identification Number

POS

Point-of-Service or Place of Service

PPIN

Performing Provider Identification Number

PPO

Preferred Provider Organization

PT

Physical Therapist

RBRVS

Resource Based Relative Value Scale

RN

Registered Nurse

RRB

Railroad Retirement Board

RVU

Relative Value Unit

SAMHSA

Substance Abuse and Mental Health Services Administration

SMI

Supplementary Medical Insurance (Part B Medicare)

SSA

Social Security Administration

SSI

Social Security Income

ST

Speech Therapist

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The Health Care Revenue Cycle

TEFRA

Tax Equity and Fiscal Responsibility Act of 1982

Title XI

Civil Monetary Penalties Law (CMPL)

Title XVIII

Medicare

Title XIX

Medicaid

Title XXI

SCHIP: State Children’s Health Insurance Program

UPIN

Unique Provider Identification Number (Medicare)

UB-04

Hospital Inpatient (and Hospital Affiliated Outpatient) billing and coding form

QIO

Quality Improvement Organization

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Test Taking and Study Strategies To learn this information to a degree that you feel secure enough to be tested on it can seem to be a daunting task, so let us suggest a few common sense and time-honored study techniques for material of this nature. 1. First of all, do not try to memorize anything until you thoroughly understand it. For example, if you do not understand and grasp the primary purpose of SCHIP, it is doubtful you will be able to respond intelligently to a question related to it. Therefore, review the material as many times as necessary until you’re comfortable with the topic. Then, whatever has to be memorized will come naturally and effortlessly. 2. Once you feel that you have a strong grip on the major topics and the data that relates to it, use flash cards as a review technique. Put a major topic such as HIPAA on one side of a 3” x 5” card and on the other side place important facts such as the date it was enacted into law, the President who signed it into law, the definition of the related acronym, if one is used, and a few pertinent defining words or phrases. You will find it an easy and convenient mechanism to review what you have learned. You can even carry these cards with you anywhere and review them whenever you have the opportunity. 3. Examinations, especially those with principally multiple choice questions, usually have time constraints (often one or two hours). In this case, it is usually wise to spend not more that one minute on each question—move quickly through the questions. 4. It is imperative for you that all questions are answered. It’s better to intelligently guess than leave a question blank, since blank answers count the same as incorrect ones. Do not make this a test taking strategy, however. Well-designed computer programs often detect flagrant guessing and invalidate the entire test. Of course, using good common sense is always an excellent way to attack any multiple choice question to arrive at the correct answer. 5. Multiple choice tests today are usually administered on a computer screen through the testing organization’s internet or intranet. Individual questions are flashed on the screen in sequence. We strongly recommend answering each question in sequence, re-checking your response for accuracy, and then moving on to the next question. Skipping questions with the intent to return later is a poor strategy because you probably will not have time to revisit it. Concentrate on completing the test as a whole in the order the questions are presented. 6. It is also important that you enter all data on the proper screens and use the computer program as instructed. Avoid “right clicking” the mouse, striking keys on the keyboard, and any unnecessary motion with the computer equipment or monitor. Actions such as this sometimes result in shutting down the examination.

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The Health Care Revenue Cycle

Beware of Pitfalls with Multiple Choice Questions 1. It is crucial to be aware of the phrasing of questions. Details in the way questions are expressed can cause you to choose wrong answers. For example, in question #15, you are asked an easy question—the definition of “MAAC”, which is an acronym for the Medicare Allowable Actual Charge. The correct answer, therefore, is “C”. If you’re not careful, however, you might choose “A”, which switches Allowable and Actual in the definition. Be careful of such tricky variations. 2. The next type of question is where the test taker quickly picks out the most important terms in the question, then focuses in on the correct answer (questions #7, 11, 12, 13, or 14 below are examples). In question #12, the term “Resource Based Relative Value Scale” is the important term in the question that defines the federal government’s legislation known as OBRA of 1989. The correct response “B”. However, the examinee has to be careful in his or her reading and interpretation to not answer “A”. This is a “distracter” choice: OBRA of 1986. (Answers “C”, “D” and “E” should be quickly eliminated as they have no relationship to the question at all.) 3. The next type of multiple choice question, which is more difficult, is where the examinee concentrates on a chart or graph in order to answer the question. The student reads the question, quickly picks out the important terms, discerns from the graph or chart what the correct response is, and then locates the correct answer. 4. For a question that you may not be exactly sure of the correct answer, try removing all the answers you know are not correct. By this process of elimination, you can often arrive at the correct one.

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Sample Test Questions Here are 90 sample questions that should prepare you for taking an exam on this chapter. They should be answered in about 90 minutes or less. 1. The two main governing bodies effecting health care change are: A. DHHS B. OIG C. Medicare D. CMS E. A and D Answer: E 2. Medicare, Medicaid, AFDC, Improving maternal/infant health, and assuring drug and food safety are some of the more than 300 programs provided by: A. CMS B. DHHS C. SCHIP D. BBA of 1997 E. TEFRA Answer: B 3. ___________ describes a program run by the CMS and other organizations for children whose parents have too much money to be eligible for Medicaid, but not enough money to buy private insurance. A. Title XIX B. BBA of 1997 C. TEFRA of 1982 D. SCHIP E. OBRAS of 1989 Answer: D 4. _____________ is a unique 10-digit number for health care providers that will identify the doctor or hospital making the paperwork easier to bill Medicare. A. ICD-9-CM B. NPI C. OIG D. CMP E. EMTALA Answer: B

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The Health Care Revenue Cycle

5. The _____________ was developed by the AMA and guarantees the patients courteous, considerate, and respectful treatment; appropriate health care, continuity of care, confidentiality and privacy, refusal of care, use of grievance mechanisms, etc. A. EMTALA B. QIO C. Patient Bill of Rights D. National Institutes of Health E. Food and Drug Administration Answer: C 6. _______________ establishes that the patient and unborn child receives a medical screening examination, necessary stabilizing treatment, restricting transfers until medically stabilized, and appropriate transfer to another medical facility. A. EMTALA B. DHHS C. Patient Bill of Rights D. Fraud and Abuse E. Qui Tam Statute Answer: A 7. ___________ acts primarily as the purchaser of health care services for Medicare and Medicaid beneficiaries, establishes protocols and policies for reimbursement of health care providers, assures that Medicare and Medicaid are properly administered by third parties, and conducts research and assesses the quality of health care facilities and services. A. DHHS B. EMTALA C. CMS D. Title XVIII E. Title XXI Answer: C 8. ______________ reimburses for the cost of physician services, outpatient hospital services, and medical equipment and supplies. A. Medicare Part A B. Medicare Part B C. Medicare Part C D. Medicare Part D E. SCHIP Answer: B

Chapter 1 - Health Care Plans and Legislation

9. Anyone with Medicare Parts A and B is eligible to join this plan called _____________, AKA-Medicare drug plan. A. Medicare Part C B. Medicare Part D C. Title XIX D. Title XXI E. HIPAA Answer: B 10. Title XVIII of the Social Security Act provides insurance coverage for: A. people who are 65 years or older. B. people who are disabled. C. people with ESRD, requiring dialysis or kidney transplantation. D. A, B, and C Answer: D 11. _____________ eliminated the age limit previously imposed on a spouse for health plan coverage where any active employee, age 65 or older, is eligible for insurance coverage under their employer’s group health plan where the employer has 20 or more employees. A. OBRA of 1986 B. OBRA of 1989 C. COBRA of 1985 D. RBRVS E. DEFRA of 1984 Answer: C 12. __________ established the Resource Based Relative Value Scale. A. OBRA of 1986 B. OBRA of 1989 C. COBRA of 1985 D. OBRA of 1990 E. DEFRA of 1984 F. HIPAA Answer: B 13. The __________ is comprised of three major elements: (1) fee schedule for payment of physician services known as the RVU, (2) the MVPS, and (3) the limiting charge. A. OBRA of 1986 B. HIPAA C. COBRA of 1985 D. RBRVS E. BBA of 1997 Answer: D

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The Health Care Revenue Cycle

14. ________ is federal legislation to make large group health plans with 100 or more employees the primary coverage for active employees who have Medicare, or for dependents of active employees who have Medicare due to a disability other than ESRD. This legislation also established the MAAC. A. OBRA of 1986 B. HIPAA C. COBRA of 1985 D. BBA of 1997 E. OBRA of 1990 F. None of the above Answer: A 15. MAAC is an acronym that represents _____________. A. Maximum Actual Allowable Charge B. Maximum Attainable Allowable Charge C. Maximum Allowable Actual Charge D. Minimum Actuated Allowable Charge Answer: C 16. The _____________ is the heart of the fee schedule whereby every medical procedure recognized by Title XVIII has been assigned units of value for resources used to provide medical services. A. RBRVS B. NPI C. RVU D. OIG E. CMP Answer: C 17. The Relative Value Unit is made up of _________________. A. Work required. B. Practice expense. C. Continuing education expense. D. Malpractice insurance expense. E. A, B, and D. F. B, C, and D. Answer: E 18. Medicare is also known as ___________ of the Social Security Act. A. Title XVIII B. Title XIX C. Title XXI D. CMP E. DEFRA of 1984 Answer: A

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19. Medicaid is also known as ___________ of the Social Security Act. A. Title XVIII B. Medicare Part C C. Title XXI D. DEFRA of 1984 E. Title XIX Answer: E 20. The State Children’s Health Insurance Program is also known as ____________ and in __________ was extended to include children of legal immigrants and pregnant women. A. Title XIX; February, 2008 B. Medicare Part D; February, 2007 C. DEFRA of 1984; February, 2009 D. Title XXI; February, 2009 E. MAAC; January, 2009 Answer: D 21. Under the RBRVS, limits on what non-participating physicians can charge Medicare beneficiaries, is known as the MAAC or the __________________, which is ___________ of the fee schedule amount. A. Limiting Charge, 100% B. Limiting Charge, 200% C. Limiting Charge, 115% D. OBRA of 1986, 115% E. OBRA of 1989, 110% Answer: C 22. The Kennedy-Kassenbaum Act of 1996 is also known as __________________. A. CMP B. OBRA of 1986 C. Medicare Part A D. HIPAA E. Qui Tam Statue Answer: D 23. _______________ legislation enacted the most significant changes to Medicare and Medicaid programs since they were begun and expanded the services provided to SCHIP recipients. A. TEFRA of 1982 B. BBA of 1997 C. Health Insurance Portability and Accountability Act of 1996 D. COBRA of 1985 E. DEFRA of 1984 Answer: B

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The Health Care Revenue Cycle

24. The ___________ is also called the “Lincoln Act,” “Informer Act,” or the “Qui Tam Statute.” A. False Claims Act B. CMP’s C. EMTALA D. Patient Bill of Rights E. QIO Answer: A 25. The ______________ was developed by the American Medical Association in 1975 which guarantees the patient courteous, considerate and respectful treatment in a clean and safe environment, appropriate health care, continuity and confidentiality of care, privacy, refusal of care, use of grievance mechanisms, etc. A. EMTALA B. Civil Monetary Penalties C. Medicare Parts A, B, C, and D D. Title XXI E. Patient Bill of Rights Answer: E 26. The CMS administers the ______________ program which is designed to monitor and improve utilization and quality of care for Medicare beneficiaries._____________ is the process of confirming the patient’s insurance eligibility, collecting necessary information prior to the the patient using the hospital or health care facility as an inpatient or outpatient, and the issuance of an authorization number. A. CMP; ABN B. Medicare Parts A, B, C, and D; Pre-certification C. QIO; Pre-certification D. OIG; Stark Laws E. EMTALA; Sarbanes-Oxley Act Answer: C 27. __________ includes the incorrect coding of diagnoses or procedures and services to maximize reimbursement, billing for services not rendered, altering claims to receive payment, or accepting kickbacks. A. Abuse B. OIG’s Compliance Plans C. Fraud D. DHHS E. CMS Answer: C

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28. ____________ includes excessive or medically unwarranted use of technology, pharmaceuticals, equipment, and supplies; abuse of patient privacy and/or confidentiality or duty of care to the patient. A. Abuse B. OIG’s Compliance Plans C. Fraud D. DHHS E. CMP Answer: A 29. When Medicare has determined a provider or facility has violated Medicare rules and regulations, for example the repeated unbundling of outpatient surgery charges or Medicare assignment provisions, the application of _______________ may occur. A. Abuse B. OIG C. Fraud D. DOJ E. CMP’s Answer: E 30. Suspected health care fraud and abuse in Title XVIII programs can be reported to ________________: A. Medicare contractor’s customer service line B. Medicare’s fraud department C. 1-800-HHS-TIPS D. OIG’s fraud hotline number E. All of the above Answer: E 31. CMS guarantees health care security which includes: A. Beneficiaries access to affordable and quality health care services and products. B. Protection of the rights and dignity of its beneficiaries. C. Beneficiaries receive clear and useful information; providers assist beneficiaries in making sound medical decisions. D. All of the above. Answer: D 32. ___________ provides coverage for inpatient hospital services, SNF, HHS, and hospice care. ___________ was originally called the Medicare + Choice plan. A. Medicare Part D; Medicare Part C B. Medicare Part C; Medicare Part B C. Medicare Part B; Medicare Part D D. Medicare Part A; Medicare Part C E. EMTALA; HIPAA Answer: D

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The Health Care Revenue Cycle

33. ______________ is also known as Medicare Advantage Plans which include HMO’s, PPO’s, private FFS plans, and Special Needs plans. A. Medicare Part D B. Medicare Part C C. Medicare Part B D. Medicare Part A E. Title XXI Answer: B 34. Written policies and procedures, designated compliance officer, effective training and education, effective lines of communication, enforced standards and well-publicized disciplinary procedures, auditing and monitoring protocols, and responding to offenses and developing corrective action plans constitute the _______________. A. Title XVIII B. Omnibus Budget Reconciliation Act of 1986 C. 7 Components of OIG’s Compliance Plans D. Civil Monetary Penalties E. Quality Improvement Organization Answer: C 35 ___________ establishes the following three (3) general requirements: medical screening examinations, necessary stabilizing treatment for the patient, and restricting transfers until patient is medically stabilized. A. EMTALA B. CMP C. Title XIX D. ICD-9-CM E. DEFRA of 1984 Answer: A 36. The ______________ is a coding manual utilized by retail pharmacies to code for pharmaceuticals and is maintained by the FDA. A. ICD-9-CM B. CDT C. CPT-4 D. NDC E. OIG Answer: D 37. The ___________ is a coding manual for physician inpatient and outpatient services and procedures, add-on codes, modifiers and patient status codes. A. ICD-9-CM B. CDT C. CPT-4 D. NDC E. OIG Answer: C

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38. _____________ is the manual made up numeric and alphanumeric code sets for diagnoses, conditions, and pathologies. A. ICD-9-CM B. CDT C. CPT-4 D. NDC E. OIG Answer: A 39. ____________ is the coding manual for dental services. A. OIG B. EMTALA C. CDT D. NPI E. CPT-4 Answer: C 40. Fraud and abuse control are coordinated by the ____________ and _____________. A. OIG B. NPI C. CPT D. DOJ E. OBRA of 1986 F. A and D G. B and C H. HIPAA Answer: F 41. HIPAA legislation: A. Insures portability of health insurance when employees change jobs B. Increases accountability of health care providers, insurers and facilities C. Also known as Kennedy-Kassenbaum Act D. Attempts to decrease fraud and abuse E. Improves availability of health insurance to working families and their children F. All of the above Answer: F 42. DEFRA of 1984 amended the ______________ upper age limit for active employees who wish to enroll in the employer’s group insurance coverage. A. OBRA of 1989 B. TEFRA of 1982 C. OBRA of 1986 D. RBRVS E. BBA of 1997 Answer: B (Important)

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The Health Care Revenue Cycle

43. ____________ is a coding manual consisting of three volumes. A. HIPAA B. CPT-4 C. ICD-9-CM D. NDC E. CDT Answer: C 44. The ______________ is known as the heart of the fee schedule. A. RBRVS B. CDT C. HIPAA D. RVU E. NPI Answer: D 45. Those eligible for the Title XIX program include all of the following except: A. Certain low income families with children B. Aged, blind, or disabled people on SSI C. Certain low income pregnant women and children D. People who have very high medical bills E. People who have COPD Answer: E 46. The ___________ program expands health care coverage for the nation’s uninsured children. A. Title XVIII B. Title XIX C. Title XXI D. HIPAA E. OBRA of 1990 Answer: C 47. The _________________ prohibits making a false claim to get paid by the federal government, withholding property with the intention to defraud or willingly conceal it from the government, or making a fraudulent receipt for government property. A. OIG B. FCA C. DOJ D. Abuse E. HIPAA Answer: B

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48. ____________ consists of three categories of numeric and alphanumeric code sets. A. ICD-9-CM B. FCA C. HIPAA D. CPT-4 E. CDT Answer: D 49. _____________ legislates significant changes to Title XVIII and Title XIX programs, and expands services through CMS to Title XXI programs. A. TEFRA of 1982 B. HIPAA of 1996 C. BBA of 1997 D. OBRA of 1989 E. COBRA of 1985 Answer: C 50. ____________ requires hospitals, as a condition of participation in the Medicare and Medicaid programs, to develop and implement plans and procedures to insure the patient’s right to make their own health care decisions, appoint a Health Care Surrogate or Durable Power of Attorney, and execute their own AMD’s. A. OBRA of 1986 B. OBRA of 1989 C. OBRA of 1990 D. TEFRA of 1982 E. HIPAA of 1996 Answer: C 51. The _____________ is a legal document where the patient determines, in advance, what health care measures they want or do not want, if they become incapacitated due to a terminal illness or injury. A. DNR B. HIPAA of 1996 C. RBRVS D. EMTALA E. NPI Answer: A 52. ____________ is legislation that provided for RBRVS, RVU, MVPS, and limiting charge. A. DEFRA of 1984 B. OBRA of 1986 C. TEFRA of 1982 D. HIPAA of 1996 E. OBRA of 1989 F. OBRA of 1990 Answer: E

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The Health Care Revenue Cycle

53. ___________ health insurance plan requires a gatekeeper. A. PPO B. POS C. HMO D. Indemnity E. FFS Answer: C 54. ___________ is the most restrictive type of health care plan. A. PPO B. POS C. HMO D. Indemnity E. FFS Answer: C 55. ____________ is the least restrictive type of health care plan and allows the patient to go to any doctor or hospital they want; there are no preauthorizations required. A. PPO B. POS C. HMO D. Indemnity E. FFS F. D and E G. A and B Answer: F 56. _________ plan has the doctor sharing in the cost of providing care to the patient by receiving a PMPM, also known as ____________. A. HMO; Capitation B. POS; FFS C. PPO; Capitation D. Indemnity; Deductible E. FFS; Co-payment Answer: A 57. The two essential types of health care plans are ___________ and _____________. A. FFS and HMO B. HMO and PPO C. POS and PPO D. Indemnity and Managed Care E. Indemnity and FFS Answer: D

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58. The Health Care Surrogate and Power of Attorney are legally appointed by the patient to oversee their medical decisions, if they become incapacitated, as outlined in the _______________. A. Indemnity insurance plan B. EMTALA C. PSDA D. CMP E. QIO Answer: C 59. _____________ type(s) of insurance has the health care provider not share the risk with the insurance company of the cost of providing treatment to the patient. A. FFS B. Indemnity C. PPO D. HMO E. POS F. B and D G. A, B, C, E Answer: G 60. ____________ are the types of insurance plans that require the patient get preauthorizations prior to receiving certain medical services. A. FFS B. Indemnity C. PPO D. HMO E. POS F. C, D and E G. A and B Answer: F 61. ______________ defines standards of conduct based on moral principles. A. HIPAA B. Fraud C. Abuse D. Medical Ethics E. EMTALA Answer: D

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The Health Care Revenue Cycle

62. ____________ was developed by the CMS to promote correct coding of health care services and diagnoses, and to control incorrect coding, that could lead to inappropriate payment of Medicare Part B health care claims. A. HIPAA B. NCCI C. Medical Ethics D. EMTALA E. Professional Liability Answer: B 63. ___________ is when the doctor or hospital are legally responsible for the action of their employees when it comes to billing and coding, fraud, abuse, HIPAA, and other matters pertaining to the business of health care. A. HIPAA B. NCCI C. Medical Ethics D. EMTALA E. Professional Liability Answer: E 64. _____________ is defined as using more procedural codes (CPT and HCPCS) than is normally warranted when billing for medical treatment, in order to receive additional insurance reimbursement. A. Unbundling B. Professional Liability C. Bundling D. EMTALA E. Professional Liability Answer: A 65. _____________ is defined as taking several procedural codes (CPT and HCPCS) and combining them into one code when billing for medical treatment. This usually results in less money being paid to the doctor or hospital by the insurance carrier. A. Unbundling B. Professional Liability C. Bundling D. EMTALA E. Professional Liability Answer: C

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66. Each physician has a separate __________ for each group or office or clinic in which the physician practices. ___________ is a number assigned by the insurance carrier to a physician who renders services to their patients. A. PPIN; PIN B. PIN; PPIN C. UPIN; PPIN D. EIN: State License Number E. SSN: PIN Answer: A 67. The ___________ is a number the physician is assigned by Medicare. The ___________ is a number that is assigned by HIPAA as part of its administrative simplification plan. A. State License Number; SSN B. PIN; PPIN C. UPIN; NPI D. EIN; NPI E. SSN; UPIN F. PPIN; EIN Answer: C 68. The ___________ is a number assigned by the IRS; is also known as the Federal Tax Identification Number. A. PPIN B. PIN C. UPIN D. EIN E. NPI F. State License Number Answer: D 69. Most commonly in an HMO the gatekeeper(s) is usually a: A. Gynecologist B. PCP C. Oncologist D. Pediatrician E. A, B, D F. All of the above Answer: E 70. _______________ is a number the health care provider must obtain from the state where they would like to practice. A. SSN B. EIN C. PPIN D. State License Number E. PIN F. UPIN Answer: D

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The Health Care Revenue Cycle

71. The organization that developed the ICD-9-CM coding manual is____________ and is used to code________________. A. HCFA; diagnoses, medical screenings, causes of trauma B. WHO; non-pathological medical situations, external causes of trauma C. AMA; medical procedures, services and products D. UPIN; medical procedures, services and products Answer: B 72. The Centers for Medicare and Medicaid was formerly known as _______________. MMI stands for _______________. A. DHHS; Maximum Modified Importance B. ICD; Minimum Medical Imporatance C. WHO; Maximum Modified Improvement D. HCFA; Maximum Medical Improvement E. EMTALA; Maximum Medical Improvement Answer: D 73. DME, orthotics and prosthetics, ambulance services and various medical supplies and products are coded in the __________. A. CPT B. ICD C. HCPCS D. DHHS E. EIN F. FCA Answer: C 74. A patient who has not been seen by their physician, or a physician of a similar medical specialty in the same group practice, within 3 years, is known for insurance purposes as a ____________. A. Established Patient B. Deceased Patient C. Inpatient D. New Patient E. Discharged Patient Answer: D 75. ____________ is defined as an MD, DO, DDS, DMD, DPM, OD, or DC that is legally licensed to practice health care in their state. ____________ is defined as PA, Psychologist, Clinical Social Worker, PT, OT, ST, RT, or RN. A. Physician; Health Practitioner B. Therapist; Nurse C. Health Practitioner; Physician D. State License Number; Physician E. Inpatient; Outpatient Answer: A

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76. The OIG has listed seven components in their compliance plan to avoid fraud and abuse. They include: A. Monitoring and auditing B. Name a compliance officer C. Have written policies and protocols D. Effective education and training E. Enforce disciplinary procedures F. A, B, C G. All of the above Answer: G 77. SCHIP covers all of the following except: A. Inpatient and outpatient hospital services B. Laboratory and x-ray services C. Well-baby/child care D. Immunizations E. Doctor’s medical and surgical services F. All of the above G. E, D and E Answer: F 78. Those who are deemed eligible for Title XIX benefits are referred to as: A. Beneficiary B. Recipient C. Relater D. Debtor E. Creditor Answer: B 79. Federal law levies which of the following punishments for filing false claims against the United States government? A. Civil penalties B. Criminal penalties such as jail time C. Monetary fines D. Removal of the provider or hospital from participation in Medicare or Medicaid E. All of the above Answer: E 80. Health care abuse includes all of the following except: A. Insufficient, excessive or unwarranted use of medical treatment and products B. Abuse of authority by doctors and hospitals related to the patient’s privacy C. Improper billing and coding practices D. Billing for medical services that were not performed E. Medically unnecessary or AMA transferring the patient to another facility Answer: D

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The Health Care Revenue Cycle

81. The ___________ required HCPCS coding on the UB-04 claim form for Medicare patients for outpatient services rendered in Acute Care, Tertiary Care, or Long Term Care Hospitals. A. BBA of 1997 B. COBRA of 1985 C. OBRA of 1986 D. OBRA of 1989 E. PSDA Answer: C 82. Which of following legislation expanded the services provided by the CMS through SCHIP and established APC’s? A. BBA of 1997 B. COBRA of 1985 C. OBRA of 1986 D. OBRA of 1989 E. TEFRA of 1982 Answer: A 83. Which of the following acts provided for the RBRVS, RVU and MAAC? A. DEFRA of 1984 B. TEFRA of 1982 C. OBRA of 1986 D. OBRA of 1989 E. HIPAA of 1996 Answer: D 84. Which of the following acts provided for employees over age 65 who are receiving health insurance through a LGHP? A. DEFRA of 1984 B. TEFRA of 1982 C. OBRA of 1986 D. OBRA of 1989 E. HIPAA of 1996 Answer: C 85. The _____________ raised the age limit above 69 years of age for an employee to be eligible for EGHP (primary payer). The _____________ raised the age limit above 69 years of age for the spouse of an employee to be eligible for EGHP (primary payer). A. DEFRA of 1984; COBRA of 1985 B. COBRA of 1985; TEFRA of 1982 C. DEFRA of 1984; HIPAA of 1996 D. BBA of 1997; COBRA of 1985 E. TEFRA of 1982; OBRA of 1990 Answer: A

Chapter 1 - Health Care Plans and Legislation

86. RBRVS is the acronym for: A. Relative Based Resource Value Scale B. Resource Based Relative Value Scale C. Reporting Based Resource Value Scale D. Resource Based Reporting Valuation Scale Answer: B 87. MVPS is the acronym for: A. Median Value Performance Scale B. Medicare Value Performance Scale C. Medicaid Value Performance Standard D. Medicare Volume Performance Standard Answer: D 88. HIPAA stands for: A. Health Information Portability and Accountability Administration B. Home Information Portability and Accountability Administration C. Health Insured Portability and Accountability Act D. Health Insurance Portability and Accountancy Act E. Health Insurance Portability and Accountability Act Answer: E 89. HCPCS: A. Health Care Common Procedure Classification Standard B. Health Care Common Procedure Coding System C. Health Care Coding Procedure Common D. Health Care CPT Procedure Coding Answer: B 90. PMPM is the acronym for ______________ and is found with ___________. A. Per Member Per Month; PPO’s B. Per Month Per Member; POS’s C. Per Membership Per Month, MCO’s D. Per Member Per Month; Indemnity Insurance E. Per Member Per Month; HMO’s Answer: E End of Chapter 1

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Chapter 2 - Contact with Hospitals and the Doctors

Chapter 2

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Contact with Hospitals and Doctors Chapter Topics •

Patient Registration, Admission, and Financial Concerns



Health Care Coverage in the Military



Medicare Determination of Patient Eligibility



The Medical Staff and Hospital Admitting Protocols



Census



Generally Accepted Accounting Principles (GAAP)



Understanding Acronyms and Abbreviations



More Test Taking Strategies



Sample Test Questions

After studying this chapter you will understand: •

Emergency Medical Treatment and Active Labor Act (EMTALA)



Clean Claim; Registration Department Control Points



Functions of the Registrar; Pre-Admission Testing (PAT)



Primary Care Physician (PCP); Effective Patient Scheduling



Categories of Health Care Delivered to the Consumer



Explanation of Benefits (EOB); Remittance Advice (RA)



Pre-certification; Hospital Charges



Medical Case Management; Utilization Review



Consent; Census



Hospital Admitting Categories: Inpatients and Outpatients



TRICARE; CHAMPVA; Non-Availability Statement (NAS)



Defense Enrollment Eligibility Reporting System (DEERS)



Medicare Spell of Illness; Advanced Beneficiary Notice (ABN



Coordination of Benefits (COB); Average Length of Stay (ALOS)



Medicare Secondary Payer (MSP)



Privacy Act of 1974; Skilled Nursing Facility (SNF)



Patient Self Determination Act (PSDA)



Advanced Medical Directives (AMD)



Joint Committee on Accreditation of Health Care Organizations (JCAHO)



Generally Accepted Accounting Principles (GAAP)



Joint Committee on Accreditation of Health Care Organizations (JCAHO)

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The Health Care Revenue Cycle

Patient Registration, Admission, and Financial Concerns Figure 3: Hospital Registration

In the business of health care, the consumer (the patient), the spouse and family members come into contact with many consequential people at the hospital, the doctor’s office and the insurance company. Because of the nature and complexity of treatment and products provided to the patient, there are often other people associated with the patient who must be kept informed. Therefore, having effective lines of communication between the health care providers, the hospital, the patient and their families, is essential. Furthermore, because of the potentially large bills generated when receiving medical services and the long periods of time the consumer may be in contact with all the providers (hospital, doctors, medical suppliers, therapists and rehabilitation specialists), the need for communication is crucial to the competent management of the patient’s financial obligations. More important, health care services and products cannot be abruptly interrupted if payment is not made by the consumer or insurance carrier, because it could adversely affect the patient’s health. Therefore, it is essential for health care providers to maintain a successful long term relationship with the patient and the significant people in their lives, to maximize a positive clinical outcome and to insure that

Chapter 2 - Contact with Hospitals and the Doctors

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monies owed are paid in a timely fashion. The insurance company, in particular, must be made aware of what is going on with its customer so that it can pay its part of the medical expenses. The insurance carrier usually pays the largest percentage, so effective dialogue with them is one of the most important aspects of the consumer’s contact with the health care industry.

Registration At the time of registration to a hospital, clinic, doctor’s office, SNF or public health facility, the following information is compiled for the patient. The information is not always supplied by the patient, but sometimes by a family member or guarantor. A guarantor is the person who assumes the financial responsibility to pay the medical bill, but is not always the patient. The person who collects this information is known as the registrar and may be part of the hospital or doctor’s office working in the admissions office or registration department. The registration or admission department has multiple duties. First of all, it collects demographic and socioeconomic information, clinical data, financial/legal data, and handles clerical matters. It also administers affiliated health coverage protocols and direct physician services (discussed shortly). The following is a representative list of the registrar’s duties: 1. Collection of demographic data includes: name, address, home and work phone numbers, age, sex, social security number, proof of identification like a driver’s license, etc. 2. Collection of socioeconomic data includes: names of spouse and relatives, religion, place of worship, important contacts, etc. 3. Preparation of the medical record by collection of clinical data includes: Chief Complaint (CC), Diagnosis (Dx), date and mechanism of injury (for example, mva 2/7/09), diagnostic imaging studies (x-ray, MRI, CAT scan, etc.), previous medical and non-medical providers, physical examination results, laboratory and biopsy results, health care history, etc. 4. Collection of financial/legal data includes: medical insurance information, credit card data, deductibles and co-payments, deposits, names/addresses/ phone numbers of insurance carriers (and adjusters) and person who is responsible for the injury, etc. 5. Get the name/address/phone numbers of lawyer, date of accident (D/A), etc. 6. Complete clerical matters such as securing patient’s personal property, transportation to and from hospital, who will responsible for the patient once discharged from hospital, etc. Note: Demographic, socioeconomic, clinical, financial/legal and clerical information are considered basic acceptable data collection by the registrar at the time of hospital registration and admission for the patient.

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Responsibilities of the Registration Staff As the health care industry becomes more complicated due in part to governmental regulations for admissions, in-house procedures, discharges and financial matters, the responsibilities of the registration/admission staff (known as the “registrar”) have evolved into handling the following items: 1. Federal, state, and institutional rules, regulations, and specialized paperwork. 2. EMTALA, Advanced Medical Directives, Patient Bill of Rights, “An Important Message from Medicare”. 3. Medicare’s Advanced Beneficiary Notice (ABN), HIPAA, BBA, MSP, and other rules and regulations that affect how the patient’s information and insurance are handled. 4. Managed care pre-authorizations/pre-certifications, and second opinion for surgery and treatment requirements. 5. Determining Average Length of Stay (ALOS) criteria. The general thrust of the health care industry is not only to provide medically necessary treatment, but reduce the amount of time the patient is in the hospital. The more care that can be provided on an outpatient basis, either in the doctor’s office or patient’s home, the better. 6. Financial matters. 7. Facilitation of the hospital registration process: emphasize customer service with easy patient pre-registration, “selling” a positive patient experience, decrease “wait” times for admission/registration, timely patient contact with a well-informed staff. 8. General Admitting Responsibilities for the Hospital Registration Staff •

Public relations and education for the patient, physician and community.



Community liaison with patient’s case management and all pertinent medical personnel. Get the patient in contact with a social worker, law enforcement, welfare, housing services, etc. after the patient leaves the hospital.



Collection of demographic, insurance, and financial data.



Pre-certification, pre-approval, and verification of insurance coverage.



Communication to the patient of all financial matters related to their health care.

Patient’s Interaction with the Hospital 1. Scheduling for medical treatment. 2. Pre-registration and pre-certification, pre-deposit activities, inpatient admitting. 3. Outpatient activities, discharge responsibilities, physician direct services. 4. Affiliated health coverage protocols (see below).

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Affiliated Health Coverage Protocols The registrar acts as liaison between the patient, hospital, doctor, therapists,

medical suppliers, regulatory agencies, etc. Standard responsibilities encompass the following:

1. 24-hour access to appropriate medical personnel (doctor, Registered Nurse [RN] or Physician Assistant [PA], etc. are kept informed of the patient’s needs). 2. Telephone triage (the registrar’s ability to contact all the health care providers and family members in a timely fashion and in the correct order of necessity). 3. Referral services for other physicians, therapists, treatment or durable medical equipment (DME) so the patient gets the health care they need in a timely fashion. 4. Customer Service, including medical education of the public, so the patient and their families understand what health care they are receiving and the ramifications of this care, as well as the costs of treatment. 5. Compliance of monitoring protocols. In other words, the registrar makes sure the hospital and doctor meet state and federal rules when handling the patient. HIPAA compliance is of utmost importance. It all must be documented in writing. For example, the registrar makes sure the patient does not become an “outlier.” An outlier is a patient whose treatment and time in the hospital exceeds what is normally expected for the diagnosis, prognosis, age, sex and history.

Physician Direct Services These are services that help the medical staff do their job. The registration

department many times is instrumental in providing these services, and they include: 1. Community and hospital physician referrals (telling the patient what doctors to go to for their needs) and marketing to the public. 2. Primary Care Physician (PCP) notification of their patients who are admitted for hospital emergency services (ER). 3. Hospital physician outbound call services (making sure the doctors at the hospital can contact the patient and their families once out of the hospital).

The Clean Claim and the Hospital Registration Staff 1. Adequate and accurate collection of all patient data so that a Clean Claim can be produced is most important! A clean claim is created on a CMS-1500 (for non-hospital outpatient, laboratory, DME, orthotics, prostheses) or a UB04 (for hospital inpatients and outpatients) coding and billing forms, that are sent to the insurance carrier for payment (either electronically or paper) with no delays in reimbursement. The data on these forms can be reviewed by the insurance carrier or a peer review organization (PRO). No additional contact with the provider or hospital is necessary and a clean claim should pass all

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edits with no delays in reimbursement. A PRO is a panel of doctors who work for the insurance company, a state licensing board, or a clearinghouse that reviews the CMS-1500 and UB-04 and the patient’s treatment record to determine medical necessity, errors in billing and coding, fraud and abuse, utilization issues in providing medical care, malpractice, etc. The PRO may be called in to review why the patient has become an outlier and was not discharged earlier from the hospital. 2. Creation of the permanent patient medical file (electronically and paper) is an essential function of the registrar so a legal record is produced. 3. Generating the permanent patient identification process for the hospital computer system is important so the patient can be accurately identified for billing purposes and the correct provision of medical services, medical record storage is accomplished, and treatment mistakes are reduced. 4. A clean claim has the following characteristics: •

It is valid — all information is accurate and spelled correctly.



It is complete — all required information is provided.



It can successfully pass inspection for payment by a third-party (insurance company, PRO, clearinghouse, or auditor) without further intervention by the health care provider or treatment facility.



According to HIPAA Privacy Rule, providers and hospitals may legally use the patient’s information they collect for treatment and payment purposes, staff training, compliance issues, and quality improvement. The information collected is known as TPO: T = Treatment, primarily for the purpose of the doctor discussing the patient’s case with other providers; P = Payment, so the provider can submit insurance claims on behalf of the patient to get paid; O = Operations, for the purpose of staff training (the attending physician training medical students and residents, for example) and quality improvement at the hospital. The information taken from the patient is known as Protected Health Information (PHI).

5. Accurate and complete collection of insurance and billing data during the registration process is essential for the generation of a Clean Claim so that insurance reimbursement is not delayed. In all cases of insurance coverage, the registrar should collect the following: •

Copy of the insurance card(s), front and back, Medicare card, and any other third party information.



Patient’s driver’s license and SSN (Social Security Number).



All the pertinent demographics.



Complete financial data.



Billing information; Occurrence, Value, Revenue, Condition, ICD and CPT codes; and other required data for the UB-04 or CMS-1500 forms.

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Financial Counselor The role of the registrar as financial counselor in the registration and admission process has changed over the years to include the following: 1. Verify patient demographics, insurance (third party payers), and basic financial information so that a determination of the patient’s ability to pay can be made. 2. Explain to the patient the hospital’s collection policy. It must be stressed to the patient the importance of paying medical bills on time. 3. Determine the patient’s estimated financial responsibility and request payment in full at the time of admission to the hospital. 4. Establish payment arrangements if the patient cannot pay in full. 5. Obtain all information regarding third party payers so that insurance verification and pre-certifications can be made in a timely fashion. 6. Complete all pre-admission paperwork to minimize patient dissatisfaction and maximize the patient’s positive experience with the doctor and hospital. 7. A good pre-registration process will emphasize the selling of a positive experience with the hospital or doctor’s office, decrease the amount of dissatisfaction by both the patient and health care staff, and reduce the number of complaints. In today’s competitive business environment, the hospital or doctor’s office must sell themselves like any retail operation to the public, patient and their families. Not only does this increase repeat business and referrals, but it also reduces potential malpractice lawsuits.

Summary To summarize thus far, a consistent and well-executed pre-registration (which includes the pre-admission) system will: 1. Firmly establish all financial matters with the patient and guarantor in advance of the provision of health care services. 2. Clearly identify all insurance benefit limitations before health care services are provided. The patient should know how his/her health care will be paid and by whom. 3. Clearly identify all deductibles, copayments, co-insurances and deposits to be collected prior to health care services being provided. 4. Accurately and completely collect all financial, insurance, demographic and socioeconomic data, and satisfy all clerical issues, so that a CLEAN CLAIM is generated! 5. Be completed at least 24 hours prior to admission, also known as the preadmission. 6. A patient is more inclined to pay the deposit, copayments, co-insurances and satisfy their deductibles, at the time of admission (when there is a sense of urgency!), than after the insurance carrier has paid the claim and the patient

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has been discharged from the hospital. The patient will be made aware of all payments, charges, and balances due to the hospital and physician because the insurance carrier will issue an Explanation of Benefits (EOB) to the patient and a Remittance Advice (RA) to the health care facility and provider. 7. Outline all health care treatment, services, and products that are planned and exact dates when they are to be scheduled and performed by the doctor and medical staff. Make sure the patient knows exactly who will provide what services, how the patient and family can contact the doctor(s), and how long the patient will be in the hospital, if possible. This will help in establishing a good rapport with the patient and their family, and maximize the “selling” of a positive health care experience. 8. It is recommended that 70% to 90% of all scheduled admissions to the hospital be pre-registered within 24 hours of the date of treatment. If the preregistration, collection, and pre-verification system are consistent and thorough, financial risk to the hospital and provider, and patient anxiety and confusion, are reduced. 9. The Deposit is the estimated portion of the hospital bill not covered by patient’s insurance coverage. Payment can be made prior to admission, at admission, or at time of discharge. The deposit can be paid by the patient in full or financed over time. However, paying the deposit in-full at the time of pre-admission is to the hospital’s and patient’s advantage. Because there is a sense of urgency on the part of the patient to handle all financial criteria prior to treatment, the patient’s anxiety level is reduced. The hospital, of course, reduces its collection expenses and improves its cash flow position. 10. Collecting the Deposit: Advantages •

Increases cash flow for hospital.



Reduces amounts due at discharge for the patient.



Reduces the accounts receivable (A/R) for hospital.



Reduces bad (uncollectable) debt for hospital.

Disadvantages •

Creates possible public relations problems between hospital, doctor, and patient.



Damages the “selling” of a good hospital experience to the patient and family. The public generally has a distorted view of doctors and hospitals. They believe that health care services are grossly expensive, and that medical bills and the methods insurance companies use to pay for them are incomprehensible. Furthermore, the public generally holds the misconception that the doctor and hospital are affluent and should not be so insistent in collecting their money; that they are in health care to primarily help the patient (altruistic) with no regard to the expenses involved. Patients and their families often think that money should not even be a consideration for the doctor and hospital. The public fails to

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understand that health care is a business, and runs on funds like any other business. Therefore, handling the patient and money when it comes to health care requires sensitivity and common sense. 11. Before the hospital’s registrar can calculate the patient’s financial obligations, particularly the deposit at pre-admission, the following must be taken into consideration: •

Most important: third party insurance plan reimbursement for medical services provided.



The average length of stay (ALOS) per the diagnosis and the admitting physician’s estimate.



The average cost of the hospital stay by medical or surgical specialty. For example, the costs for neurosurgery can easily run tens of thousands of dollars compared to an appendectomy or setting a simple fracture.



The average cost of outpatient procedures being conducted, such as CBC, urinalysis (UA), x-rays, CAT scan, biopsy, etc.



Third party payer fee schedule — hospital’s DRG, flat rate, contractual payer allowances (these terms means how much the hospital and doctor will be paid according to pre-determined insurance and Medicare payment schedules).



Intensive care unit (ICU), Critical care unit (CCU), Progressive care unit (PCU), private, semi-private per diem room charges.



Other than urgent care or emergency room treatment, collection of the patient’s portion of health care services is highly desirable for both financial and public relations reasons during pre-admission.



EMTALA, however, forbids the registrar from addressing the consumer’s financial obligations, collection of any monies, or contact with the insurance company for coverage verification or pre-certification numbers, until the patient is stabilized in emergency situations.

Effective Patient Scheduling Effective Patient Scheduling insures maximum productivity in the hospital or doctor’s office. The efficient administration of medical services is essential, to keep dissatisfaction to a minimum by physician, clinical staff, patient, and administrative personnel. A balance between collecting the necessary demographic, clinical, financial, legal, and insurance information from the patient, and providing medically necessary clinical services to the patient in a timely fashion, is the goal of optimal patient scheduling. Patient scheduling is usually performed by the registrar.

Advantages of Pre-Admitting Patients There are major advantages for pre-admitting patients: 1. Maximizing patient familiarity with admissions process. 2. Minimizing admission time.

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3. Hospital room, facility needs, and pre-admission diagnostic services (EKG, laboratory, imaging, biopsy) can be anticipated and provided in a timely fashion by reducing any surprises for the patient. Pre-admission testing (PAT) is particularly important, as diagnostic medical testing in advance of providing treatment, are critical for the patient and doctor and facility so that surgical/ hospitalization suitability can be determined for the patient prior to being admitted. PAT helps the doctor determine what treatment is to be provided before the patient is admitted to the hospital and takes into account any medical history (such as diabetes, cancer, or hemophilia), which would have negative consequences if surgery is to be performed due to retarded healing and bleeding problems. 4. Insurance resources, forms, and requirements (for example, precertification) can be completed and validated prior to the delivery of treatment. It is important the patient sign and date the “Assignment of Benefits” allowing the hospital or doctor to release medical information to the insurance company so the claim can be processed and paid (Block #12 in the CMS-1500 claim form). It is also imperative the patient sign the “I authorize payment of medical benefits (to the hospital or doctor or supplier)” so they can be paid directly by the insurance carrier (Block #13 in the CMS-1500 claim form). If block #13 is not signed, the check would be sent to the patient and the provider would have to seek out the patient for payment. 5. Financial counseling can be provided prior to the delivery of hospital services. Therefore un-reimbursable care can be determined early. This is important for the hospital’s accounting department and cash flow. The hospital should know in advance if they should pursue obtaining welfare reimbursement for the patient to help pay the bill. 6. Copayments, deductibles, and deposits can be determined and collected prior to services being delivered. 7. Second opinions for surgery and other procedures or tests can be conducted prior to treatment being rendered. 8. Patient anxiety is reduced, as the patient is more fully aware of all financial obligations and health care procedures and tests are explained in advance of treatment being delivered. This helps in the “selling” of a positive health care experience to the consumer (good public relations).

Disadvantages of Pre-Admitting Patients Disadvantages of pre-admitting patients include: 1. Actual dates of hospital admission are not always known in advance. The practice of medicine is not exact and cannot always be predicted. 2. Insurance forms, consent forms, and other paperwork are forgotten by the patient, or are delayed, invalid, or incomplete. 3. Insurance pre-certification and pre-verification cannot always be satisfactorily completed in a timely fashion.

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4. Patient forgets to bring valid and current insurance information, identification data, social security information, or does not adequately complete demographic information; patient’s and/or guarantor’s writing is illegible.

The Five Control Points There are five control points during which the registrar has an opportunity to complete the registration and financial requirements of a patient’s hospital stay. They are as follows: 1. Pre-admission 2. Admission 3. While the patient is in the hospital receiving treatment 4. At discharge 5. Post-discharge (at home, while recuperating)

Pre-Certification Pre-certification is the mechanism of verifying insurance coverage, authorizing medical necessity for treatment, and data collection prior to the patient’s admission to the hospital. 1. Pre-certification does not insure that the claim will be paid under the insurance policy’s provisions. 2. Ultimately, it is the policyholder’s (patient) obligation to get the necessary precertifications and pre-authorizations from the insurance company. However, as a courtesy and good public relations, the hospital usually provides this customer service. 3. The end result is elimination of payment delays, reduction of financial risk and bad debt, and to make the pre-admission and registration process an agreeable experience for the consumer. 4. The purpose of insurance verification is as follows: •

Calculation of pre-certification and pre-authorization benefits (most insurance plans limit how much treatment they will pay for and how long they will pay for it).



Surgical second opinion determinations are on file. Especially for expensive surgeries or cancer therapies, the insurance company many times wants to make sure the treatment is verified by another doctor.



Deductibles, co-payments, deposits, and any other out-of-pocket expenses collected



Name of the third party administrator (TPA) handling the claim for the employer is confirmed. A TPA is sometimes used as an intermediary between the patient and employer (who is self-insured) that handles collecting premiums, processing, and paying claims.

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Names, addresses and phone numbers of insurance adjusters, lawyers, employers and claims offices are confirmed.

5. An employer that is self-insured creates healthcare coverage for its employees that does not use an outside insurance company, but funds their own healthcare coverage for their own employees.

Medical Case Management/Utilization Review As the health care industry becomes more complex, the role of the utilization review nurse (a member of the nursing staff, PRO or insurance company), and the registration and financial services and admissions staff, has become increasingly more interdependent. Examples of some of these mutual obligations include: 1. Liaison with the PCP and specialty physicians; liaison with the hospital and insurance carrier’s utilization department. 2. Reduction of unnecessary admissions and efficient management of the ALOS. 3. Assist the patient with discharge matters and insurance appeals process when treatment is denied. 4. Pre-certification and re-authorization approvals.

Important Criteria for Registering Patients with Managed Care Coverage 1. Check carefully consumers with insurance coverage endorsed by Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs) and Point of Service plans (POS) 2. Information that must be collected to process payment for hospital and provider services include: •

Pre-certification and pre-authorization requirements, numbers, signatures, and forms.



Utilization of only “in-network” or participating health care facilities, hospitals, and providers. Name and address and phone number of the gatekeeper.



Collection of co-payments.

Consent Consent is the hospital’s legal way to get the patient’s permission to be admitted to the hospital (inpatient or outpatient) to receive treatment. Signed release forms are essential to legally obtain the patient’s consent for care. It is usually the registrar’s responsibility to get the patient’s consent at pre-admission or admission to the hospital or doctor’s office. Normally parents or guardians of a minor, married or divorced, regardless of any divorce judgments, are legally responsible for giving consent for health care and are financially responsible for the health care costs of their child.

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Emancipated Minor, for health care purposes, is a patient who has not reached the age of majority, has been liberated from their parents, and has been granted the same responsibilities and financial obligations as an adult. Therefore, an emancipated minor would make their own medical decisions. The age of majority is 18 to 21 years (varies from state to state). An emancipated minor is where a court of law has liberated the child (declared an adult) on the basis of the following: 1. The child no longer requires parental guidance or financial assistance. 2. The child fathered or gave birth to a child. 3. The child has reached the age of majority. Six Types of Consent 1. General Consent involves getting permission from the patient to receive routine laboratory testing such as a complete blood count (CBC) or urinalysis (UA), diagnostic imaging (x-rays, MRIs, CAT scans) and general medical screening and treatment. 2. Special Consent involves getting permission from the patient to receive HIV testing; major/minor surgery; anesthesia; non-surgical procedures with more than a minimal risk of body structure alteration; Cobalt, chemotherapy or radiation therapy; Psychiatric or electroshock therapy; experimental procedures; and treatment for drug and alcohol abuse/disorders. 3. Expressed Consent can be written or oral with the patient allowing the treatment recommend by the medical staff. 4. Implied Consent in Fact is agreement for treatment by the patient’s silence, by the patient not objecting. 5. Implied Consent by Law is legal agreement for treatment because the patient is unconscious, includes transportation to the emergency room, and the law allows health care treatment to proceed. 6. Informed Consent is where the patient understands why he or she is receiving treatment and what health care services are being performed and agrees to the treatment to be provided.

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The Health Care Revenue Cycle

Hospital Admitting Categories Figure 4: Hospital Admitting Categories

1. Inpatient: Patient is formally admitted to the hospital overnight and occupies a bed (upon the doctor’s order) for more specialized and intensive diagnostic, laboratory, medical and surgical services. It is the hospital’s obligation for continued care after discharge of the patient.

2. Outpatient: The patient in this case is not admitted to the hospital overnight and usually is treated and discharged within the same day. An outpatient can become an inpatient if it is medically warranted. •

Emergency: Patient receives immediate medical screening, diagnosis and treatment on an unscheduled basis in the hospital’s emergency or urgent care facilities, but not admitted for inpatient or observation services. The hospital is responsible for the emergency outpatient while under care and until discharge. Frequently the hospital will recommend the patient see their personal doctor once discharged from the E/R and return if any complications occur.



Clinic: Patient receives diagnosis and treatment in the hospital’s medical or surgical facilities on an ambulatory basis. It is the hospital’s obligation for continued care until the diagnosis is resolved, and it is the hospital’s responsibility to discharge the patient from treatment. In this case the patient may go back and forth from the clinic over a period of days or weeks until the diagnosis is resolved.

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Private or Referred: Patient is referred by patient’s private physician for diagnosis and treatment on an ambulatory basis at the hospital. The outpatient will return to his/her private physician, and it is the private physician’s obligation for continued care and discharge from care. The private physician, if on the hospital’s staff, can also admit the patient to the hospital if medically warranted.



Ambulatory: Broader and less specialized diagnostic, medical and surgical care provided to the outpatient in this setting. Examples would include podiatric (foot) surgery, plastic surgery, or other minor surgery for cuts or abrasions. The ambulatory surgical center (ASC) would handle this type of outpatient.



Same Day Surgery: The patient receives surgical services on an ambulatory basis and does not require hospital admission. The hospital is responsible for the patient’s condition only while under care. This designation could include the clinic or private outpatient, or ambulatory surgical center (ASC).

Categories of Health Care Charges (also known as Rates) 1. Actual: The true dollar amount the provider or supplier or hospital bills Medicare or other third party payers for services rendered. For example, although the appendectomy was billed by the surgeon for $3,000 (the actual charge), Medicare’s approved charge or approved amount is $2,200. If the surgeon is a participating provider with Medicare, she must accept the $2,200 as payment in full, plus collecting any co-payments, co-insurances or deductibles. 2. Approved: What Medicare will reimburse the hospital or provider for each service, which is dependent on what part of the country treatment is provided. This is Medicare’s fee schedule, the highest amount of money Medicare will pay, no matter what the hospital or doctor bills Medicare. $2,200 would be the approved charge (see Actual charge above). 3. Prevailing: “Market determined” or “going rate” for the cost of medical services and products in a particular geographic area, for example New York City metropolitan area. The fees charged by doctors in New York may exceed or be less than the payment Medicare approves in its fee schedule. If the doctor is a “participating provider” with Medicare, they must accept what Medicare pays and cannot charge the patient more money to collect the balance (balance billing). For New York City, for example, the prevailing rate (what Medicare will pay) is $2,200 for an appendectomy. However, for Oklahoma City the prevailing rate for an appendectomy would be $1,500. It costs a lot more to perform this surgery in New York City than in Oklahoma City. Even if the doctor bills Medicare $5,000 for an appendectomy, Medicare will only pay the doctor $2,200 if performed in New York City. 4. Usual, Customary and Reasonable (UCR): What most health care providers or facilities charge for a particular procedure or service within a geographic region. For example, a New York hospital’s fee for a service would be

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The Health Care Revenue Cycle

considered “UCR” if it fell within what most other hospitals charge within the New York City metropolitan area for that particular treatment. 5. Global: Total amount paid by Medicare, which consists of the professional fee (what the doctor charges for performing surgery, making a diagnosis, interpreting x-rays or laboratory studies) and the technical fee (the cost of producing the x-ray or laboratory analysis or surgical procedure; fee for use of hospital’s surgical suite, anesthesia, supplies, equipment). When this charge is for surgery, it is known as a Global Surgery charge or Surgical Package.

Categories of Health Care Delivered to the Consumer 1. Acute Inpatient Care is a level of short-term urgent health care that is delivered to a patient suffering from acute disease or trauma, which may be life-threatening. It is generally administered in the hospital’s emergency room (ER) or urgent care facility. This type of care is short-term (days) rather than long-term (weeks or months) or chronic (years) in nature. 2. Observation Care is health care administered in a hospital where the patient occupies a bed and is monitored by the nursing staff, to ascertain the need for possible hospital admission. Observation services usually do not exceed 24 hours, and CMS has established guidelines that insurance claims submitted for observation care exceeding 48 hours will be reviewed for medical necessity. Important: Outpatient observation services cannot be substituted for medically appropriate inpatient hospitalization. The hospital must decide quickly whether to treat the patient in the ER and discharge them, or admit as an inpatient. 3. Outpatient Care pertains to the patient receiving treatment at a hospital, clinic, ambulatory surgical center (ASC), outpatient center, laboratory or radiologic facilities, but is not hospitalized as an inpatient. 4. Long-term Care (LTC) is reserved for patients who are chronically ill, permanently or temporarily disabled or those afflicted with Alzheimer’s disease. Services include 24-hour nursing care; rehabilitation such as physical, speech, and occupational therapy; help and training with Activities of Daily Living (ADLs) such as eating, toileting, dressing, bathing; and rehabilitation directed to assist those transitioning from hospital to home. Coverage for LTC and Skilled Nursing Facility (SNF) services is provided through Medicare (Title XVIII) for up to 100 days per calendar year, and Medicaid (Title XIX) for those who have limited financial resources. 5. Hospice Care is made available to terminally ill patients and support for their families through not-for-profit hospice organizations. This type of care is covered under Medicare and Medicaid. 6. Respite Care is short term custodial supervision that provides the family member or other unpaid caregiver “relief” from caring for an elderly, frail, ill, disabled, or dependent person at home. Respite care is covered under Medicare and Medicaid. In other words, someone else replaces the full-time caregiver for a short time to give them a break.

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7. Custodial Care provides assistance to the individual to meet personal needs such as shopping, dressing, cleaning the house, personal hygiene, paying bills, companionship, etc. This type of service may be provided by those persons who do not have professional health care training and are not covered by Medicare. 8. Home Health Care provides the individual at their residence rehabilitative care, supportive care, physical or occupational therapy, or other therapeutic care. In order to be reimbursed by Medicare, the physician must certify that the patient is home-bound and in need of intermittent skilled nursing services and therapy, with an established plan of treatment and care. 9. Gatekeeper is the role of the Primary Care Provider (PCP) in closed panel managed care organizations. The PCP is the initial contact for the consumer with the managed care organization (MCO). The gatekeeper controls the patient’s access to all medical care and hospitals. The patient must go through the gatekeeper for all medical referrals, treatment, diagnostic and laboratory work. A closed panel is defined as a limited number of health care providers and facilities the MCO contracts with to provide services to its membership, who sign an agreement to provide services to the MCO’s beneficiaries at a pre-agreed fee. MCO’s include HMO’s, PPO’s and POS’s.

Health Care Coverage in the Military Figure 5: Health Care Coverage in the Military

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The Health Care Revenue Cycle

CHAMPVA (Civilian Health and Medical Program of the Veterans Administration) This is a Veterans Administration (VA) program for veterans (and their spouses and children) with total or permanent service-connected disabilities, or the spouses and children of veterans who died as a result of military related disabilities. Veterans are those men and women who have served in the Army, Navy, Marines, Air Force, Coast Guard and reserves and have been discharged.

TRICARE Is a regionally administered health care plan for active duty and retired members of the uniformed services (those who are serving or did serve in the Army, Navy, Air Force, Marines, Coast Guard, etc.) TRICARE is the new name for CHAMPUS. For any member of the military, or their spouse or family, to be enrolled in a military health care plan, they must be listed in the Defense Enrollment Eligibility Reporting System (DEERS). Note: Be careful not to confuse CHAMPUS with CHAMPVA. 1. The three types of TRICARE coverage are: •

TRICARE Prime is where Military Treatment Facilities (MTF) are the principal source of health care delivery for active duty personnel. They pay no fees for any medical service they receive. A MTF is a health care facility operated by one of the branches of the Army, Navy, Marines, Coast Guard, Air Force, etc., such as Veterans Administration hospitals or clinics, field hospitals (places that provide health care on the battlefield) or facilities located in militarily active areas, or any other health care facilities operated in active or non-active areas anywhere in the world.



TRICARE Extra is a preferred provider organization (PPO) that operates just like those offered to the general public. A Non-Availability Statement (NAS) is required before any non-emergency hospital inpatient services are provided by a non-MTF, such as a civilian hospital or civilian doctor’s office. Civilian means not affiliated with the military.



TRICARE Standard is a fee-for-service (FFS) health plan that operates just like those offered to the general public. This type of health plan uses a Diagnosis Related Group (DRG) payment system (which is a fee schedule listing how much will be paid for different types of treatment) for acute care in hospitals in 49 states, District of Columbia, and Puerto Rico. Maryland is exempt from the DRG payment system. A NAS is required before any non-emergency hospital inpatient services are provided by a nonMTF.

Important: TRICARE Extra and TRICARE Standard both require an NAS before non-emergency treatment is provided at civilian hospitals and civilian doctors. See #5 below for further discussion of the NAS 2. Federal law mandates that any civilian hospital participating in Medicare also participate in TRICARE Standard for in-patient hospital services, so members of the military can get treatment in a civilian hospital or non-MTF.

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3. Those who are not eligible for TRICARE include: •

Most people who are eligible for Medicare and are over 65 years of age, are not eligible for TRICARE, unless they are a family member of someone on active duty in the military.



Someone who is Medicare eligible due to a disability or end stage renal disease (ESRD), and less than 65 years of age, can have TRICARE until age 65, but also must be enrolled in Medicare Part B.



After age 65, these individuals lose their TRICARE health plan and must enroll in Medicare.

4. TRICARE for Life is an expanded TRICARE program for Medicare-eligible military retirees who are 65 or older, their eligible family members and survivors, and certain former spouses. In order to qualify for TRICARE for Life benefits, the member must also be enrolled in Medicare Parts A and B. There are no premiums for TRICARE for Life and Medicare Part A, except for Medicare Part B coverage which requires the payment of a premium. TRICARE for Life is the secondary payer to Medicare. TRICARE for Life pays for any out-of-pocket expenses for treatment after Medicare has paid first. 5. The Non-Availability Statement (NAS) is required before any nonemergency hospital inpatient services are provided to a TRICARE Extra or Standard beneficiary by a non-MTF. The NAS is valid for 30 days after it is issued and only for pre-approved treatment. It can be used from the date of the hospital admission until 15 days after discharge (for any follow-up care). Note: Understanding the NAS is not easy, so it’s recommended that you

read this section several times. You may also want to research the NAS on the internet.

Exclusions to NAS requirements include: •

If the beneficiary has health insurance coverage that is primary to TRICARE.



Any outpatient emergency medical or psychiatric treatment.



Skilled Nursing Facility (SNF) or Residential Treatment Center (RTC) admissions; treatment in a student infirmary (found at a trade school, college or university).



Any health benefits mandated under the Program for Persons with Disabilities.



Medical care received outside the catchment area (a geographical area made up of so many square miles) of an MTF, which consists of an area of 40 miles. For example, if the VA hospital is located in Philadelphia, PA, then the catchment area would include a geographical area 40 miles in any direction from the Philadelphia VA. The area 40 miles north to Allentown, PA, 40 miles east to Atlantic City, NJ, 40 miles south to Wilmington, DE,. and 40 miles west to Lancaster, PA, would be the catchment area for the Philadelphia VA.

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The Health Care Revenue Cycle

When the patient has other health insurance THAT IS NOT TRICARE Standard, such as Blue Cross/Blue Shield, this other health insurance is primary. Tricare Standard will share the cost of non-emergency inpatient hospital care, without a NAS, in this case. Providers should be aware that even if the MTF issues a NAS, this neither guarantees payment nor authorizes that TRICARE Standard will pay at all. TRICARE is primary coverage when the patient also has Medicaid, Indian Health Service (IHS) obtaining non-IHS care, or other insurance coverage for out-of-pocket medical expenses. TRICARE pays second when the patient has medical coverage under workers’ compensation, personal injury protection, no-fault, uninsured motorist insurance under the patient’s automobile policy, student health care insurance, Health Maintenance Organization insurance (HMO), or Preferred Provider Organization insurance (PPO). 6. With maternity care, the date when the pregnant patient starts with prenatal care with a civilian doctor, this is determined to be the Date of Admission, as far as TRICARE is concerned. Moreover, since maternity care is considered not an emergency, an NAS is required if the mother chooses to use civilian doctors and hospitals. The NAS is valid for 42 days following the end of the pregnancy. 7. Submission of TRICARE claims must be within one (1) year of the date when treatment was rendered; otherwise late, invalid, and/or incomplete claims will not be processed or paid. 8. Information necessary for the timely payment of TRICARE claims include: •

Patient’s name, date of birth (DOB), social security number (SSN), sponsor or patient (as listed on the Military Identification Card)



Other pertinent health insurance information



CPT, HCPCS and ICD codes; dates of service (DOS)



Treatment Authorization Number (TAN)



Provider’s and/or hospital’s tax identification number or SSN

Defense Enrollment Eligibility Reporting System (DEERS). This is a computerized database, operated by the Department of Defense (DOD), and utilized by TRICARE contractors (providers of health care services to the military) to substantiate what military health care plans are available for the beneficiary (and their families). DEERS also lists exactly what persons can get health care.

Continued Health Care Benefit Program (CHCBP) 1. Provides health care benefits to former members of the military and their families for 18 to 36 months after separation from active duty or loss of eligibility for military health benefits. 2. The member of the military must enroll in CHCBP within 60 days from leaving the military, or loss of eligibility, in order to continue coverage under the CHCBP program. 3. CHCBP provides the same coverage as the TRICARE Standard program.

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Medicare Determination of Patient Eligibility Medical Spell of Illness Definition: Medical Spell of Illness, also referred to as the Benefit Period, commences when the patient is admitted to the hospital or SNF, and terminates sixty (60) consecutive days after the final discharge. A beneficiary can be moved from the hospital to a SNF and back again an unlimited number of times, provided no more than 60 consecutive (continuous) days have elapsed between each discharge and readmission. All these transfers from the hospital to the SNF and home and then back again to the hospital and SNF, etc., would be considered the same Spell of Illness. Once a Spell of Illness has ended, the patient’s next admission to a hospital or SNF will constitute a new Benefit Period. There is no limit on the number of Benefit Periods. Each new Spell of Illness, however, will generate a new inpatient deductible that has to be paid by the patient. For year 2009, the deductible for Medicare Part A which covers hospitalization and SNF, for each Spell of Illness, is $1,068.00. For example, if the patient has five Spells of Illness in 2009, the patient would pay (5 X $1,068=) $5,340. See www.medicare.gov for more information on Medicare deductibles, copayments, and premiums.

Hospital Inpatient Benefit Days Coverage (see also p. 118-119) Medicare Part A pays for 150 days of inpatient hospitalization per calendar year, with coverage arranged into 60 day, 30 day, and 60 day reimbursement periods (6030-60). The initial 60 days are called “full days” or “covered days” and are paid in full by Medicare except for the annual deductible, which is paid by the patient (for 2009: $1,068.00 for each Spell of Illness). The next 30 days are known as the “co-insurance days”, as Medicare will pay for these days less the daily co-insurance amount (for 2009: $267.00 per day of hospitalization). These first 90 days of the total of 150 days, “full/covered days” and “co-insurance days”, are known as renewable as they can be used repeatedly with each new benefit period or Spell of Illness. The last 60 days of the 150 days are referred to as “Non-Renewable,” or Lifetime Reserve Days (LTR). The Medicare patient has these 60 LTR days available once in a lifetime. Once they are utilized, they are gone forever. LTR co-insurance for 2009 is $534.00 per day of hospitalization. If the patient elects not to use these LTR days, then the patient is responsible for all inpatient costs incurred during this time period.

Skilled Nursing Facility Coverage (SNF) (see also p. 118-119) For Medicare to pay for treatment in a SNF, the beneficiary must first be an inpatient in a hospital for at least three consecutive days, not including the day of discharge, before being admitted to a SNF for skilled and/or special medical services. SNF care does not cover custodial care. Medicare pays for 100 days of care per calendar year. The first 20 days are paid entirely by Medicare. The beneficiary’s responsibility for

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The Health Care Revenue Cycle

days 21 through 100 is $133.50 per day for 2009. Beyond these 100 days per year, the patient is responsible for all costs incurred in the SNF.

Advanced Beneficiary Notice (ABN) For those consumers that have Medicare Part B, an Advanced Beneficiary Notice of Non-Coverage (ABN) can be used. An ABN must be completed by the patient BEFORE any Medicare Part B services are rendered by the doctor that may be determined not medically reasonable and necessary (Medicare denies payment). Medicare medical necessity criteria should be carefully examined by the provider and patient to establish whether it is reasonable to assume the treatment for the diagnosis will not be paid by Medicare. The purpose of the ABN is to notify the patient, in a timely manner, that in case of Medicare denial they will be responsible for all costs if they still get the medical care; the patient has the right to refuse treatment; and the patient is informed of the consequences of their health care decisions. The patient must read and sign and date the ABN so that it is legally in effect. When it is an emergency situation, EMTALA stipulates that an ABN not be given to the patient until the patient is medically screened and clinically stabilized. See www.cms.hhs.gov/BNI/Downloads/CMSR131G.pdf for more information concerning the ABN.

Medicare Secondary Payer (MSP) and the Working Aged Provision The employer, or two or more employers, must have at least 20 employees combined and provide an employer group health plan (EGHP), to be eligible for the Working Aged Provision to make the MSP effective. This means that when there are 20 or more employees, the employers must offer the same health insurance plans (EGHP) to its employees that are over 65 years of age as those who are younger than 65. If those employees that are over 65 elect to join the EGHP, then the Working Aged provision applies and the EGHP becomes the primary payer and Medicare becomes the secondary payer for health care services. In other words, MSP operates by using coordination of benefits (COB) with the patient’s other insurances to determine who is the primary or secondary payer. More information can be accessed at: www.cms.hhs.gov/medicare/cob/msp/msp_home.asp. Medicare is the secondary payer for those who are the following: 1. Aged 65 or older, employed, and has coverage under an employer-sponsored group health plan (EGHP) or an employee group health plan (plan offered through a union). 2. Aged 65 or older and covered by working spouse’s EGHP or an employee group health plan.

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3. Those under 65, disabled, and covered by a large group health plan (LGHP) provided by their employer, or the EGHP offered by another family member’s employment (spouse). 4. Those afflicted with End Stage Renal Disease (ESRD) and have their own or spouse’s EGHP or union plan, or other family member’s EGHP or union plan. A thirty (30) month Coordination of Benefits (COB) period is in effect whereby the EGHP starts as the primary coverage, and pays for the first 30 MONTHS of medical treatment for ESRD, before Medicare pays ESRD expenses as the primary payer after these 30 months have passed. 5. Those covered by Workers’ Compensation, Federal Black Lung, automobile, no-fault, or liability insurance plans. 6. Those who health care needs are covered under Veterans Administration (VA).

The Medical Staff and Hospital Admitting Protocols The most important privilege a member of the hospital’s medical staff is granted is the right to admit patients to the hospital for health care services. The admission of the patient to the hospital is a critical decision impacting on the consumer’s health, requiring decisions by the admitting physician and hospital administrator. The admitting staff or registrar cannot admit patients. 1. It is not permissible for the registrar to refuse to admit a patient the doctor has ordered to admit, even if the consumer is unable to pay for treatment. Any delays the registrar causes the patient in getting treatment may result in adverse legal action such as a malpractice suit. 2. EMTALA does not allow interference with the admitting process for any reason whatsoever if it is an emergency situation. The hospital is obligated to admit the patient to the ER when it is medically urgent. 3. If it is strictly an elective procedure, which means not an urgent or emergency clinical condition directly affecting the patient’s health, only the admitting physician can cancel or delay the admission until the hospital’s financial criteria are satisfied by the patient. 4. Admitting the patient to the hospital presents the registrar with clinical, legal, and time-sensitive issues that could expose the hospital, administrator, and physician to adverse legal action. In addition, the refusal or delayed admission of the consumer denies the hospital of potential revenue and generates negative publicity. 5. Only a member of the hospital’s medical staff can admit a patient. 6. If a patient is refused admission for any reason, it is imperative the admitting physician and hospital administrator are contacted immediately. The admitting physician must have the right to appeal the refusal of their patient’s admission to the hospital in a timely manner.

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Patient Confidentiality: Privacy Act of 1974 1. Patient privacy is a serious legal matter and cannot be violated whatsoever by any member of the hospital’s Registration, Admission, Financial, Administration, Medical staff, employee, volunteer or anyone connected with the hospital. 2. The legislation that governs protection of the patient’s confidentiality related to all hospital service areas is called the Privacy Act of 1974. Related to health care, anyone who has contact with the patient, all records, all treatment provided, etc., must be kept confidential. Practically speaking, the patient’s medical records need to be out of public view and doctors and nurses and therapists should not be discussing private health information (PHI) in public. This act established protection for the patient against invasion of privacy by the abuse of their records by the executive branch of the federal government (The White House), and those governmental agencies subject to the Freedom of Information Act (FOIA). This act does not apply to records maintained by state and local governments, or private organizations and companies. 3. The Privacy Act of 1974 is legally applicable to United States citizens and aliens legally admitted for permanent residence.

The Patient’s Medical Record and Telephone/Verbal Communication in the Hospital 1. The Patient’s medical record is a legal document (important) and cannot be released without the patient’s written consent. It may, however, be released by legal subpoena for any civil or criminal proceedings (unless prohibited by law). It must be stored in areas free from theft, destruction, unauthorized access, water damage, and insect infestation. 2. All medical documentation must be valid, complete, sufficiently detailed and accurate, and legible. 3. Incorrect entries into the medical record will be corrected with a single line drawn through the incorrect information, initialed and dated by the member of the medical staff performing the correction, with the correct data written adjacent to the incorrect data. (Note: This is very important for anyone working in the health care field) Medical personnel legally authorized to make corrections include: •

Attending physician, physician assistant (PA), licensed registered nurse (RN), or nurse practitioner (NA).



Student, under supervision from a properly licensed supervisor or teacher, from an accredited health professions program.

4. Verbal and telephone orders from the referring physician can only be accepted by a licensed physician, nurse, physician assistant, nurse practitioner or other duly licensed Health Care practitioner. The referring physician is the doctor who sends the patient to the hospital for further specialized treatment. The admitting physician is the one who places the patient in the hospital and assumes all responsibility for care, administers

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and documents the treatment, and discharges the patient back to the referring physician. Sometimes the referring physician and admitting physician are the same. 5. All telephone and verbal orders will contain the following information: •

Date and time the order was received by the physician, PA, RN, NA, etc. (with full name and designation).



Name of the ordering physician and patient involved (patient status and all identifying data included).



The exact medical order transcribed word for word (verbatim).

6. It is mandatory that permanent copies of the patient’s Advanced Medical Directive (AMD), Living Will, Health Care Surrogate, and Health Care Power of Attorney are included and continually updated in the medical record. 7. There is a direct connection between completion of the insurance claim form and the patient’s medical record. All information pertinent to successfully filling out the insurance claim form (producing a “clean claim”) so the doctor and hospital get paid, will be found in the medical record.

Patient Self-Determination Act (PSDA) 1. PSDA is also known as the Advanced Medical Directive (AMD), which is a legal instrument that includes the following: •

A Living Will, which is legal documentation prepared while the patient is still alive and coherent, addressing what health care is desired or not desired (e.g. Do Not Resuscitate or DNR) if the patient becomes incoherent due to a terminal disease or other debilitating condition. The Living Will or AMD will be activated when the patient becomes incapacitated, and the Health Care Surrogate can then legally make treatment decisions. Out-of-state approval of a Living Will may be problematic as laws governing PSDAs vary from state to state.



Selection of a Health Care Surrogate or Health Care (Durable) Power of Attorney. This is a legal document that designates someone else, also known as a proxy or agent, the right to make medical care decisions if the patient becomes incapacitated. Having an AMD on file does not mean that it will ever have to be implemented.

2. The PSDA or AMD is defined as a legal document such as a Living Will or Durable Power of Attorney and is recognized by state law. The PSDA: (1) gives the patient the right to make directives about their future medical care when they are incapable of making these decisions on their own; (2) allows the patient to accept or refuse any health care; and (3) gives the patient the right to execute a living will or grant a durable power of attorney for health care to a designated individual. The Durable Power of Attorney means that someone is legally appointed by the patient to act with the powers of a lawyer specifically related to executing the patient’s wishes for their future health care when they become unable to do this on their own.

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3. Omnibus Budget Reconciliation Act of 1990 (OBRA) states that in order for hospitals to participate in Medicare (Title XVIII) and Medicaid (Title XIX) programs, they must develop ways to implement Advanced Medical Directives so their patients can be enabled to make their own health care decisions. Most hospitals are promoting the importance of the AMD before the consumer becomes sick and needs the hospital for treatment. This act established the PSDA. 4. Important: An AMD is activated when the patient becomes incapacitated. The patient can revoke the AMD anytime by destroying ALL copies.

Figure 6: OBRA 1990

The Joint Commission on Accreditation of Health Care Organizations (JCAHO) In the United States, JCAHO is the leading organization establishing health care standards and an accrediting body in the health care industry. JCAHO’s main focus is to promote state-of-the-art protocols that emphasize improving the quality, safety, and optimal delivery of treatment administered by health care organizations such as hospitals. JCAHO is the pre-eminent surveyor of hospitals, and audits and accredits them every three (3) years. JCAHO inspects, certifies, and establishes the standards of just about every aspect of the functioning of a hospital, which includes the registration and admissions departments. Remember, JCAHO used Medicare as the gold standard.

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JCAHO emphasizes the following areas in the registration and admission areas of the hospital: 1. Patient Confidentiality and Privacy (HIPAA) 2. Advanced Medical Directives 3. Patient Rights and Responsibilities 4. Hospital’s Organizational Ethics and Protocols (ways of doing things) 5. Continuum of Health Care (how treatment is provided in a timely manner and a smooth medically necessary fashion) 6. Management of the Health Care Environment and the Delivery of Health Care 7. Patient Security (medical record privacy and patient’s physical security in the hospital) 8. Communication between Doctors, Allied Medical Staff, Hospital Staff, Patient, and Public Contingency Plans for Disasters in the Registration and Admissions Departments 1. JCAHO requires registration and admissions departments in every hospital to have in place plans in case of disruptions of hospital services, or disasters. Disasters include: fires, floods, storms such as hurricanes, and earthquakes. Also included are civil disorders such as riots, power failures, massive injuries (terrorism or outbreaks of disease affecting many people [epidemics]) that would tax the hospital’s resources, bomb threats, or explosions. 2. JCAHO’s requirements demand that each hospital have institution-wide plans in place, and operational, in case of emergencies for the registration and admissions departments, particularly affecting inpatient admissions and discharge operations. 3. Planning for disaster and emergency contingencies encompasses three areas for the admitting/registration departments: •

Emergency Response involves the handling of the disaster so that as it is happening the extent of damage is limited, sensitive data is protected, and operational impact is minimized.



Back-up plans involve the time period immediately after the disaster. Categorizing time-sensitive operations, identifying operating resources and facilities critical to the maintenance of admission/registration hospital functions in temporary facilities (if necessary), and preparing permanent facilities to be made functional again.



Recovery plans are coordinated with back-up directions to insure the transition from emergency response, to a resumption of permanent functioning of the admission and registration departments is smooth, and conflicts are resolved.

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A comprehensive emergency contingency plan involves: personnel, security, data, software, hardware, supplies, communications, IT, storage, operational space, and documentation.

Census Census refers to the number of inpatients in the hospital at any particular point in time. 1. The most common census is the Midnight Census. 2. Every health care institution has fixed and variable expenses that are affected by the population of patients admitted to the hospital, as well as those utilizing inpatient and outpatient services such as radiology, laboratory, ASC, PT, OT, ST, etc. 3. A low census for a period of time (weeks, for example) will have a negative effect on the hospital’s cash flow, accounts receivable (A/R) and accounts payable (A/P), due to hospital beds that are not filled and hospital services not being utilized. A low census means the hospital and doctors are not selling their services to enough customers to make enough money to pay their expenses and make a profit. 4. Lost revenues during periods of low census may result in cash generation that is insufficient to cover the hospital’s fixed expenses (many of which are 24 hours per day, 7 days per week) such as salaries, utilities (heat, electricity), building maintenance, operation of the emergency room and surgical suites and laboratories, etc., which remain the same over the short term (weeks) regardless of the number of patients in the hospital. 5. Over the long term (months) with a low census, variable expenses will be lowered because less medical supplies are used and fewer employees are working (they are laid off). However, the hospital may still experience cash flow problems negatively impacting the hospital’s capital reserves, because there are fixed expenses that need to be paid and other obligations that need to be handled. Hospitals simply cannot shut down their services because of future uncertainties of the medical needs of the public; ongoing training of medical and allied health students, residents, and nurses; ongoing research operations; and contractual obligations with permanent medical staff and use of specialized medical equipment (CAT scan, MRI, electron microscope, surgical equipment and laboratories, etc.) 6. Therefore, a high census for a sufficiently long period of time will compensate for a low census by the hospital making more and more money during times of a high census.

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Average Daily Census This is the average number of inpatients physically in the hospital each day for a specific period of time. Formula: Sum of Total Patient Days (patients in the hospial)

Number of Days Within a Time Period (i.e, one month)

= Average Daily Census

For example, for the month of January, 2009, the daily census is: January 1:

167 patient days = daily census

January 2:

177 patient days = daily census

January 3

180 patient days = daily census

January 4

190 patient days = daily census

January 5

159 patient days = daily census

through to January 31: 209 patient days = daily census

7120 = Sum of Total Patient Days (Total Number of Patients in the Hospital) for the Entire Month of January, 2009

Total Number of Days in January, 2009 = 31 Days Sum of Total Patient Days Days in January

=

7120

= 229 = Average Daily Census

31

On Average, for the month of January, 2009, there were 229 patients in the hospital each day.

Percentage of Occupancy Formula is the ratio of actual number of patient days (hospital beds filled with people) divided by the maximum number of patient days (hospital beds that can be filled) the hospital can handle during a specific period of time. If the hospital can hold a maximum of 200 patients per day (it has 200 beds available), and for January 1, 2009 the hospital had a daily census of 167 patients (167 beds were actually filled with patients), the percentage of occupancy would be as follows: Actual Patient Days

Maximum Patient Days

=

167 200

= 84%

“84%” indicates that for January 1, 2009, the Hospital is 84% Full = PERCENTAGE OF OCCUPANCY

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Generally Accepted Accounting Principles (GAAP) Definition: The accounting principles used in the handling of cash, credit card receipts, checks, and other financial instruments the registrar in the registration or admissions office must follow to insure financial safety and accuracy, and to minimize shortages (losses). This is another one of the many duties of the registrar— that of a cashier. The cashier must: 1. Maintain a payment log (who paid what to whom). 2. Maintain a locked cash drawer that is secured and out of public view. 3. Maintain duplicate numbered receipt logs of all financial transactions, so that the hospital, doctor and patient all have a written record of all financial activity. For example, the patient can prove they actually did pay their copayments, co-insurances, deposits, etc. 4. Issue receipts for all cash payments and all financial transactions in a timely fashion. 5. Store financial deposits, that have not been deposited in the hospital’s bank accounts, in a theft-proof and fire-proof safe 6. Checks should be immediately endorsed with “For Deposit Only” to the hospital or doctor’s office.

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Understanding Acronyms and Abbreviations It is recommended the student prepare flashcards to facilitate memorizing these concepts. ABN

Advanced Beneficiary Notice

ADL

Activities of Daily Living

ALOS

Average Length of Stay

AMD

Advanced Medical Directive

A/P

Account Payable (bills waiting to be paid to vendors that have provided services and products to the hospital)

A/R

Accounts Receivable (revenues waiting to be received by the hospital from patients or insurance companies that have been billed for health care services provided by the hospital)

CC

Chief Complaint

CAT scan

Computerized Axial Tomography scan

CCU

Critical Care Unit

CHAMPVA

Civilian Health and Medical Program of the Veterans Administration

CHCBP

Continued Health Care Benefit Program

CMS-1500

Centers for Medicare and Medicaid services billing and coding form (outpatient)

COB

Coordination of Benefits

DEERS

Defense Enrollment Eligibility Reporting System

DOB

Date of Birth

DOD

Department of Defense

DOS

Date of Service

DNR

Do Not Resuscitate

DRG

Diagnosis Related Group

Dx

Diagnosis

EGHP

Employer Group Health Plan

EOB

Explanation of Benefits

EKG

Electrocardiogram

ESRD

End Stage Renal Disease (kidney failure)

FOIA

Freedom of Information Act

GAAP

Generally Accepted Accounting Principles

HMO

Health Maintenance Organization

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The Health Care Revenue Cycle

IHS

Indian Health Service

ICU

Intensive Care Unit

JCAHO

Joint Commission on Accreditation of Health Care Organizations

LTC

Long Term Care

LTR

Lifetime Reserve Days

MSP

Medicare Secondary Payer

MCO

Managed Care Organization

MRI

Magnetic Resonance Imaging

MTF

Military Treatment Facility

NP

Nurse Practitioner

NAS

Non-Availability Statement

OBRA (1990)

Omnibus Budget Reconciliation Act of 1990

PA

Physician Assistant

PAT

Pre-Admission Testing

PCU

Progressive Care Unit

PPO

Preferred Provider Organization

PSDA

Patient Self Determination Act

RA

Remittance Advice

RN

Registered Nurse

RTC

Residential Treatment Center

SNF

Skilled Nursing Facility

SSN

Social Security Number

TAN

Treatment Authorization Number

TPA

Third Party Administrator

UB-04

Billing and coding form for hospital use (inpatient)

VA

Veterans Administration

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More Test Taking Strategies In this chapter, much of the information is presented in an outline or “laundry list” format, where multiple lines of data are related to a main concept. When answering multiple choice questions for this kind of information, be sure to remain focused on the main concept as you consider each answer. Those that pertain to the main concept are correct, those that do not are incorrect. To use a simple example, in question #3 below—The responsibilities of the hospital registration’s staff—the main concept is registrar. As you read each possible answer ask whether it relates to a registrar’s responsibilities. Because, in this case, they all do, the correct answer is “E” —all of the above. (Look also at questions #6, 9, 12 and 13.) Sometimes you are asked to choose the one response that is not applicable. Again, a simple example is question #2 — All of the following are included in the Physician’s Direct Services except…. The main concept is, of course, Physician’s Direct Services. There is only one answer that does not relate to the main concept—answer “C”, changing the patient’s prescription for pharmaceuticals. Often the choice that is not applicable (the correct answer) either is so absurd as to not make any sense (the registrar would never alter the patient’s prescription) or is not consistent with the listed responsibilities that you have learned. (Questions #7, 8 and 10 are similar kinds of questions.)

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Sample Test Questions These 80 questions should be answered in 80 minutes or less (one minute per question). 1. Advantages of pre-admitting a patient to the hospital include all of the following except: A. Hospital room, facility needs, and PAT can be anticipated in a timely fashion. B. Insurance pre-certification, pre-verification, and collection of copayments, deductibles, and deposits can be handled prior to the medical service being rendered. C. 70% to 90% of all patients should be pre-registered at least 48 hours prior to admission. D. Second opinions for surgery and other procedures can be obtained prior to provision of health care services. Answer: C 2. All of the following are included in Physician Direct Services except: A. Hospital staff physician outbound call services B. PCP notification of their patients who experience an emergency department admission C. Changing the patient’s prescription for pharmaceuticals D. Community and staff physician referrals and marketing to the public E. Effective Patient Scheduling Answer: C 3. The responsibilities of the hospital registration staff, the registrar, include handling: A. ABN, EMTALA, Patient Bill of Rights. B. Adequate collection of all necessary data so that a clean claim can be produced. C. Creating the permanent patient medical file. D. Adherence to HIPAA rules and regulations. E. All of the above. Answer: E 4. The estimated portion of the hospital bill, not covered by insurance and paid by the patient at pre-admission, is known as the: A. EOB B. RA C. Deposit D. Clean claim E. PCP Answer: C

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5. Excellence in patient scheduling involves a balance between patient satisfaction and collecting the necessary ___________ information. A. Demographic B. Financial/Legal C. Clinical D. Insurance E. All of the above Answer: E 6. The most important responsibility of the hospital registration staff is: A. Production of a clean claim B. Creating the permanent patient medical file C. Creating the permanent patient identification process D. Accurate collection of patient information Answer: A 7. A clean claim submitted to the insurance carrier involves all the following, except: A. It is Valid and Complete B. TPO information collected is PHI and covered under HIPAA’s Privacy Rule C. Will result in no delays in reimbursement to the doctor or hospital D. It is fraudulent and abusive E. Can be audited by a third party with no further intervention by the health care provider or facility Answer: D 8. As the health care industry becomes more complicated, the role of the hospital registrar has evolved to include all of the following except: A. Implementation of federal and state rules, regulations; completion of paperwork. B. Handling the hospital’s legal matters. C. Compliance of HIPAA, ABN, MSP. D. Adherence to ALOS criteria. E. All of the above. Answer: B 9. Disadvantages of pre-admitting a patient to the hospital includes: A. Paperwork is incomplete, invalid, delayed or forgotten by the patient. B. Pre-certification and pre-verification processes are not always completed in a timely fashion. C. Dates of actual hospital admission, procedures and surgical services are not always known in advance. D. All of the above. Answer: D

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10. The five collection control points the registrar has with the patient to complete the registration process include all of the following except: A. In-house B. After discharge C. HIPAA D. Pre-Admission E. Admission F. At discharge Answer: C 11. The process of conducting all laboratory work, diagnostic imaging, EKG’s, biopsies, etc., prior to the patient being admitted to the hospital, is called ___________. A. PAT B. ALOS C. ABN D. EOB E. PCP F. CHCBP Answer: A 12. A consistent and well-executed hospital registration system will ___________ before health care services are provided to the patient. A. Identify all patient’s copayments, deductibles, deposits, and financial obligations B. Be completed at least 24 hours C. Identify all insurance limitations, pre-certifications, pre-verifications, and other requirements D. Collect all demographic, socioeconomic, and clerical information E. All of the above Answer: E 13. Advantages of pre-admitting a patient to the hospital include all of the following: A. Insurance pre-certification and pre-verification criteria, collection of copayments, deductibles, and deposits are handled prior to medical service being rendered. B. 70% to 90% of all patients should be pre-registered at least 24 hours prior to admission. C. Second opinions for surgery and other procedures can be obtained prior to provision of health care services. D. Hospital room, facility needs, and PAT can be anticipated in a timely fashion. E. Takes advantage of the patient’s sense of urgency. F. All of the above Answer: F

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14. The three types of TRICARE are: A. Special B. Prime C. Standard D. Extra E. B, C, D F. A, B, C Answer: E 15. Active military duty personnel are enrolled in ______________ and pay no fees. A. TRICARE Prime B. TRICARE Standard C. TRICARE Extra D. CHAMPVA E. None of the above Answer: A 16. Federal law requires hospitals participating in Medicare to also participate in __________________ for inpatient services. A. TRICARE Prime B. TRICARE Standard C. TRICARE Extra D. CHAMPVA E. B and E F. A and C Answer: B 17. _______________ describes a computerized database administered by the DOD and used by TRICARE to confirm who is eligible for treatment and what plan they have. A HIPAA B. Department of Defense C. OIG D. DEERS E. PCP F. CHCBP Answer: D 18. ______________ is defined as a health care program for veterans, their spouses and children, with permanent or total service-connected disabilities, and surviving spouses and children of veterans who died as a result of a service connected disability. A. CHAMPUS B. TRICARE C. CHAMPVA D. MEDICARE E. DEERS Answer: C

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The Health Care Revenue Cycle

19. _____________ utilizes a DRG payment system for most admissions to acutecare, short-term hospitals in 49 states, the District of Columbia, and Puerto Rico for those in the military or their families. _________________ is exempt from DRGs. A. TRICARE Prime; Maryland B. TRICARE Extra; Virginia C. TRICARE Standard; Maryland D. CHAMPVA; Virginia E. None of the above Answer: C 20. Which of the following require a NAS to be issued to the beneficiary before any non-emergency civilian hospital inpatient services may be provided? A. TRICARE Prime B. TRICARE Standard C. TRICARE Extra D. CHAMPVA E. CHCBP F. A and B G. B and C H. D and E Answer: G 21. Which of the following criteria are not related to the NAS? A. Required for TRICARE Standard and Extra B. Valid for 30 days after the date of issuance of the NAS C. Remains valid from the beneficiary’s date of admission to the hospital until 15 days after discharge D. It is not issued at the discretion of the MTF Commander. E. All of the above Answer: D 22. TRICARE for Life is a(n): A. Expanded program for Medicare-eligible military who are 65+ years, families, survivors, some spouses. B. Must be enrolled in Medicare Parts A, B and C. C. There are no fees except for Part B premiums. D. Secondary payer to Medicare. E. A, C and D F. B, C and D Answer: E 23. TRICARE claims must be submitted within _______________. A. One (1) year of the DOS, regardless whether the claim is invalid or incomplete. B. Two (2) years of the DOS. C. One (1) year of the DOS, and claim must be valid and complete. D. Three (3) years of the DOS, and claim must be valid and complete. Answer: C

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24. TRICARE is the primary payer for all of the following when the beneficiary also has: A. Medicaid. B. IHS coverage for non-IHS medical services. C. Other insurance coverage for out-of-pocket expenses. D. All of the above. Answer: D 25. Medicare’s “Spell of Illness” is defined as: A. Having no deductible to be paid. B. Benefit Period. C. Begins when the patient is admitted to the hospital or SNF. D. Ceases 60 days after the beneficiary has been discharged from the hospital or SNF. E. Is considered the same “Spell of Illness” as long as each admission and readmission to the hospital or SNF are consectuve and not longer than 60 days each. F. B, C, D, E G. A, B, C Answer: F 26. TRICARE is considered the secondary payer when the beneficiary also has ______________ coverage: A. Workers’ Compensation B. PIP coverage C. No Fault D. Uninsured motorist’s (under auto policy) E. Student health F. HMO, PPO G. All of the above Answer: G 27. Before the registrar can accurately estimate the patient’s financial obligation to the hospital, the following are applicable: A. Preferably will occur at discharge. B. ALOS and the admitting physician’s estimated length of hospital stay have to be determined. C. Average cost per diem by type of medical/surgical service, inpatient and/or outpatient, have to be estimated. D. EMTALA does not have to be considered. E. Daily ICU, CCU, private or semi-private room charges determined. F. B, C, E G. A, B, C. Answer: F

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The Health Care Revenue Cycle

28. When the consumer enters the hospital for emergency care or an urgent care clinic before being medically screened, the registrar can: A. Call the insurance company for authorization and certification numbers. B. Ask the patient for deposit or co-payments. C. Ignore EMTALA requirements. D. None of the above. E. All of the above. Answer: D 29. Medicare Part A pays for all or part of ____________ of hospitalization. A. 60 days. B. 150 days. C. 30 days. D. 100 days. E. None of the above. Answer: B 30. The inpatient hospital benefit days that Medicare will pay for are defined as: A. First 60 days: Full or Covered Days. B. First 30 days: LTR Days C. Third 60 days: Lifetime Reserve Days D. Second 30 days: Coinsurance Days E. Third 60 days: SNF benefit F. A, C and D G. B, D and E Answer: F 31. The first 90 inpatient hospital benefit days that Medicare Part A will pay for are known as _______________ ; the last 60 inpatient hospital benefit days are known as _____________. A. Renewable days; Non-Renewable days. B. Renewable days; LTR. C. Non-renewable days; Renewable days. D. Spell of Illness; Benefit Period. E. A and B Answer: E 32. The following are applicable for Medicare to reimburse SNF care except: A. The patient is receiving custodial care. B. The patient was first admitted to the hospital for at least three consecutive days, not including the day of discharge, prior to entering the SNF. C. The patient was receiving skilled or special services. D. There is a 100 day SNF benefit. Answer: A

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33. TRICARE will never pay for health care services when the patient also has ______________. A. Medicaid B. Worker’s compensation C. CHAMPVA D. Student health insurance E. PIP and no-fault coverage under patient’s own automobile policy Answer: C 34. The ABN encompasses the following: A. In an emergency situation, should not be given to a beneficiary until medically screened and stabilized. B. Applicable for patients with Medicare Part B benefits. C. Beneficiary should not be given an ABN unless there is a genuine likelihood the medical services will be denied. D. All of the above. E. B and C Answer: D 35. Pre-certification: A. Insures that the claim will be paid under the provisions of the health insurance policy. B. Is the hospital’s obligation to get from the patient’s insurance carrier. C. Does not affect payment delays, financial risk, and bad debt for the hospital. D. Does not affect the pre-admission process or patient’s experience with the hospital. E. None of the above. Answer: E 36. In consideration of the physician admitting the patient to the hospital: A. In case of an emergency, cannot be denied because of the patient’s inability to pay for services. B. Only a member of the hospital’s medical staff can admit patients for health care services. C. It is acceptable for a member of the hospital’s registration staff to deny or delay admission. D. It is an important privilege the hospital grants only to the medical staff. E. B, C and D F. A, B and D Answer: F

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The Health Care Revenue Cycle

37. The Privacy Act of 1974: A. Is applicable only to United States citizens and aliens lawfully admitted for permanent residence. B. Provides protection against invasion of privacy due to abuse of personal records by the executive branch of the federal gov’t. C. Applies to governmental agencies subject to the FOIA. D. Applies to records maintained by state and local governments. E. All of the above. F. A, B and C. G. B, C and D. Answer: F 38. The patient’s medical record includes all of the following: A. Optional to be complete, valid, legible, accurate and sufficiently detailed. B. Is not a legal document. C. Not necessary to be stored to be free from water and insect damage. D. Not necessary to be protected from theft, abuse, destruction, or unauthorized use. E. Incorrect entries can be erased. F. Anyone in the hospital can make corrections into the medical record. G. None of the above. Answer: G 39. All verbal and telephone orders concerning the patient’s hospital care include: A. Full name and designation of authorized staff member documenting the order B. Date and time the order was received. C. The name of the ordering physician. D. Not necessary to write down the order verbatim. E. Can be accepted by anyone employed by the hospital. F. A, B, D, and E. G. A, B, C. Answer: G 40. The AMD’s are written legal instruments that include: A. The Living Will B. HMO C. Assignment of a health care surrogate. D. Assignment of a health care power of attorney. E. NAS F. A, C and D G. C, D and E Answer: F

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41. _____________ is a written legal document providing direction about what health care the consumer wants or does not want when there is a terminal illness or other debilitating condition. A. MCO B. Living Will C. OBRA of 1990 D. FOIA E. Privacy Act of 1974 Answer: B 42. The key elements of HMOs, MCOs, or PPOs the registrar must confirm prior to medical care being rendered are: A. Pre-certification and pre-authorization data. B. Refuse to admit the patient to the hospital until HMO data is verified, even if it is an emergency. C. Insure the hospital accepts the patient’s managed care health insurance. D. Insure the medical staff doctors accept the patient’s managed care health insurance. E. A, C and D F. B and D Answer: E 43. The AMD is also known as the: A. PSDA B. CHAMPVA C. HIPAA D. DEERS E. PROXY Answer: A 44. The AMD is activated when the patient becomes ________________ and can be revoked by the patient ______________. A. Coherent, Calling the attorney. B. Incapacitated, destroying some copies of the AMD. C. Incapacitated, destroying all copies of the AMD. D. MSP; accepting OBRA of 1990. E. None of the above. Answer: C 45. Medicare is the secondary payer for all of the following except: A. 65 or older, employed with an EGHP. B. Spouse, who is 65 years or older, of someone who is employed with an EGHP. C. Those who receive coverage under Workers’ Compensation, Federal Black Lung, automobile insurance. D. Those with ESRD and for the COB period of 15 months. E. Those who receive services covered under the VA. Answer: D

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46. ___________________ is consent that can be written or oral and the patient agrees to the treatment described to him or her. A. Informed consent B. Implied consent in fact C. Special consent D. Implied consent by law E. General consent F. Actual or expressed consent Answer: F 47. __________________ occurs when the patient is unconscious and admitted to the ER for treatment allowed by law. A. Informed consent B. Implied consent in fact C. Special consent D. Implied consent by law E. General consent F. Actual consent Answer: D 48. _________________ is consent by silence as the patient implies permission for the treatment by not objecting. A. Informed consent B. Implied consent in fact C. Special consent D. Implied consent by law E. General consent F. Actual consent Answer: B 49. ____________ type of consent is used to get permission for the patient to receive HIV testing, major/minor surgery, anesthesia, chemotherapy or radiation therapy, or psychiatric therapy. A. Informed consent B. Implied consent in fact C. Special consent D. Implied consent by law E. General consent F. Actual consent Answer: C

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50. _____________ describes a type of consent where the patient understands what treatment is being provided and what procedures are to be performed. A. Informed consent B. Implied consent in fact C. Special consent D. Implied consent by law E. General consent F. Actual consent Answer: A 51. The following are related to the PSDA except: A. AMD B. Health Care Surrogate C. Living Will D. Privacy Act of 1974 E. OBRA of 1990 Answer: D 52. _________________ describes a consumer who suddenly enters the hospital for immediate screening, diagnosis and treatment but not admitted to the hospital for inpatient or observation services. A. Clinic B. Inpatient C. Emergency D. Ambulatory E. Same Day Surgery Answer: C 53. _____________ describes a consumer who has been admitted to the hospital upon the orders of a physician who is expected to stay overnight. A. Clinic B. Inpatient C. Emergency D. Ambulatory E. Same Day Surgery Answer: B 54. ________________ describes an outpatient who receives surgical services with no admission to the hospital. A. Clinic B. Inpatient C. Emergency D. Ambulatory E. Same Day Surgery F. D and E Answer: F

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55. _____________ is the charge consisting of the professional fee and technical fee. A. Global B. Actual C. UCR D. Prevailing E. Approved Answer: A 56. ____________ charge is the monies paid to the provider or hospital per the Medicare fee schedule. A. Global B. Actual C. UCR D. Prevailing E. Approved Answer: E 57. ____________ charge is the average fee billed by most of the providers or hospitals for a particular service in a geographic area. A. Global B. Actual C. UCR D. Prevailing E. Approved Answer: C 58. _______________ defines broader and less specialized diagnostic, medical, and surgical care provided to the consumer on an outpatient basis. A. Clinic B. Inpatient C. Emergency D. Ambulatory E. Same Day Surgery Answer: D 59. Observation care involves: A. Usually does not exceed 24 hours. B. Those services provided in a hospital. C. Those services provided in an ASC. D. Claims submitted for more than 48 hours of observation care will be reviewed for medical necessity by CMS. E. A, B, and C F. A, B, and D G. A, B, C and D Answer: F

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60. _______________ is generally made available to patients who are terminal, chronically ill or disabled in a nursing facility or rest home. A. Outpatient care B. Respite care C. Long Term care D. Hospice care E. Custodial care F. Home Health care G. Gatekeeper Answer: C 61. _______________ is not covered by Medicare and can be administered by those who are not professionally trained. A. Outpatient care B. Respite care C. Long Term care D. Hospice care E. Custodial care F. Home Health care G. Gatekeeper Answer: E 62. ______________ is the role of the PCP in managed care plans that controls access to specialized medical treatment and facilities. A. Outpatient care B. Respite care C. Long Term care D. Hospice care E. Custodial care F. Home Health care G. Gatekeeper Answer: G 63. _____________ care that is provided to terminally ill individuals and their families by non-profits. A. Outpatient care B. Respite care C. Long Term care D. Hospice care E. Custodial care F. Home Health care G. Gatekeeper Answer: D

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The Health Care Revenue Cycle

64. Checks immediately endorsed with “For Deposit Only,” cashier maintains a locked cash drawer and payment log, cashier stores un-deposited cash and checks and other financial instruments in a theft-proof and fire-proof safe, are required of: A. HIPAA B. GAAP C. Privacy Act of 1974 D. JCAHO E. Durable Power of Attorney Answer: B 65.

Sum of Total Patient Days in a Month Total Number of Days in a Month

=

.

A. GAAP B. Percentage of Occupancy C. HIPAA D. Average Daily Census E. Informed Consent F. Revenue Answer: D 66

Actual Patient Days (Census) . Maximum Patient Days (Total Beds)

=

.

A. GAAP B. Percentage of Occupancy C. HIPAA D. Average Daily Census E. Informed Consent F. Revenue Answer: B 67. Planning for emergency and disaster events includes the following except: A. GAAP B. Response C. Back-up D. Recovery E. Privacy Act of 1974 F. A and E G. B and C Answer: F 68. ___________ requires hospital-wide disaster and emergency plans. A. GAAP B. ABN C. JCAHO D. ALOS E. PSDA Answer: C

Chapter 2 - Contact with Hospitals and the Doctors

69. The most important privilege a member of the hospital’s medical staff is to: A. Admit patients for health care services. B. Follow GAAP. C. Enforce HIPAA. D. Follow PSDA directives. E. Insure the JCAHO is followed in the hospital. Answer: A 70. _______________ refers to the number of patients occupying beds in the hospital at a particular point in time, for example, January 5, 2009. A. JCAHO B. Census C. Percentage of Occupancy D. ALOS E. Medicare Part A Answer: B 71. “Assignment of Benefits” must be obtained from the patient _____________. A. At discharge B. When the patient is home C. At time or service D. At Registration E. None of the above Answer: D 72. If Medicare considers an item or service as medically necessary, it must meet all of the following criteria except: A. Provided at the convenience of the patient or doctor or hospital B. Be consistent with generally accepted medical standards C. Consistent with the patient’s diagnosis, illness or symptoms D. Established as safe and effective Answer: A 73. Verbal telephone orders must contain all of the following except: A. The order must be written verbatim as taken over the telephone B. SSN of the patient C. Name of referring physician D. The date the order was received E. The time the order was received Answer: B 74. MSP utilizes the ____________ when determining who is the primary or secondary payer. A. Deductibles B. HIPAA C. Birthday Rule D. COB E. ABN Answer: D

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75. Which of the following is not a type of consent? A. Implied Consent in Fact B. Implied Consent by Law C. Special Consent D. Emergency Consent E. Informed Consent Answer: D 76. DEERS: A. Defense Enrollment Eligibility Reporting System B. Defense Eligibility Enrollment Reporting System C. Defense Enrollment Eligibility Recording System D. Defense Enrollment Elastic Reporting System Answer: A 77. ALOS: A. Audited Length of Stay B. Average Length of Stay C. Average Line of Stay D. Audited Leave of Stay Answer: B 78. JCAHO: A. Joint Committee on the Accreditation of Home Organizations B. Joint Commission on the Accreditation of Health Care Organizations C. Joint Committee on the Accreditation of Health Care Organizations D. Joint Commission on the Average of Health Care Organizations Answer: B 79. CHAMPVA: A. Congressional Health and Medical Program of the Veterans Administration B. Civilian Home and Medical Program for the Veterans Administration C. Civilian Health and Military Program for the Veterans Administration D. Civilian Health and Medical Program of the Veterans Administration Answer: D 80. CHCBP: A. Continued Health Continuum Benefit Program B. Continued Health Care Benefit Premiere C. Continued Health Care Benefit Program D. Care Health Continued Benefit Program Answer: C End of Chapter 2

Chapter 3 - Processes and Procedures

Chapter 3

Processing Procedures Chapter Topics •

UB-04 Claim Form



Common Working File



Medicare Processing of the UB-04 Claim Form



Medicare Deductibles, Co-Payments and Co-Insurances for 2009



Electronic Billing



Financial Statements



Abbreviations & Acronyms



Sample Test Questions

After studying this chapter you will understand: •

UB-04 Claim Form



UB-04 Field Locators and Data Elements



Insurance Policy and Coordination of Benefits (COB)



Common Working File



What does returning a Medicare claim as unprocessable mean?



Claim Form Processing Terminology



Medicare; MS-DRG’s; 72-Hour Rule



Medicare Deductibles, Co-payments, Co-insurances



Clean Claim



Financial Statements: Superbill, Itemized Statement, and Data Mailer



Birthday Rule



Medicare Secondary Payer (MSP)



Electronic Billing: Electronic Data Interchange (EDI)



Chargemaster

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The Health Care Revenue Cycle

UB-04 Claim Form Patients rarely pay health care providers directly. The only payments they make to the health care system is for insurance coverage (through premiums) or through copayments, co-insurances and deductibles. This, of course, represents only a small fraction of what is actually paid for health care services and products. The insurance policy is a legal contract between the policyholder (the consumer who buys the contract) and the insurance carrier (the company or government agency that agrees to pay for most of the approved health care services and treatments provided the patient). Keep in mind that the insurance carrier (per the contract with the patient) only pays for what it is legally liable to pay for as well as what it decides is medically warranted. For example, if the patient has diabetes, the insurance policy will not necessarily pay for everything associated with the treatment of that disease. For example, there may be limitations on the amounts of insulin that will be reimbursed, whether the insurance carrier will pay for a brand name or a generic version of insulin, how many syringes will be paid for, how many glucose (laboratory ) tolerance tests (GTT) will be paid for, how many office visits and what types of medical specialists will be allowed per month or year, how much will be paid for medically proven complications related to the patient’s diabetes, etc. The diabetic patient may very well require treatment and supplies that are medically warranted and necessary, but this does not mean that the insurance company will pay for everything. The patient may still be responsible for thousands of dollars of uncompensated medically warranted and necessary treatment and supplies. Generally, whether the patient is aware of it of not, there is more than one insurance company responsible for payments. There is the primary insurance company that pays first. Insurance carriers that pay the remainder of the health care bill after the primary insurance company has paid its share are known as the secondary (number 2 in line) and tertiary payers (number 3 in line). Therefore, if Medicare is the primary payer, it pays the medical bill first, then whatever treatment and products remain unpaid, Medigap (for example, through Aetna) pays second and Blue Cross/Blue Shield pays third. This process of determining in what order the insurance companies pay is called coordination of benefits (COB). This does not mean the patient has nothing remaining to pay after these three insurance companies are finished— there are deductibles, co-payments and co-insurances, for which the patient is contractually liable. Furthermore, not all medical treatments and products will be approved for payment by these insurance carriers, so the patient may also have additional bills to pay. Information collected from the patient, doctor and hospital needs to be placed on claim forms so the insurance carrier and Medicare can process them and issue payment for health care services. There are two standard claim forms—the CMS1500 for treatment, services and products given to the patient outside the hospital, and the UB-04 for services given the patient inside the hospital or affiliated with the hospital. The UB-04 is used for services rendered to the patient while admitted to the hospital (inpatient), as well as for services provided the patient while using the

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emergency room, outpatient clinic, and other facilities affiliated with the hospital but on an outpatient basis. The National Uniform Billing Committee (NUBC), Centers for Medicare and Medicaid (CMS) and the American Hospital Association (AHA) are responsible for the creation and revisions of the UB-04 (aka-CMS 1450) claim form (see example p. 222,) that replaced the UB-92 as of February, 2005, which until then was the form used for all hospital inpatient and outpatient services and procedures. As of May 23, 2007, skilled nursing facilities (SNF), home health practitioners (such as nurses, physical and occupational therapists, home health aides, etc.), outpatient rehabilitation facilities, and community mental health centers were also required to begin using this claim form for their invoicing and coding of health care services. The electronic version of the UB-04, known as the X12N837 Institutional Health Care Claim Transaction (837I), was created as a result of HIPAA. The X12N837 is considered an Electronic Data Interchange transaction set (EDI), which is software for this claim form, utilized on the computer. One of the major improvements of this electronic version of the UB-04 is that secondary and tertiary payers can be billed simultaneously with the primary insurance carrier, because this electronic version incorporates a feature named Coordination of Benefits data (COB). COB determines the financial responsibility for each insurance payer—primary, secondary, and tertiary. In other words, the insurance carriers “talk” to each other and agree who should pay the medical bills first, then second and third. The UB-04 or CMS 1450 claim form contains 81 Form Locators or Field Locators (FL), which hold Data Elements. Data Elements are bits of information critical to the payment of the claim by the insurance company. The information is inserted by a medical coder and pertains to the medical treatment of the patient and the nature of the invoice itself along with billing, coding, patient, hospital, department, clinic, identification numbers, and other provider, patient and facility information. Note: Form locators and data elements are crucial elements in the process of medical billing. There are 81 Field or Form Locators (FL), which are 81 numbered spaces (listed from #1 to #81) on the UB-04 form, which delineate names, revenue/occurrence/ value codes, addresses, numbers, charges, third party payers, hospital and provider identification, social security numbers, name of guarantor, credit card numbers, financial information, ICD/CPT codes, hospital department information, and other statistics necessary for the payment, analysis, storage, and adjudication of hospitalrelated health care administered to the patient by a commercial insurance company, third party administrator (TPA), TRICARE/CHAMPVA, Medicare or Medicaid, etc.

Important UB-04 Code/FL Definitions Each of the Field (Form) Locators on the UB-04 have specific information that is placed into them. It is important to know exactly what codes, numbers, and information goes into the Form (Field) Locators—there are 81 of them—for employment or test purposes.

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Field Locators (FL) #1 to #17: Provider and Patient Information is placed here in the UB-04. FL #4 is particularly important as it describes the Type of Bill (TOB) the insurance company will receive from the hospital (see “Completion of the #4 Form Locator in the UB-04” below). Condition Codes 1. Are placed in Form Locators (FL) #18 to #28. 2. Are UB-04 claim form codes which define circumstances relating to the invoice that affects how the insurance company or third party payer processes the health care bill. In other words, the Condition Code: “02” would tell the insurance company the bill for hospital services is because the patient was injured while working on-the-job. 3. Examples: 02 Condition is Employment Related. This code is for medical services provided due to the patient being injured while working on the job. 21 Billing for Denial. Code for billing for medical services that will not be paid (not medically necessary or not covered by insurance). 40 Same Day Transfer. Code indicates the patient is being transferred from one health care facility to another. Occurrence Codes 1. Are placed in Form Locators (FL) #31 to #34. 2. Are UB-04 claim form codes used to identify a specific date defining a significant event that affects how the insurance company processes the health care bill. In other words, the Condition Code: “01” would tell the insurance company the bill for hospital services is because the patient was injured on 1/1/09 because of an mva. The specific date is “1/1/09.” 3. Examples: 01 Auto Accident. The date the auto accident or MVA (motor vehicle accident) occurred. 11 Date of Onset of Symptoms/Disease. 18 Date of Patient or Beneficiary Retirement. Value Codes 1. Are placed in Form Locators (FL) #39 to #41. 2. Are UB-04 claim form codes used to specify a value of monetary nature such as the cost of a specific medical provision (hospital room), type of insurance coverage that pays the hospital bill, or a type of insurance that will pay for a specific disease. 3. Examples: 01 Most common dollar amount (UCR) for the cost of a semi-private (2 beds and 2 patients ) room in the hospital.

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12 Working Aged Patient (over 65 years), or spouse, with an Employer Group Health Plan (EGHP). 13 End Stage Renal Disease (ESRD) Beneficiary with Medicare Coordination of Benefits (COB) of 30 months with an EGHP.

Revenue Codes

1. Revenue codes are descriptions and dollar amounts charged for hospital services provided to the inpatient or outpatient. 2. Are placed in Form Locators (FL) #42 to #49 3. Are UB-04 claim form codes used to identify a specific accommodation, ancillary service or invoicing calculation for a particular service in the hospital. 4. Examples: 250 Pharmacy: a dollar amount indicating the costs of the patient receiving drugs while an inpatient in the hospital. 300 Lab: a particular dollar amount indicating the costs of the patient receiving laboratory services such as a complete blood count [CBC] or urinalysis [UA] while an inpatient or outpatient in the hospital. 351 Outpatient Procedures: a particular dollar amount associated with surgical procedures done on an ambulatory basis not requiring admission to the hospital as an inpatient. 450 Emergency Room: a particular dollar amount associated with health care administered on an urgent basis in the hospital’s ER.

Field Locator #56: This is where the National Provider Identification number (NPI) of the doctor who is billing for medical services given to the patient in the hospital is placed.

ICD-9-CM Codes 1. Are placed in Form Locators (FL) #66 to #71. 2. Are codes taken from the International Classification of Diseases, 9th Revision, Clinical Modification coding manual (ICD-9-CM) and put into the UB-04 claim form to describe diagnoses, trauma, medical conditions, medical history, and V and E codes of the patient while in the hospital as an inpatient or outpatient. Field Locator #67: The main diagnosis (ICD) code that brought the patient to the

hospital in the first place. After the patient initially comes to the hospital, this is the preliminary major diagnosis presented to the medical staff or the major diagnosis the referring doctor sent the patient to the hospital with for further examination and treatment.

Field Locators #67A through #67Q: Other diagnosis (ICD) codes that are pertinent to describing the patient’s medical condition.

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Field Locator #69: Admitting Diagnosis (ICD). This is the diagnosis the admitting

physician at the hospital initially determined was the cause of the patient’s chief complain (CC) when the patient first came to the hospital. This diagnosiis may

be the same as that found in FL #67, or it may have been changed to reflect what additional examination and testing revealed.

Field Locator #70A to #70C: Patient’s reason for the hospital visit. Why the patient came to the hospital in the first place.

Field Locator #71: The Prospective Payment System (PPS) code is placed here. The PPS is described later in this chapter.

Field Locator #72A to #72C: The External Cause of Injury code is placed here. These are known as E codes and found in the ICD coding manual that describe what

trauma the patient suffered. Examples are car accident (MVA), fall, poisoning, sports accident, act of terrorism, etc.

Field Locator #74: Main Procedure (CPT-4) codes and dates that the medical services were provided are placed here. These are codes that describe what medical

services or treatment or supplies were provided at the hospital to the patient.

These CPT codes are found in the coding manual called the Current Procedural Terminology, 4th edition (CPT-4).

Field Locators #74A to 74E: Other Procedural Terminology Codes {CPT} and dates

are placed here. These codes complement the codes entered in FL #74 (principal treatment), which describe additional procedures and services rendered to the patient at the hospital.

Completion of the #4 Form Locator in the UB-04 The chart on the next page is to be used for Form Locator #4 on the UB-04. It is very important the FL #4 three-digit codes are understood because they inform the insurance carrier of the “shape” of the invoice. Such as does the bill come from the hospital, SNF, or a clinic (digit 1 called the “Type of Facility”); are services being provided to an inpatient or outpatient, or is the patient at a rural or mental health facility (digit 2 called the “Bill Classification”); and what type of bill is it: a no-pay or hospital admission (digit 3 called the “Frequency”). Use the UB-04 coding form in this study guide to help you understand how to complete this part of the form. The following example illustrates how Form Locator #4 and the data elements are connected (aka-linkage):

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Form

4

Data Element

Type of Bill (TOB)

105

Description The kind of claim form (TOB) the hospital is submitting to the insurance company for payment. Contains three (3) numbers with each digit representing: (1) the type of health care facility providing treatment, (2) status of the patient and/ or type of insurance, and (3) what type of payment situation exists (how the hospital bill will be paid). The TOB is used on all claims sent to Medicare, Medicaid, Blue Cross/Blue Shield, commercial insurance companies, TRICARE and workers’ compensation insurance.

For this example, “110” is the data element which is placed into form locator (FL) #4 on the UB-04. It is often an important test question. See the UB-04 claim form, p. 222, for the location of the FL #4 (right upper corner). UB-04 Claim Form Type of Bill (TOB) Code “110” is known as a “No Pay Claim.” For Medicare recipients, a hospital must submit a no-pay bill (utilizing “110”) when the Utilization Review (UR) nurse that works for the hospital has determined the Medicare patient should not have been admitted as an inpatient because the admission is considered not medically necessary. However, the admitting physician has determined the hospital admission is medically warranted and the patient has been admitted anyway. Because Medicare is not going to pay for treatment, it is mandatory that the hospital’s registration, admissions, or financial departments discuss monetary obligations with the patient, patient’s family, guarantor, or health care surrogate at this time so that payment arrangements can be made. Regardless of whether the hospital will be paid or not, Medicare must be notified of all interactions of its beneficiaries with hospitals and doctors. Identifying and Defining TOB “110” The chart below is to be used to determine the correct code to be placed in Form Locator #4 in the UB-04. The following example illustrates how Form Locator #4 and the data element are connected (a.k.a.-linkage). Note: This is a commonly asked question on coding tests and understanding this concept is crucial for the medical coder because all UB-04 claim forms require FL #4 to be filled so payment can be issued from Medicare or third party payers. 1. The first digit is categorized as TYPE OF FACILITY. For example, the 1st digit of “1 1 0” is “1” and defines “hospital” for Place of Service (POS). This is where the medical services are rendered to the patient. 2. The second digit is categorized as BILL CLASSIFICATION. For example, the 2nd digit of “1 1 0” is “1” and defines the type of patient who has been admitted to the hospital, in this case an inpatient, who is utilizing Medicare Part A benefits to pay their hospital bill.

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The Health Care Revenue Cycle

3. The third digit is categorized as FREQUENCY. For example, the 3rd digit of “1 1 0” is “0” which defines a type of claim where payment from Medicare to the hospital for medical services rendered to the patient will probably not occur. This third digit tells the insurance company how the bills will be coming in for payment from the hospital and providers. Important This chart is to be used for filling out FL #4 for the TOB. The medical coder has one set of choices for the first digit, three sets of choices for the second digit, and one set for the third digit. First Digit:

Type of Facility (Place of Service-POS)



1

Hospital



2

Skilled Nursing



3

Home Health



4

Religious Non-medical Healthcare Facility (Hospital)



5

Religious Non-medical Healthcare Facility (Extended Care)



7

Clinic (see special coding for second digit below)



8

Special Facility, Hospital ASC Surgery (requires special information

Second Digit:

for second digit below)

Bill Classification (and/or type of patient or care level)

Use if first digit is 1,

2, 3, 4 or 5.



1

Inpatient (Medicare Part A)



2

Inpatient (Medicare Part B)



3

Outpatient



4

Other (Medicare Part B)



5

Intermediate Care-Level I

or Second Digit: Classification for (type of ) Clinic Use if first digit is 7.

1

Rural Health Clinic (RHC)



2

Hospital Based or Independent Renal Dialysis Facility



3

Free Standing Provider-Based Federally Qualified Health Center



4

Other Rehabilitation Facility (ORF)



5

Comprehensive Outpatient Rehabilitation Facility (CORF)



6

Community Mental Health Center (CMHC)

(FQHC)

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or Second Digit: Classification for (type of ) Special Facilities Use if first digit is 8.

1

Hospice (Non-hospital based)



2

Hospice (Hospital Based)



3

Ambulatory Surgical Center Services to Hospital Outpatients



4

Free Standing Birthing Center



5

Critical Access Hospital

Third Digit Classification: This is known as FREQUENCY, or how often the patient is utilizing medical services and how many or types of bills are being generated. A Hospice

Admission Notice

B Hospice

Termination or

Revocation Notice 0

Non-payment or Zero Claim

Used when hospice is submitting UB-04 as an admission notice (Medicare is informed the patient has entered this facility).

Used when UB-04 is notice of termination or revocation (patient will not be coming to this place for treatment).

Provider uses this code when payment is not anticipated

from the insurance company. Medicare requires this third digit only for “Spell of Illness” for hospital inpatient cases.

2

Interim-First Claim

Used for first of an expected series of bills for which medical care is invoiced or for updating inpatient deductibles.

Common Working File The Common Working File (CWF) was developed by the CMS in 1989 to manage all of the records for each Medicare patient. It is an information gathering device that is decentralized into nine regional sites across the United States. The CWF is also officially known as “Medicare’s master patient and procedural data base.”

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The Health Care Revenue Cycle

The CWF contains the following: 1. Medicare Patient Eligibility and Utilization data: claim history, MSP, ESRD patient, benefits and effective dates of insurance coverages, LTRs, etc. 2. Benefit periods and days remaining in the current benefit period 3. Entitlement of Medicare Parts A and B 4. Medicare Parts A and B deductible information 5. Date of Birth (DOB) 6. Date of Death

Medicare Processing of the UB-04 Claim Form What does returning a Medicare claim as unprocessable mean? It means the Medicare Fiscal Intermediary (FI) or Medicare carrier (the insurance company like Blue Cross/Blue Shield that actually signs a contract with Medicare to provide health care services) uses many different review processes to check submitted claims, and will notify the hospital or provider that their Medicare claim cannot be processed and that it must be corrected and/or re-submitted. The claim can be returned to the hospital or provider by Medicare either electronically or by paper copy, with a checklist of items that need attention and directions on how to make corrections. 1. The main reason that a Medicare claim is unprocessable is that it contains incomplete or invalid data. An incomplete claim has required information that is missing, such as DOB or NPI. An invalid claim has all the necessary information, but some part of the required information is incorrect or illogical, such as a wrong DOB or the NPI is missing some numbers and letters. 2. Corrections by the hospital or provider must be submitted to the Medicare FI or carrier so the corrected claim can be processed. If it is not returned within 45 days, that portion of the claim that is not corrected is considered “suspended” and is returned as unprocessable, and the hospital or provider is notified by Remittance Advice (RA) or Explanation of Medicare Benefits (EOMB). 3. When the Medicare FI or carrier returns a claim for correction, it will provide the following: •

The beneficiary’s (patient) name.



HICN (Health Information Claim Number) or Social Security Number (SSN).



Dates that health care services were given to the patient.



Patient account number assigned by the hospital or doctor’s office.



A list of the corrections to be made on the claim form, either by description or by code.

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109

If the Medicare carrier or FI normally keeps certain required UB-04 data elements on the patient (such as condition codes), then if that particular field locator is submitted incomplete, the FI or carrier will not return the claim as unprocessable, since it is already on file.

4. Medicare Claim Editor (MCE) is computer software that edits (reviews) UB-04 and CMS-1500 claim forms for valid and complete data submitted by hospitals, providers, and suppliers to insurance carriers. There are three types of MCE’s: •

Code Edits examine the claim form for the correct use of ICD codes.



Coverage Edits examine the type of patient and the procedures (CPT) performed on the patient to determine if the medical services administered are covered by the insurance company.



Clinical Edits examine the clinical necessity of CPT and ICD information for linkage. Linkage is where the patient’s diagnoses (ICD), and the medical services provided (CPT) to the patient by the hospital and doctor, are reasonable. For example, if the patient is diagnosed with appendicitis, is the patient receiving the appropriate examinations, lab tests, diagnostic imaging studies (x-rays, MRI’s, CAT scans, etc.) and surgical care to correct the appendicitis?

5. Medicare Administrative Contractor (MAC). By 2011, Medicare will amend its contracts so that Medicare Parts A and B will be administered (the health care paperwork will be handled) by 15 MAC’s. The provider or hospital or supplier will be assigned to the MAC that covers the geographic location where they are located. Until 2011, Medicare Parts A and B are being handled by 25 FI’s (Fiscal Intermediary) and 18 insurance carriers. 6. Billing Compliance programs must be established by the hospital or physician practice, third party billing company, or collection agency to meet legal requirements for Medicare best practices (the most efficient and correct way to handle things). These compliance programs cover billing and coding protocols and to prevent fraud and abuse. These programs include: •

Employee training and competency assessments.



Internal and external audits of department operations.



Clinical issues as they relate to improved patient services through more efficient billing.



How to Develop the Billing Compliance Program.



Making sure employees follow all billing laws and regulations



Providing compliance orientation and training to employees.



Making sure employees are compliant with all billing rules and regulations.



Establishing a way to make sure employees know what they are doing. Monitor their work on a regular basis.



Performing background checks on employees and vendors providing Medicare contracted services.

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The Health Care Revenue Cycle



Providing for non-retaliatory confidential reporting of suspected fraud and abuse.



Establishing disciplinary policies for non-compliance by employees and vendors.

Claim Form Processing Terminology 1. Incomplete: Any claim that has missing required information such as DOB, HCIN, patient’s name, address, ICD or CPT codes, signatures, etc. 2. Invalid: Any claim that has all the required information, but some of it is inaccurate such as wrong DOB or HCIN, patient’s name is spelled incorrectly, address of hospital is wrong, ICD or CPT codes are wrong or not linked properly, etc. 3. Required: Any data element or piece of information that is essential for the claim to be processed by the Medicare FI or carrier. 4. Conditional: Any data element that must be completed if other conditions or situations exist in the provision of health care services to the patient. A perfect example is when the guarantor (the person who actually has purchased the insurance, the insured) is different than the person who is receiving medical attention in the hospital (the patient). 5. If the claim is Returned as Unprocessable: This does not mean the claim will be physically returned to the hospital, doctor or supplier. It refers to the fact that the FI or carrier, through any of a number of editing processes, will notify the doctor or hospital or supplier of invalid and/or incomplete data and request correction and re-submission of the claim within 45 days. 6. Charge Capture: The process by which all monies billed for health care treatment, services, procedures and products are accurately and completely collected and placed in the correct Field (Form) Locators on the UB-04, CMS1500 or other claim forms such as a superbill. 7. A Clean Claim is a claim that will pass all front-end claim editing by the Medicare FI or carrier. This means the insurance carrier will send all claims first through a computer scanner (remember UB-04 and CMS-1500 paper claim forms are printed with red optical scanning ink or in electronic form for computers to read them) to quickly ascertain invalid and/or incomplete information. a. A claim that is processed electronically. b. A claim, if investigated for further review, does not require additional

contact with the hospital, provider or supplier, insurance beneficiary or guarantor, or Social Security Administration (SSA).

c. A claim, if chosen for medical necessity review, has all supporting

medical evidence complete and valid (progress notes, laboratory results,

surgical reports, rehabilitation notes, etc.) and included with the original UB-04 or CMS-1500 claim, as instructed by the Medicare FI or carrier.

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111

d. A claim that will not be reviewed on a retrospective or post-payment

basis. This means the Medicare FI or carrier cannot review a claim after it has been paid to the hospital, doctor or supplier.

e. A claim that correctly identifies Conditional Payments. This is a

payment made by Medicare because another insurance company is

responsible for the bill. The claim is not expected to be paid within 120 days from the date of receipt by the primary insurance carrier, so this

conditional (temporary) payment is made by Medicare to prevent the

Medicare beneficiary from using their own money to pay their medical bills. Medicare reserves the right to collect the monies they paid out to the primary insurance payer such as workers’ compensation, liability, automobile insurance, etc.

f. A claim that correctly captures the Assignment of Benefits. The

Assignment of Benefits should be completed at the time of patient

registration, pre-admission, or admission, and never later than the patient being discharged from the hospital. It is a written authorization signed by the policyholder (owner of the insurance policy or covered patient

such as spouse or child) to the insurance company stating the insurance company should pay the hospital, doctor or medical supplier directly.

If the provider or hospital accept assignment of Medicare benefits, they

agree to be paid by Medicare directly, accept only what the Medicare fee

schedule pays for medical services rendered, and only charge the patient

the Medicare deductibles, co-insurances and co-payments. If the hospital or provider do not accept Medicare assignment, they can charge more

than what Medicare allows for a medical service, and they can demand the patient pay the entire charge for medical treatment before they

are rendered. If the provider or hospital do not accept the Assignment of Benefits, they are restricted to charging no more than 115% of the Medicare fee schedule.

g. A claim that follows the provisions of the Working Aged Rule. This

rule is for someone who is at least 65 years old, currently employed and covered by an EGHP, or is covered by an EGHP of a working spouse of any age. Equal Benefit Rule: Federal law mandates that any employer, with twenty (20) or more employees (full time or part time), must

offer the same health care coverage under the same conditions to their employees over age 65, as that offered to employees and their spouses who are under 65 years of age.

EGHP = Employer Group Health Plan.

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The Health Care Revenue Cycle

h. A claim that follows the regulations of the Birthday Rule. The Birthday Rule relates to coordination of benefits (COB) when the responsible

parents’ insurance is determined to pay the child’s health care bills first, where both parents have health insurance. COB means the insurance

companies determine who is responsible to pay the child’s medical bills. Gender Rule: The male head of household (father) who has insurance is determined to pay the child’s health costs first. i.

The Birthday Rule states that the birthday of the parent born first in the calendar year, regardless of the year he/she was born, is responsible to have his/her health insurance pay the child’s medical bills first. If the

father’s DOB is January 31, 1960, and the mother’s DOB is July 1, 1959, although the mother is older, since the father was born in January, and

the mother was born in July, and January comes before July in the calendar,

it is the father’s insurance that is responsible to pay for his child’s health care bills first. j.

Exceptions to the Birthday Rule: •

If both parents have the same birthday, the parent with the health insurance plan for the longer period of time covers the child first.



If the parents are divorced or separated, and both have health insurance plans, it is the parent who has legal custody of the child whose health insurance pays the child’s medical bills first. If the parent who has custody remarries, and if the new spouse has health care insurance, then the new spouse’s insurance policy pays second. Finally, the health care insurance plan of the parent that does not have custody pays the child’s medical bills last.



Exception: If the court has issued a divorce decree indicating that one parent is responsible for paying their child’s medical bills, then that parent pays first, but the health care insurance carrier has to be made aware of this legal arrangement.

Medicare Secondary Payer (MSP) Federal regulations require all health care providers, hospitals, and medical suppliers to know when they can bill Medicare as the primary payer (first insurance company to pay the patient’s bill) or when they can bill Medicare as the secondary payer (second insurance company to pay the patient’s bill). Medicare requires that providers and hospitals accurately identify the primary payer and bill them first. Repeatedly billing Medicare first when Medicare is the secondary payer, constitutes fraud and abuse. About three (3) months before a potential beneficiary becomes eligible for coverage by Medicare, an Initial Enrollment Questionnaire (IEQ) is completed by the patient, which documents other health care insurance coverage they have that may be

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113

primary to Medicare. This information is entered into the Common Working File (CWF). Since 1980, costs have been shifted from Medicare to other sources of payment. In essence, Medicare has moved its responsibility from primary payer to secondary payer. Medicare is determined to be the secondary payer when: 1. The beneficiary is injured on the job and whose treatment is covered first by Workers’ Compensation insurance the employer has purchased (required in most states). 2. The beneficiary has black lung disease documented by the federal government—usually those who have worked in coal mines-- and other insurance is the primary payer. 3. The beneficiary is injured due to a car accident as the driver, pedestrian, or passenger, where the beneficiary’s no-fault automobile insurance is the primary payer. Homeowner’s or commercial insurance is primary when the beneficiary is injured as the result of someone else’s fault, e.g. falling on their property, an accident due to their negligence, or falling on a slippery floor in a store or being assaulted by an employee, etc. 4. Liability insurance that covers injuries as a result of someone else’s fault where subrogation is involved, is the primary payer. Subrogation mean the injured person’s own insurance pays first, then the responsible party’s insurance becomes legally obligated to reimburse the injured party’s insurance who has already paid first. 5. The beneficiary is entitled to Medicare coverage due to end stage renal disease (ESRD). However, Medicare has a 30 month coordination of benefits (COB) period that begins when a patient is first diagnosed with ESRD, regardless if the beneficiary is enrolled with Medicare or not. The 30 month COB means that regardless if the person is enrolled with Medicare, no matter what their age, 30 months after the day they are diagnosed with ESRD, Medicare will become the primary payer for ESRD. During the initial 30 months, the beneficiary would be required to find another primary payer until Medicare coverage kicks in and pays first. If ESRD is the only reason the patient is receiving Medicare coverage, then

after another insurance plan covers the first 30 months as the primary payer: •

Medicare coverage will end 12 months after the patient no longer requires kidney dialysis maintenance care. Patient’s other insurance will then be responsible again to pay for ESRD.



Medicare coverage will end 36 months after the patient has a successful kidney transplant. Patient’s other insuarance will then be responsible again to pay for ESRD.



After Medicare has terminated coverage in #1 or #2 above, EGHP provided for employees aged 65 or older or spouse (of any age) of employee with EGHP, will again resume payment for care related to ESRD.

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The Health Care Revenue Cycle



Where Veterans Administration (VA) health care coverage is available for ESRD care, the patient can choose either Medicare or VA coverage, but not both. In this case, if the VA health care coverage is chosen, it handles all ESRD treatment from the date it is diagnosed, whereas Medicare begins coverage only after the 30 month COB.



Medicare coverage will end when disabled patients with ESRD under 65 years of age are covered by LGHP (more than 100 employees). In this case, the LGHP covers all ESRD treatment. For example, if the patient under 65 years of age had LGHP coverage when first diagnosed with ESRD, the LGHP would cover all treatment related to the ESRD. If the patient had received Medicare coverage after the 30 month COB, and then was eligible for LGHP coverage, the LGHP would assume being the primary payer for ESRD instead of Medicare. LGHP=Large Group Health Plan, which means employers with more than 100 employees provide coverage with major insurance carriers such as AllState, State Farm, Humana, Aetna U.S. Healthcare, United Health, Blue Cross/Blue Shield, etc.

MS-DRG’s are also known as Medicare Severity-Diagnosis Related Groups. The CMS created 745 MS-DRG’s which are based on how much service or product a patient consumes or utilizes in the hospital, or how long the patient stays in the hospital. These MS-DRG’s are based on 25 major diagnostic categories (MDCs), which are 25 groupings of associated diagnoses of illnesses, pathologies, or conditions. An example of an MS-DRG would be diabetes and the associated complications affiliated with this disease such as retinopathy, neuropathy, poor wound healing, etc. or comorbidities such as obesity and poor physical status of the patient. MS-DRG’s allow the hospital to define and measure what kinds of diseases and what types of patients the hospital treats. CMS allows the hospital to adjust the claim forms sent to the Medicare FI or carrier up to 60 days after submission, by sending in subsequent (additional corrected) claim forms, from the date the hospital receives the Remittance Advice (RA) from Medicare. The CMS uses the UB-04 claim forms to determine which of the 745 MS-DRG’s are applicable to the hospital. MS-DRG’s are created based on three (3) levels of payments to the hospital by the Medicare FI or carrier: 1. Major complication (infection) or comorbidity (pre-existing condition such as obesity, advanced age or diabetes). MCC= major complication or comorbidity. 2. Complication or comorbidity = CC. 3. No complication or comorbidity. MS-DRG’s do not produce any money savings to Medicare, but will increase payments to hospitals treating patients that are more severely sick or have more complicated diseases, and decrease payments to hospitals that treat patients who

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are less sick or have fewer complicated diseases. From a practical point of view, a hospital that treats more severely sick people (heart disease and cancer, for example) will use more medical services and supplies, and should be paid more by Medicare, than a hospital that treats patients whose diagnoses are less complicated and more routine (uncomplicated diabetes, foot care, simple fractures, etc.) Therefore, major medical centers (such as University of Pennsylvania, Harvard, Stanford, Mayo Clinic, Columbia University, University of Chicago, etc.) that have medical schools and teaching hospitals will attract the more complicated diseases and will have the personnel and equipment and expertise. Therefore, Medicare, through the MS-DRG, will recognize this and pay them more. MS-DRG’s are defined by the following criteria: 1. Diagnosis: Primary and secondary diagnoses (ICD). 2. Procedures: medical and surgical procedures (CPT and HCPCS). 3. Complications 4. Comorbidities 5. Signs and symptoms 6. Gender (male or female) 7. Discharge status from care or the hospital

Medicare DRG Window (The 72-Hour Rule) 1. Applies to Inpatient Prospective Payment System (IPPS) hospitals and providers paid by the DRG payment system. The IPPS is a method of payment and DRG is a fee schedule, which describe the mechanism by which Medicare pays for services. Medicare designates certain types of hospitals either as participating with IPPS or not participating with IPPS. The Medicare DRG window, 72-Hour Rule, does not apply to non-IPPS hospitals (see #2 below). The 72-Hour Rule means that if the consumer gets treatment and services and products related to their illness or injury outside of the hospital as an outpatient for up to three days, then has to be admitted to a hospital for the same illness or injury, according to Medicare, all the outpatient services received outside the hospital for up to 3 days prior to being admitted to the hospital, PLUS all the care received while admitted to the hospital as an inpatient, would be ALL bundled (combined) together and coded and billed on the claim forms as one incident. 2. For example, a patient has chest pain and weakness and shortness of breath for three days (for example, Monday-Tuesday-Wednesday), then goes to his family doctor for an examination, diagnostic testing (EKG), and treatment for a heart condition, gets medicine from the local pharmacy for his heart condition, then is admitted to the hospital for a week (Thursday through the following Wednesday), and is treated for this same heart condition. Medicare states that the 3 days of outpatient treatment and the 7 days of inpatient treatment, all for the same heart condition (principal diagnosis), should be billed as if it were one episode of illness on the claim forms. In other words,

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The Health Care Revenue Cycle

only the 3 days of outpatient treatment, no matter how much outpatient treatment the patient actually received, and all the 7 days of inpatient treatment for the same diagnosis, will be consideration as one (bundled) and billed as one. Non-diagnostic treatment and outpatient services not related to the principal diagnosis provided within 3 days of admission to the hospital, are not covered by the 72-hour Rule and must be billed separately (cannot be bundled) on different claim forms. 3. Non-IPPS hospitals are subject to the 24-Hour Rule (which acts just like the 72-Hour Rule but for 24 hours instead) and exempt from the 72-Hour Rule. Non-IPPS hospitals that are covered by the 24-Hour Rule include: •

Psychiatric Hospitals.



Rehabilitation Hospitals (those that provide PT, OT, ST to patients that have suffered stroke, cancer, severe trauma, etc.)



Children’s Hospitals.



Long-term Care Hospitals (LTC)



Cancer Hospitals.



ANY hospital located outside the 50 states, District of Columbia, or Puerto Rico.

Resource Utilization Groups (RUG’s) There are 53 RUG’s, representing a mix of different types of inpatients, diagnoses, conditions and pathologies, that are found in a Skilled Nursing Facility (SNF). By determining the variety of patients and their health status in an SNF, Medicare can ascertain what payment to make for each type of patient and medical services required under the SNF Prospective Payment System (PPS). In other words, Medicare can examine the kinds of diseases patients are being treated for at nursing homes all over the country and decide how much money to pay the SNF for their services in consideration of the funds Medicare has available. Critical Access Hospital Program:. The CAH program assures Medicare beneficiaries the ability to get medical care in rural areas where there is a lack of doctors, emergency rooms, maternity facilities, cancer treatment facilities etc. Medicare can allocate sufficient funds so that enough doctors and hospitals and equipment are available to serve the needs of the population in areas distant from cities all over the United States.

Chargemaster The chargemaster is also known as the Charge Description Master (CDM). The CDM contains a variety of numbers and letters that include department numbers, revenue codes, chargemaster numbers, descriptions of charges, dollar amounts of the charges, CPT/HCPCS codes, modifiers, and general ledger numbers (numbers in a list describing some aspect of service or product supplied to the hospital inpatient or outpatient). The chargemaster is a master pricing list, the main compilation of all charges (amount of money billed) for services, drugs, medical equipment, supplies,

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or anything provided in the delivery of health care to the hospital inpatient or outpatient. Data elements of the chargemaster are placed in the UB-04 claim form in field locators (FL) 42 to 49, some of which are known as revenue codes, are numbers that define specific accommodations, ancillary services, or billing calculations such as “370” for anesthesia or “490” for Ambulatory Surgical Center (ASC). “490” describes the use of the surgical suite by the doctor in the ASC, and “370” describes the use of the anesthesia equipment the hospital provides the doctor. Revenue codes were developed by the National Uniform Billing Committee (NUBC). Another type of data element of the chargemaster is known as the Department Number. This is a three digit number, for example “335” for radiology department or “770” for the medical supplies department, that defines which department in the hospital is charging the patient for a specified health care service or product.

Figure 7: Chargemaster

Chargemaster Numbers are a combination of numbers the hospital assigns to describe supplies, procedures, or use of facilities. In the following example, the chargemaster number includes both the item (or product) number and the department number which goes into FL 42 to 49. For example: Department Number = “325” for the medical supplies department

of the hospital that has the sutures in its inventory

Item or Product Number = “6767” for sutures (which is a product

the doctor uses to sew up a surgical incision).

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The Health Care Revenue Cycle

THEREFORE, the Chargemaster Number = 3256767 (325 + 6767).

goes in the UB-04 in FL 42 to 49. This number tells Medicare what hospital department and what product is being billed.

Charges, created by a series of numbers (270, 325, 6767 and 1), reflect what the patient and the insurance company or Medicare are being billed for a specific

medical item. All these numbers, and the charge of $60.00, is placed in the UB-04

in FL 42 to 49. This way the UB-04 shows numbers for each service, procedure or product that is billed.

The following example for sutures is as follows: Revenue Code = 270 (Surgery) This is the department where the sutures will be used. Department Number = 325 (Medical Supplies) This is where the inventory (sutures) are stored and will be billed to. Item Number = 6767 (Sutures) Description of Item = Sutures Units (how many?) = 1 (Package of Sutures) Charge = $60.00 (Per package of Sutures)

Medicare Deductibles, Co-Payments and CoInsurances for 2010 These figures change every year. For more information contact: www.medicare.gov. The following chart displays the fees the patient pays for the health care services and products he/she receive when Medicare is used to pay for the treatment. These figures should be memorized as their use is routine for health care employees (It is also wise that students commit them to memory.)

Medicare

Calculation per Benefit Period

2010 Benefit Period

(What the Patient Pays)

Part A: Hospital Inpatient 1. Part A Deductible for Days 1 through 60

2. Part A Co-Insurance for Days 61-90

3. Part A Lifetime Reserve Days (LTR) or Non-Renewable days. Days 91-150.

This satisfies the 2010 Inpatient Deductible Rate is 25% of 2010

Inpatient Deductible Rate is 50% of 2010

Inpatient Deductible Amount

= $1,100.00 for 2010 per each Illness

= $275.00 per day

(1100/4 = $275.00) = $550.00 per day

(1100/2 = $550.00)

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119

Part A: Skilled Nursing Facility (SNF)

Inpatient in the SNF for Days

No Deductibles or Co-

= $0

Inpatient in the SNF for Days

Rate is 1/8 of 2010

= $137.50 per day

1-20

21-100

Part A: Blood Deductible for 2010

Part B Outpatient Annual Deductible

Insurance or Co-payments Inpatient Deductible Amount

(1100/8 = $137.50)

Patient pays for first 3

= 3 pints of blood for

pints

2010

This satisfies the Medicare Part B Outpatient Deductible

$155.00 for 2010. The

patient pays this once/ year for all services

and products provided under Medicare Pt. B

Electronic Billing Under HIPAA, the use of electronic billing of health care services (Electronic Data Interchange: EDI) has been strongly promoted and the use of paper claims discouraged. As of October 16, 2003, HIPAA has prohibited most Medicare participating hospitals, providers and medical suppliers from submitting paper claims to Medicare. Also, electronic submission has to be HIPAA compliant before payment is made. Examples of electronic billing (non-paper) transactions to the insurance carrier for payment include:

1. Entry of medical information by hand (manual, typing on the keyboard) into the computer. 2. Personal Computer (PC) downloading of data. 3. Use of tape, compact disc (CD), or flash drive to electronically transfer information to the computer. 4. Use of a Central Processing Unit (CPU), a large main-frame computer, to another CPU. Advantages of Electronic Billing for the hospital, provider, and insurance carrier include: 1. Faster payment (no delays due to mailing and re-mailing claim forms) 2. Less paper needed and less clerical involvement by fewer people; more automation of billing process.

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3. Speeds up moving information of the health care claim to the insurance carrier. 4. An electronic receipt (proof) that the medical information was sent to the insurance carrier is created. 5. Faster follow-up and communication between the hospital, provider, and medical supplier and insurance carrier. Disadvantages of Electronic Billing for the hospital, provider, and insurance carrier include: 1. Not every insurance carrier handles electronic billing transactions effectively; there still may be problems. 2. Computer attachments, formats, software, etc., may not be compatible between hospital and provider and insurance carrier; uploading and downloading information problems and incompatibilities. 3. Retrieval of information and communication issues between parties is compromised. 4. Security issues; hacking.

Types of Financial Statements (see example of the Superbill on page 223.) Itemized Statement. Shows a detailed accounting of every hospital service included on the patient’s bill including date of service (DOS), description of service, all codes, amounts of monies charged, what the insurance company will pay, what the patient has paid and will owe, and totals. Also known as an I-Bill. An itemized statement is generated after a UB-04 has been established; the UB-04 summarizes all the charges listed on the I-bill. Superbill. Is an invoice that documents the most common ICD/CPT/HCPCS codes and charges for medical services and products used in an outpatient hospital facility, clinic, or office, including routine examination, treatment, laboratory and diagnostic services. A superbill will be customized to reflect the services and products provided for each medical specialty, and it is designed to eliminate the medical coder from transcribing to a claim form all the necessary information from the medical record or patient chart. The superbill becomes the claim form, as the physician simply fills out the superbill, which is then sent directly to the insurance payer. The superbill is also known as a Face Sheet or an Encounter Form or Charge Slip. Data Mailer. A statement used to tell the patient how much the patient owes the hospital or doctor on an account with a balance. It also tells the patient how old the amount owed is (e.g.-30 days, 60 days, 90 days) or if it has been sent to a collection agency.

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Abbreviations and Acronyms AHA

American Hospital Association

CBC

Complete Blood Count

CC

Complication or Comorbidity

CD

Compact Disc

CDM

Charge Description Master

CORF

Comprehensive Outpatient Rehabilitation Facility

CMHC

Community Mental Health Center

CMS-1500

A universal claim form used by doctors, medical supply companies, ambulatory surgical centers, orthotic and prosthetic suppliers, etc., for patients on an outpatient basis for billing dollar amounts and coding medical diagnoses and procedures. This claim form is used for non-hospital services.

COB

Coordination of Benefits

CPU

Central Processing Unit

CWF

Common Working File

CPT

Current Procedure Terminology

DOB

Date of Birth of the patient

EDI

Electronic Data Interchange

EGHP

Employee Group Health Plan (more than 20 employees)

EOMB

Explanation of Medicare Benefits, also known as Remittance Advice.

FI

Fiscal Intermediary, also known as carrier, is an insurance company that contracts with Medicare to provide health care services and products to its beneficiaries.

FL

Form Locator or Field Locator which is found on the UB-04

FQHC

Federally Qualified Health Center

HICN

Health Information Claim Number found on the Medicare card, or Social Security Number for the patient

ICD/ICD-9-CM International Classification of Diseases, 9th Revision, Clinical Modification IEQ

Initial Enrollment Questionnaire

LGHP

Large Group Health Plan (more than 100 employees)

LTC

Long Term Care

MAC

Medicare Administrative Contractor

MCC

Major Complication or Comorbidity

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MCE

Medical Claim Editor

MDC

Major Diagnostic Categories

MS-DRG

Medicare Severity-Diagnosis Related Groups

MSP

Medicare Secondary Payer

NUBC

National Uniform Billing Committee

ORF

Other Rehabilitation Facility

PC

Personal Computer

PPS

Prospective Payment System, or IPPS (Inpatient Prospective Payment System), or OPPS (Outpatient Prospective Payment System)

RHC

Rural Health Clinic

RUG

Resource Utilization Groups for Skilled Nursing Facility (SNF)

SNF

Skilled Nursing Facility

TOB

Type of Bill. Placed in field locator #4 in the UB-04 claim form.

UA

Urinalysis

UB-04

A universal claim form used by a hospital for billing dollar amounts and coding medical diagnoses and procedures (ICD, CPT, HCPCS) for inpatients/outpatients. Also known as CMS 1450; used to be called the UB-92.

UR

Utilization Review

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Sample Test Questions These questions in multiple choice format require particular attention to the details concerning the UB-04 and CMS-1500 claim forms, all aspects concerning types of bills, and what is included in each form locator or block of each insurance form. These questions are detailed and require the student or employee to differentiate minutiae. These 65 questions should be answered in 65 minutes or less. 1. The UB-04 claim form is also known as the __________ which replaced the _____________. A. CMS-1500;UB-92. B. CMS-1450;UB-92. C. UB-92; CMS-1450. D. X12N837; CMS-1500. Answer: B 2. The UB-04 has ________________ or _______________. A. 33 Blocks, 81 Data Elements. B. 81 Form Locators, 33 Blocks. C. 81 Form Locators, 81 Field Locators. D. None of the above. Answer: C 3. The UB-04 must be used by all of the following when it involves hospital inpatient or outpatient care: A. Medicare, Medicaid B. Workers’ Compensation Insurance C. TRICARE D. Commercial Insurance Companies, Blue Cross E. All of the above Answer: E 4. Conditions Codes are: A. Found in FL #18 to #28. B. Defines circumstances relating to the invoice that affects how the insurance company processes the invoice. C. Examples are 02, 21, and 40. D. All of the above. Answer: D 5. ____________ are found in FL #42 to #49. A. Condition Codes B. ICD Codes C. Occurrence Codes D. Revenue Codes E. Value Codes Answer: D

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6. ___________ are used to identify a specific accommodation, ancillary service, or invoicing calculation for a particular service provided in the hospital in the CMS­1450. A. Condition Codes B. Revenue Codes C. Value Codes D. ICD Codes E. Occurrence Codes Answer: B 7. Form Locator #4 is very important as it describes in the UB-04 the _____________. A. Admitting Diagnosis B. Provider and Patient Information C. Type of Bill D. External Cause of Injury E. E Code Answer: C 8. Form Locators #1 to #17 in the CMS-1450 describe ________________. A. Admitting Diagnosis B. Provider and Patient Information C. Type of Bill D. Main Diagnosis Code E. NPI Answer: B 9. ____________ describes the TOB the hospital is submitting to the insurance company for payment in the CMS-1450. A. FL# 69 B. FL# 71

C. FL# 18 to #28. D. FL# 4

E. None of the above. Answer: D

10. ______________ codes in the UB-04 the external cause of injury such as car accident, sports injury, poisoning, or terrorism. A. FL #72A to C B. FL #70A to C C. FL #71 D. FL #42 to #49 E. FL #31 to #34 Answer: A

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11. ____________ claim is one that has missing required information. A. Incomplete B. Clean C Invalid D. Required E. Complete Answer: A 12. ___________ claim is one that has all the necessary information but the data is inaccurate or illogical. A. Incomplete B. Clean C. Invalid D. Valid E. Complete Answer: C 13. A clean claim involves the following except: A. B. C. D. E.

Will pass all front-end claim editing by a Medicare FI or carrier. It is processed electronically. Will be reviewed on a retrospective or post-payment basis. If investigated for further review, does not require further contact with the hospital, provider or supplier, SSA, or insurance company. If chosen for medical necessity review, all supporting medical evidence and a valid/complete UB-04 have already been included.

Answer C 14. When a Medicare FI or carrier returns the hospital’s UB-04 claim form as unprocessable, the hospital has __________ to correct it and re-submit it. A. 88 days B. 45 days C. 90 days D. 100 days E. None of the above Answer: B 15. ____________ was developed by the CMS in 1989 to manage all of the records of each Medicare beneficiary. It is an information gathering device that is decentralized into 9 regional sites across the United States. A. Fiscal Intermediary B. HICN C. MSP D. CWF E. RHC F. TOB Answer: D

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16. The main procedural code (CPT) is placed in _____________ in the UB-04. A. FL #69 B. FL #67A to Q C. FL #74 D. FL #4 E. FL #56 Answer: C 17. ___________ is a UB-04 claim form code used to identify a specific date defining a significant event that affects how the insurance company processes the invoice. A. Occurrence Code: FL #31 to #34 B. Value Code: FL#39 to #41 C. Revenue Code: FL #42 to #49 D. ICD Code: FL #66 to #71 Answer: A 18. The name of the pieces of information (or bits of data) placed in the 81 field or form locators in the UB-04 claim form is known as _______________. A. CWF B. Data Elements C. CPT D. Clean Claim E. TOB Answer: B 19. The UB-04 TOB code is a 3-digit code whereby each digit is determined by ____________ and entered in FL# _____. A. First Digit-Type of Facility (POS) B. Second Digit-Bill Classification for the first digit being 1 to 5 C. Second Digit-Bill Classification for the first digit being 7 D. Second Digit-Bill Classification for the first digit being 8 E. Third Digit-Frequency F. 4 G. 69 H. 71 I. A, B, C, D, E, F J. A, B, D, G K. C, D, E, H Answer: I 20. The CWF contains the following: A. Those beneficiaries who have Medicare Parts A and B B. Medicare Parts A and B deductible information C. DOB, Date of Death D. Benefit periods and days remaining in the current benefit period E. All of the above Answer: E

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21. The blood deductible for 2009 for Medicare is ______________. A. 1 Pint B. 2 Pints C. 3 Pints D. 4 Pints E. 5 Pints Answer: C 22. The first 20 days of inpatient treatment in a SNF for Medicare will cost the patient: A. $1068.00 per year B. $ 267.00 per day C. $ 133.50 per day D. $0 Answer: D 23. Days 21 through 100 for inpatient treatment in a SNF for Medicare will cost the patient: A. $1068.00 per year B. $ 267.00 per day C. $ 133.50 per day D. $0 Answer: C 24. The patient will have to pay ____________ deductible for 2009 for Medicare Part A Hospital inpatient care. A. $1068.00 B. $ 256.00 C. $ 133.50 D. $0 Answer: A 25. Medicare will pay for the first ___________ days of inpatient care at a SNF per year. A. 60 days B. 90 days C. 100 days D. 150 days E. None of the above Answer: C 26. The Chargemaster includes all of the following except: A. Department Numbers B. Revenue Codes C. Refunds D. CPT/HCPCS codes E. Charges Answer: C

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27. LTR’s are ______________ and pay for _________________ days of Medicare Part A inpatient hospital care. A. Renewable; 91 to 150 B. Non-renewable; 91 to 150 C. Non-renewable; 61 to 90 D. Renewable; 61 to 90 Answer: B 28. $267.00 per day is what the patient pays for _______________________ for Medicare Part A inpatient hospital care. A. Deductible B. Co-insurance C. LTR D. SNF E. None of the above Answer: B 29. A No-Pay Claim is defined as: A. For Medicare patients. B. Hospital must submit this TOB when the UR nurse has determined the Medicare patient’s admission is not medically necessary. C. The admitting physician, however, feels the Medicare patient’s hospital admission is medically warranted. D. It will be necessary for the registration and/or financial department to discuss with the patient, their family, guarantor, or health care surrogate monetary obligations. E. A hospital invoice that will probably not be paid by Medicare. F. None of the above. G. All of the above. Answer: G 30. ________________ must be established by the hospital or physician practice, third party billing company, or collection agencies to meet Medicare best practices billing and coding protocols and to prevent fraud and abuse. A. No-Pay claims B. LTR’s C. Billing Compliance programs D. MCE’s E. MAC’s Answer: C

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31. An _______________ provides a complete detailed accounting of every hospital service posted to the patient’s account including DOS, description of services and products, all codes, dollar amounts, estimated insurance payment, and patient’s financial obligations and what the patient already paid by leaving a deposit. A. Itemized Statement B. Superbill C. No-pay claim D. Data Mailer E. UB-04 F. Face Sheet Answer:A 32. A _______________ is an invoice to document the most common ICD/CPT/ HCPCS codes and charges for medical services and products, is customized for each medical specialty, and be sent directly to the insurance carrier for payment, and eliminates the need for transcription from the medical record. A. Superbill B. Face Sheet C. Encounter Form D. Data Mailer E. B, C and D F. A, B, and C Answer: F 33. Medicare is determined to be the secondary payer when _______________. A. The employee is injured on the job and worker’s compensation insurance will cover the health care costs first. B. The person has black lung disease as determined by the federal government. C. The person has suffered an injury covered by auto no-fault, liability, commercial, or homeowner’s insurance which will pay the health care costs first. D. The person has ESRD, however, Medicare will be the primary payer after a 15 month COB period. E. All of the above. F. A, B, and C G. B, C, and D Answer: F 34. When the provider, hospital or medical supplier repeatedly bills Medicare as the primary insurer when they know Medicare should be billed secondarily, and they do not identify the primary payer, this constitutes _____________. A. Violation of MSP provisions B. Fraud C. Abuse D. All of the above E. None of the above Answer: D

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35. __________ is software that edits UB-04 and CMS-1500 claim forms for validity and completeness. A. MCE B. MSP C. EOMB D. PPS E. FQHC Answer: A 36. The electronic version of the UB-04 is known as: A. Explanation of Medicare Benefits B. X12N837 Institutional Health Care Claim Transaction C. FQHC D. MCE E. Common Working File Answer: B 37. The ______________ relates to the COB for health care insurance to determine which parent’s insurance coverage pays their child’s medical bills first, when both parents have health care insurance. A. Chargemaster B. MCE C. Birthday Rule D. EOMB E. Assignment of Benefits Answer: C 38. ______________ is a written authorization, signed by the insurance policyholder or patient, given to the insurance carrier indicating payment for medical services should be sent to the hospital or provider directly. A. Birthday Rule B. EOMB C. FQHC D. MCE E. Assignment of Benefits F. Chargemaster Answer: E

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39. Advantages of Electronic billing of health care claims to the insurance carrier include: A. Faster payment to the hospital. B. Less paper required; fewer people involved in the billing process; more automation. C. Receipt of all communication and transactions between the hospital and insurance company is made. D. Faster follow-up and communication between the hospital and insurance carrier. E. All of the above. F. B, C and D Answer: E 40. Concerning EDI, HIPAA: A. Encourages the use of electronic transactions (EDI) for the hospital to bill Medicare. B. Discourages the use of paper claims for billing purposes. C. Since 10/16/2003, only allows Medicare participating hospitals to bill electronically. D. Electronic submission of claim forms must be HIPAA compliant before payment is made to the hospital. E. All of the above F. A, B and D Answer: E 41. ________________ describes the main pricing list for hospital services, products, supplies or drug prices for inpatients and outpatients. A. EDI B. Chargemaster C. MS-DRG D. COB E. Data Mailer Answer: B 42. _____________ define and measures what kinds of diseases and what types of patients are using the hospital. A. EDI B. Chargemaster C. MS-DRG’s D. COB E. Data Mailer Answer: C

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43. CMS allows a hospital to file subsequent inpatient DRG adjustments up to _______________ from the date the hospital receives the RA. A. 60 days B. 30 months C. 100 days D. 45 days E. 90 days Answer: A 44. MS-DRG’s are determined based on three levels of payments from the Medicare FI or carrier, which are: A. MCC B. CC C. No complication or comorbidity D. All of the above E. A and C Answer: D 45. _____________ applies to IPPS hospitals where all outpatient medical and diagnostic services provided up to three days prior to admission to the hospital, that are related to the primary diagnosis, and all care provided while the consumer is an inpatient, all for the same principal diagnosis, are bundled together and billed together. A. 24-hour Rule B. 48-hour Rule C. 72-hour Rule D. MS-DRG E. RUG Answer: C 46. The 72-hour Rule does not apply to all of the following except: A. Psychiatric Hospitals B. Ambulance Services C. IPPS Hospitals and Providers D. Children’s Hospitals E. Cancer Hospitals F. Any hospital outside the 50 states, Washington DC, and Puerto Rico Answer: C 47. __________________ program assures that patients with Medicare access to health care services in rural areas. A. 24-hour Rule B. 72-hour Rule C. MS-DRG D. Critical Access Hospital E. Chargemaster Answer: D

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48. The _____________ applies to Psychiatric, Rehabilitation, Cancer, and NonIPPS hospitals. A. 24-hour Rule B. 72-hour Rule C. Critical Access Hospital D. MS-DRG E. 48-hour Rule Answer: A 49. ____________ are used by Medicare to determine payment to SNF patients based on the patient’s health status and amount of care they require. A. RUG’s B. MS-DRG’s C. IPPS D. Chargemaster E. 72-hour Rule Answer: A 50. There are 53 RUG’s which represent the mix of different types of inpatients, diagnoses, conditions and pathologies, that are found in a: A. CAH B. ASC C. SNF D. E/R E. None of the above Answer: C 51. ______________ are a combination of numbers (such as “3256767”) the hospital assigns to describe supplies, procedures, or use of facilities. A. Global Charges B. UCR’s C. No Pay’s D. Chargemaster Numbers E. Professional Components Answer: D 52. ____________ is computer software that edits UB-04 and CMS-1500 claim forms for valid and complete data submitted by hospitals, providers, and suppliers to insurance carriers. A. CAH B. UCR C. EDI D. RUG E. MCE Answer: E

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53. The _______ is also officially known as “Medicare’s master patient and procedural data base.” A. MAC B. MCE C. CWF D. RUG E. FQHC Answer: C 54. “02 Condition is Employment Related. This code is for medical services provided due to the patient being injured while working on the job” is a _____________ found in FL #18 to #28 on the UB-04. A. Revenue Code B. TOB Code C. Value Code D. Condition Code E. Occurrence Code Answer: D 55. “01 Auto Accident (the date the auto accident or mva [motor vehicle accident] occurred)” is a ______________ found in FL #31 to #34 on the UB-04. A. Revenue Code B. TOB Code C. Value Code D. Condition Code E. Occurrence Code Answer: E 56. “01 Most common dollar amount (UCR) for the cost of a semi-private (2 beds and 2 patients ) room in the hospital” is a _______________ found in FL #39 to #41 on the UB-04. A. Revenue Code B. MSP C. Value Code D. Condition Code E. Occurrence Code Answer: C 57. “250 Pharmacy: a dollar amount indicating the costs of the patient receiving drugs while an inpatient in the hospital” is a ________________ found in FL #42 to #49 on the UB-04. A. Revenue Code B. MSP C. Value Code D. Condition Code E. Occurrence Code Answer: A

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58. ____________ is for Provider and Patient Information to be placed here in the UB-04. A. FL #18 to #28 B. FL #42 to #49 C. FL #66 to #71 D. FL #67A to #67Q E. FL #1 to #17 Answer: E 59. About three (3) months before a potential beneficiary becomes eligible for coverage by Medicare, an ________ is completed by the patient which documents other health care insurance coverage they have that may be PRIMARY to Medicare. This information is entered into the _______. A. CWF; IEQ B. IEQ; CWF C. CWF; ABN D. MSP; CWF E. RHC; IEQ Answer: B 60. _____________ in the UB-04 represents the “ADMITTING DIAGNOSIS (ICD). This is the diagnosis the admitting physician at the hospital initially determined was the cause of the patient’s chief complaint (CC) when the patient first came to the hospital.” A. FL #1 to #17 B. FL #71 C. FL #69 D. FL #74 E. FL #56 Answer: C 61. IPPS is the acronym for: A. Inpatient Payment Prospective System B. Involuntary Prospective Payment System C. Inpatient Prospective Provider System D. Inpatient Prospective Payment System Answer: D 62. HICN is the acronym for ___________ and is issued by ______________: A. Health Insurance Claim Number; Medicare B. Healthcare Information Claim Number; Medicare C. Health Information Classification Number; Medicaid D. Home-Based Insurance Classification Number; Medicaid Answer: A

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63. MS-DRG represents: A. Medicaid Severity-Diagnosis Related Group B. Medicare Severity-Diagnosis Related Group C. Medicare Special-Diagnostic Related Group D. Medicaid Several-Diagnosis Related Group Answer: B 64. EOMB stands for: A. Explanation of Medicaid Benefits B. Exploration of Medicare Benefits C. Examination of Medicare Benefits D. Explanation of Medicare Benefits Answer: D 65. EGHP represents ____________ and is for employers with ___________ employees. A. Employee Group Health Plan; 20 or more B. Employer Group Healthcare Provisions; 25 or more C. Explanation of Group Health Plan; 30 or more D. Employer Group Health Plan; 20 or more Answer: D

End of Chapter 3

Chapter 4 - Claim Form for the Doctor’s Office

Chapter 4

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Claim Form for the Doctor’s Office Chapter Topics •

Medicare



The CMS-1500 Claim Form



The International Classification of Diseases, 9th Revision, Clinical Modification (ICD-9-CM)



Current Procedural Terminology, 4th Edition (CPT-4)



Health Care Common Procedure Coding System (HCPCS)



Abbreviations and Acronyms



Sample Test Questions

After studying this chapter you will understand: •

Medicare: Timely Filing of Claims; Parts A, B, C and D; Medigap



CMS-1500 Claim Form



Medigap



Medical Unlikely Edits (MUE)



ICD: Diagnosis codes, V and E codes



CPT: Category I, II and III codes



HCPCS: Level I and II codes



Resource Based Relative Value Scale (RBRVS)



Evaluation and Management Services (E/M)



SOAP notes; Problem-Oriented Medical Record (POMR)



National Correct Coding Initiative (NCCI)



Advanced Beneficiary Notice (ABN)



Comprehensive Error Rate Testing (CERT)



Recovery Audit Contractors (RAC)



Ambulatory Payment Classification (APC)



Clinical Laboratory Improvement Amendment (CLIA)



Medical Necessity



Waiver of Liability



Third Party Reimbursement: Capitation, Fee-for-Service (FFS), Per Diem



Health Insurance Claim Number (HICN or HIC)



Medicaid



Medical Standards of Care; Malpractice



Neoplasms and Cancers

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Medicare Medicare, of course, has been covered in previous chapters, but because almost every administrative procedure in the health care industry derives from it, it is always wise to begin with a short review and further discussion of this very large and influential government program. As you know, Medicare beneficiaries select from two main types of coverage plans: traditional fee-for-service (payment per each service, procedure or supply rendered) or Managed Care. Timely Filing of Claims (UB-04/CMS-1500) Requirements for Medicare Parts A and B

1. For Medicare Part B: When medical services are rendered January 1st through September 30th in one calendar year, the provider or hospital has until December 31st of the next calendar year to file a claim to Medicare. For example, if the services were provided June 30, 2009, the provider or hospital has until December 31, 2010 to file the claim. 2. For Medicare Part B: When medical services are rendered October 1st through December 31st in one calendar year, the provider or hospital has until December 31st two years later to file the claim to Medicare. For example, if the services were provided November 30, 2009, the provider or hospital has until December 31, 2011 to file the claim. 3. If these time requirements are not met for Medicare Part B, Medicare will not pay the claim. 4. Providers of services to Medicare beneficiaries cannot charge the patient for preparing and filing any claim sent to Medicare. 5. Medicare Part A claims must be filed within one (1) year of the date of service (DOS) or Medicare reimbursement will be reduced by 10%. Ancillary Services (Important) 1. These are services provided to the patient other than usual and customary room and board (the bed and food the hospital provides the patient). 2. These ancillary services include: •

Operating Room Charges



Anesthesia



Pharmacy and Blood and its Administration



Radiology



Laboratory



Medical and Surgical Supplies



Physical Therapy (PT), Occupational Therapy (OT), Speech Therapy (ST)



Inhalation Therapy (specialized equipment and medication that helps the patient breath better)

Medicare is available to the following categories of people: 1. Persons who are 65 years or older, retired on Social Security benefits. 2. Spouse of a person paying into the Social Security System with payroll taxes.

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3. Those who received Social Security disability benefits for 24 months. 4. Those diagnosed with ESRD. 5. Kidney donors to ESRD patients; all expenses related to the kidney transplantation are covered. 6. Retired Federal employees of the Civil Service Retirement System (CSRS). Medicare is made up of 4 parts: A, B, C and D Medicare Part A: Pays for the following: care in a hospital as an inpatient, CAH, skilled nursing facilities, hospice care, and home health care. Most people get Part A automatically at age 65, and do not have to pay premiums because they or their spouse worked for at least 10 years and paid into Medicare Part A through their Social Security taxes. Medicare Part B: Part B is also known as Supplementary Medical Insurance (SMI). It pays for doctor’s services, outpatient care in a hospital setting, PT, OT, ST, diagnostic services, surgical services, ambulatory surgical care, DME, outpatient mental health care, laboratory services, blood, ambulance, emergency care, chiropractic care, orthotics and prosthetics, and home health care. Enrolling in Part B is optional and requires the patient to pay a separate monthly premium, which is usually deducted from the consumer’s monthly social security check. For 2009, the premium is $96.40. (Note: It can be useful to know this number.) Certain Preventative Screening Services are also covered under Medicare Part B, some of which are: 1. Bone Mass Measurements 2. Pap Smears and Pelvic Examinations 3. Prostate Cancer Screenings (Digital Rectal Examinations [DRE]: one DRE every 12 months) 4. Vaccinations (One Flu shot per year in the fall or winter; Pneumonia shot; Hepatitis shot). What is not covered by Medicare Parts A and B: 1. Acupuncture 2. Dental Care and Dentures 3. Cosmetic Surgery 4. Custodial Care 5. Healthcare received outside the United States 6. Hearing Aids 7. Orthopedic Shoes

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The Health Care Revenue Cycle 8. Outpatient Prescription Drugs (that would be covered by Medicare Part D) 9. Routine Foot Care 10. Routine Eye Care and Prescription Glasses 11. Routine Physical Examinations Medicare Part C: Managed Care Plans (formerly known as Medicare + Choice) Medicare Part D: Prescription Drug Plan

Medigap Medigap is a supplemental insurance policy sold by a private insurance carrier (AARP or Humana, for example) that pays for some of the “gaps” (unpaid amounts), in Medicare coverage such as the annual deductibles, co-payments, and coinsurances the patient would have to normally pay. Medigap works only with the Original Medicare Plan, Parts A & B (fee-for-service). Patients covered by Medicare managed care plan (Part C), Part D (drug plan), and Medicaid do not need Medigap policies. Note: This concept is important for the employee working in the doctor’s office or hospital because the consumer usually does not understand the intricacies between their Medicare coverage, Medigap, and any other insurances they have! After a Medicare carrier or FI processes a claim for a patient with Medigap coverage, the carrier automatically forwards the claim to the Medigap payer, indicating the amount Medicare approved and paid for the procedures, services and supplies. This process of Medicare automatically forwarding the processed claim to Medigap is known as Coordination of Benefits (COB). Once the Medigap carrier adjudicates the claim, the provider is paid directly, eliminating the need for the practice or hospital to file a separate Medigap claim. This is one of the advantages of electronic submission—not only does Medicare send the processed claim to Medigap automatically, but the amount of paperwork is significantly reduced and the doctor and hospital are paid in a much shorter period of time. This is why the CMS-1500 form needs to be properly completed for Medicare and Medigap. The beneficiary receives copies of the Medicare Summary Notices (MSN) that explain the charges paid and what is due.

Medical Unlikely Edits (MUE) MUE is where HCPCS and CPT codes are reviewed due to anatomical considerations to reduce incorrect coding errors. By anatomical, this type of pre-payment review makes sure the diagnosis codes (ICD) are consistent (linked) with the part of the body being treated by the doctor. For example, if the ICD code for “bunion” of the right big toe is used on the claim form, the MUE process makes sure that it is consistent with the CPT code for the appropriate surgical procedure (“bunionectomy”), and that both the ICD and CPT codes are appropriate for the correct part of the body—the foot.

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National Correct Coding Initiative (NCCI or CCI) The NCCI was established by Medicare to help the physician and hospital code (CPT and HCPCS) services, procedures and products correctly, reduce wrong coding (such as unbundling), and eliminate codes that should not be used together under certain clinical situations (also known as mutually exclusive codes [MEC]). NCCI controls incorrect coding that would lead to inappropriate payment of Medicare claims. For the most part, all other insurance companies and third party payers follow Medicare’s lead in correcting improper coding and reviewing their claims. The NCCI checks for improper coding by applying CCI edits, which is a computer program that electronically scans the claim forms. CCI edits apply to claims that bill and code for more than one procedure performed on the same Medicare patient, on the same date of service, by the same provider. Claims are denied when codes reported together do not “pass” an edit. An example of “unbundling” involves CPT codes for spinal manipulative therapy (SMT) (98941) a chiropractor would use, and the CPT code for the use of moist heat or cold (97010). If the doctor manipulates the cervical vertebrae and applies heat to the neck on the same visit (2 procedures in the same encounter), they would never be billed and coded separately (“unbundled”) for the same date of service, because most third party payers and Medicare normally bundle these two codes under the one main SMT code (for example, 98941). If the provider does unbundle when billing and coding, Medicare would apply the NCCI edits and only pay one fee under the one SMT CPT code (for example, 98941) for both the SMT and heat. If “98941” is billed at $50.00 and “97010” is billed at $30.00, Medicare would bundle these codes into “98941” and pay the provider only $50.00. If the chiropractor continues to unbundle these codes and bills them separately encounter after patient encounter, even after being informed of Medicare bundling these codes on the RA, Medicare would consider this abuse. Another case of unbundling involves surgery that is billed as “global surgery” or “surgical package.” Normally all pre-surgical preparation of the patient, the surgery itself, and all the normal post-surgical and recovery services, are bundled and paid one fee under the one main CPT surgical code. Therefore, the CPT code for an oophorectomy (surgical removal of the ovary) is “58940.” “58940” pays for all the services (with one fee to the doctor) associated with this surgical procedure. This spans the time beginning with the pre-operative evaluation and management services, to the admission of the patient to the hospital, the surgery, all the postsurgical recovery, and concluding with the discharge. Under the NCCI, all the separate CPT codes for the oophorectomy are bundled under one code (58940), and would not be billed “a la carte” with many different CPT codes. The doctor, therefore, is paid one fee for “58940.” Mutually Exclusive Code edits (MEC) apply, for example, when the doctor bills “50021” for an “open percutaneous drainage of renal or perirenal abscess.” Codes “50020 (open drainage of renal or perirenal abscess)” and “49061 (open percutaneous drainage of retroperitoneal abscess)” could not also have been reasonably (clinically) performed during a single patient encounter or date of service. Therefore, “50020” and “49061” cannot be billed concurrently with “50021.” If the provider reports

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The Health Care Revenue Cycle

both codes to the insurance company on the claim form, either “50021/50020” or “50021/49061”, only the “50021” will be paid but at the lower fee of the two reported CPT codes. This means the medical biller cannot report “49061” or “50020” when billing “50021.” Medicare will reject the claim until the provider corrects the claim and removes the 50020 or 49061. If “50021” and 49061” are reported together, for example, Medicare will use MEC edits and will pay the lower of the two fees. In this case, “50020” is reimbursed at $1500 and “49061” is reimbursed at $750, Medicare will pay the $750 only. The provider at this point cannot appeal the payment of $750 retroactively after Medicare adjudicated the claim, nor can the provider balance bill the patient because the reduced fee was due to the doctor’s incorrect coding of the drainage of the kidney abscess. Medicare considers repeated inappropriate use of these codes as abuse. The NCCI establishes standards for medical billing, identifies codes that are prone to fraud and abuse and identifies codes that are susceptible to unbundling or should not be billed together. NCCI reviews claims before they are paid, known as pre-payment review, analyzing codes to make sure they comply with NCCI editing standards particularly to insure that certain pairs of codes are compatible. When codes are rejected due to NCCI edits, those charges related to those denied codes cannot be billed to the patient, since Medicare not paying those denied codes is due to incorrect coding rather than a lack of medical necessity. Therefore, the provider cannot use the Advanced Beneficiary Notice (ABN) for denied services and cannot collect from the patient. The doctor or hospital would have to correct the coding errors and re-bill Medicare within 45 days after receiving the Remittance Advice (RA) from Medicare (remember this from Chapter 3?). Guidelines for the use of CPT-4 and HCPCS codes, as well as ways to identify fraud and abuse in the use of these codes, are handled under the NCCI. For further information see: http://www.cms.hhs.gov/manuals/iom and http://www.cms.hhs. gov/physicians/cciedits/

Advanced Beneficiary Notice (ABN) The ABN is a signed document which notifies the patient that certain procedures, products or services Medicare will probably not pay the doctor or service provider (such as a laboratory) before they are administered. If rejected by Medicare (as all procedures, products or services must be billed to Medicare whether payment is expected or not), the ABN makes the patient legally responsible for payment for all the Medicare denied services. This means the ABN can be used in court to force the patient to pay his/her debt for medical services. It is imperative the doctor include diagnoses and conditions (ICD codes) on the ABN along with the anticipated procedures (CPT codes) that will be conducted, so that Medicare can edit these and make a determination of medical necessity. If the provider fails to get a signed ABN prior to services being rendered, and is denied by Medicare, the patient is not liable to pay for the denied services and the doctor cannot ask the patient for payment. The Balance Budget Act (BBA) places limitations on certain laboratory, radiology, and cardiovascular tests provided to

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Medicare patients. Therefore, it is imperative that prior to services being provided, an ABN is signed by the patient. If medical necessity and the diagnosis codes and procedural codes do not satisfy Medicare standards, it is the responsibility of the service provider, doctor, medical supplier or laboratory to notify the Medicare patient that these services will be denied and that the patient is therefore responsible for payment of these denied services.

Comprehensive Error Rate Testing (CERT) This produces a report showing error rates found on claim forms submitted by providers and hospitals. It tells Medicare how well the insurance companies and fiscal intermediaries (FI) that adjudicate (process the paperwork) and pay Medicare services are instructing the hospitals and doctors to code correctly. It also reports the current number of mistakes being made in coding. Obviously, if the FI has CERT results that are substantially higher than other comparable third party payers, this informs Medicare that something is wrong with the insurance carrier regarding how it handles its claims or how it is instructing its doctors and hospitals and suppliers.

Recovery Audit Contractors (RAC) The purpose of the RAC is to reduce wrong payments by Medicare to doctors and hospitals. It does this by detecting and correcting overpayments and underpayments made by Medicare.

Ambulatory Payment Classification (APC) This is an important and sometimes difficult concept. The Balanced Budget Act of 1997 (BBA), the Balanced Budget Refinement Act of 1999 (BBRA) and the CMS, developed a Medicare Outpatient Prospective Payment System (OPPS) and APC. The OPPS describes a mechanism (paperwork and regulations) in which Medicare pays its bills. Diseases that are clinically similar (such as diabetes, retinopathy [disease of the eye] and neuropathy [nerve pain]) are grouped under an Ambulatory Patient Classification system (APC) by Medicare, which is a fee schedule that bundles all the charges into payment based on the value of treating the diabetes, neuropathy and retinopathy, for outpatients. Therefore, when the doctor treats diabetes and eye disease and nerve pain on an outpatient basis, reimbursement to the provider and hospital is made by Medicare (using the OPPS paperwork and regulations) according to the preset fees (monies to be paid by Medicare) based on the APC classification. In the case of diabetes, all associated medical treatment is assigned to an APC, which are fees for the treatment for diabetes, nerve pain and eye disease. Conversely, for services provided in the hospital for inpatients, an Inpatient Prospective Payment System (IPPS ) is used instead of the OPPS, and the fee schedule used is called a DRG (Diagnosis Related Group) instead of an APC. So if this same patient gets his diabetes, nerve pain and eye disease treated while admitted to the hospital, the billing department would use the IPPS (paperwork and regulations) as the way to bill Medicare, and use the DRG to figure out what they can charge Medicare for services rendered to the patient. I hope this is clear!

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The DRG’s and APC’s are used to help control costs. Previously, the use of DRGs (and APC’s beginning in 2000) had services, procedures and products paid on a much more expensive FFS basis. In other words, a separate fee would be charged to treat the diabetes, another fee to treat the eye disease, and another fee to treat the nerve pain, known as “unbundling.” The FFS fee schedule is more expensive than using the APC or DRG, which consist of assigning one less expensive bundled fee for treating everything related to the treatment of the diabetes. In other words, the APC is a schedule of fees applied using the OPPS mechanism, so that Medicare can pay for certain medical services provided for patients who are outpatients. Included in the definition of “outpatient” are: (1) outpatient services provided in a hospital setting, (2) outpatient hospitalization services at community mental health centers and (3) Medicare Part B services for inpatients at hospitals who have no Medicare Part A coverage. In the case of this last point (#3), there are patients who do not have Medicare insurance coverage when they are admitted to a hospital (Part A), so any medical service or product provided on an outpatient basis while they are in the hospital would be paid under the APC. For example, if the patient is in the hospital for repair of a fractured femur (a broken thigh bone), the APC would be the fee schedule used for outpatient services and products like post-surgical bandages, wound care, cast maintenance, crutches, physical and occupational therapy, etc., associated with the healing of the repaired femur. The hospital and doctor would have to find another way to get the actual surgical repair of the fractured femur paid, probably through public assistance or simply absorb the cost. All paid services that have clinical similarities are classified into groups known as APC’s. In other words, each APC represents medical services that are for the same type of diagnoses, such as all services used in the treatment of diabetes have prices for these services listed under one APC. There may also be more than one APC utilized for each patient encounter (the patient may be treated for more than one type of diagnosis or clinical situation per visit, for example, diabetes and skin cancer). The APC is for outpatient services that are affiliated with the hospital, but not inpatient. The DRG is similar to the APC in that the DRG is utilized for services affiliated with the hospital but are inpatient. It is important to understand the subtle differences between the APC and DRG! 1. An APC is determined by utilizing HCPCS/CPT-4 Codes, Evaluation and Management Codes (E/M), ICD-9-CM codes for reason of the visit (V or E codes), and Place of Service Codes (POS). When utilizing HCPCS/CPT-4 codes, services in the hospital must be listed by the amount provided (or by units of service provided). They include the following: •

Ambulatory Surgery



Diagnostic Imaging



Radiology



Emergency Department (E/R)



Pharmacy



Clinic

Note: These services are all outpatient hospital services.

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2. Hospitals and health care facilities that are exempt (not affected) by the APC’s (Outpatient PPS) include:

1. Critical Access Hospitals (CAH) 2. Certain Hospitals in Maryland 3. Cancer Hospitals 4. Indian Health Services Facilities (IHS) 3. Hospitals and health care facilities that are affected by the APC’s (outpatient PPS) include:

1. Acute Care Hospital Outpatient Services (your typical full service hospital) 2. Hospitals exempt from Inpatient Prospective Payment System (IPPS) such as psychiatric hospitals, rehabilitation hospitals, children’s hospitals, LTC hospitals, cancer hospitals, etc. 3. Hospitalization associated with Community Mental Health Centers

Medical Necessity This is defined as follows: Health care services that are safe and effective, reasonable and necessary for the treatment of the illness or injury,

consistent with the diagnosis, generally accepted medical

procedures and services (not experimental), not provided for the convenience of the patient or doctor, and administered

at the appropriate level of care (no over-utilization or underutilization).

A part of medical necessity would presume that medical personnel who treat the patient are appropriately trained and licensed for the diagnosis and treatment provided. For example, a periodontist (a dentist who specializes in the treatment of the gums) must be licensed in the state where the patient is receiving the care. This would be necessary for the insurance carrier to pay the claim. The third party payer would also demand that all appropriate documentation (surgical reports, pathology reports, x-ray and MRI reports, laboratory results, PT and OT reports, medical supplies and equipment, etc.) be included with the CMS-1500 claim forms, and proper pre-authorizations and second surgical opinions are secured before payment is made. It is imperative that the medical coder/biller and front office personnel be vigilant and detail oriented so that payment is made in a timely fashion and delays are minimized.

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The Health Care Revenue Cycle

Medical Standards of Care and Malpractice Medical standards of care are state and federal specific performance measures for the delivery of health care for medical professionals. This can include doctors, nurses, therapists, medical suppliers, and anyone else licensed to provide any health care service or product to the public. Medical malpractice (malpractice = “bad practice”) results when the provider or hospital injures the patient, or is responsible for their death or disability or medical complications, due to failure to follow generally accepted treatment protocols, neglect, or abandonment of the patient.

Medical malpractice can involve the following: 1. The health care professional or hospital not performing necessary surgical procedures in a timely manner (for example, waiting too long to perform cardio-pulmonary resuscitation [CPR] resulting in brain damage). 2. Performing the wrong surgery (for example, amputating the wrong leg). 3. Medically unnecessary delays in treatment (for example, delaying chemotherapy to shrink a tumor). 4. Administering the wrong treatment for the diagnosis. 5. Prescribing the wrong drugs or the incorrect amounts of drugs. 6. Abandoning the patient. 7. Not responding to the patient’s medical needs in a timely fashion. 8. Misdiagnosing or failing to diagnose (for example, the doctor completely missing a cancerous growth). 9. Intentionally or unintentionally harming the patient. 10. Over-treating or under-treating the patient. 11. Assault and battery. 12. Inappropriate contact with the patient, sexual or otherwise. 13. Violating HIPAA, or any other medical or non-medical violations of the doctor-patient relationship.

Waiver of Liability This is applicable to all health care providers. It is defined as Medicare patients who did not know, nor could reasonably be expected to know, that certain medical services were not covered by Medicare, are protected from the obligation to pay for health care services. Medicare also considers over-utilization or under-utilization of care, or custodial care, as medically unnecessary and will deny payment and the Waiver of Liability will relieve the patient of the responsibility to pay. If Medicare determines that the patient should have been aware that the service would not be covered by Medicare, then the patient would be liable to pay for the services that Medicare denied. 1. The Waiver of Liability rule states that when the patient and/or doctor is first notified that a medical service is not covered by Medicare, this is called the Notification of Non-coverage. When the patient receives the Notification of

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Non-Coverage, but still receives the service, the patient cannot expect Medicare to pay for the denied services and the patient is liable for payment. Second and third notices do not remove the patient’s liability to pay for denied services, and the patient cannot claim he/she was not aware of the denial of coverage nor received the first Notification of Non-Coverage. Medicare encourages the provider and hospital to know the latest regulations and insurance coverage rules by reading the Medicare Summary Notice (MSN) and its bulletins. 2. When the Waiver of Liability rule would or would not be applicable include: •

When a partial denial is made by the insurance carrier for a particular medical service because it is determined to be medically unnecessary or unreasonable (for example, the medical treatment is not consistent with the diagnosis). A partial denial means that only part of all the services billed for a diagnosis will not be paid, and an insurance appeal (review) of the entire claim has not been made, then the Waiver of Liability applies. For example, when the ophthalmologist performs a complete eye exam, the doctor can reasonably assume that an eye refraction would also be paid as an eye refraction is normally a part of a complete eye exam. If Medicare pays for the entire eye exam, except for the eye refraction, the Waiver of Liability applies and the patient would not have to pay for the eye refraction.



The doctor may have also had previous experience with Medicare that they do pay for complete eye exams including the eye refraction, and would not have expected that suddenly Medicare would not pay for part of the complete eye exam, the refraction. At this point, the ophthamologist could appeal Medicare’s non-payment of the eye refraction and attempt to get payment. Whether the doctor gets paid or not for the eye refraction, the Waiver of Liability protects the patient from paying for the eye refraction. The doctor may ultimately have to absorb the cost of the eye refraction because, after all, the patient could not have reasonably been expected to know that the eye refraction would not have been reimbursed as part of a complete eye examination.



When a third party payer (insurance carrier or Medicare, for example) denies coverage of a specific medical service, such as performing a fasting blood glucose test (FBG) as part of a complete exam for diabetes, and the third party payer has clearly excluded the FBG in its health care insurance contract (policy) with the patient, the Waiver of Liability does not apply. The provider can still attempt to seek reimbursement by appealing the claim (asking the insurance carrier to look at the claim again) to the third party payer. However, if ultimately the doctor cannot get payment for the FBG from the insurance carrier, the patient would be liable for payment of the FBG because the FBG is contractually excluded from payment in the patient’s insurance policy.

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Clinical Laboratory Improvement Amendment (CLIA) 1. All clinical laboratory services (CBC, UA, liver panel, thyroid, biopsy, FBG, etc.) that a Medicare patient receives must be performed by a laboratory that is certified by one of the following CLIA accrediting bodies and is issued a certificate known as a: •

Certificate of Waiver



Certificate for Provider-Performed Microscopy Procedures



Certificate of Registration



Certificate of Compliance



Certificate of Accreditation

2. All approved laboratory facilities and providers are issued a CLIA number, which consists of ten letters or numbers with a "D" in the third position of the CLIA number (for example: 12D3456789). Only New York and Washington do not require a CLIA number. The CLIA number is placed in block 23 of the CMS-1500 claim form. Only one CLIA number can be reported per claim form submitted to Medicare. 3. The CLIA number must be placed in Block #23 in the CMS-1500 claim form so that the third party payer will issue payment. For further information on CLIA consult www.cms.hhs.gov/clia/ 4. Managed Care Organizations (HMO, PPO, POS) require that their members use their approved laboratory facilities. The provider, hospital, and patient should be aware of the approved facilities, and if the patient insists upon using a non-approved lab, this will result in the MCO patient being financially responsible for all costs. Ultimately, the patient is responsible to know what facilities and services are approved.

Health Insurance Claim Number (HICN or HIC) 1. Each Medicare beneficiary receives a red, white and blue card (see example, p. 224) listing his/her name, Medicare claim number, sex, and what coverage exists (Medicare Parts A, B, C or D). This card has the Health Insurance Claim Number (HICN or HIC) and permits the patient to access health coverage under the Medicare program. It is important the medical coder see this card, as well as the Medigap card, and any other insurance identification cards, and copy them and place them in the patient’s file for future reference. 2. The HICN is made up of the patient’s 9 digit numerical social security number plus a suffix. Example: 123-45-6789A is the HICN. “A” is the suffix representing this

beneficiary as the wage earner and the person who worked for at least 10 years (40 quarters) and paid into the social security system. Examples of Suffixes used in the HCIN: A B

Wage Earner, 65 years or older

Wife (spouse), 65 years or older

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Child

D

Widow

M

Part B benefits only

F5

Adopting Father

HAD Disabled Adult T

W

Uninsured and entitled only to health insurance benefits Disabled Widow

Medicaid (MCD) Medicaid (MCD) is state-federal partnership that provides monetary assistance, food stamps, health care, and other types of assistance to those who are low income. Medicaid is the payer of last resort, meaning that all other health insurance plans pay first, including Medicare, before Medicaid will pay. In some instances, the patient may have both Medicare and Medicaid coverage, known as Dual Eligibility, where Medicaid pays for some of Medicare’s premiums, deductibles, co-payments and co-insurance.

Resource Based Relative Value Scale (RBRVS) 1. This was made into law by the Omnibus Reconciliation Act of 1989 (OBRA89) and changed the way doctors and hospitals were paid. The RBRVS contains three features: •

Fee schedule for paying doctor's services



A schedule that determines the rate of increase for doctor's services known as the Medicare Volume Performance Standard (MVPS). This indicates how much the price of certain health care services and products are increased each year. For example, the MVPS is 10%. The payment is $10.00 for 2008, therefore the MVPS would increase the $10.00 by 10% so the new price for 2009 would be $10.00, plus the $1.00 increase = $11.00 for 2009.



What physicians can charge for their services who do not participate in Medicare is known as the Limiting Charge. The limiting charge is 115% of the Medicare fee schedule. The limiting charge used to be known as the MAAC.

2. The Relative Value Unit (RVU) is the BASIS (or “heart”) of the Medicare fee schedule The RVU is made up of three (3) components that determine what Medicare will pay the doctor for providing services to the patient and include: •

The amount of work required to perform the medical service (for example, effort the doctor has to provide to do the surgery).



What it costs the doctor to perform the medical service (overhead).



What it costs the doctor in malpractice insurance premiums to practice his specialty. More highly complex surgery like brain neurosurgery is not

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The Health Care Revenue Cycle only far more complicated and takes many hours to perform, but is far more risky and the patient has a higher chance of death, complications or disability. It will therefore cost the neurosurgeon much more in malpractice premiums. Compared to less complex surgery such as a bunionectomy performed by a podiatrist, which costs much less in malpractice premiums, these expenses are reflected in the RVU. Medicare Participation by the Doctor Advantages •

Higher payments to the doctor from the Medicare fee schedule (in some cases, the doctor is paid more by Medicare than what they would normally charge a non-Medicare patient)



RBRVS payments are 5% higher than the Medicare fee schedule



Less collection effort required since Medicare is a reliable payer



Medicare pays 80% of the fee schedule directly to the provider or hospital. The other 20% is paid through co-insurances and co-payments directly to the provider or hospital.



Medicare advertises to the public the doctor is participating, potentially increasing the pool of patients available to the doctor.



Easier for the doctor to collect deductibles, co-payments and coinsurances directly from the patient.

Disadvantages •

Doctor is limited to how much money can be charged the Medicare patient



Doctor can only collect up to what the Medicare fee schedule allows

Medicare Non-Participation by the Doctor Advantages •

Revenue collections are increased for the doctor (Doctor gets paid directly from the patient and does not have to wait for Medicare to pay).



Doctor can collect up to 115% of the Medicare fee schedule.



Doctor can choose to participate or not to participate for each patient; flexibility for the doctor.



Medicare patients must be charged the exact same fees for the same services as any other patient.

Disadvantages •

May cost the doctor more to collect fees by having to chase the patient for payment.



Doctor's fees must be collected entirely from the patient; doctor therefore may lose some patients who do not want to pay cash.



Doctor must still submit claims to Medicare even if the patient pays the provider directly; patient gets reimbursed through Medicare

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The CMS-1500 Claim Form



(see p. 221) 1. The CMS-1500 claim form is generally used by the doctor, DME company, laboratory, PT, OT, ST, orthotics and prosthetics, and other outpatient services to bill the insurance carrier or Medicare. Although electronic submission is the preferred method of submission, paper claims are still acceptable in some instances. Ambulance companies are still required to use the CMS-1491 claim form. 2. The CMS-1500 claim form is printed in red drop out ink so that it can be read optically by computer such as image processing technology known as image character recognition (ICR). This kind of electronic processing allows easier facsimile transmission (fax) and image storage by Medicare and other third party payers. Photocopies of the CMS-1500 will not be accepted for processing by any third party payer. 3. Medicare will not accept non-standard claim forms, such as superbills, face sheets, or encounter forms or other extraneous documentation in place of the CMS-1500. However, other third-party payers may accept the superbill in place of the CMS-1500. Documentation that is necessary for processing the CMS-1500, such as medical records, certificates of medical necessity, certifications required by law, surgical reports and second opinions, lab reports, diagnostic imaging studies, etc., will be accepted in addition to the CMS-1500 form. 4. For the CMS-1500 to generate payment, it must be submitted clean, that means complete and valid. All required or mandatory fields or blocks must be filled out complete and valid, and those fields that are known as conditional must be completed for specific situations depending on each case. A good example of conditional fields that need to be completed would be blocks #1a, 4, 7, 11a-d, where the insured (or guarantor) is different than the patient. Therefore these blocks in this particular case would need to be completed so the claim would be considered valid and complete and therefore clean, and would be paid. 5. Completion of the CMS-1500 Claim Form (related to Medicare) is discussed block by block and listed whether each block must be filled out for every patient (required) or may be filled out depending if certain situations exist (conditional). Blocks that are considered “optional” are suggested by Medicare to be completed for statistical analysis. The right upper margin of the claim form should not be used at all by the medical coder, doctor or hospital, and should be left blank. 6. Blocks #1 to #13 are filled out with data related to the patient. Blocks #14 to #33 are filled out with data related to the health care provider. Important!

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The Health Care Revenue Cycle

How to Complete the CMS-1500 Claim Form Note: Some information is specific for Medicare claims only. CMS-1500 Block or Field #1:

This is where the type of health care insurance carrier is placed (Medicare,

#1a:

This is where the HICN is placed, and whether Medicare is the primary or

#2:

Enter the Patient’s Name (last name [including Jr., Sr., II, III, etc], first name

Blue Cross/Blue Shield, TRICARE, etc.) and is REQUIRED. secondary payer. This is REQUIRED.

and middle initial). However, leave out titles and degrees (such as MD, PhD, Esq., Sister, Captain, etc.) This is REQUIRED. Example: Smith Jr. Stanley A. or Hancock III, Frederick H.

#3:

Enter the Patient’s Birth date in “MM/DD/YY” format only and sex (M or

#4:

Enter the Insured’s Name here. When insured and patient are the same, enter

F). This is REQUIRED. Example: 11/10/49.

“SAME” in this block. If there is no insurance primary to Medicare, leave blank. This is CONDITIONAL.

#5:

Enter the Patient’s Mailing Address and telephone number. If there is no

#6:

Patient’s relationship to the person who has the insurance, such as self,

telephone number, enter “000-000-0000.” This is REQUIRED

spouse or child, is the information entered in this block. Filling out this block is CONDITIONAL and dependent on whose insurance plan it is and who is receiving treatment under this insurance plan.

#7:

Insured’s address and telephone number is entered in this block. When the insured’s address is the same as the one who is receiving treatment, write

“SAME”. Filling out this block is CONDITIONAL when blocks #4 and #11 are completed. #8:

The status of the patient: married or single, employed, or a student, is placed here. This information is REQUIRED and used to determine COB eligibility (helps the insurance carriers determine who pays first, second, third, etc.)

#9, 9a, 9b, 9c, 9d: Other insured’s name, insurance policy number, DOB, sex,

employer or school name, name of insurance carrier is placed in blocks #9A, #9B, #9C and #9D. This data is CONDITIONAL depending on whether there is Medigap insurance.

Block #9: Other insured’s Last Name, First Name and Middle Initial are placed here.

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Block #9a: Other insured’s insurance policy or group number. This is where information for Medigap is placed.

Block #9b: Other insured’s date of birth in “MM/DD/YY” format and sex. Block #9c: DO NOT enter the Employer’s name or School name (of Other Insured’s) and instead put in this block the address of where the Medigap claims are adjudicated by the carrier.

Block #9d: Enter the name of the insurance carrier that is providing the Medigap insurance.

#10, 10a, 10b, 10c: Patient’s condition (how the patient was injured or developed an illness or disease) related to employment, auto accident or other accident is placed here. This information is REQUIRED.

#10d: Medicaid (MCD) number of the patient is placed in this block. CONDITIONAL if the patient has Medicaid.

#11, 11a, 11b, 11c, 11d: If there is no insurance primary to Medicare, enter NONE in #11, ignore 11a, b, c and go to block #12.

Block #11: This field is REQUIRED if there is insurance PRIMARY to

Medicare. Put in Medigap’s insurance number (or other insurance

carrier) here if applicable. When there is insurance primary to Medicare,

it is REQUIRED to fill out 11a, b, and c. If there is no insurance PRIMARY to Medicare, put “NONE” in #11.

Block#11a: Put in Insured’s (Medigap or other insurance carrier) DOB (MM/ DD/YY) and sex. CONDITIONAL.

Block#11b: Put the name of the insured’s employer (or date of retirement

[MM/DD/YY]) or the name of the school where the insured is enrolled. CONDITIONAL.

Block#11c: Put in the name of the insurance carrier that provides Medigap,

or other insurance carrier that is primary to Medicare. CONDITIONAL.

Block#11d: Leave BLANK, not required by Medicare. If Medicare is not involved in this claim, check “YES” or “NO”.

#12:

“Patient’s or Authorized Person’s Signature” (guarantor or guardian if child) plus date (MM/DD/YY) is entered in this field. The purpose of this block is

to give permission for the doctor or hospital to release the patient’s protected health information (PHI) that is on the claim form to the insurance carrier or Medicare so that it can be processed and payment can be made. “Signature

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The Health Care Revenue Cycle on File” (SOF) may be placed in the “signed” line instead of the patient’s

actual signature. Many times the SOF authorization is created by the patient signing a separate piece of paper legally authorizing the doctor or hospital

to release the patient’s PHI as needed for as many CMS-1500 or UB-04 claim forms as is necessary. This SOF authorization is effective indefinitely unless revoked by the patient. The completion of Block #12 is REQUIRED. #13:

“Insured’s or Authorized Person’s Signature” is placed in this block. This is also known as the “Assignment of Benefits.” This block must be filled out so the insurance carrier pays the doctor or hospital directly. An SOF

authorization, just like that done in Block #12 above, can be used instead of the patient’s actual signature. Completion of this block is REQUIRED. #14:

Date of current illness, injury or pregnancy (MM/DD/YY) is put in this

block. More specifically, the first date when the illness or injury began, or the pregnancy began, is the date that must be entered here and is REQUIRED.

For chiropractic services, the first date when treatment began is the date put

in this block and is REQUIRED. In addition, when treatment is chiropractic care, the date when x-rays were taken (for the parts of the spine treated), in MM/DD/YY format, is placed in field #19 as well. #15:

If the patient has had the same or similar illness as the one being coded and billed on the current CMS-1500 form, that date (MM/DD/YY) is normally put in this block. However, for Medicare claims this field would be left blank.

Therefore, for all insurance claims other than Medicare, this block should be filled out, but it is OPTIONAL. #16:

The dates (from: MM/DD/YY; to: MM/DD/YY)) the employed patient

is unable to work is put in here. Used for disability insurance information purposes and is CONDITIONAL.

#17:

Name of Referring Physician, if there is one, who sent the patient or ordered a service (such as laboratory or medical supplier), is placed in this block.

Completion of this block is CONDITIONAL. Referring Physician means

an MD, DO, DDS, DMD, DPM, OD, or DC who refers the patient to another doctor in the hospital for more specialized services. An Ordering Physician prescribes non-physician services such as PT/OT/ST therapy, laboratory

(CLIA) services, or durable medical equipment (DME) such as a neck or back brace, wheelchair, etc.

#17a: An identifying number (other than NPI) of the referring or ordering

physician is placed in this block. Filling out this block is CONDITIONAL on whether there is a referring or ordering physician.

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#17b: The NPI (HIPAA National Provider Identifier Number) is placed in this

block, CONDITIONAL on whether there is a referring or ordering physician for a service or product.

#18:

This field holds the dates the patient was in the hospital (from: MM/DD/YY;

#19:

This field is known as “Reserved for Local Use”. This includes chiropractic

to: MM/DD/YY) and is CONDITIONAL on the patient being hospitalized. care, and other “Not Otherwise Classified” (NOC) codes such as: unlisted drug codes, unlisted procedure codes, CPT modifier “-99” code, hearing aid, homebound status of the patient, dental, hospice, and information

related to respiratory (lung) measurements, etc. Filling out this block is CONDITIONAL if any of these situations are pertinent for this patient. #20:

This block is filled out when an Outside Laboratory is used (also known as

purchased diagnostic services). Fill in this block by checking YES for “Outside Lab?,” and the price the doctor paid for buying the services of a laboratory

outside of the doctor’s office. For example, when the doctor sends the patient to an outside lab whose staff takes the blood and urine samples (technical portion), and the doctor at the lab interprets the results (professional

component), and a dollar amount is reported, this would constitute the

CONDITIONAL situation when Block #20 would need to be completed. This dollar amount tells the insurance carrier or Medicare that this is the price the referring doctor paid to a laboratory, outside of his office, to perform requested laboratory tests. #21:

This is where up to four ICD-9-CM diagnosis codes are placed in order of

severity; coded to the HIGHEST LEVEL OF SPECIFICITY. This must be filled out for every claim and is REQUIRED!

#22:

Medicaid re-submission. When a Medicaid claim is sent again to the carrier for re-consideration for payment. NOT REQUIRED BY MEDICARE. OPTIONAL.

#23:

Prior Authorization Number. Enter the “Prior Authorization Number,”

assigned by the Professional Review Organization (PRO) of an MCO, that is given to the health care provider before a medical service is rendered to

the patient. This number tells the MCO that the service was pre-approved

and it can now be paid upon submission of the CMS-1500. This block is also where the CLIA number is placed for outside lab services. Completing this

field is CONDITIONAL on whether the insurance carrier requires a Prior

Authorization Number or an outside lab was used. Only one CLIA number can be used per claim and only for paper claims.

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#24A, B, C, D, E, F, G, H, I , J. Successfully completing this block is very important Block #24A: Dates when health care services were provided (from:

MM/DD/YY; to: MM/DD/YY) and is REQUIRED information for every claim.

Block #24B: Where the service was provided (POS-Place of Service) and is

REQUIRED information for every claim. Is it important to know these POS codes! The POS codes are located on the first page of the CPT-4 coding manual.



POS CODES:



21



11

Office

22

Outpatient services provided in hospital setting

23

Inpatient in the hospital

Emergency Room in a hospital

24

Ambulatory Surgical Center (ASC) that may be affiliated with a

31

Skilled Nursing Facility (SNF)

hospital or is a free-standing facility

Block #24C: EMG. This block is completed if the medical treatment is emergency related. CONDITIONAL, dependent on insurance or governmental requirements.

Block #24D: Codes for Medical Procedures, Services, or Supplies are entered here. This is where the HCPCS and CPT codes are placed and are REQUIRED for all claims submissions.

Block #24E: Diagnosis Pointer. This is where the ICD diagnoses are matched (linked) to the HCPCS/CPT procedural codes. For example, in Block

#21 if the diagnosis was listed under #1 as “appendicitis,” and in Block #24D on line #1 the medical service was an “appendectomy,” then in

Block #24E (on line #1) appendicitis would be linked to appendectomy

with the number “1.” In other words, the diagnosis and medical surgical procedure would be clinically connected (making sense to the insurance

carrier), and the claim then could be successfully processed and payment would be made. REQUIRED.

Block #24F: Charges. This is where the actual dollar amounts (for example: $1500.00 for the appendectomy) are placed for the medical services rendered to the patient by the surgeon. REQUIRED.

Block #24G: Days or Units. Place in this block the numbers of services

provided, minutes of anesthesia administered, amount of medication provided, numbers of medical supplies given to the patient, etc. REQUIRED for every claim.

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Block #24H: EPSDT Family Planning. For early and periodic screening

of certain medical conditions (for example, mammograms for breast

cancer [CA] or prostate PSA testing for prostatic cancer [CA]), diagnoses (cancer), and treatment related medical services. Family Planning

(birth control) would also be listed here. Completion of this block is not

required by Medicare. Filling out this field is OPTIONAL. PSA=Prostate Specific Antigen

Block #24I: ID (identification) Qualifier. An additional identification number (non-NPI) for the doctor is placed here if the doctor does not have an NPI number. CONDITIONAL.

Block #24J: Rendering Provider ID number. The number of the doctor, CLIA laboratory, medical supplier or therapist who actually administered the service or product to the patient is entered in this block. Completion of this block is REQUIRED for every claim.

Block #25: Federal Tax Identification Number, Employer Identification

Number (EIN), or Social Security Number (SSN) is placed here for the doctor or supplier of health care services or products. If Medigap was

reported, filling out this block is CONDITIONAL for Medicare claims. Block #26: Patient’s Account Number, assigned by the doctor’s office or

laboratory or medical supplier’s accounting system, is used to help the provider keep track of the patient and is not related to Medicare or the

insurance carrier. CONDITIONAL on whether any number is assigned by the provider of medical services.

Block #27: Accepts Assignment. Check this block “YES or NO” to indicate

whether the doctor accepts assignment of Medicare benefits (takes what Medicare will pay according to the fee schedule), will bill Medicare

directly, and will wait for payment from Medicare. REQUIRED for all Medigap and Medicare participating providers.

Block #28: Total Charge. Add up all the individual charges listed in 24F and place that number in this block. REQUIRED for all claims.

Block #29: Amount Paid. This block reflects the total amount of money the patient paid for services that are covered by Medicare or other

insurances. This number represents the co-payments or co-insurances

the patient is contractually required to pay according to their health care policy. REQUIRED for all claims.

Block #30: Balance Due. This number reflects how much remains to be paid on the claim. It is calculated by taking the total charges (#28)

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The Health Care Revenue Cycle and subtracting what the patient paid (#29). NOT REQUIRED FOR MEDICARE. It is OPTIONAL for all other insurances.

Block #31: This block is for the signature of the provider or supplier, plus academic degrees or credentials, and date signed (MM/DD/YY). For example: “John Smith, MD.” REQUIRED for all claims.

Block #32: Name of the physical location where the actual medical services

were provided (Main Street Podiatry Services, 1234 Walnut Street, Phila.,

PA 19111). No Post Office addresses allowed. This applies to all providers (hospitals, laboratories, clinics, doctor’s office). If the location where

the actual services were administered to the patient is also the billing

address, the word “SAME” would go into block #32. REQUIRED of all claims.

Block #32a: Put the National Provider Identification (NPI) number of the

provider in this field. CONDITIONAL if there is an NPI. If the provider does not have an NPI, see block #32b below.

Block #32b: Other identification numbers go into this block. CONDITIONAL for the provider with a non-NPI number. The non-NPI number goes into this block, plus two more digits (listed in a special chart) are added to

the non-NPI number as a prefix. All this sounds very confusing, but these

numbers would be provided by the doctor or hospital and you would be aware what to do with them.

Block #33: The physical location where the claim form is being billed from, where the insurance check is to be mailed to, and where the insurance carrier should make contact with the provider or facility for any

additional information related to the claim. No Post Box Office numbers. When block #32 is the same as block #33, enter “SAME” in block #32. This is REQUIRED of all claims.

Block #33a: The provider’s NPI is placed in this block (just like #32a). CONDITIONAL.

Block #33b: Other identification numbers go into this block (just like #33a). CONDITIONAL

Important Rejected claims that are incomplete or invalid must be corrected and resubmitted to Medicare. The provider or supplier or hospital cannot bill the Medicare beneficiary (patient) for rejected claims, attempting to collect monies owed, due to the fact the insurance company or Medicare is denying the claim because of an incorrectly prepared CMS-1500 claim.

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Physicians or suppliers that do not accept Medicare assignment can request payment in full from the patient when services are rendered to the patient. Medicare requires that even though the provider does not participate with Medicare, the provider can still submit claims to Medicare so the patient can be reimbursed, avoiding a financial hardship. Additional information concerning completion of the CMS-1500 claim form can be accessed at: http://www.nucc.org/images/stories/PDF/claim_ form_manual_v3-0_7-07.pdf Important Provider Identification Numbers for completion of the CMS-1500. Other than the NPI, the doctor, supplier, group practice (a collection of doctors), or hospital are assigned other numbers by the insurance carrier or Medicare. They include: 1. UPIN: Unique Provider Identifying Number is the number assigned to each doctor providing services to Medicare patients. 2. PPIN: Performing Provider Identification Number is a special number assigned to each doctor in a group of doctors practicing together (group practice). 3. PIN: Provider Identification Number is the number an insurance company assigns to each participating doctor. Review of important terms that are related to the processing of the insurance claim and the patient’s Protected Health Information (PHI): 1. MSP: Medicare as the secondary payer. This is where another insurance carrier is the first one to pay the claim before Medicare. This is determined through COB (coordination of benefits) where the insurance carriers and Medicare determine who pays the claim first, second, third, etc. It is the doctor or hospital or supplier’s responsibility to determine if Medicare is primary or secondary payer before submitting the claim forms! 2. Bundled Services: This is where multiple medical services are coded with one CPT code, and billed and paid with one fee, aka Global Surgical Fee or Surgical Package. The one CPT code covers uncomplicated (normal, no infections or complications) pre-operative, surgical, and post-operative services for the diagnosis, regardless of the amount of procedures or services rendered. For example, there would be one CPT code, one charge, and one payment for all the services the doctor and hospital provides the patient for an “appendectomy” for the diagnosis of “appendicitis.” 3. Unbundled Services: This is where multiple medical services are CPT coded, billed and paid separately, “a la carte.” An insurance carrier may choose not to pay for unbundled services and may bundle them for payment purposes. 4. Release of the PHI Under Court Order happens if required to be used as evidence by a court of law. The provider may release the PHI without the patient’s written approval if a judicial order is served upon the doctor or hospital. If the court issues a subpoena, this is a court order demanding

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The Health Care Revenue Cycle the doctor or a member of the medical staff to appear in person and testify. Usually in this case the doctor will bring all the necessary paperwork and records to court to help their testimony. If the court requires the witness to bring specific evidence, such as a patient’s medical record, it issues a subpoena duces tecum, which demands the doctor or member of the staff to appear, testify, and to bring the requested documentation. “Testify” means the doctor is ordered to speak the truth publicly in court about a specific matter or patient. 5. The HIPAA Security Rule requires covered entities (doctors, hospitals, SNF’s, governmental bodies, public health clinics, etc.) to establish and enforce safeguards to protect the patient’s Protected Health Information (PHI). The security rule delineates how to secure and protect the PHI on computer networks, the Internet, storage discs (CDs), paper files, anywhere in the doctor’s office, hospital, SNF, insurance company, any health care facility, third party payer, clearinghouse, in transit, etc. 6. The Security Rule includes: •

Encryption. The process of coding information in such a way that only authorized individuals on a computer with the password and username can decipher the PHI.



Access Control. Limits who can handle the PHI and a record of who has seen what information when is preserved. The doctor should have complete access to the PHI, however, the secretary or medical biller may only need permission to see certain parts of the PHI.



Back-up protocols. Critical so that lost or damaged PHI can be quickly replaced. Hopefully, back-up will be off-site away from the doctor’s office or hospital.

International Classification of Diseases, 9th Revision, Clinical Modifications Also known as the ICD-9-CM, the International Classification of Diseases, 9th Revision, Clinical Modifications, was developed by the World Health Organization (WHO). It is utilized by hospitals, providers, medical suppliers, and any other health care delivery system in the United States to report to third party payers such as health care insurance companies, Medicare and fiscal intermediaries, the patient’s diagnoses, conditions, symptoms, complaints, problems, injuries, trauma, medical histories, screenings or clinical situations. The ICD is used all over the world—in Europe, Canada, Japan, Australia, etc. The ICD is updated every year to reflect new disease processes, new technologies, greater specificity in coding, and codes that are expanded, changed, added or deleted. The National Center for Health Statistics and CMS publish these changes to the ICD every fiscal year beginning October 1, with implementation of these changes by January 1 of the following year (for example, changes made on October 1, 2009 must be utilized by health care providers and hospitals no later than January 1, 2010).

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Figure 8: ICD

1. Diagnoses, conditions, pathologies, symptoms, complaints, problems, medical histories or injuries are reported in codes consisting of numbers and/or letters the patient is experiencing, as determined by the health care provider. The CMS provides guidelines on how to properly apply standardized coding practices to the UB-04 and CMS-1500 throughout the United States. In other words, how to correctly place all the CPT and ICD codes on these forms. See Chapter 3 for appropriate placement of ICD codes in the UB-04 form for hospital inpatients and outpatients. The CMS-1500 is generally utilized for coding non-hospital outpatient treatment, OT/PT/ST, prosthetics, orthotics, and durable medical goods (DME) where ICD codes are placed in block 21. See examples of the UB-04 and CMS-1500 on pages 221 of this study guide. (For further information concerning the ICD, see www.ama.org)! 2. It is imperative the medical coder provide complete, valid, and precise ICD codes so that every pertinent aspect of the patient’s diagnostic condition and medical situation are captured in the UB-04 and CMS-1500 on page 221. By properly coding with the ICD and CPT/HCPCS manuals, the hospital or provider can get fully reimbursed for every service or product provided.

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The Health Care Revenue Cycle When coding is complete and valid, linkage is accomplished. Linkage is when procedures such as surgeries, examinations, administration of therapies and drugs and medical supplies are consistent with the diagnosis and medical situation the patient is experiencing, and may be experiencing on an acute or chronic basis. 3. Accurate and appropriate coding will maximize the hospital’s and doctor’s cash flow, improve the financial bottom line, reduce insurance denials, reduce lost charges for medical services billed, reduce lost revenues, and reduce the accounts receivable (A/R). A/R represents all the money outstanding that is owed to the hospital or doctor by the patient and/ or insurance carrier or FI. Medicare’s National Coverage Determinations (NCD) and/or Local Medical Review Policies (LMRPs) are instrumental in providing coding initiatives and coverage criteria to the hospital and provider. 4. Therapies can include physical therapy (PT), occupational therapy (OT), speech therapy (ST), cardiac and respiratory rehabilitation, radiation therapy and chemotherapy, nursing care, orthotist (who fits neck and back braces, for example), prosthetist (who fits artificial legs and breasts, for example), and other types of treatment administered by a physician, therapist, nurse, or other licensed health care provider. The ICD codes would be for diagnoses and conditions, the CPT or HCPCS codes would be for the actual services these health care providers would administer. The HCPCS manual would also code for medical supplies and ambulance services these health care providers would prescribe for the patient. 5. The ICD coding manual consists of a Table of Contents, Introduction, then three volumes and the appendices. However, Volume 3 is reserved for procedures, hospitals, and special uses. Volumes 1 and 2 are primarily for the medical coder for assigning ICD codes. After volumes 1 and 2 are the “Official ICD-9-CM Government Appendices A through E.” 6. APPENDIX A is known as the Morphology of Neoplasms, which are special ICD codes that begin with the letter “M” followed by 4 numbers, a slash and another number, for example “M8640/1.” This number is used solely by pathologists, who are medical doctors that specialize at looking at tissue samples under the microscope, to determine whether the tissue sample is cancerous, neoplastic, malignant or benign. 7. Volume 2 is positioned first in the ICD book, known as the “Alphabetic Index”, and lists every diagnosis, symptom, condition, complaint, pathology or problem, alphabetically (A to Z). “V” and “E” Codes are also listed in Volume 2. However, the actual sections where V and E codes are positioned is at the end of Volume 1, the Tabular List. Volume 2 matches the actual words of the diagnosis to an ICD number, this number is then found in Volume 1 by the coder, and the ICD code can then be expanded upon further and verified to the highest level of specificity. 8. The Highest Level of Specificity means that ICD codes have been established to the greatest degree of definition and accuracy. Optimally, the ICD code should be coded up to 5 numbers, for example “123.45,” and are

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found in the ICD coding manual for each diagnosis the patient is determined to have by the health care provider. Sometimes the highest level of specificity may have only 4 numbers, such as “123.4,” and rarely only 3 digits, such as “123.” The following represents three ways the ICD codes are presented: 123 = This ICD number is coded to the category level (3 numbers) 123.4 = This ICD number is coded to the sub-category level (4 numbers). 123.45 = This ICD number is coded to the sub-classification level (5 numbers). This ICD number is considered coded to the Highest Level of Specificity. 9. Also in Volume 2, when the coder proceeds alphabetically to the letter “N”, the “Table of Neoplasms” is found, which lists all cancers and neoplasms by Anatomical Body Location according to six (6) categories of malignancies and non-malignancies. 10. These six categories include: Three listings for Malignant Cancers. Malignant cancers are aggressive, rapidly growing, can invade other tissues, and can be lethal. 1 2

3

Primary Malignancy. The original malignant cancer site, for example, prostate. Secondary Malignancy. This is a cancer that has spread from the primary malignancy’s original cancer site, for example the prostate, to a second location, the lumbar spine. When a cancer has spread, it is known to have “metastasized.” Carcinoma In Situ. This is a malignant cancer that never moves to other parts of the body. In other words, the cancer stays in place [“in

situ”]. It is stationary. Three listings for Non-Malignant Cancers. These cancers are not aggressive. They are slow growing, rarely invade other tissues, and are generally not lethal. 1 Benign (Think of early skin cancers like basal cell carcinoma or squamous cell carcinoma, generally as a result of too much sun exposure) 2 Uncertain Behavior (The pathologist cannot determine if it is benign or malignant cancer; aka-borderline malignancy) 3 Unspecified Nature (The pathologist determines it is a growth of cells [neoplasm], but cannot determine if it abnormal, cancerous or not) 11. Volume 1 is positioned second in the ICD manual, and is known as the “Tabular List.” The Tabular List has the exact same ICD numbers as found in Volume 2, but presented in numerical order, corresponding to every diagnosis, pathology or problem the coder found first in Volume 2. These

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The Health Care Revenue Cycle ICD codes in both Volumes 1 and 2 can be up to 5 numbers (e.g.-123.45) in length. 12. ICD codes in Volumes 1 and 2 begin with the number “001” and go up to “999.9.” The Tabular List consists of 17 Chapters (for example, numbers running from 100 to 150), with each chapter broken up into Sections (for example, 100 to 110), each Section broken up into Categories (for example, 103), each category subdivided into Sub-categories (for example, 103.4), and each sub-category is finally subdivided into Sub-classifications (for example, 103.45). The sub-classification code of the ICD, for example: 103.45, is coded to the Highest Level of Specificity. 13. The last portion of Volume 1, Tabular List, are sections for V codes and E codes. The V codes are all alphanumeric, running from V01 through V89.09, with all codes beginning with the letter “V” plus up to 4 numbers. V CODES include medical services or health care situations other than disease or pathologies such as the following: 1

Vaccinations (Flu, Hepatitis or Small Pox)

2

Tissue Transplantation (Kidney, Bone or Skin)

3

Medical screenings for diseases or conditions (HIV, Mammography, Prostate, Scoliosis, Meningitis or Hepatitis)

4

Medical History (woman with a history having caesarian births, exposure to poisons or black lung disease, family history of cancer)

5

Psychological Counseling

6

Use of Medical Devices, Orthotics, Prosthetics

7

Kidney dialysis

E CODES follow the V codes at the end of the Tabular List (Volume 1) in the ICD manual. E codes are all alphanumeric and begin with the letter “E” followed by up to four digits and range from E800 to E999.1. E codes document EXTERNAL causes of disease, injury or trauma such as: 1

Automobile, bus, truck, subway, train, motorcycle, bicycle accidents, etc., involving driver, passenger, and pedestrians

2

Boats, wave runners, waterskiing accidents, etc.

3

Sports related accidents such as skiing, football, swimming, etc.

4

Terrorism related injuries

5

Poisoning

6

Aircraft and spacecraft accidents

7

Work related injuries

14. Sequencing the ICD Codes on the UB-04 and CMS -1500 Claim Forms includes the following: The ICD Code representing the most severe diagnosis, pathology or injury is placed first in the coding form (primary or principal), followed by the next most severe which is secondary, followed by the third diagnosis (tertiary),

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and so on. Co-existing medical conditions are also ICD coded in this way, as long as they have a direct clinical significance on the Primary Diagnosis. Do not code diagnoses that are probable, suspected, questionable, no longer applicable (cured or resolved), or ones that have been ruled out by the physician prior to the Primary Diagnosis being established. In surgical cases, when the pre-operative diagnosis (aka “working or qualified diagnosis”) is different than the post-operative diagnosis, code the postoperative diagnosis only on the UB-04 as the actual diagnosis. For example, if the patient enters the emergency room with subjective signs and symptoms of chest pain, nausea and left arm pain, the pre-operative diagnosis would tentatively be “myocardial infarction” (heart attack!). Once the patient was admitted to the hospital, a thorough examination conducted, cardiac catheterization was performed, laboratory tests (EKG) were run, the primary diagnosis would be changed to “dyspepsia” (indigestion). Both diagnoses have very similar signs and symptoms. The post-operative diagnosis of dyspepsia is the one that is coded on the UB-04. The doctors may even document several working diagnoses in the course of the patient’s hospitalization such as myocardial infarction, dyspepsia, ventricular fibrillation, etc., in attempt to establish the one clinically accurate diagnosis and “rule out” the diagnoses that are not correct. This process substantiates to Medicare or the insurance carriers all the tests, biopsies, examinations, and procedures that had to be performed on the patient to finally rule out all the incorrect diagnoses, and establish the one diagnosis that is objectively proven and needs to be treated. This ruling out process is called establishing a “differential diagnosis.”

Current Procedural Terminology, 4th Edition (CPT-4) The CPT is a uniform coding system that defines and lists in numerical order medical services and procedures such as surgery, medicine, laboratory tests, x-rays and MRI’s, biopsies, anesthesia, medical evaluation and management, optometry and podiatry services, etc., covering all the medical and allied health specialties that are provided by doctors, nurses, therapists, allied health practitioners, and anyone licensed to deliver health care treatment. The CPT manual is made up of a Table of Contents, Introduction, three Categories of 5-digit codes (made up of numbers and/or letters) known as Category I, Category II, and Category III, Appendices A through M, and the Index. Category I codes constitute the majority of the CPT manual, which consists of codes with five numbers, covering services in six sections labeled: Evaluation and Management, Anesthesia, Surgery, Radiology, Pathology and Laboratory, and Medicine. Category I codes run from 00100 through 99607. Category II codes cover health care performance and statistical measurements, and Category III codes are for health care experimental procedures.

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The Health Care Revenue Cycle

Figure 9: CPT

CPT category I codes (which are also found in HCPCS Level 1) may also have modifiers attached to them. Modifiers are made up of two numbers (22 to 99), and indicate that a performed service or procedure has been altered in some way, but not changed the definition or the assigned HCPCS/CPT code. Example: “27590-62.” “27590” is the Category I code for “Amputation, thigh, through femur, any level,” and modifier “-62” indicates “Two Surgeons.” Therefore, this CPT procedural code indicates to the insurance carrier (that is going to pay the bill) that two surgeons were involved in the surgical procedure of cutting off the patients thigh. The modifier “-62” has altered the CPT code “25790” to indicate that two surgeons are involved in this surgical procedure instead of just one surgeon. Modifiers are found in Appendix “A” of the CPT manual and can indicate the following: 1

A service or procedure has both a technical and professional component, or at more than one location, or has been increased or decreased in amount of service provided, was performed by more than one doctor (for example, the surgery involved the operation of the cardiopulmonary bypass machine by one doctor and the open heart surgery was performed by another doctor)

2

Only part of a service or procedure was performed on the patient.

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3

An adjunctive service (another additional service) to the main service or procedure was performed.

4

A service or procedure was performed on more than one area of the body (bilateral). For example, both eyes.

5

A service or procedure was performed more than once or unusual circumstances were involved in the administration of the service or procedure For example, repeated surgeries were performed for the removal of a cancer.

Health Care Common Procedure Coding System (HCPCS) HCPCS is a coding manual that is composed of two levels: 1

Level I consists of CPT category I codes, which consist of five numbers running from 00100 through 99607. CPT Category I codes are found in Level I of HCPCS.

2

Level II consists of 5-digit alphanumeric codes beginning with letters “A” through “V” and followed by four numbers (for example, “L1134”) that identify health care products, supplies or services. Examples would be Durable Medical Equipment (DME) such as walkers, commodes, oxygen tanks, low back supports, etc; ambulance services; prosthetics; orthotics; and other supplies (syringes, bandages, drainage tubes, catheters, etc.) when used outside the doctor’s office or hospital.

The Omnibus Reconciliation Act of 1986 (OBRA-86)) is legislation that requires that the HCPCS coding be utilized on the UB-O4 claim forms for all Medicare outpatient services provided in Acute Care Hospitals, Tertiary Care Hospitals, Long Term Care Hospitals, Hospital Based Rural Health Clinics (RHCs), and Federally Qualified Health Clinics (FQHCs). HCPCS Level I codes are the federal government’s equivalent of the CPT4 Category I codes, and are mandatory for billing (utilizing the UB-04 claim form) for procedures and services and products for Medicare inpatients and outpatients. HCPCS Level I is used for assigning codes for procedures and services in the hospital. In other words, CPT Category I codes = HCPCS Level I codes.

Evaluation and Management Services (E/M) 1. Evaluation and Management Service codes are found in the CPT-4 Category I codes, and HCPCS Level I codes, and reflect the health care provider’s determination of the patient’s status, counseling of the patient and coordination of medical care. In other words, these codes represent all the cognitive (thinking) activities (such as analysis of examination findings, diagnostic imaging studies, laboratory tests, medical history, previous treatment, and referrals) the doctor goes through at arriving at a determination of what the diagnoses are and what treatment to give the

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The Health Care Revenue Cycle patient. The E/M section is divided into broad categories such as office visits, hospital visits, and consultations. The E/M codes are created by considering seven key components which are: • History (Important) • Examination (Important) • Medical decision making by the doctor (Most Important) • Counseling • Coordination of Care • Nature of Presenting Problem • Time involved 2. E/M services are for office visits, outpatient services, hospital observation services, hospital inpatient services, consultations, emergency department services, nursing facility services, case management services, rest home and custodial care, delivery/newborn/pediatric care, critical care services and home-based health services. E/M codes are meant to cover all health care providers’ evaluation and management of procedures, services, treatments and products administered in all the medical specialties such as Dermatology, Obstetrics and Gynecology, Urology, Radiology, Orthopedics, Cardiology, Ophthamology, Internal Medicine, Gastroenterology, Colorectal Medicine, Otorhinolaryngology, Psychiatry, and all the subspecialties such as Hematology, Immunology, Parisitology, Hepatology, Oncology, Trauma Medicine, Nephrology, Physiatry, Pneumonology, Podiatry, etc. 3. Dentistry has its own CPT-type manual called the Common Dental Terminology manual (CDT). Allied health care is also covered in the CPT/HCPCS manual such as OT, PT, ST, radiology technician, respiratory technician, nursing, home health aide, Chiropractic, Psychology, etc. 4. Other procedures, services and products found in the CPT and HCPCS manuals include: •

Ambulatory surgical services



Diagnostic imaging services such as x-rays, MRIs, CAT scans, etc.



Laboratory services (UA, CBC, biopsies, etc.)



Occupational Therapy, Physical Therapy, Speech Therapy



Medical services provided in the clinical setting or emergency room



Durable Medical Equipment (DME)



Orthotic and prosthetic devices (artifical legs, breasts, etc.)



Surgical dressings that are used at home



Preventative medical services and immunizations



Immunosuppressive drugs



Psychiatric services



Infusion therapy and chemotherapy



Other assorted drugs and services described in the Medicare Hospital Manual

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SOAP Notes and the Patient-Oriented Medical Records (POMR) The doctor and medical coder work with a number of protocols that are used to organize patient medical records (aka-chart). The most common format is known as the problem-oriented medical record (POMR). The POMR has a section with data from the initial patient examination, evaluation and assessment. When the patient makes additional visits, the reasons for those encounters are listed separately and have their own entries into the POMR. The process of the doctor performing evaluation and management services (E/M) of the patient and creating the POMR requires the use of the SOAP note format so that a comprehensive and sequential collection of data is produced. This careful collection of the patient’s data is important because it assists the doctor in keeping track of a patient’s progress. More important, the medical record is a legal document and helps the health care provider reduce mistakes and malpractice claims. A problem-oriented medical record contains information known as SOAP notes, which is a format that reflects the doctor’s face-to-face encounter with the patient, and has four parts: subjective, objective, assessment and plan. S: The subjective information is what the patient discusses. It documents the problems, complaints or trauma that brought the patient to the doctor’s office or hospital. O: The objective information is what the physician finds during the examination of the patient and may include lab tests, x-rays and CAT scans, reports from other providers and therapists, medical history, other treatment, pharmaceuticals (drugs), etc. A: The assessment, also called the evaluation, impression or conclusion, is the doctor’s diagnosis and prognosis. P: The plan, aka-advice or recommendations, is the course of treatment and referrals the doctor recommends for the patient. This may include surgery, medications, laboratory tests, referrals to other providers and facilities, medical supplies, follow-up directions, prognosis and disability evaluations concerning absence from work or school. Standard Code Sets The ICD-9-CM, CPT-4, HCPCS, CDT and NDC are all examples of compatible numbers and letters used to describe all health care diagnoses and conditions, medical procedures and services, dental procedures and services, drugs, ambulance services, and medical supplies and products, which are used by the medical coder on the UB-04 and CMS-1500 claim forms. By using these standard collections of numbers and letters, the hospital or doctor can consistently and reliably communicate with the insurance carrier all health care activity the patient receives in a concise and understandable manner anywhere in the country.

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Definitions: Types of Third Party Reimbursement and Categories of Providers 1. Capitation: This is where the doctor is given a fixed amount of money per patient per month (PMPM), regardless of how much medical service is provided. Capitation is seen in HMO’s with gatekeepers. 2. Straight Charges or Fee-for-Service (FFS): This is where the doctor charges money for each service provided (“a la carte”) and is the most expensive way to pay for health care treatment. It is an amount paid for each service by the insurance company to the doctor. 3. Per Diem: This is where the hospital is paid by the insurance company a set amount per day for each diagnosis regardless of how much the actual service costs the hospital. The hospital may make a profit or suffer a loss if the hospital does not properly anticipate the cost of providing the treatment. 4. Non-Participating Provider: This is a provider that has not contracted with an insurance carrier, managed care plan or Medicare to provide health care services to the carrier’s membership. 5. Participating Provider: This is a provider that has signed a contract with an insurance carrier, MCO, or Medicare to provide health care services to the carrier’s membership. 6. Any Willing Provider: Many states have “any willing provider” laws that require a managed care organization to accept all qualified physicians who wish to participate in its plan (open panel). This regulation helps reduce the number of patients who have to switch physicians if they change from one MCO plan to another. Prior to this law, many MCO’s used closed panels of doctors, meaning they only accepted a certain number of providers in each specialty in each geographic area, so that most of the providers, for example in the Los Angeles metropolitan area, were shut out and could lose many of their patients if the patients’ employers switched to an HMO in which the provider was not participating.

Chapter 4 - Claim Form for the Doctor’s Office

Abbreviations and Acronyms AARP

American Association of Retired People

ABN

Advanced Beneficiary Notice

AKA

Also Known As

APC

Ambulatory Payment Classification

BBA

Balanced Budget Act of 1997

ASC

Ambulatory Surgical Center

BBRA

Balanced Budget Refinement Act of 1999

CAH

Critical Access Hospital

CERT

Comprehensive Error Rate Testing

CPT-4

Current Procedural Terminology, 4th edition

DC

Doctor of Chiropractic

DDS

Doctor of Dental Surgery

DMD

Doctor of Dental Medicine

DME

Durable Medical Equipment

DPM

Doctor of Podiatric Medicine (Foot Doctor)

DO

Doctor of Osteopathy (Osteopathic Medicine)

EIN

Employer Identification Number (used by the IRS)

EKG or ECG

Electro-Cardiogram

E/M

Evaluation and Management

ESRD

End-Stage Renal Disease

FFS

Fee-For-Service

FQHC

Federally Qualified Health Clinics

HICN or HIC Health Insurance Claim Number HCPCS

Healthcare Common Procedure Coding System

ICD-9-CM

International Classification of Diseases, 9th Revision, Clinical Modification

ICR

Image Character Recognition

LMRPs

Local Medical Review Policies

MCD

Medicaid

MD

Doctor of Medicine

MEC

Mutually Exclusive Codes

MSN

Medicare Summary Notice

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The Health Care Revenue Cycle

MSP

Medicare Secondary Payer

MUE

Medically Unlikely Edits

NCCI

National Correct Coding Initiative

NCD

Medicare’s National Coverage Determinations

NPI

National Provider Identifier Number

OBRA-86

Omnibus Reconciliation Act of 1986

OBRA-89

Omnibus Reconciliation Act of 1989

OD

Doctor of Optometry (eye doctor)

OT

Occupational Therapy

PHI

Protected Health Information

PIN

Provider Identification Number

PMPM

Per Member Per Month

POMR

Patient Oriented Medical Record

POS

Place of Service

PPIN

Performing Provider Identification Number used in a group practice

PRO

Professional Review Organization or Peer Review Organization

PT

Physical Therapy

RBRVS

Resource Based Relative Value Scale

RHC

(Hospital Based) Rural Health Clinics

RVU

Relative Value Unit

SOAP

Subjective, Objective, Assessment and Plan (notes)

ST

Speech Therapy

UPIN

Unique Provider Identification Number (for Medicare)

WHO

World Health Organization

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Sample Test Questions These questions for the most part concentrate on details concerning the CMS-1500 claim form. The following 70 questions should be answered in 70 minutes or less. 1. The ICD-9-CM was developed and owned by the _____________. A. CMS B. Medicare C. WHO D. RBRVS E. HIPAA Answer: C 2. The ______________ establishes standards for medical billing, identifies codes that are prone to fraud and abuse, and identifies codes that are susceptible to unbundling or should not be billed together. A. NCCI B. Medicare C. CERT D. ABN E, CPT-4 Answer: A 3. The RBRVS contains: A. Fee schedule for paying doctor’s services. B. MVPS. C. Limiting Charge. D. All of the above. E. None of the above. Answer: D 4. The _____________ is the basis of the Medicare fee schedule. A. MVPS B. RVU C. ABN D. E/M E. RAC Answer: B 5. The purpose of the ______________ is to reduce wrong payments by Medicare to doctors and hospitals. A. MVPS B. RVU C. ABN D. E/M E. RAC Answer: E

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6. The three most important key components of E/M services are __________. The doctor uses E/M services to create the ________ which make up the _________. A. History, Examination, Medical Decision Making by Doctor; SOAP notes, POMR B. Encounters, ABN, Medical Decision Making by Doctor; MVPS, RBRVS C. Medical decision making by doctor, Highest Level of Specificity, Evaluation and Management; SOAP notes, POMR D. ABN, HIPAA, NCCI; POMR, SOAP notes E. A and B F. B, C, and D Answer: A 7. _______________ is legislation that states that HCPCS codes must be used on the UB-04 claim forms for all Medicare inpatient and outpatient services used in acute care hospitals. A. OBRA-86 B. OBRA-89 C. HIPAA D. LMRP E. RBRVS Answer: A 8. Examples of standard code sets include: A. CPT-4 B. ICD-9-CM C. HCPCS D. CDT E. NDC F. All of the above G. B, D, E Answer: F 9. HCPCS Level I codes are the federal government’s equivalent of _________________ and are mandatory for billing procedures and services and products for Medicare outpatiens. A. CPT Category II codes B. ICD-9-CM codes C. CPT Category I codes D. E/M codes E. None of the above Answer: C

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10. HCPCS Level II codes begin with letters ______________ followed by _____________ and are used to code ______. A. M through Z; 4 numbers; DME, ambulance services, orthotics and prosthetics B. A through V; 4 numbers; DME, ambulance services, orthotics and prosthetics C. F through M; 5 numbers, DME, syringes, surgical dressings D. A through V; 5 numbers; DME, ambulance services, syringes, comodes, walkers E. None of the above Answer: B 11. _________ begin with the number “001” and go up through “999.9” and consist of _________ chapters, which are further subdivided into sections, categories, subcategories, and sub-classifications. A. E codes, 17 B. V codes, 17 C. ICD codes, 17 D. CPT codes, 6 E. HCPCS Level I codes, 2 F. HCPCS Level II codes, 2 Answer: C 12. V codes include the following medical services or health care situations except: A. Vaccinations B. Tissue Transplantation C. Medical Screenings D. Ambulance Services E. Malignant Neoplasms F. All of the above G. D and E Answer: G 13. The __________ is a uniform coding system that defines and lists in numerical order medical services and procedures such as surgery, CBC, x-rays, anesthesia, etc. A. CPT-4 B. ICD-9-CM C. HCPCS Level I D. HCPCS Level II E. RBRVS F. A and C G. B and D Answer: F

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14. CPT Category I codes have __________ attached to them as a suffix, consist of two numbers, that describe a medical situation that alters the main CPT Category I code (such as 97039-50). A. E codes B. Modifiers C. E/M Services D. Sub-classification codes E. V codes Answer: B 15. The CPT Category I codes are made up of _______ sections that include __________________. A. 5; E/M, Anesthesia, Surgery, Radiology, Pathology and Laboratory, Medicine. B. 7; E/M, Anesthesia, Surgery, Radiology, Pathology and Laboratory, DME. C. 6; E/M, Anesthesia, Surgery, Radiology, Pathology and Laboratory, Medicine. D. None of the above. Answer: C 17. The Table of Neoplasms are located in ____________. A. Volume I, ICD B. Category I, CPT C. Category II, CPT D. Volume II, ICD E. HCPCS, Level I Answer: D 18. The following ICD code represents the highest level of specificity. A. 123.4 B. 00889-P3 C. 345.67 D. 97039-50 E. D4567 Answer: C 19. In surgical cases, when the pre-operative diagnosis is different from the postoperative diagnosis, the __________ is used in the UB-04 claim form. A. Post-operative B. Pre-operative C. No diagnosis D. None of the above Answer: A

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20. The three types of malignant neoplasms found in the Table of Neoplasms in the Alphabetic Index of the ICD include: A. Secondary Malignancy B. Carcinoma in Situ C. Primary Malignancy D. Benign E. Uncertain Behavior, Unspecified Nature F. C, D, E G. A, B, C Answer: G 21. _____________ is where CPT and HCPCS codes are reviewed due to anatomical considerations to reduce linkage mistakes and incorrect coding errors. A. CERT B. MUE C. RAC D. MVPS E. ABN Answer: B 22. ___________ is a signed document that notifies the patient that a particular service, product or procedure Medicare will probably not pay the doctor. A. CERT B. MUE C. RAC D. MVPS E. ABN Answer: E 23. Medicare Part A pays for: A. Hospital inpatient services B. Outpatient medical services administered in a hospital setting C. Visits to the doctor’s office D. All of the above E. B and C F. A and B Answer: F 24. ___________ defines health care services that are safe and effective, reasonable for the illness or injury, generally accepted medical services, consistent with the diagnosis, not provided for the convenience for the patient or doctor, and administered at an appropriate level of care. A. ABN B. Medical Necessity C. APC D. Waiver of Liability E. CERT Answer: B

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25. All paid services that have clinical similarities are classified into groups known as ____________. A. ABN or APCs B. Medical Necessity C. APCs or DRGs D. Waiver of Liability or ABN E. CERT or DME F. SMI or CERT Answer: C 27. The APC is a schedule of fees (OPPS) that Medicare has established to reimburse for: A. Outpatient medical services in a hospital setting. B. Medicare Part B services for inpatients at hospitals that do not have Medicare Part A coverage. C. Hospitalization services for community mental health centers. D. DME E. A, B, C F. C and D Answer: E 28. Medicare Timely Filing regulations stipulate that health care services provided on June 1, 2009 can be billed to Medicare no later than _______________. A. December 31, 2009 B. December 31, 2010 C. December 31, 2008 D. December 31, 2011 E. None of the above Answer: B 29. Medicare Timely Filing regulations stipulate that health care services provided on November 1, 2009 can be billed to Medicare no later than _____________. A. December 31, 2009 B. December 31, 2010 C. December 31, 2008 D. December 31, 2011 E. None of the above Answer: D 30. Ancillary services include all of the following except: A. Operating room B. Anesthesia C. Pharmacy D. Ambulance E. PT, OT, ST F. Radiology Answer: D

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31. Hospitals and health care facilities that are exempt from APC’s include: A. CAH B. Certain Hospitals in Maryland C. Cancer Hospitals D. IHS facilities E. All of the above F. None of the above Answer: E 32. Sequencing means that the ICD codes should be placed in order of ________________ on the UB-04 or CMS-1500 claim forms. A. Severity B. Cost C. The Alphabet D. None of the above Answer: A 33. _____________ is a regulation that is used when a Medicare patient did not know, or was reasonably not expected to know, that certain medical services would not be covered by Medicare and therefore the patient is not liable to pay for those Medicare denied services when found to be not medically necessary or reasonable. A. Advanced Beneficiary Notice B. Medical Unlikely Edits C. Waiver of Liability D. Medicare Timely Filing Regulations E. FQHC Answer: C 34. ______________ describes reimbursement to the doctor where he is paid a fixed amount (of money) per member (patient) per month; ______________ describes reimbursement to the doctor where he is paid for each service provided, the most expensive way to pay for health care services; _____________ describes reimbursement to the hospital on a daily basis a fixed amount no matter what the service actually costs the hospital. A. Per Diem; Capitation (PMPM); FFS B. FFS; Per Diem; Capitation (PMPM) C. Capitation (PMPM); FFS; Per Diem D. SMI; Capitation; Cash E. None of the above Answer: C

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35. All laboratory services a Medicare patient receives must be provided by a laboratory certified by ____________. A. PMPM B. CLIA C. DME D. BBRA E. Medigap F. SMI Answer: B 36. A ___________ policy pays for deductibles, co-payments, and co-insurances that the patient would normally be responsible for under Medicare. A. MCD B. CLIA C. DME D. BBRA E. Medigap Answer: E 37. ___________ is a joint state-federal program that provides monetary assistance, food stamps, health care, and other benefits to those who are low income. A. Medigap B. Medicare C. Medicaid D. SMI E. MCD F. CLIA Answer: C 38. Dual Eligibility means the beneficiary has both _____________ and _____________ coverage. ___________ is the program that is known as the “payer of last resort.” A. Medicare, Blue Cross/Blue Shield; Medicaid B. Medigap, Medicare; MCD C. CLIA, Medicare; Medicaid D. Medicare, Medicaid; MCD E. None of the above. Answer: D 39. The CMS-1500 claim form: A. Is printed in red drop out ink B. Can be scanned optically C. Photocopies will not be accepted by Medicare D. Must be complete and valid in order to be paid E. All of the above F. None of the above Answer: E

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40. The ICD diagnosis codes are placed in block _____________ in the CMS-1500 claim form. A. 24J B. 21 C. 24B D. 10A E. 1 Answer: B 41. The “Rendering Provider ID” number is placed in block ___________ in the CMS‑1500. A. 24J B. 21 C. 24B D. 10A E. 1 Answer: A 42. The type of health care insurance carrier is placed in block __________ in the CMS‑1500. A. 24J B. 21 C. 24B D. 10A E. 1 Answer: E 43. The actual location where medical services are billed is placed in block _________ in the CMS-1500. A. 31 B. 32 C. 33 D. 12 E. 13 Answer: C 44. The actual location where medical services are rendered to the patient (POS) is placed in block _______ in the CMS-1500. A. 31 B. 32 C. 33 D. 12 E. 13 Answer: B

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45. The HCPCS/CPT codes for medical services and procedures provided to the patient are placed in block_________. A. 24A B. 24B C. 24C D. 24D E. 24E Answer: D 46. The charges for medical services rendered to the patient are placed in block __________. A. 24A B. 24C C. 24E D. 24F

E. 24G

Answer: D 47. The correct way to enter the date on the CMS-1500 form is: A. MM/DD/YY B. DD/MM/YY C. MM/DD/YYYY D. YYYY/MM/DD Answer: A 48. The CLIA number is placed in block _________ in the CMS-1500 claim form. A. 21 B. 22 C. 23 D. 24 E. 25 Answer: C 49. Patient’s address and phone number are placed in block ____________. A. 1 B. 2 C. 3 D. 4 E. 5 Answer: E 50. The name of the person whose insurance is paying for the medical services (guarantor) is placed in block ___________. A. 1 B. 2 C. 3 D. 4 E. 5 Answer: D

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51. The purpose of the ____________ is to reduce wrong payments by Medicare to doctors and hospitals. It does this by detecting and correcting overpayments and underpayments made by Medicare. A. RAC B. ABN C. PRO D. ICR E. CERT Answer: A 52. Date of current illness, injury or pregnancy (MM/DD/YY) is put in this block in the CMS-1500. A. 12 B. 13 C. 14 D. 15 E. 16 Answer: C 53. Federal Tax Identification Number, Employer Identification Number (EIN), or Social Security Number (SSN) of the doctor or supplier of health care services or products is placed in this block in the CMS-1500. A. 24A B. 24B C. 26 D. 25 E. 33 Answer: D 54. The ____________________________ means that ICD codes have been established to the greatest degree of definition and accuracy. A. Advanced Beneficiary Notice B. Highest Level of Specificity C. Assignment of Benefits D. Surgical Package E. Per Member Per Month Answer: B 55. ___________ include medical services or health care situations other than disease or pathologies such as immunizations, medical history, and tissue transplantation. A. E codes B. ICD codes C. HCPCS Level I codes D. CPT Category II codes E. V codes Answer: E

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56. __________document EXTERNAL causes of disease, injury or trauma such as mva’s, sports accidents, terrorism, and poisoning.: A. E codes B. ICD codes C. HCPCS Level I codes D. HCPCS Level II codes E. V codes Answer: A 57. ___________ codes reflect all the cognitive (thinking) activities, such as analysis of examination findings, diagnostic imaging studies, laboratory tests, medical history, previous treatment, and referrals, the doctor goes through at arriving at a determination of what the diagnoses are and what treatment to give the patient. The most common format for medical records is the ___________ which contains ___________ and has 4 parts. A. E codes; ABN; SOAP notes B. V codes; CLIA; HCIN C. ICD codes; SOAP notes; POMR D. E/M codes; POMR; SOAP notes E. None of the above Answer: D 58. _____________ describes where multiple medical services are coded with one CPT code, and billed and paid with one fee, AKA- Global Surgical Fee or Surgical Package. A. Unbundling B. Bundling C. Capitation D. Medical Necessity E. ABN Answer: B 59. Block __________ in the CMS-1500 claim form is for “Accepts Assignment. Check this block “YES or NO” to indicate whether the doctor accepts assignment of Medicare benefits (takes what Medicare will pay according to the fee schedule), will bill Medicare directly, and will wait for payment from Medicare. A. 25 B. 26 C. 27 D. 28 E. 29 Answer: C

Chapter 4 - Claim Form for the Doctor’s Office

60. Block ___________ is for the “Diagnosis Pointer.” This is where the ICD diagnoses are matched (linked) to the HCPCS/CPT procedural codes. A. 24C B. 24D C. 24E D. 24F E. 24G Answer: C 61. Medicare Part B insurance is also known as ___________. A. ABN B. SMI C. CLIA D. HCIN E. MUE Answer: B 62. Medigap insurance is meant for consumers with: A. Medicare Parts A and B B. Original Medicare Plan C. Medicare Parts C and D D. Medicaid E. A and B F. A, B, C and D Answer: E 63. _______ is a schedule of fees (OPPS) that Medicare pays for certain medical services provided for patients who are outpatients. A. DRG B. APC C. MCO D. HCIN E. SSN Answer: B 64. “123-45-6789D” is the ______________ for the _____________. A. HCIN, Child B. SSN, Spouse C. HCIN, Widow D. DRG, Wage Earner E. HCIN, Adopting Father Answer: C

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65. The suffix ___________ in the HCIN is for the Disabled Adult, and the suffix __________ in the HCIN is for the Adopting Father. A. A, B B. B, HAD C. D, F5 D. HAD, F5 E. HAD, A F. F5, C Answer: D 66. Many states have _____________ laws that require a managed care organization to accept all qualified physicians who wish to participate in its plan (open panel). A. Participating Provider B. Any Willing Provider C. Non-participating Provider D. Closed Panel E. FQHC Answer: B 67. If the court issues a __________, this is a court order demanding the doctor or a member of the medical staff to appear in person and testify. A. HIPAA Security Rule B. Encryption C. POMR D. Subpoena E. Malpractice Answer: D 68. If the court requires the witness to bring specific evidence, such as a patient’s medical record, it issues a ___________, which demands the doctor or member of the staff to appear, testify, and to bring the requested documentation. A. Subpoena B. SOAP notes C. Subpoena duces tecum D. ABN E. HIPAA Security Rule Answer: C 69. When the doctor documents several working diagnoses in the course of the patient’s hospitalization until further testing and examination finally establishes the final clinically correct diagnosis, this process is called creating a ______________. A. Differential Diagnosis B. Prognosis C. Against Medical Advice D. Pre-operative Diagnosis E. None of the above Answer: A

Chapter 4 - Claim Form for the Doctor’s Office

70. The _________________ requires covered entities (doctors, hospitals, SNF’s, governmental bodies, public health clinics, etc.) to establish and enforce safeguards to protect the patient’s Protected Health Information (PHI). A. NPI B. Waiver of Liability C. HIPAA Security Rule D. Subpoena E. Subpoena duces tecum Answer: C End of Chapter 4

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Chapter 5 - Doctor/Hospital Financial Matters

Chapter 5

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Doctor/Hospital Financial Matters Chapter Topics •

Medical Identity Theft



Third Party Collection Activity



Bankruptcy



Collection Regulations of the Federal Government



Calculations: Average Daily Revenues and Average Days of Revenue in Accounts Receivable (ADRR)



Abbreviations and Acronyms



Sample Test Questions

After studying this chapter you will understand: •

Medical Identity Theft



Third Party Collections; Bad Debt Requirements



Bankruptcy: Chapters 7, 11, 12 and 13



Involuntary Bankruptcy



The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005



Discharge of Debtor



Dismissal of Bankruptcy



The Truth in Lending Act



Fair Debt Collection Practices Act (FDCPA)



Fair Credit Billing Act



Fair Credit Reporting Act (FCRA)



Fair and Accurate Credit Transaction Act



Equal Credit Opportunity Act (ECOA)



Deceased Patient Notification



SKIP



Statute of Limitations



Judgement, Lien, Tort Liability



Charity, Indigent and Bad Debt



Courtesy Discharge



Average Daily Revenues



Average Days of Revenue in Accounts Receivable (ADRR)

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Medical Identity Theft Medical Identity Theft occurs when someone uses the patient’s protected health information (PHI) without the consumer’s knowledge or permission in order to obtain or receive payment for medical treatment or services or products. Medical Identify Theft is a crime that has increased exponentially in the last several decades, and is particularly harmful because it can result in erroneous entries into the patient’s medical records creating fictitious medical records in the victim’s name. Wrong data in the medical record can adversely affect future treatment the patient will receive—for example, an incorrect medical history of diabetes or cancer. If such mistaken information is found in the medical record, and the patient appears for treatment, this may lead the doctor to make treatment decisions that could adversely affect the patient’s diagnosis, prognosis, health care, or even their life. A wrong medical history of diabetes or cancer could also negatively affect the patient’s future ability to get employment or purchase life or health or disability insurance. In addition, an erroneous medical history of diabetes or cancer could result in needlessly higher costs due to medical care the patient does not need such as excessive testing, incorrect treatment, misuse of medical providers and hospital resources, and a longer stay in the hospital. Medical Identity Theft not only results in poor medical care, but increases the chances of malpractice exposure for the health care provider and hospital. As Medical Identity Theft can result in thousands of dollars of unnecessary medical treatment, it could potentially drive the consumer into bankruptcy in an attempt to pay health care bills that are insurmountable. Medical Identity Theft can plague the consumer for years, destroy the consumer’s credit rating, take years to correct, and require the use of expensive legal intervention.

Tips for preventing and detecting Medical Identity Theft by the consumer include: 1. Monitoring health care records closely and address any errors quickly. 2. Share PHI, financial and insurance information only with trusted health care providers and carriers and those the patient knows and trusts. 3. Monitor all EOB and financial records (itemized statements, data mailers, receipts, etc.) received from insurance carriers, doctors and hospitals for accuracy. Get an annual summary of all health care benefits paid by insurance carriers to all doctors, suppliers and hospitals utilized by the consumer. Contact and correct immediately all health care providers if fraud or abuse is suspected or documented in the paperwork. 4. Maintain copies of all paperwork related to health care services and products received by the patient. 5. Avoid the use of “FREE” medical services or products, as these are frequently used to obtain information so criminals can submit fraudulent insurance claims for money.

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6. Protect all health insurance information such as insurance cards and identifying numbers, EOB’s, financial statements from doctors and hospitals, or any other health care correspondence. 7. Review credit reports with nationwide credit reporting companies such as Equifax, Experian, or TransUnion. Carefully review any medical debts incurred and make sure they are accurate. Report immediately any suspected fraudulent or abusive medical charges.

Responding to Medical Identity Theft incidents by the consumer include: 1. Contacting the health information manager, HIPAA privacy officer, or antifraud hotline at the insurance company or Medicare. 2. Writing down dates, names, contact information (phone numbers, email addresses, mailing addresses) of everyone contacted including what was discussed, all paperwork involved, and any other relevant information. Make hard copies of all letters, emails, legal correspondence, and any other relevant information and keep in a file safe from loss. 3. Filing complaints with the state Attorney General, state insurance department and the insurance commissioner, the Identity Theft Clearinghouse, and the federal Department of Health and Human Services in Washington, DC. 4. Regularly changing all personal information numbers (PIN), usernames and passwords for all PHI, internet access sites, etc. 5. Important Contact Numbers for detecting and correcting errors, and filing complaints for Medical Identity Theft and related issues, include: •

For suspected misuse of the patient's Social Security Number (SSN): 800269-0721. The SSN can be misused to get Medicare benefits, for example.



Explore "Tools for Victims" provided by the Federal Trade Commission (FTC) at: www.ftc.gov/bcp/edu/microsites/idtheft/tools.html. This is an excellent resource for the consumer to help correct and file affidavits for suspected cases of health care and financial fraud and abuse.



If the health care provider, hospital or insurance carrier refuses the patient access to their medical records contact: Office for Civil Rights at Health and Human Services (HHS) at 866-627-7748 or www.hhs.gov/ ocr/privacyhowtofile.htm.



To file a complaint with the Attorney General in the state where the Medical Identity Theft or insurance problems have occurred, contact: www.naag.org/attorneys_general.php.



To contact the insurance commissioner of each state to file complaints about an insurance carrier, visit the National Association of Insurance Commissioners at www.naic.org.

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The Health Care Revenue Cycle



To file a complaint with the Identity Theft Data Clearinghouse, operated by the FTC and the Internet Crime Complaint Center, contact: http:// rn.ftc.gov/pls/dod/widtpub$.starup?Z_ORG_CODE=PU03.

Third Party Collection Activity 1. Anytime the patient owes money for health care services to the hospital, physician or medical supplier, outstanding balances can be forwarded to a third party at anytime so the money can be collected. Obviously, for the purposes of good public relations, it makes good sense to notify the patient in advance of any collection activity to see if the outstanding balance can be satisfied in an amicable fashion. This helps in reducing the accounts receivable for the hospital or doctor and maintaining the patient’s good will. If the hospital sends the patient’s outstanding balance to a collection agency, it is recommended that they are always sent by certified mail. Remember, HIPAA does not allow disclosure of the patient’s PHI including medical, therapeutic, diagnostic, or any other protected health care records to the collection agency. 2. Before any collection activity is initiated, it is imperative that the outstanding balance is legitimate, valid, and properly documented. Before any third party collection activity begins, it behooves the hospital or doctor’s office to attempt all reasonable means of collecting the balance with data mailers, phone calls, and other communication sent by regular mail, as well as by certified mail, so there is no doubt in the patient’s mind that they have been notified before collection activities commence. 3. Medicare’s Bad Debt Requirements recommend that an appropriate sequence of collection attempts are tried by mail and phone, prior to a third party collection agency becoming involved. Repeated phone contacts are the most effective way to contact the patient or guarantor to attempt to collect the debt. 4. Further information can be accessed on bankruptcy laws at the following website: http://www.firstgov/Topics/Reference_Shelf.shtml. 5. Once an official written notice is received by the physician’s office or hospital from the United States Bankruptcy Courts, particularly for Chapter 7 Bankruptcy, that the patient or guarantor or responsible party has filed for relief under the United States Bankruptcy laws, all collection efforts must stop. 6. It is very important the physician’s office or hospital document in the patient’s account the legal chapter (7, 11, 12, or 13) and the court of the bankruptcy notice, as well as the lawyer (name, address, and phone number) who represents the patient with the bad debt. The physician’s office or hospital must have a copy of the bankruptcy notice in the patient’s file. It is important the patient includes the debt owed to the doctor or hospital in the bankruptcy legal petition so that the provider has a chance to collect monies owed. Otherwise, the provider can proceed with normal collection activities against the patient because their health care debts are not covered if not

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included in the bankruptcy petition. Bad debts that are not included in the bankruptcy notice are not protected from collection activities. 7. Debtor = The individual, patient or business that owes the doctor or hospital money Creditor = The individual or business (doctor or hospital) that is owed the money by the patient or guarantor. Money = Actual amount of cash the debtor possess Assets = Stocks, bonds, property, cars, real estate (home), furniture, material and machinery related to the patient’s business, etc. of the debtor. Assets include all liquid (can be sold for money or liquidated) and non-liquid (hard to sell for money) valuables. Auction = A public selling of the assets of the debtor to raise money to pay the bad debt owed by the debtor. Seen with Chapter 7 bankruptcy. 8. Patient Refunds. Money occasionally needs to be refunded to patients when the practice has overcharged a patient for a service. The balance due the patient must be refunded promptly if the patient has completed care and has been discharged. However, if the patient is still active and in treatment, the balance is listed as a “credit” on the patient’s account ledger. This overpayment on the patient’s account ledger is applied to any charges the patient may incur as a result of future treatment.

Bankruptcy Figure 10: Bankruptcy

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The most common bankruptcy chapters are the following: 1. Chapter 7: Applies to individuals and businesses that cannot pay their debts based on their income. Some property and assets are exempt from the bankruptcy laws which are determined according to each state’s laws. Approximately seventy percent (70%) of all bankruptcy claims are filed under Chapter 7. The debtors’ assets are auctioned (liquidated) to satisfy the creditors’ Chapter 7 bankruptcy claims. This is also known as “liquidation bankruptcy.” 2. Chapter 11, is also known as “reorganization bankruptcy.” Chapter 11 bankruptcy gives the business or corporation who is in financial trouble relief, while it continues to function, so it can work out a repayment plan with the bankruptcy judge overseeing all the company’s important decisions. The business has three months to draft a plan to pay its debts initially, then any party (creditor) can submit a bankruptcy plan to the judge to have the bad debts paid by the business who is in financial trouble. Most Chapter 11 cases end up as Chapter 7 liquidation cases. 3. Chapter 12: This is bankruptcy for a farmer who has “a regular annual income,” meaning that this individual makes a living primarily as a farmer. Having a regular annual income for the farmer is to insure that there is a sufficient stable amount of money being made every year on a regular basis, even seasonally, so the debtor (farmer) can make payments and pay back the bad debt to the creditor. Chapter 12 is known as “voluntary” meaning only the debtor farmer can apply for this type of bankruptcy. 4. Chapter 13: This is bankruptcy for individuals who make a regular income but who cannot currently pay their debts. The purpose of this type of bankruptcy is to allow people who have financial problems, under court supervision and protection, to repay their debts to their creditors over an extended period of time. Chapter 13 bankruptcy permits the debtor to pay their creditors, in installments, over a three year period of time. During this three year period creditors cannot carry out continuing collection activities. If the repayment period is for more than three years, it must be approved by the court for sufficient reasons and cannot be longer than five years.

Involuntary Bankruptcy This is where the creditors force the debtor into bankruptcy under Chapter 7 or 11. If the debtor has 12 or more creditors, three of which are for claims in excess of $5,000 each, then any of the three can force the debtor into Chapter 7 or 11 Bankruptcy. If there are less than 12 creditors, then only one (1) creditor has to be owed at least $10, 775 to force the debtor into Chapter 7 or 11 bankruptcy.

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The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 This is legislation making filing for bankruptcy more difficult for individuals, and insuring those debtors who are financially capable to pay what they can afford to satisfy their debts. 1. Debtors will have to get credit counseling, including budgeting and debt management advise, before they can file a bankruptcy case and have their debts eliminated. Before the bankruptcy case is filed with the court and finalized, the debtor will have to attend additional counseling to learn personal financial management, then a bankruptcy discharge will be issued by the court finally wiping out their debts. The purpose of bankruptcy counseling is to help the debtor determine whether they really need to legally file for bankruptcy, or if they could enter in an informal repayment plan with their creditors. 2. Those with higher incomes may not be able to eliminate all their debts under Chapter 7, but instead will have to pay back some of their debt under Chapter 13. 3. New requirements will be placed on lawyers in bankruptcy cases, therefore the consumer may experience more difficulty to find a lawyer for representation.

Confirming Bankruptcy by the Doctor or Hospital 1. Contact the Federal United States Bankruptcy Court for the district where the patient or guarantor (who owes the hospital or doctor’s bill) lives. 2. Use Voice Case Information System (VCIS), which is a telephone check at the bankruptcy clerk’s office (at the court), to confirm the bankruptcy. Confirming the bankruptcy can also be done by using the national computer system known as PACER, or by calling the District Clerk’s office, or by contacting the attorney handling the patient’s bankruptcy, or by confirming the bankruptcy in the newspaper.

Notification of Bankruptcy Once the doctor or hospital gets receipt of Chapter 7 Notification of Bankruptcy of the patient or guarantor, the following must be done: 1. Clearly mark the patient’s account or file indicating a Chapter 7 bankruptcy has occurred. 2. End all collection activity and cease all contact with the patient for payment, until receipt of final disposition of the patient’s bankruptcy has been received from the Bankruptcy Court. 3. Make sure any third party collection agencies the doctor or hospital are using are notified to stop all collection activities with the patient due to the patient’s Bankruptcy Notice. Send third party collection agencies a copy of the Bankruptcy Notice.

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4. If any payments are received on the patient’s account while under bankruptcy, the doctor or hospital should NOTIFY all parties involved: patient, third party collection agency, court, attorney, etc.

Discharge of Debtor 1. This is a legal notice concerning the patient’s bankruptcy, called the “Discharge of Debtor,” which releases the patient or guarantor from having to pay any of the money owed to the debtor’s creditors listed in the Bankruptcy Petition. The patient’s debt is wiped out and the creditor cannot legally collect what is owed to them by the debtor. 2. Any debts not listed in the Bankruptcy Petition will not be eliminated, and the patient will still owe them and the doctor or hospital can continue with collection activities. 3. It is important the doctor or hospital make certain that the patient’s debts are legally listed in the bankruptcy petition. This is important because under Chapter 7 bankruptcy the patient’s assets will be auctioned, and under Chapter 13 bankruptcy the patient is put into a repayment plan, so there may be a chance that the doctor or hospital can recover at least some of what is owed. Otherwise, the doctor or hospital should “write off” the patient’s bad debt (account balance) from their books. Smaller medical practices rarely sue their patients to collect money they are owed. Hospitals and doctors owed large amounts of money have a financial incentive to sue for collections; however, this may generate an unfounded malpractice suit and will produce bad public relations. Usually small unpaid balances are deemed uncollectible to avoid going through the expense of a court case with uncertain results. 4. Both Medicare and Medicaid require a medical practice, hospital or supplier to follow a specific series of steps before an account can be “written-off.” Writing-off some accounts and not others could be considered fraud if there are discrepancies between charges for the same services, procedures or products. Remember, the health care provider must charge the same fees regardless of whether the patient is a Medicare, private insurance, workers’ compensation, accident, or cash payer.

Dismissal of Bankruptcy This is where the court rules the debtor’s (patient) bankruptcy is ended (cancelled). The bankruptcy is no longer in effect. This means the creditor (doctor or hospital) can begin billing the patient directly, refer the account to a debt collection agency, or begin legal action against the debtor to collect the debt. When the patient’s bankruptcy is no longer valid, it is most commonly due to the following: 1. Debtor (patient) is not following through with the legal process of filing for bankruptcy. 2. Patient is not paying their attorney’s fees to execute their bankruptcy. 3. The debtor fails to provide requested legal documentation for their bankruptcy.

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Collection Regulations of the Federal Government It is important not to confuse the different Titles of the Consumer Credit Protection Act. Know the differences between all the following pieces of legislation. Remember: 1. Title I of the Consumer Credit Protection Act = The Truth in Lending Act or Truth in Lending Consumer Credit Cost Disclosure Act (1969) or Regulation Z or The Consumer Credit Protection Act 2. Title VI of the Consumer Credit Protection Act = Fair Credit Reporting Act (FCRA) (1971) 3. Title VIII of the Consumer Credit Protection Act = Fair Debt Collection Practices Act (FDCPA) (1978)

The Truth in Lending Act (TLA) or Truth in Lending Consumer Credit Cost Disclosure Act (1969). This is Title I of the Consumer Credit Protection Act. 1. Also known as “Regulation Z” or “The Consumer Credit Protection Act.” 2. This act deals with the disclosure of information to the consumer before credit is given to the consumer. Disclosure means complete and full explanation of all information. 3. The disclosure is made in writing by the company extending the credit and the consumer receives a copy of this disclosure. •

The annual percentage rate (APR) and finance charge must be clearly and obviously seen by the consumer.



If the APR and finance charges are estimates, this fact must be clearly stated to the consumer.



If more than one creditor is involved, all the creditors have to agree amongst themselves who will comply with the credit regulations, APR, and finance charges.

Fair Debt Collection Practices Act (FDCPA) (1978) This is Title VIII of the Consumer Credit Protection Act Imposes strict limitations on: 1. How the debt collector acquires information on the location of the debtor (consumer). 2. How the debt collector communicates with the debtor or others in the collection of a debt. The FDCPA prohibits:

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1. Harassment or abuse of the debtor in the collection process. This includes the debt collector using any profanity or threatening language. 2. Use of false or misleading information in the collection process. This includes lying to the debtor. 3. Communication by the debt collector with the debtor at unusual times or places. 4. At any unusual place includes locations that are inconvenient to the debtor such as public humiliation of the debtor at their job, home, social functions, movies or church. 5. Unusual times such as middle of the night or very early in the morning. Debt collection activities can only occur between 8 AM to 9 PM (debtor’s time zone), unless prior approval has been granted to the debt collector from the consumer. Abusive debt collection activities include repeated harassing telephone calls or emails, or personal face-to-face contact, at the consumer’s home, place of employment, social functions, church, etc. 6. Communication by the debt collector with the consumer is strictly forbidden if the debtor has legal representation, unless prior approval is received by the debt collector from the attorney for communication with the consumer. 7. If communication at the place of the debtor’s employment is permitted, the debt collector does not discuss the nature of the call except with the debtor and in private.

Fair Credit Billing Act (1975) The purpose of this act is to protect consumers from the following: 1. Inaccurate or unfair practices by those who issue open ended credit, for example: a bank (Mastercard or VISA) or department store (Sears, Macy’s, Lord and Taylor, Walmart, Target, etc.). 2. Requires creditors to inform debtors of their rights and responsibilities under this act. 3. Main goal of this act is to provide prompt settlement (clear up inaccuracies) of billing problems. This act as related to hospital billing includes: 1. The patient must notify the hospital of any errors within 60 days after the patient receives a bill or statement from the hospital. The hospital then has 30 days to respond to the patient’s inquiry. 2. The error must be corrected by the hospital, or the accuracy of the statement or bill explained satisfactorily to the patient (customer), within two billing cycles or a maximum of 90 days. 3. If the time frames in #1 or #2 above are not met, the patient’s rights are violated and forfeiture (cancellation) of the hospital’s account may occur. In other words, the hospital may lose its right to collect the disputed amounts of money if they do not respond to the patient correctly within 90 days.

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Fair Credit Reporting Act (FCRA) (1971)

Title VI of the Consumer Credit Protection Act 1. This act defines what information from a consumer credit report can be used and by who. The FCRA provides maximum protection of the consumer’s right to privacy and confidentiality concerning the consumer’s credit report. The consumer report is a listing of the consumer’s credit, and all the credit that has been extended to the consumer, such as credit cards, mortgages, student loans, car loans, all business and personal loans (secured and unsecured), etc. 2. FCRA is enforced by the Federal Trade Commission (FTC), is designed to promote accuracy and privacy of the information used in consumer reports, establish and police the activities of Credit Reporting Agencies (CRA) and the businesses that supply data about debtors to CRA’s, and those entities that use the information found in CRA’s. 3. CRA’s are used: •

To determine whether an applicant is eligible to be extended credit for credit cards, to buy insurance policies, personal or business loans, mortgages, car loans, etc.



For employment purposes.



For legal or court related matters.



For legitimate requirements connected with a business transaction (buying a car or home).

Fair and Accurate Credit Transaction Act (includes SKIP) Amends the FCRA which include: 1. Make the reporting of delinquent data (and dates of delinquency) more consistent and clear. 2. Creating “Safe Harbors” (legal places where legal liability is reduced) for debt collectors and those who provide information to debt collectors. 3. Guidance, clarification and limits to legal liability with reasonable policies and procedures for the debt collector. “SKIP” and SKIP Tracing Resources (Important) 1. A SKIP is a debtor who cannot be located by a creditor. 2. There are three types of SKIP: •

Intentional SKIP are debtors who avoid paying bills by intentionally changing where they live (residency), failing to leave a forwarding address, intentionally changing their name or intentionally providing wrong information to hinder collection activities.



Un-intentional SKIP: A debtor (patient) who moves or changes their residency, but unintentially does not notify their creditors of a forwarding address.

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False SKIP: This type of SKIP is unintentional and caused by a clerical error when the patient’s information is entered (registration), such as numbers in the street address are mixed up or wrong, incorrect zip code, or incomplete information.

3. SKIP Tracing resources gives the debt collector information to contact the debtor and include: •

Internet



Telephone Directories



Credit Bureaus such as TRW



U.S. Postal Service



Cross-reference directories known as “bressers” (matching names with addresses and phone numbers, etc).



Department of Motor Vehicles



Tax Records



Landlord or Mortgage Holder



Employers (when asking the employer for help to locate the debtor, ALWAYS SPEAK to Human Resources, and keep all communication private)



Relatives, neighbors

Equal Credit Opportunity Act (ECOA) This legislation does not allow creditors to discriminate against applicants on the basis of sex, marital status, race, national origin, ethnicity, religion or age. Furthermore, creditors cannot deny credit because the applicant receives public assistance or has exercised their rights under the Consumer Credit Protection Act (for example, Titles I, VI or VIII above).

Deceased Patient Notification: When the hospital or doctor is notified the patient is deceased (has died): 1. Check to see if a legitimate estate exists (check register of wills at the county courthouse for estate information) and file appropriate caveat (legal claim) to the estate to retrieve money owed. 2. Change the mailing address of the patient to: “To the Estate of. . . .” so that it will be properly delivered to the executor of the deceased patient’s estate in a timely manner. 3. If no estate exists, and another party cannot be located that assumes the patient’s debt, make sure all insurance has been collected, then write off (cancel) any remaining balance the deceased patient is responsible for. 4. “Estate” is a legal term describing all of the deceased person’s possessions and assets. The “executor” is the individual who the debtor legally has given permission to handle all their legal and financial affairs (carry out the deceased person’s will) after the debtor has died. The “will” is a legal

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document indicating the distribution of a person’s possessions and to carry out their wishes after their death.

General Accounting Principles Applied to Cashier Functions for the Hospital or Doctor. 1. Patient’s checks are to be endorsed with “For Deposit Only,” and a duplicate numbered receipt log is maintained so both patient, doctor and hospital have identical records of all financial transactions. The patient cannot later say they paid by check or cash but there remains a balance on their account, there is always a receipt. 2. Issue patient a receipt for all cash deposits and make all deposits in the bank the same day. 3. Store undeposited payments, cash or check, and valuables in a fire-proof safe. 4. The rules the cashier follows in all financial transactions is listed in the “Generally Accepted Accounting Procedures (GAAP)”

Effective Collection Policies Include: 1. At admission, the hospital or doctor must have policies to collect minimally acceptable payments from the patient. The optimal time to get the patient to pay deductibles, co-payments, co-insurances, and deposits is at preadmission or admission, before any health care services are provided. Once the patient is admitted and medical services are rendered, or at discharge, or after discharge when the patient is at home, the sense of urgency is gone and it is much harder for the hospital or doctor to collect any outstanding debts. The sense of urgency is greatest before any health care is delivered and is the best time to collect monies owed by the patient. 2. Follow-up policies for the hospital or doctor to collect payments from the patient must be established and the patient should be informed of these policies. This improves the hospital’s public relations. 3. Make sure public relations concerns are taken into account when getting payments from the patient. Insure repeat business for the hospital and doctor with a satisfied patient. 4. Policies for charity care and discounts for the patient are clearly known. Again, these help improve the hospital’s or doctor’s public relations image with the patient and their families. 5. Policies for charging interest are clearly understood by the patient and/or guarantor. 6. Policies to collect outstanding balances from the patient, whether they are collectible or bad debt, and cancelling bad debt, should be clearly stated.

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Statute of Limitations 1. Statute of Limitations is defined as the amount of time (which varies from state to state) in which a claim against the patient, for outstanding monies owed to the hospital or doctor, must be collected before it is considered paid or uncollectible. 2. The Statute of Limitations is in effect when: •

If the patient owes money, get the patient to sign a written "Promise to Pay" document making it a legal obligation. At this point, the Statute of Limitations is in effect as there will be a legally established period of time the patient has to pay the debt, before it goes to a debt collector for non-payment. The "Promise to Pay" helps with the doctor's or hospital's efforts at good public relations. For example, the patient signs the "Promise to Pay" and agrees to pay $100 every month for the next 6 months until their balance of $600 is satisfied.



Get the patient to pay a partial payment on the amount owed, which legally binds the patient to the whole debt owed, and the patient is now obligated to pay the entire debt. Once a partial payment has been documented, the Statute of Limitations in legally in effect as the patient has a certain period of time to pay the rest of the debt, otherwise the debt goes to a collection agency.

Collection Calls to the Patient and Collection Policies 1. The primary purpose of placing a collection (telephone) call to the patient or guarantor is to get payment in full of the outstanding balance. Make sure all facts and questions are prepared in advance by the debt collector. Repeated telephone contact is more effective than letter writing. 2. A written collection policy should include: •

Standards to be used to pursue and follow-up on the patient's account.



Time limits when the account should be considered uncollectible.

Third Party Collection Agencies Third Party Collection Agencies are involved in collecting outstanding debts owed by the patient. By capturing as much money owed as is possible by debt collecting agencies, which are hired by the hospital (the hospital is the first party, the patient is the second party, the collection agency is the third party), cash flow is improved and accounts receivable (A/R) are reduced. It is important in the account aging process, which is the amount of time a debt is owed by the patient to the doctor or hospital, is kept to a minimum. The longer a debt is owed, the longer the aging process (30 to 60 to 90 days), the less chance the hospital or doctor have of being receiving payment from the patient. 1. Common reasons the bill is not paid on time by the insurance company, or patient does not pay their debt, are as follows: •

Never received the hospital or doctor's bill

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Coordination of Benefits (COB) problems by insurance companies and Medicare



Medical chart review requested by the insurance company; Peer Review Organixation (PRO) requirements



Insurance claim forms have invalid or incomplete information, coding problems, wrong insurance numbers, etc.



Referral forms, authorization, and pre-certification requirements are invalid or incomplete



Time requirements were not met to file claims, legal adjudication problems (the workers' compensation or motor vehicle accident [MVA] case may take years to settle and health care bills paid)



Workers' compensation, Application for Benefits, and other forms not received or invalid or incomplete

2. When attempting to collect a patient’s outstanding debt, work the accounts from the highest amount owed to the lowest.

Charity Care, Indigent Patient, and Bad Debt 1. Charity Care is defined when hospital or doctor’s services are provided and payment is never expected. Charity care is considered providing health care services free of charge to those patients who meet certain financial criteria. 2. An Indigent Patient has no way of paying for health care services and is not eligible for Medicaid or Public Assistance. 3. Bad Debt is money that cannot be collected from the patient or guarantor resulting from giving the patient or guarantor credit. Bad debt includes a patient who defaults (simply does not or refuses to pay) their medical bill, patient that SKIPS, patient that files bankruptcy without assets, or a patient that has insolvent assets (the patient dies and whose estate has no money).

Judgment, Lien and Tort Liability 1. A Judgment is a legally binding claim against a debtor (patient) issued by a court. 2. A Lien is a recorded claim (written and legally binding) against the patient’s real and personal property as a result of a debt (money owed the hospital by the patient). A lien occurs after a judgment has been issued. 3. Tort Liability is a legal obligation as a result of an injury or other damage done by one person to another (as a result of a breach, or breaking, of legal duty). This could include a car accident, falling on someone’s property, one person injuring another, not fulfilling the terms of a contract, etc.)

Courtesy Discharge 1. When the patient or guarantor has met all their financial obligations (and a payment schedule has been worked out) to the hospital, a courtesy discharge occurs where the patient is permitted to leave the hospital without going through the usual discharge formalities.

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2. Advantages: Improves pubic relations for the hospital; patient can leave the hospital in a more controlled fashion at their convenience when the hospital is not busy. •

Improves patient flow through the hospital, opens up more hospital beds and facilities.



By providing courtesy discharge at non-peak times, the need for additional staff is reduced. This avoids "rush hour" type of patient discharge.



Allows for greater accuracy in billing because patient's financial considerations are determined in advance of discharge.

Calculations Average Daily Revenues and Average Days of Revenue in Accounts Receivable (ADRR) Average Daily Revenues = Average Amount of Revenue (money or charges) generated by the hospital for a specific period of time. Formula = Total Amount of Money and Charges ($) Generated For a specific number of days Total number of days (for example, number of days in January 2010) For Example: January 2009 Revenue / Charges = $3,000,000

(January has 31 days)

February 2009 Revenue / Charges = $2,600,000 (February has 28 days) March 2009 Revenue / Charges = $2,000,000 (March has 31 days) Total for Jan., Fe b., Mar. 2009 = $5,600,000 (Jan., Feb., Mar. have a total of 90 days) Total Money/Charges

Total Number of Days

=

$5,600,000 90 Days

= $62,222

Therefore, $62,222 is generated for each day the hospital was in business. This is equal to the Average Daily Revenues. $62,222 represents the average amount of money the hospital generates per day for 90 days for January 2009, February 2009 and March 2009. Average Days of Revenue in Accounts Receivable also known as AR Days Outstanding or ADRR. This number is an estimate, using average current revenues

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(amount of money made), of the days required to turn over the accounts receivable (earn enough money to equal the A/R), under the hospital’s normal operating conditions (the hospital is providing the usual treatment and services to patients). The Accounts Receivable or A/R is the amount of money the hospital is owed (balance) from providing services to patients. Warning. This is a difficult financial concept telling the accountants in the

hospital how long it will take the hospital to earn the money that the hospital is owed by patients and insurance carriers and Medicare, who have yet to pay their bills for the medical treatment and products it has provided to

them. In this case, it will take the hospital working for 144.6 days to earn

$9,000,000, which is the accounts receivable, or the amount of money it is

owed as of 3/31/09. Accounts Receivable at a Specific Time Average Daily Revenue

= ADRR =

Required to turnover (collect or earn) the A/R under the hospital’s normal operating conditions

For example: The Accounts Receivable (A/R) is $9,000,000 as of March 31, 2009; this is the amount of money that is OWED to the hospital as of 3/31/09 from providing health care services to patients. The average daily revenue from Jan., 2009, Feb., 2009 and March, 2009 = $62,222 (see Average Daily Revenues above) Therefore, A/R =

Average Daily Revenue =

$9,000,000 $62,222

= 144.6 Days Outstanding

the average number of days (144.6) necessary for the hospital to generate the $9,000,000 (A/R) from providing health care service to patients.

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Abbreviations and Acronyms ADRR

Average Days of Revenue in Accounts Receivable or AR Days Outstanding

APR

Annual Percentage Rate

A/R

Accounts Receivable

COB

Coordination of Benefits

CRA

Credit Reporting Act

ECOA

Equal Credit Opportunity Act

FCRA

Fair Credit Reporting Act (Title VI of the Consumer Credit Protection Act)

FDCPA

Fair Debt Collection Practices Act (Title VIII of the Consumer Credit Protection Act)

FTC

Federal Trade Commission

HHS

Health and Human Services

MVA

Motor Vehicle Accident

PACER

Is a national computer system used to verify bankruptcy

PHI

Protected Health Information

PIN

Personal Information Number

Regulation Z

The Truth in Lending Act (TLA) (Title I of the Consumer Credit Protection Act)

SKIP

When a debtor cannot be located by the creditor

SSN

Social Security Number

VCIS

Voice Case Information System

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Sample Test Questions These questions emphasize the various pieces of legislation covered in this chapter, including their various names and acronyms and what they represent, plus the four types of bankruptcy. These 65 questions should be answered in 65 minutes or less. 1. _______________bankruptcy is for farmers. A. Chapter 7 B. Chapter 11 C. Chapter 12 D. Chapter 13 E. Involuntary Bankruptcy Answer: C 2. ______________ bankruptcies are for individuals, excluding farmers. A. Chapter 7 B. Chapter 11 C. Chapter 12 D. Chapter 13 E. A and D F. B and C Answer: E 3. Once the doctor or hospital receives notice from the court of a patient’s bankruptcy, all collection efforts must: A. Stop B. Continue C. May continue if the doctor or hospital desire to do so. D. Stop, then continue, then stop again at the decision of the doctor or hospital. Answer: A 4. The ___________ is the one who is owed money by the patient for health care services rendered. A. Creditor B. Debtor C. Hospital or Doctor D. A and C E. B and C Answer :D 5. Concerning involuntary bankruptcy: A. The debtor can only be forced into Chapter 7 or 11 bankruptcy by the creditor. B. If more than 12 creditors, at least three creditors must be owed more than $5,000 each to force involuntary bankruptcy. C. If less than 12 creditors, then only one creditor must be owed at least $10,775 to force involuntary bankruptcy. D. All of the above. E. None of the above. Answer: D

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6._____________ bankruptcy is for individuals with a regular income who cannot currently pay their debts but want to. A. Chapter 7 B. Chapter 11 C. Chapter 12 D. Chapter 13 Answer: D 7. Chapter 13 bankruptcy allows the debtor to pay creditors, in installments, over a ___________ period of time but can be extended to a _____________ period of time if approved by the bankruptcy judge. Creditors __________ continue to pursue collection activities during the Chapter 13 bankruptcy repayment period. A. 5 year, 3 year, can B. 3 year, 5 year, cannot C. 1 year, 3 year, can D. 3 year, 7 year, cannot Answer: B 8. _________________ is also known as “reorganization bankruptcy” and is designed for _________________ who continue to function, work out a repayment plan, and pay back their creditors. A. Chapter 7, individuals B. Chapter 11, businesses C. Chapter 12, farmers D. Chapter 13, individuals Answer: B 9. The Truth in Lending Act: A. is also known as Title I of the Consumer Credit Protection Act B. is also known as Regulation Z C. is also known as the Truth in Lending Consumer Credit Cost Disclosure Act D. means the APR and finance charges must be clearly identified to the consumer E. means the disclosure of credit is made in writing and the consumer receives a copy F. All of the above G. A, C, E Answer: F 10. _______________ is where the court rules that the debtor’s (patient) bankruptcy is ended or cancelled. A. Discharge of Debtor B Regulation Z C. Dismissal of Bankruptcy D. VCIS E. Chapter 7 Answer: C

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11. _____________ is where the patient or guarantor is legally no longer responsible for paying the debts owed to the listed creditors in the bankruptcy petition. A. Discharge of Debtor B. Regulation Z C. Dismissal of Bankruptcy D. Fair Credit Billing Act E. FDCPA Answer: A 12. The FDCPA: A. Is Title VIII of the Consumer Credit Protection Act B. Prohibits harassment or abuse in the collection process C. Prohibits the use of false or misleading information in the collection process D. Prohibits communication with the debtor before 8AM or after 9PM E. Prohibits communication with debtor if there is an attorney or at the debtor’s place of employment, unless prior approval has been given F. All of the above G. B, D, E Answer: F 13. According to the Fair Credit Billing Act, the patient must notify the hospital of any errors within __________ after the statement has been mailed to the patient, and the hospital has _______________ to correct the error or prove the accuracy of the bill to the patient. A. 90 days, 60 days B. 60 days, 90 days C. 30 days, 60 days, D. 3 months, 2 months E. None of the above Answer: B 14. The FCRA: A. Is known as Title VI of the Consumer Credit Protection Act B. Is enforced by the FTC C. Promotes accuracy and insures privacy of information used in consumer reports D. Oversees the activities of CRA’s E. All of the above F. B, C, D Answer: E 15. A ___________ SKIP is a patient who moves or changes their address, but fails to notify creditors, but a forwarding address is normally on file. A. False B. Un-intentional C. Intentional D. Deceased Answer: B

210

The Health Care Revenue Cycle

16. A __________ SKIP is caused by a clerical error such as mixed up numbers on the street address, incorrect zip code, or missing information. A. False B. Un-intentional C. Intentional D. Deceased Answer: A 17. SKIP tracing resources include: A. Internet B. Landlord or Mortgage holder C. Employers, Relatives, Neighbors D. Telephone Directories E. All of the above F. B and C Answer: E 18. ____________ makes the reporting of delinquent data more consistent and clear, creates safe harbors for debt collectors and those businesses who provide information to debt collectors. A. FCRA B. FDCPA C. Fair and Accurate Credit Transaction Act D. Regulation Z E. Chapter 11 Answer: C 19. ____________ represents the average amount of money the hospital generates from providing health care services to patients over a specific period of time, for example, 90 days. A. ADRR B. Average Daily Revenue C. FDCPA D. Intentional SKIP E. A/R Answer: B 20. ___________ represents an estimate, using average current revenues (money generated) of the days required to turn over the accounts receivable under the hospital’s normal operating conditions. A. ADRR B. Average Daily Revenues C. FDCPA D. Intentional SKIP E. A/R Answer: A

Chapter 5 - Doctor/Hospital Financial Matters

211

21. ___________ is a legally binding claim against a debtor issued by a court. A. Lien B. Tort Liability C. Judgment D. A/R E. SKIP Answer: C 22. ___________ is a recorded claim (written and legally binding) against the patient’s property as a result of a debt. A. Lien B. Tort Liability C. Judgment D. A/R E. SKIP Answer: A 23. _____________ is a legal obligation as a result of an injury or other damage done by one person to another person. A. Lien B. Tort Liability C. Judgment D. A/R E. SKIP Answer: B 24. A ____________ is a debtor who cannot be located by a creditor. VCIS is the acronym for: A. Courtesy Discharge; Voice Case Information System B. Tort Liability; Vicarious Caseload Information System C. Judgment; Voice Case Informed System D. A/R; Vacated Case Information System E. SKIP; Voice Case Information System Answer: E 25. A ____________ is when a patient or guarantor has met all their financial obligations to the hospital and is permitted to leave the hospital without going through the normal discharge formalities. A. Courtesy Discharge B. Indigent C. Judgment D. A/R E. SKIP Answer: A

212

The Health Care Revenue Cycle

26. ______________ has no way of paying for health care services and is not eligible for Medicaid or Public Assistance. A. Courtesy Discharge B. Indigent Patient C. Bad Debt D. A/R E. Aging Account Answer: B 27. ____________ is money that cannot be collected from the patient or guarantor from giving credit to the patient or guarantor. A. Charity Care B. Indigent Patient C. Bad Debt D. A/R E. Judgment Answer: C 28.______________ is when a hospital’s or doctor’s services are provided and payment is never expected. A. Charity Care B. Indigent Care C. Bad Debt D. A/R E. Lien Answer: A 29. An ______________ is the amount of time an outstanding debt is owed by the patient to the hospital, for example, 30 or 60 or 90 days. A. Lien B. Bad Debt C. Aging Account D. Involuntary Bankruptcy E. Average Daily Revenues Answer: C 30. _____________ is Title VI of the Consumer Credit Protection Act. A. FCRA B. FDCPA C. A/R D. Regulation Z E. ADRR Answer: A

Chapter 5 - Doctor/Hospital Financial Matters

213

31. ____________ is Title VIII of the Consumer Credit Protection Act. A. FCRA B. FDCPA C. A/R D. Truth in Lending Act E. Regulation Z Answer: B 32. ____________ is Title I of the Consumer Credit Protection Act. A. FCRA B. FDCPA C. A/R D. Truth in Lending Act E. Regulation Z F. D and E G. B and C Answer: F 33. Advantages of a courtesy discharge include: A. Better PR for the hospital and doctor B. Patient can leave the hospital in a more controlled fashion C. Improves patient flow through the hospital D. Reduces the amount of hospital staff required to discharge the patient E. A and B F. All of the above Answer: F 34. The best time for the hospital to collect deposits, deductibles, co-payments, and co-insurances from the patient or guarantor is: A. At discharge

B. When the patient is already admitted to the hospital C. At Admission

D. At Pre-admission E. Does not matter Answer: D

35. Debts that are not included in the bankruptcy petition ____________be eliminated when the bankruptcy is granted. A. Will B. Will Not C. May not D. Cannot be Answer: B

214

The Health Care Revenue Cycle

36. _____________ is where the debtor’s assets are liquidated to pay the creditors. A. Chapter 13 B. Chapter 12 C. Chapter 11 D. Chapter 7 E. Involuntary Bankruptcy Answer: D 37. Most ____________ bankruptcies cases wind up as Chapter 7 bankruptcies. A. Chapter 13 B. Chapter 12 C. Chapter 11 D. Chapter 7 E. Involuntary Bankruptcy Answer: C 38. When the debt collector is working outstanding debts owed by patients to the hospital, try to collect debts with the _____________ balances first. A. Lowest B. No C. Highest D. Minimal Answer: C 39. The FTC enforces the ___________ and regulates the activities of CRA’s. A. FCRA B. Fair and Accurate Credit Transaction Act C. FDCPA D. ADRR E. Regulation Z Answer: A 40. ___________ are used to determine whether credit should be extended to an applicant, for credit checks for employment, for legal matters, or connected with business transactions such as buying a car or a house. A. FCRA B. FDCPA C. CRA’s D. Judgment E. Fair Credit Billing Act Answer: C 41. The Truth in Lending Act: A. Is AKA Regulation Z B. Is AKA Consumer Credit Protection Act C. Is AKA Truth in Lending Consumer Credit Cost Disclosure Act D. Is AKA FDCPA E. A, B, C F. B, C, D Answer: E

Chapter 5 - Doctor/Hospital Financial Matters

215

42. The FDCPA prohibits the debt collector from contacting the debtor: A. Between 8AM and 9PM, in the debtor’s time zone B. Before 8AM and after 9PM, in the debtor’s time zone C. At the place of the debtor’s employment, unless the debt collector is given permission D. A and B E. B and C Answer: E 43. The ________________ is the amount of time, varying from state to state, in which a claim against a patient (debtor) for outstanding monies owed to the hospital for services rendered, must be paid before it is considered paid or uncollectible. A. Fair Credit Billing Act B. Statute of Limitations C. Average Daily Revenues D. ADRR E. Judgment Answer: B 44. SKIP tracing resources include: A. Internet B. Telephone Directories C. Employer, Neighbors, Family D. Mortgage Holder or Landlord E. All of the above F. A, B, and D Answer: E 45. Regulation Z includes: A. Disclosure of information to the consumer, in writing, before credit is given to the consumer B. APR and finance charge must be clearly written and obvious to the consumer C. Prohibits harassment and abuse of the debtor by the debt collector D. If more than one creditor is involved in getting credit, all the creditors must agree on one creditor who will comply with the APR, finance charge, and other terms of the credit E. A, B, C F. A, B, and D Answer: F

216

The Health Care Revenue Cycle

46. When the doctor or hospital has to confirm a patient’s bankruptcy, the following are employed: A. VCIS B. SKIP C. Pacer D. Contacting District Clerk’s office or confirming the bankruptcy in the newspaper E. Contacting the patient’s attorney handling the bankruptcy F. A, C, D and E G. A, B, C Answer: F 47. A ____________ is a patient who owes money to the hospital which is called the ___________. A. Debtor, Creditor B. Creditor, Debtor C. SKIP, Judgment D. Auction, Creditor E. Lien, Debtor Answer: A 48. Average amount of revenues generated by the hospital over a specific period of time is called: A. ADRR B. Average Daily Revenues C. Average Days of Revenue in Accounts Receivable D. VCIS E. FCRA F. AR Days Outstanding Answer: B 49. An estimate, using average current revenues (of the hospital), of the days required to turn over the accounts receivable under normal operating conditions, is called: A. ADRR B. Average Daily Revenues C. Average Days of Revenue in Accounts Receivable D. VCIS E. FCRA F. AR Days Outstanding G. A,C,F H. A,D,E Answer: G

Chapter 5 - Doctor/Hospital Financial Matters

217

50. ____________ occurs when someone uses the patient’s protected health information without the patient’s knowledge or consent to obtain treatment or receive payment for medical services. A. ADRR B. Average Daily Revenues C. Medical Identity Theft D. SKIP E. Coordination of Benefits Answer: C 51. Medical Identity Theft can result in: A. Erroneous entries made into the patient’s medical records B. Production of fictitious medical information in the patient’s name C. Take years to correct D. Affect the treatment given to the patient and risk the patient’s health E. Adversely effect the consumer getting life, health and disability insurance F. All of the above G. A, C, D Answer: F 52. ______________ of the Consumer Credit Protection Act is AKA The Truth in Lending Act or _______________. A. Title VI, Regulation A B. Title VIII, Regulation Z C. Title I, Regulation Z D. Title V, Regulation Y Answer: C 53. ___________ of the Consumer Credit Protection Act is known as The Fair Debt Collection Practices Act. ___________ does not allow creditors to discriminate against applicants on the basis of sex, marital status, race, or religion or because they receive public assistance or have exercised their rights under the Consumer Credit Protection Act. A. Title VIII, ECOA B. Title VII, FDCPA C. Title I, ECOA D. Title VI, FCRA E. Title V, TLA Answer: A 54. __________ of the Consumer Credit Protection Act is AKA Fair Credit Reporting Act, and expands rights and places additional requirements on _______. A. Title VIII, FDCPA B. Title I, FDCPA C. Title VI, SKIP D. Title VI, CRA E. Title I, CRA Answer: D

218

The Health Care Revenue Cycle

55. The primary objective of the debt collector making a collection telephone call is to request payment of the patient’s outstanding balance ____________. A. in time. B. in part. C. in full D. according to a new repayment schedule E. to determine if this is a charity case Answer: C 56. Collection calls are regulated by the guidelines established by: A. HIPAA B. FCRA C. ADRR D. FDCPA E. Regulation Z Answer: D 57. Financially distressed companies can use which bankruptcy code to establish a repayment schedule with their creditors? A. Chapter 7 B. Chapter 11 C. Chapter 12 D. Chapter 13 E. Regulation Z Answer: B 58. Before a patient’s account is sent to a debt collection agency, you must have: A. Proof the patient received a valid and verified medical service B. Multiple attempts to contact the patient by phone and mail C. The diagnosis, prognosis and coding are confirmed D. The patient’s medical records are properly stored E. None of the above Answer: A 59. The following piece of legislation defines SKIP and SKIP tracing resources: A. FDCPA B. The Truth in Lending Act C. Regulation Z D. Fair and Accurate Credit Transaction Act E. FCRA Answer: D 60. A clerical error in the debtor’s address or phone number is known as a ______________. A. Intentional SKIP B. Unintentional SKIP C. False SKIP D. Late SKIP Answer: C

Chapter 5 - Doctor/Hospital Financial Matters

219

61 A patient who is medically indigent is: A. Has the ability to pay for medical services B. Does not have the ability to pay for treatment C. Does not have the ability to pay and is not eligible for Medicaid or Public Assistance D. Doctor’s services are provided and payment is not expected E. None of the above. Answer: C 62. When the patient’s account has a balance for medical treatment rendered, but has passed timely filing limits, the Statute of Limitations has passed, the doctor or hospital: A. Rebills the insurance carrier or Medicare for what the patient owes B. Bills the patient again C. Asks the debt collection agency to begin collection activities D. Do not bill the patient, and write-off the debt as uncollectible E. All of the above Answer: D 63. The definition of bad debt versus charity care is: A. The patient won’t pay compared to the patient can’t pay B. The patient can’t pay versus the patient refuses to pay C. Intentional SKIP versus False SKIP D. FCRA compared to the FDCPA Answer: A 64. Money occasionally needs to be ___________ to patients when the practice has overcharged a patient for a medical service. A. Discharged B. SKIP C. Refunded D. Kept E. Not Refunded Answer: C 65. A bankruptcy dismissal allows for all of the following except: A. Legal activity to collect the patient’s account can be pursued by the doctor or hospital B. Billing the patient directly for the outstanding balance due can occur C. Referral of the account to a debt collection agency D. The patient’s bankruptcy has been cancelled and is not longer legally in effect E. The doctor or hospital can write-off the account as uncollectible as a result of bankruptcy Answer: E End of Chapter 5

Appendix

Appendix A: CMS-1500 Form

221

222

Appendix B: UB-04 Form

The Health Care Revenue Cycle

Appendix

223

Appendix C: Superbill

Doctor’s Address City, State ZIP (123) 456-7890

224

The Health Care Revenue Cycle

Appendix D: Medicare Card

JOHN DOE 000-00-0000-A

John Doe

2007 2007

Bio

Robert A. Kaplan

225

BA, DC, MBA, CPAT

For the past twenty years, Dr. Kaplan has built and operated three chiropractic offices. He is NHA certified as a medical billing and coding specialist. He has lectured students in anatomy, physiology, dissection, pathology and medical terminology. In addition, he has taught medical billing and coding and front office procedures. Because of his extensive knowledge of the health care industry, he’s been interviewed on CBS and Fox News as well as many well-known radio talk shows. He is a Doctor of Chiropractic Medicine. He earned his BA in Biology at LaSalle College in Philadelphia and his MBA in Health Care Administration from Eastern College in St. Davids, PA. Dr. Kaplan is also dedicated to his volunteer work with senior citizens in the Ever Young Club and Interac.

Index

Index Symbols 72-Hour Rule............................................................................... 115

A Admission, Patient......................................................................... 50 Admitting Categories, Hospital..................................................... 62 Admitting Protocols, Hospital....................................................... 71 Advanced Beneficiary Notice (ABN).................................... 70, 142 Ambulatory Payment Classification (APC)................................. 143 Anti-Kickback Statute.................................................................... 20 Average Daily Revenues and Average Days of Revenue in Accounts Receivable (ADRR)................................................................. 204 Average Length of Stay (ALOS)................................................... 52

B Balanced Budget Act of 1997 (BBA)............................................ 12 Bankruptcy................................................................................... 193 Bankruptcy Abuse Prevention and Consumer Protection Act of 2005....................................................................... 195 Chapter 7......................................................................... 194 Chapter 11........................................................................ 194 Chapter 12....................................................................... 194 Chapter 13....................................................................... 194 Confirming Bankruptcy by the Doctor or Hospital......... 195 Discharge of Debtor........................................................ 196 Involuntary Bankruptcy................................................... 194 Notification of Bankruptcy.............................................. 195 BBA see Balanced Budget Act of 1997...................................... 12 Birthday Rule............................................................................... 112 Bundled Services......................................................................... 159

C Census

Average Daily Census....................................................... 77 defined............................................................................... 76 Percentage of Occupancy.................................................. 77 Centers for Medicare and Medicaid Services (CMS).................. 7, 9 CHAMPVA................................................................................... 66 Chargemaster............................................................................... 116 Civil Monetary Penalties (CMP)................................................... 19 Civil Monetary Penalties Law (CMP or CMPL)........................... 12 Claim Form Processing Terminology.......................................... 110 Clean Claim............................................................................. 53, 54 and the Hospial Registration Staff..................................... 53 Clearinghouse defined................................................................................. 6 Clinical Laboratory Improvement Amendment (CLIA).............. 148 CMS see Centers for Medicare and Medicaid Services................ 7 CMS-1500 Claim Form............................................................... 151

227 How to Complete the CMS-1500 Claim Form................ 152 CMS-1500 Form.......................................................................... 221 COBRA see Consolidated Omnibus Budget Reconciliation Act of 1985............................................................................. 13 Coding defined................................................................................. 5 Co-insurance.................................................................................... 3 Collection Calls to the Patient and Collection Policies............... 202 Collection Regulations of the Federal Government..................... 197 Common Working File (CWF).................................................... 107 Comprehensive Error Rate Testing (CERT)................................ 143 Consent defined............................................................................... 60 Six types............................................................................ 61 Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA).......................................................................................... 13 Continued Health Care Benefit Program (CHCBP)....................... 68 Coordination of Benefits (COB).................................................. 140 Courtesy Discharge...................................................................... 203 CPT-4 see Current Procedural Terminology, 4th edition.............. 16 Current Dental Terminology manual (CDT)................................. 17 Current Procedural Terminology, 4th edition (CPT-4).......... 16, 165 Custodial Care................................................................................ 65

D Data Mailer.................................................................................. 120 Deceased Patient Notification...................................................... 200 Defense Enrollment Eligibility Reporting System (DEERS)........ 68 Deficit Reduction Act of 1984 (DEFRA)...................................... 12 DEFRA see Deficit Reduction Act of 1984..................................... 12 Department of Health and Human Services (DHHS).................. 7, 9 Department of Justice (DOJ)......................................................... 16 DHHS see Department of Health and Human Services.................. 7 DRG see Medicare.................................................................... 115

E EDI

see National Electronic Data Interchange......................... 16 Effective Collection Policies........................................................ 201 Electronix Billing Electronic Data Interchange: EDI................................... 119 Emancipated Minor........................................................................ 61 Emergency Medical Treatment and Active Labor Act (EMTALA).................................................................................... 21 Employer Identification Number (EIN)........................................... 7 EMTALA....................................................................................... 71 Admitting process.............................................................. 71 see Emergency Medical Treatment and Active Labor Act. 21 End stage renal disease (ESRD).................................................. 113 Equal Credit Opportunity Act (ECOA)....................................... 200 Established Patient

228 defined................................................................................. 5 Evaluation and Management Services (E/M).............................. 167

F Fair and Accurate Credit Transaction Act (includes SKIP)......... 199 Fair Credit Billing Act (1975)...................................................... 198 Fair Credit Reporting Act (FCRA) (1971)................................... 199 False Claims Act (FCA)................................................................. 20 FCA see False Claims Act.......................................................... 20 Fee-for-service (FFS)....................................................................... 3 Field Locators.............................................................................. 101 18 Date of Patient or Beneficiary Retirement. Value Codes..................................................................... 102 Completion of the #4 Form Locator in the UB-04.......... 104 Condition Codes.............................................................. 102 Data Elements.................................................................. 101 ICD-9-CM Codes............................................................ 103 Important UB-04 Code/FL Definitions............................ 101 Occurrence Codes............................................................ 102 Revenue Codes................................................................ 103 Financial Concerns, Patient........................................................... 50 Financial Counselor....................................................................... 55 Financial Statements.................................................................... 120 Data Mailer...................................................................... 120 Itemized Statement.......................................................... 120 Superbill.......................................................................... 120 Five Control Points, Registration................................................... 59 Fraud and Abuse............................................................................ 18 defined............................................................................... 18 Department of Justice (DOJ)............................................. 16 Office of Inspector General (OIG).................................... 16 reporting............................................................................ 19

G Gatekeeper................................................................................. 4, 65 General Accounting Principles Applied to Cashier Functions for the Hospital or Doctor.................................................................... 201 Generally Accepted Accounting Principles (GAAP).................... 78 Good Samaritan Act......................................................................... 5 defined................................................................................. 5

H Health Care Charges, Categories................................................... 63 Health Care Common Procedure Coding System (HCPCS)....... 167 Health Care Coverage in the Military............................................ 65 Health Care Delivered to the Consumer Categories.......................................................................... 64 Health Care Practitioner defined................................................................................. 5 Health Coverage Protocols............................................................ 53 Health Insurance Claim Number (HICN or HIC)........................ 148 Examples of Suffixes used in the HCIN.......................... 148 Health Insurance Portability and Accountability Act of 1996 (HIPAA)..................................................................................... 15

The Health Care Revenue Cycle Health Maintenance Organizations (HMOs) see Managed Care Coverage 60 Health Savings Accounts (HSAs).................................................. 15 HIPAA see Health Insurance Portability and Accountability Act of 1996............................................................................. 15 HIPAA Security Rule.................................................................. 160 Home Health Care.......................................................................... 65 Hospital Admitting Protocols........................................................ 71 Hospital Inpatient Benefit Days Coverage..................................... 69

I ICD-9-CM...................................................................................... 16 see International Classification of Diseases, 9th Revision, Clinical Modifications............................................... 160 ICD-10-PCS................................................................................... 16 Indemnity......................................................................................... 3 Inpatient......................................................................................... 62 defined................................................................................. 5 International Classification of Diseases, 9th Revision, Clinical ......... Modification (ICD-9-CM).................................................. 16, 160

J JCAHO see Joint Commission on Accreditation of Health Care Organizations................................................................... 74 Joint Commission on Accreditation of Health Care Organizations (JCAHO).................................................................................... 74 Judgment, Lien and Tort Liability............................................... 203

L Lincoln Act.................................................................................... 20 Long-term Care (LTC)................................................................... 64

M Managed Care Coverage Criteria for Registering Patients........................................ 60 Managed Care Organization (MCO) goal...................................................................................... 3 Health Maintenance Organizations (HMO)........................ 3 participating providers......................................................... 3 Point-of-Service Plans......................................................... 4 Preferred Provider Organizations (PPO)............................. 3 Medicaid (MCD).................................................................... 11, 149 Medical Case Management/Utilization Review............................ 60 Medical Ethics............................................................................... 18 Medical Identify Theft Responding to Medical Identity Theft............................. 191 Medical Identity Theft................................................................. 190 Preventing and detecting................................................. 190 Medical Malpractice.................................................................... 146 Medical Necessity defined............................................................................. 145 Medical Standards of Care and Malpractice................................ 146

Index Medical Unlikely Edits (MUE).................................................... 140 Medicare................................................................................ 10, 138 Ancillary Services........................................................... 138 Coordination of Benefits (COB)...................................... 140 End-stage renal disease (ESRD)................................ 11, 113 Medical Spell of Illness..................................................... 69 Medicare Secondary Payer (MSP).................... 70, 112, 159 Medicare Claim Editor (MCE)........................................ 109 Medicare Deductibles, Co-Payments and Co-Insurances for 2009........................................................................... 118 Medicare Determination of Patient Eligibility.................. 69 Medicare DRG Window (The 72-Hour Rule)................. 115 Medicare Processing of the UB-04 Claim Form............. 108 Part A......................................................................... 10, 139 Part B......................................................................... 10, 139 Part C......................................................................... 11, 140 Part D......................................................................... 11, 140 Timely Filing of Claims (UB-04/CMS-1500) Requirements for Medicare Parts A and B........................................ 138 Medicare Secondary Payer (MSP)................................. 70, 112, 159 Medicare Card.............................................................................. 224 Medicare Volume Performance Standard (MVPS)....................... 14 Medigap....................................................................................... 140 Military, Health Care Coverage..................................................... 65 CHAMPVA........................................................................ 66 Continued Health Care Benefit Program (CHCBP).......... 68 TRICARE.......................................................................... 66 MS-DRG’s, Medicare Severity-Diagnosis Related Groups........ 114

N NAS

see Non-Availability Statement........................................ 67 National Correct Coding Initiative (NCCI or CCI)..................... 141 National Drug Code manual (NDC).............................................. 17 National Electronic Data Interchange (EDI).................................. 16 National Provider Identifier (NPI)................................................... 7 National Uniform Billing Committee (NUBC)........................... 101 New Patient defined................................................................................. 5 Non-Availability Statement (NAS)................................................ 67 Non-participating provider............................................................... 3

O OBRA of 1986 see Omnibus Budget Reconciliation Act of 1986.............. 13 OBRA of 1989 see Omnibus Budget Reconciliation Act of 1989.............. 13 OBRA of 1990 see Omnibus Budget Reconciliation Act of 1990...... 14, 74 Office for Civil Rights (OCR)........................................................ 16 Office of Inspector General (OIG)................................................. 16 Omnibus Budget Reconciliation Act of 1986................................ 13 Omnibus Budget Reconciliation Act of 1989................................ 13 Omnibus Budget Reconciliation Act of 1990.......................... 14, 74 Operation Restore Trust of 1995 (ORT)........................................ 14

229 ORT

see Operation Restore Trust of 1995................................. 14 Outpatient....................................................................................... 62 defined................................................................................. 5 Outpatient Care.............................................................................. 64

P Participating provider....................................................................... 3 Patient Bill of Rights...................................................................... 22 Patient Confidentiality................................................................... 72 Patient Registration, Admission, and Financial Concerns............. 50 Patient Self-Determination Act (PSDA)........................................ 73 Patient’s Medical Record and Telephone/Verbal Communication in the Hospital................................................................................. 72 Performing Provider Identification Number (PPIN).................... 159 Per Member Per Month” or PMPM)................................................ 4 Physician defined................................................................................. 5 Physician Direct Services.............................................................. 53 Point-of-Service Plans..................................................................... 4 Point of Service plans (POS) see Managed Care Coverage 60 Pre-Admitting Patients................................................................... 57 Pre-Admitting Patients, Disadvantages......................................... 58 Pre-certification defined................................................................................. 6 Pre-Certification............................................................................. 59 Preferred Provider Organizations (PPO)......................................... 4 Preferred Provider Organizations (PPOs) see Managed Care Coverage 60 Primary Care Provider (PCP)......................................................... 65 Privacy Act of 1974....................................................................... 72 Professional Liability..................................................................... 18 Program for Persons with Disabilities........................................... 67 Provider Identification Number (PIN)..................................... 6, 159 PSDA see Patient Self-Determination Act................................... 73

Q Quality Improvement Organizations (QIO)................................... 22 Qui Tam Statute............................................................................. 20

R Recovery Audit Contractors (RAC)............................................. 143 Registering Patients with Managed Care Coverage....................... 60 Registrar Five Control Points............................................................ 59 Registration, Patient....................................................................... 50 Registration Staff, Responsibilities................................................ 52 Relative Value Scale (RBRVS)..................................................... 13 Relative Value Unit (RVU)........................................................... 13 Resource Based Relative Value Scale (RBRVS)......................... 149 Respite Care................................................................................... 64

230

S Sarbanes-Oxley Act of 2002.......................................................... 21 Scheduling, Effective Patient......................................................... 57 SCHIP see State Children’s Health Insurance Program................ 12 Fair Debt Collection Practices Act (FDCPA) (1978).................. 197 Skilled Nursing Facility Coverage (SNF)...................................... 69 “SKIP” and SKIP Tracing Resources.......................................... 199 SOAP Notes and the Patient-Oriented Medical Records............. 169 Standard Code Sets...................................................................... 169 Stark Laws..................................................................................... 20 State Children’s Health Insurance Program (SCHIP).................... 12 Statute of Limitations................................................................... 202 Superbill............................................................................... 120, 223

T Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA)........ 12 TEFRA see Tax Equity and Fiscal Responsibility Act of 1982...... 12 Test Taking and Study Strategies.................................................. 27 Physician’s Identification Numbers................................................. 6 The Truth in Lending Act (TLA) or Truth in Lending Consumer Credit Cost Disclosure Act (1969)........................................... 197 Third Party Collection Activity................................................... 192 Third Party Collection Agencies.................................................. 202 Third Party Reimbursement, Doctors and Hospitals, Types of Any Willing Provider...................................................... 170 Capitation........................................................................ 170 Non-Participating Provider.............................................. 170 Participating Provider...................................................... 170 Per Diem.......................................................................... 170 Straight Charges or Fee-for-Service (FFS)...................... 170 TRICARE...................................................................................... 66 Defense Enrollment Eligibility Reporting System............ 68 Exclusions to NAS requirements....................................... 67 TRICARE Extra................................................................ 66 TRICARE for Life............................................................. 67 TRICARE Prime............................................................... 66 TRICARE Standard........................................................... 66

U UB-04 Claim Form.............................................................. 100, 222 Electronic version, X12N837.......................................... 101 Field Locators.................................................................. 101 Important UB-04 Code/FL Definitions............................ 101 Medicare Processing of the UB-04 Claim Form............. 108 Unbundled Services..................................................................... 159 Unique Provider Identification Number (UPIN)...................... 6, 159

W Waiver of Liability....................................................................... 146

X X12N837 Institutional Health Care Claim Transaction............... 101

The Health Care Revenue Cycle

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The Health Care Revenue Cycle - Finney Learning Systems

The Health Care Revenue Cycle How Money is Generated for the Business of Health Care Delivery Robert A. Kaplan BA, DC, MBA, CPAT Finney Learning S...

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