Post on 13-Jan-2016
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CHAPTER
© 2011 The McGraw-Hill Companies, Inc. All rights reserved.
1The Medical Billing
Cycle
© 2011 The McGraw-Hill Companies, Inc. All rights reserved.
Learning Outcomes
When you finish this chapter, you will be able to:1.1 Identify four types of information collected during
preregistration.
1.2 Compare fee-for-service and managed care health plans, and describe three types of managed care approaches.
1.3 Discuss the activities completed during patient check-in.
1.4 Discuss the information contained on an encounter form at check-out.
1.5 Explain the importance of medical necessity.
1-2
© 2011 The McGraw-Hill Companies, Inc. All rights reserved.
Learning Outcomes (Continued)
When you finish this chapter, you will be able to:1.6 Explain why billing compliance is important.
1.7 Describe the information required on an insuranceclaim.
1.8 List the information contained on a remittance advice.
1.9 Explain the role of patient statements in reimbursement.
1.10 List the reports created to monitor a practice’s accounts receivable.
1-3
© 2011 The McGraw-Hill Companies, Inc. All rights reserved.
Key Terms
• accounting cycle• accounts receivable
(A/R)• adjudication• capitation• coding• coinsurance• consumer-driven health
plan (CDHP)• copayment• deductible• diagnosis
1-4
• diagnosis code• documentation• electronic health records
(EHRs)• encounter form• explanation of benefits
(EOB)• fee-for-service• health maintenance
organization (HMO)• health plan• managed care
© 2011 The McGraw-Hill Companies, Inc. All rights reserved.
Key Terms (Continued)
• medical coder• medical necessity • medical record • modifier • patient information form • payer • policyholder • practice management
program (PMP)• preferred provider
organization (PPO)• premium
1-5
• procedure• procedure code• remittance advice (RA)• statement
© 2011 The McGraw-Hill Companies, Inc. All rights reserved.
1.1 Step 1: Preregister Patients 1-6
• Patient information gathered via phone or Internet before visit:– Name– Contact information– Reason for the visit– Whether patient is new to practice
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1.2 Step 2: Establish Financial Responsibility for Visit
1-7
• Many patients have medical insurance, which is an agreement between a policyholder and a health plan
• To secure medical insurance, policyholders pay premiums to payers, which are health plans such as government plans and private insurance
© 2011 The McGraw-Hill Companies, Inc. All rights reserved.
1.2 Step 2: Establish Financial Responsibility for Visit (Continued)
1-8
• Fee-for-Service Health Plans– Policyholders are repaid for medical costs– Requires payment of coinsurance– Usually a deductible must be paid before benefits
begin
• Managed Care Health Plans– Managed care organizations control both financing
and delivery of health care– Have contracts with both patients and providers
© 2011 The McGraw-Hill Companies, Inc. All rights reserved.
1.2 Step 2: Establish Financial Responsibility for Visit (Continued)
1-9
• Types of managed care health plans– Preferred provider organization (PPO): provider
network for plan members; discounted fees– Health maintenance organization (HMO): pays
fixed amounts called capitation payments to contracted providers; patients must pay a small fixed fee called a copayment per visit
– Consumer-driven health plan (CDHP): combines a health plan with a high deductible with a policyholder's savings account
© 2011 The McGraw-Hill Companies, Inc. All rights reserved.
1.3 Step 3: Check In Patients 1-10
• Patients complete the patient information form that contains personal, employment, and medical insurance information
• Patient identity is verified• Time-of-service payments due before treatment
are collected
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1.4 Step 4: Check Out Patients 1-11
• Every time a patient is treated by a health care provider, a record, known as documentation, is made of the encounter
• This chronological medical record, or chart, includes information that the patient provides
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1.4 Step 4: Check Out Patients(Continued)
1-12
• Diagnoses and Procedures– A diagnosis is the physician’s opinion of the nature of
the patient’s illness or injury– Procedures are the services performed– Coding is the process of translating a description of a
diagnosis or procedure into a standardized code• A patient’s diagnosis is communicated to a health plan as a
diagnosis code• A procedure code stands for a particular service, treatment,
or test• A modifier is a two-digit character that is appended to a CPT
code to report special circumstances
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1.4 Step 4: Check Out Patients(Continued)
1-13
• The diagnosis and procedure codes are recorded on an encounter form, also known as a superbill
• A practice management program (PMP) is a software program that automates the administrative and financial tasks required to run a medical practice
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1.5 Step 5: Review Coding Compliance 1-14
• A physician, medical coder, or medical insurance specialist assigns codes
• The documented diagnosis and medical services should be logically connected, so that the medical necessity of the charges is clear to the insurance company– Medical necessity is treatment by a physician for the
purpose of preventing, diagnosing, or treating an illness, injury, or its symptoms in an appropriate manner
© 2011 The McGraw-Hill Companies, Inc. All rights reserved.
1.6 Step 6: Check Billing Compliance 1-15
• Each charge, or fee, for a visit is represented by a specific procedure code
• The provider’s fees for services are listed on the medical practice’s fee schedule
• Medical billers use their knowledge to analyze what can be billed on health care claims
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1.7 Step 7: Prepare and Transmit Claims 1-16
• Medical practices produce insurance claims to receive payment
• PMPs generate health care claims for electronic transmittal
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1.8 Step 8: Monitor Payer Adjudication 1-17
• When a claim is received by a payer, it is reviewed following a process known as adjudication—a series of steps designed to judge whether it should be paid
• The document explaining the results of the adjudication process is called a remittance advice (RA) or explanation of benefits (EOB)
© 2011 The McGraw-Hill Companies, Inc. All rights reserved.
1.9 Step 9: Generate Patient Statements 1-18
• A statement lists all services performed, along with the charges for each service
• Statements list the amount paid by the health plan and the remaining balance that is the responsibility of the patient
© 2011 The McGraw-Hill Companies, Inc. All rights reserved.
1.10 Step 10: Follow Up PatientPayments and Handle Collections
1-19
• The accounting cycle is the flow of financial transactions in a business
• PMPs are used to track accounts receivable (AR)—monies that are coming into the practice
• PMPs are also used to create day sheets, monthly reports, and outstanding balances reports