Transcript Continued

CHAPTER
7
Visit Charges and
Compliant Billing
© 2012 The McGraw-Hill Companies, Inc. All rights reserved.
7-2
Learning Outcomes
When you finish this chapter, you will be able to:
7.1
7.2
7.3
7.4
Explain the importance of properly linking diagnoses
and procedures on health care claims.
Describe the use and format of Medicare’s Correct
Coding Initiative (CCI) edits and medically unlikely
edits (MUEs).
Discuss types of coding and billing errors.
Explain major strategies that help ensure compliant
billing.
© 2012 The McGraw-Hill Companies, Inc. All rights reserved.
7-3
Learning Outcomes (Continued)
When you finish this chapter, you will be able to:
7.5
7.6
7.7
7.8
Discuss the use of audit tools to verify code
selection.
Describe the fee schedules that physicians create
for their services.
Compare the usual, customary, and reasonable
(UCR) and the resource-based relative value scale
(RBRVS) methods of determining the fees that
insurance carriers pay for providers’ services.
Describe the steps used to calculate RBRVS
payments under the Medicare Fee Schedule.
© 2012 The McGraw-Hill Companies, Inc. All rights reserved.
7-4
Learning Outcomes (Continued)
When you finish this chapter, you will be able to:
7.9
7.10
Discuss the calculation of payments for participating
and nonparticipating providers, and describe how
balance billing regulations affect the charges that
are due from patients.
Differentiate between billing for covered versus
noncovered services under a capitation schedule.
© 2012 The McGraw-Hill Companies, Inc. All rights reserved.
7-5
Key Terms
•
•
•
•
•
•
•
advisory opinion
allowed charge
assumption coding
audit
balance billing
capitation rate (cap rate)
CCI column 1/column 2
code pair edit
• CCI modifier indicator
• CCI mutually exclusive
code (MEC) edit
• charge-based fee
structure
• code linkage
• computer-assisted
coding (CAC)
• conversion factor
• Correct Coding Initiative
(CCI)
• documentation template
• downcoding
• edits
© 2012 The McGraw-Hill Companies, Inc. All rights reserved.
7-6
Key Terms (Continued)
• excluded parties
• external audit
• geographic practice cost
index (GPCI)
• internal audit
• job reference aid
• medically unlikely edits
(MUEs)
• Medicare Physician Fee
Schedule (MPFS)
• OIG Work Plan
• professional courtesy
• prospective audit
• provider withhold
• Recovery Audit
Contractor (RAC)
• relative value scale
(RVS)
• relative value unit (RVU)
• resource-based fee
structure
• resource-based relative
value scale (RBRVS)
• retrospective audit
© 2012 The McGraw-Hill Companies, Inc. All rights reserved.
Key Terms (Continued)
7-7
• truncated coding
• upcoding
• usual, customary, and
reasonable (UCR)
• usual fee
• write off
© 2012 The McGraw-Hill Companies, Inc. All rights reserved.
7-8
7.1 Compliant Billing
• Diagnoses and procedures must be correctly
linked on health care claims so payers can
analyze the connection and determine the
medical necessity of charges
• Code linkage—connection between a service
and a patient’s condition or illness
© 2012 The McGraw-Hill Companies, Inc. All rights reserved.
7-9
7.2 Knowledge of Billing Rules
• To prepare correct claims, it is important to know
payers’ billing rules as stated in patients’
medical insurance policies and participation
contracts
• Correct Coding Initiative (CCI)—computerized
Medicare system that prevents overpayment
– CCI edits—code combinations used by computers in
the Medicare system to check claims
• CCI column 1/column 2 code pair edit–
Medicare code edit where CPT codes in column
2 will not be paid if reported in the same way as
the column 1 code
© 2012 The McGraw-Hill Companies, Inc. All rights reserved.
7.2 Knowledge of Billing Rules
(Continued)
7-10
• CCI mutually exclusive code (MEC) edit—
both services represented by MEC codes that
could not have been done during one encounter
• CCI modifier indicator—number showing if the
use of a modifier can bypass a CCI edit
• Medically unlikely edits (MUEs)—units of
service edits used to lower the Medicare fee-forservice paid claims error rate
© 2012 The McGraw-Hill Companies, Inc. All rights reserved.
7.2 Knowledge of Billing Rules
(Continued)
7-11
• OIG Work Plan—OIG’s annual list of planned
projects
• Advisory opinion—opinion issued by CMS or
the OIG that becomes legal advice
• Excluded parties—individuals or companies not
permitted to participate in federal health care
programs
© 2012 The McGraw-Hill Companies, Inc. All rights reserved.
7-12
7.3 Compliance Errors
• Claims are rejected or downcoded because of:
– Medical necessity errors
– Coding errors
– Errors related to billing
• Truncated coding—diagnoses not coded at the
highest level of specificity
• Assumption coding—reporting undocumented
services the coder assumes have been provided
due to the nature of the case or condition
© 2012 The McGraw-Hill Companies, Inc. All rights reserved.
7.3 Compliance Errors (Continued)
7-13
• Upcoding—use of a procedure code that
provides a higher payment
• Downcoding—payer’s review and reduction of
a procedure code
© 2012 The McGraw-Hill Companies, Inc. All rights reserved.
7-14
7.4 Strategies for Compliance
• Major strategies to ensure compliant billing:
– Carefully define bundled codes and know global
periods
– Benchmark the practice’s E/M codes with national
averages
– Keep up to date through ongoing coding and billing
education
– Be clear on professional courtesy and discounts to
uninsured/low-income patients
– Maintain compliant job reference aids and
documentation templates
– Audit the billing process
© 2012 The McGraw-Hill Companies, Inc. All rights reserved.
7.4 Strategies for Compliance (Continued) 7-15
• Professional courtesy—providing free services
to other physicians
• Job reference aid—list of a practice’s frequently
reported procedures and diagnoses
• Computer-assisted coding (CAC)—allows a
software program to assist in assigning codes
• Documentation template—form used to prompt
a physician to document a complete review of
systems (ROS) and a treatment’s medical
necessity
© 2012 The McGraw-Hill Companies, Inc. All rights reserved.
7-16
7.5 Audits
• Monitoring the coding and billing process is done
to ensure adherence to established policies and
procedures
• An important compliance activity involves audits
– An audit is a formal examination or review
– Recovery Audit Contractor (RAC)—program
designed to audit Medicare claims
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7-17
7.5 Audits (Continued)
• External audit—audit conducted by an outside
organization
• Internal audit—self-audit conducted by a staff
member or consultant
• Prospective audit—internal audit of claims
conducted before transmission
• Retrospective audit—internal audit conducted
after claims are processed and RAs have been
received
© 2012 The McGraw-Hill Companies, Inc. All rights reserved.
7-18
7.6 Physician Fees
• Physicians set their fee schedules in relation to
the fees that other providers charge for similar
services
• Usual fee—normal fee charged by a provider
© 2012 The McGraw-Hill Companies, Inc. All rights reserved.
7-19
7.7 Payer Fee Schedules
• Payers use two main methods to establish the
rates they pay providers
– Charge-based fee structure—fees based on
typically charged amounts
– Resource-based fee structure—fee structures built
by comparing three factors:
(1) how difficult it is for the provider to do the procedure,
(2) how much office overhead the procedure involves, and
(3) the relative risk that the procedure presents to the patient
and to the provider
© 2012 The McGraw-Hill Companies, Inc. All rights reserved.
7.7 Payer Fee Schedules (Continued)
7-20
• Payers that use a charge-based fee structure
also analyze charges using one of the national
databases
– Usual, customary, and reasonable (UCR)—setting
fees by comparing usual fees, customary fees, and
reasonable fees
– Relative value scale (RVS)—system of assigning
unit values to medical services based on their
required skill and time
© 2012 The McGraw-Hill Companies, Inc. All rights reserved.
7.7 Payer Fee Schedules (Continued)
7-21
• The relative value system can be used to assign
a relative value, known as the relative value unit
– Relative value unit (RVU)—factor assigned to a
medical service based on the relative skill and
required time
• Conversion factor—amount used to multiply a
relative value unit to arrive at a charge
© 2012 The McGraw-Hill Companies, Inc. All rights reserved.
7.7 Payer Fee Schedules (Continued)
7-22
• Resource-based relative value scale
(RBRVS)—relative value scale for establishing
Medicare charges
– Geographic practice cost index (GPCI)—Medicare
factor used to adjust providers’ fees in a particular
geographic area
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7.8 Calculating RBRVS Payments
7-23
• Each part of the RBRVS—the relative values,
the GPCI, and the conversion factor—is updated
each year by CMS
• Medicare Physician Fee Schedule (MPFS)—
the RBRVS-based allowed fees
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7.8 Calculating RBRVS Payments
(Continued)
7-24
• The following steps are used to calculate the
RBRVS payments under the MPFS:
– Determine the procedure code for the service
– Use the MPFS to find three RVUs—work, practice
expense, and malpractice—for the procedure
– Use the Medicare GPCI list to find the three
geographic practice cost indices
– Multiply each RVU by its GPCI to calculate the
adjusted value
– Add the three adjusted totals, and multiply the sum by
the annual conversion factor to determine the
payment
© 2012 The McGraw-Hill Companies, Inc. All rights reserved.
7.9 Fee-Based Payment Methods
7-25
• In addition to setting various fee schedules,
payers use one of three main methods to pay
providers:
1. Allowed charges
2. Contracted fee schedule
3. Capitation
• Allowed charge—maximum charge a plan pays
for a service or procedure
© 2012 The McGraw-Hill Companies, Inc. All rights reserved.
7.9 Fee-Based Payment Methods
(Continued)
7-26
• Balance billing—collecting the difference
between a provider’s usual fee and a payer’s
lower allowed charge
• Write off—to deduct an amount from a patient’s
account
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7-27
7.10 Capitation
• The capitation rate (or cap rate) is the periodic
prepayment to a provider for specified services
to each plan member
– Health plan sets a capitation rate that pays for all
contracted services to enrolled members for a given
period
• Provider withhold—amount withheld from a
provider’s payment by an MCO
© 2012 The McGraw-Hill Companies, Inc. All rights reserved.