Chapter 17 Hospital Billing

Copyright ©2014 by Saunders, an imprint of Elsevier Inc. All rights reserved 1

Chapter 17

Hospital Billing

Insurance Handbook for the Medical Office

13th edition

Copyright ©2014 by Saunders, an imprint of Elsevier Inc. All rights reserved

Hospital Billing Basics

1. Define common terms related to hospital billing.

2. Name qualifications necessary to work as a hospital patient service representative.

3. List instances of breach of confidentiality in a hospital setting.

4. Explain the purpose of the appropriateness evaluation protocols.

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Lesson 17.1


Hospital Billing Basics (cont’d)

5. Describe criteria used for admission screening.

6. Define the 72-hour rule.7. Describe the quality improvement

organization and its role in the hospital reimbursement system.

8. Describe the International Classification of Diseases, Tenth Revision, Procedure Coding System (ICD-10-PCS).

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Lesson 17.1


Hospital Billing Basics (cont’d)

9. State the role of International Classification of Diseases, Tenth Revision, Procedure Coding System (ICD-10-PCS) in hospital billing.

10. Explain the basic flow of the inpatient hospital stay from billing through receipt of payment.

11. Describe the charge description master.

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Lesson 17.1


Patient Accounts Representative

Qualifications Knowledge and competence in:

• ICD-9-CM, ICD-10-CM, and ICD-10-PCS diagnostic codes• CPT and HCPCS procedure codes• CMS-1500 insurance claim form• Uniform Bill (UB-04) insurance claim form• Explanation of benefits and remittance advice

document• Medical terminology• Major health insurance programs• Managed care plans• Insurance claim submission• Denied and delinquent claims

5


Appropriateness Evaluation Protocols

6


Admitting Procedures for Major Insurance Programs

Preauthorization Private insurance (group or individual) Commercial insurance and managed

care Emergency inpatient admission Nonemergency inpatient admission/elective

admission

7


Admitting Procedures for Major Insurance Programs

Medicaid Medicare TRICARE Workers’ Compensation

8


Preadmission Testing

Diagnostic studies Laboratory tests Chest x-ray Electrocardiography

9


Medicare 3-Day Payment Window Rule or 72-Hour Rule

Also called 3-day payment window rule If patient receives diagnostic tests and

hospital outpatient services within 72 hours of admission to hospital, all such tests and services are combined with inpatient services

Preadmission services become part of the DRG payment to hospital and may not be billed separately

10


Medicare 3-Day Payment Window Rule or 72-Hour Rule

Exceptions to the 72-hour rule Services provided by home health agencies,

hospice, nursing facilities, and ambulance services

Physician’s professional portion of a diagnostic service

Preadmission testing at an independent laboratory when the laboratory has no formal agreement with the healthcare facility

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Utilization Review

Department conducts an admission and concurrent review and prepares a discharge plan on all cases

Utilization review (UR) companies exist for self-insured employers, third-party administrators, and insurance companies

12


Quality Improvement Organization Program

Admission review Readmission review Procedure review Day outlier review Cost outlier review DRG validation Transfer review

13


Coding Hospital Diagnoses and Procedures

Diagnosis codes come from ICD-9-CM or ICD-10-CM

Procedure codes come from CPT, HCPCS, ICD-9-CM (Volume 3) or ICD-10-PCS

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Principal diagnosis First listed diagnosis Reason patient is seeking medical care On outpatient claims, known as:

• Reason for the encounter

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Principal diagnoses subject to 100% review Arteriosclerosis heart disease (ASHD) Diabetes mellitus without complications Right or left bundle branch block Coronary atherosclerosis

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Coding Inpatient Procedures

Procedural coding systems ICD-9-CM, Volume 3 ICD-10-PCS

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Character Definitions

Character 1: Medical Section Character 2: Body Systems Character 3: Root Operation Character 4: Body Part Character 5: Approach Character 6: Device Character 7: Qualifier

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Coding Hospital Outpatient Procedures

Healthcare Common Procedure Coding System Level I Current Procedural Terminology Coding System Use up-to-date Current Procedural

Terminology (CPT) Use HCPCS to obtain medical procedural

codes for Medicare and some non-Medicare patients on outpatient hospital insurance claims that are not in CPT code book

Use modifiers as noted in CPT/HCPCS guidelines

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Inpatient Billing Process

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Charge Description Master

Services and procedures are checked off and coded internally

Data includes: Procedure code Charge Revenue code

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Practice Hospital Billing

12. State when the CMS-1450 (UB-04) paper or electronic claim form may and may not be used.

13. State reimbursement methods used when paying for hospital services under managed care contracts.

14. Describe the purpose of diagnosis-related groups.

15. Discuss the electronic claim filing guidelines as stated in the Administration Simplification Act of 1996.

16. Identify how payment is made on the basis of diagnosis-related groups.

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Lesson 17.2


Practice Hospital Billing (Cont’d)

17. State how payment is made on the basis of the ambulatory payment classification system.

18. Name the four types of ambulatory payment classifications.

19. Complete insurance claims in both hospital inpatient and outpatient settings to minimize their rejection by insurance carriers.

20. State the general guidelines for completion of the paper CMS-1450 (UB-04) and transmission of the electronic claim form.

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Lesson 17.2


Reimbursement Methods

Ambulatory payment classifications Bed leasing Capitation or percentage of revenue Case rate Contract rate Diagnosis-related groups (DRGs) Differential by day in hospital Differential by service type

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Fee-for-service Fee schedule Flat rate Per diem Percentage of accrued charges Periodic interim payments (PIPs) and cash

advances Relative value studies or scale (RVS) Resource-based relative value scale

(RBRVS) 25



Usual, customary, and reasonable (UCR) Withhold Managed care stop loss outliers Charges Discounts in the form of sliding scale Sliding scales for discounts and per

diems

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Hard copy billing Used for insurance companies that are not

capable of receiving electronic claims Receiving payment

After receipt of payment, patient sent net bill listing any owed deductible, coinsurance amount, and charges not covered

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Outpatient Insurance Claims

Emergency department visits Elective surgeries Only outpatient services provided by

the hospital should be submitted by the hospital unless the hospital is billing for physicians

Using the hospital for surgical or medical consultations that could be done in a physician’s office should be avoided

28


Billing Problems

Incorrect name on form Wrong subscriber, patient name listed in

error Covered days vs. noncovered days Duplicate statements Double billing Phantom charges

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Uniform Bill Inpatient and or Electronic Claim Form

Used since 1982 for inpatient and outpatient hospital claims

Updated in 2007 Considered as a summary document

supported by an itemized bill Printed in red ink on white paper Dates of service and monetary amounts

entered without spaces or decimal points Dates of birth are entered using two sets of

two-digit numbers for the month and day, four-digit numbers for the year

30


The Medicare Severity Diagnosis-Related Group System Designed to increase reimbursement for

sicker patients Diagnoses are assigned values that

commensurate with severity of illness Split into a maximum of three payment

tiers Reimbursement crosswalk will identify

ICD-9 and corresponding ICD-10 codes and MS-DRGs

31


The Medicare Severity Diagnosis-Related Group System Clinical outliers

Unique combinations of diagnoses and surgeries causing high costs

Very rare conditions Long length of stay, or day outliers, no longer

apply Low-volume DRGs Inliers (hospital case falls below the mean

average or expected length of stay) Death Leaving against medical advice Admitted and discharged on the same day

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Diagnosis-Related Groups and the Physician’s Office

When calling the hospital to admit a patient, give all of the diagnoses authorized by the physician

Ask the physician to review the treatment or procedure in question when a hospital representative calls with questions

Get to know hospital personnel on a first-name basis

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Ambulatory Payment Classification System

Developed as outpatient classification systems by Health System International

Based on patient classification rather than disease classifications

More than 500 APCs are continually being modified; updated and released twice a year in the Federal Register

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APCs are applied to the following: Ambulatory surgical procedures Chemotherapy Clinic visits Diagnostic services and diagnostic tests Emergency department visits Implants Outpatient services furnished to nursing

facility patients not packaged into nursing facility consolidated billing

35



APCs are applied to the following: Partial hospitalization services for

community mental health centers (CMHCs) Preventive services (colorectal cancer

screening) Radiology including radiation therapy Services for patients who have exhausted

Part A benefits Services to hospice patient for treatment of

a non-terminal illness Surgical pathology

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Hospital Outpatient Prospective Payment System

Procedure code is primary axis of classification, not the diagnostic code

Reimbursement methodology based on median costs of services and facility cost to determine charge ratios and copayment amounts

Adjustment for area wage differences based on the hospital wage index currently used for inpatient services

OPPS may be updated annually 37


Types of Ambulatory Payment Classifications

Surgical procedure APCs Significant procedure APCs Medical APCs Ancillary APCs

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Questions?

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Documents

Chapter 17 Hospital Billing