Unit 8

Medical Insurance

Class Overview

Medical Insurance

Purpose of Medical Insurance

• • • • • Provides protection from risk and financial loss Money is paid to the insured Premiums are paid for by the insured Assists patients in covering costs incurred for medical treatment Expenses covered by insurance include: – Regular medical expenses – Hospitalization – Surgery – Major medical expenses

Coverage Offered Through Hospitalization Insurance • • • • • Cost of hospital room Cost of meals Use of the operating room X-ray and lab fees Usually limited to a total dollar amount or a maximum number of days

Insurance Coverage for Surgery

• • • Charges typically based on “reasonable and customary” charges Costs vary by region Copays and deductibles may apply

Fixed Payment Plans

• • • Payment of a fixed fee provides monthly coverage The fixed fee is known as the premium Reimbursement is available once the premium has been paid

Types of Health Care Insurance

Health Care Insurance Description Managed care

Fixed, prepaid-fee plans

Group sponsored or individual policies

Purchased through commercial insurance companies

Government sponsored programs

Plans financed and regulated by federal and state governments

Managed Care Organizations

• • • • Payment of fixed fee provides monthly coverage Fixed fee is known as the premium Reimbursement is available once the premium has been paid Plans referred to as prepaid plans

Why Managed Care?

• Advantages – Lowers expenses for patients – Requires nominal copayments for patients – Offers plans with no deductibles – Contains health care costs – Provides payment for authorized services – Ensures established fee schedules – Usually covers preventive care

Why Managed Care?

• Disadvantages – Increases amount of paperwork – Requires preauthorization – Lowers reimbursement rates – Limits physician choices – Lacks guarantee of coverage – Limits specialized care – Limits referrals – Limits flexibility

Health Maintenance Organization (HMO) • • • • • • Type of managed care plan Original concept was to control health care costs Membership limited to certain providers Services provided on a predetermined fee Patients must see physicians who participate in the plan Emphasizes maintenance of health

Closed Panel Model

• The clinic is owned by the HMO and the providers are employees of the HMO

Open Panel HMO

• The health care providers are not employees of the HMO and do not belong to a medical group owned or managed by the HMO

Preferred Provider Organization (PPO) • • • • • Type of managed care plan Purpose is to contain costs Patient must use contracted provider Fee-for-service program Members not restricted to designated physicians or hospitals

Point-of-Service Plan (POS)

• • • Type of managed care plan Offers more flexibility than some HMOs & PPOs Out-of-network or in network provider may be seen

Exclusive Provider Organization (EPOs) • • • Managed care system Patients select physicians from a list Providers are reimbursed on a modified fee-for service basis

Integrated Delivery System (IDS) • • Organization of provider sites contracted to offer services to subscribers Example: – Physician-hospital organization (PHO) – Medical foundation – Management service organization (MSO) – Group practice without walls (GPWW) – Integrated provider organization (IPO)

Commercial Insurance Carriers

• • • Typically for-profit organizations Often offer both traditional fee-for-service plans and managed care plans Require subscribers to pay a premium for membership

The Health Insurance Card

Blue Cross/Blue Shield

• • • • • Largest prepayment medical insurance system in U.S.

Exist in every state Operate locally under state laws Provide coverage for medical procedures and services Offer various types of health care plans

Government Programs

• • • • • • Medicare Medicaid TRICARE CHAMPVA Worker’s compensation Disability insurance

Coverage Provided by Basic Insurance Policies • • • • • Office visits Hospitalization Emergency room Surgery Wellness exams

Major Medical Insurance

• Provides coverage for: – Catastrophic illnesses or injuries – Prolonged illnesses – Typically a supplemental policy – Usually increases insurer’s premiums

Surgical and Long-Term Care Insurance • • Surgical insurance: – Provides coverage for surgical services – Uncommon policies since most basic insurance plans cover these costs Long-term care insurance: – Provides coverage for the costs of nursing home care – Common policies since most basic insurance plans do not cover these costs

Dental Insurance

• • • Typically provides coverage for: – Dental examinations – Cleaning – Polishing – Fillings – Certain extractions Often requires a deductible 50% to 100% coverage offered by plans

Coverage Provided by Vision Insurance • • • • • Eye examination Contact lens Prescription frames Prescription lenses Laser corrective eye surgery

UCR Method

• • • UCR = usual, customary, reasonable Used to determine the portion that an insurance company is obligated to pay Takes into consideration: – The usual fee a provider charges for most patients for a certain service/procedure – The geographic location and specialty of the practice – Any complications or unusual services or procedures

Indemnity Schedules

• • • • Another method used to determine insurance carrier payment Based on the maximum amount charged for a specific service Payment is determined on the lowest charge submitted by physician or by the physician’s fee schedule Common method used in managed care

Relative Value Studies (RVS)

• • • A method to determine pricing factors in reimbursement Areas considered in the accounting include: – Time of the provider – Skill of the provider – The provider’s overhead expenses Each area is then turned into unit counts that are applied to a specific service

Medicare and RVS

• • Medicare payments based on resource-based RVS (RBRVS) Resource-based RVS: – Utilizes the RVS – Allows for increases in charges due to economic changes and other factors

Filing Requirements

• • • • • Claims must be filed in a timely manner If deadline is not met than no money can be retrieved from the insurance carrier Filing deadlines vary by carrier Correct claim form must be used for each carrier. Most will accept the CMS-1500.

Supporting materials with claims may be required. These must be turned in correctly and on time.

Preauthorization

• • • • • • Also called precertification To obtain permission from the insurance carrier to provide services to a patient Must be acquired prior to patient appointment unless an emergency Patient may or may not be aware of need for preauthorization Failure may delay treatment If service is provided without preauthorization insurance carrier may refuse to pay

Calling the Insurance Carrier for Precertification • • If possible obtain at least 24 hours prior to patient services being provided Gather all pertinent patient information prior to calling

Pertinent Information

• • • • • Patient’s insurance information Precertification form Procedure or service request with specifics regarding number of treatments and for how long Documentation by the physician requesting the procedure or service Information on the provider who will be performing the procedure or service

Acquired Information When Approval is Obtained • • • • Precertification or preauthorization information Preauthorization numbers are often provided Any precertification numbers that are obtained must be included on the insurance claim form Copy of completed precertification form must be placed in the patient’s medical record

Steps to Take When Preauthorization is Rejected • • • Physician can write a letter to the carrier providing rationale for the treatment Subscriber of the insurance can send a letter of appeal Any letters sent to the insurance company should be kept in the patient’s file

Guidelines for Verifying Insurance • • • Obtain all insurance information from patient at initial contact Provide the patient with a copy of the practice’s written policies and procedures for dealing with insurance carriers Discuss the patient’s insurance benefits prior to services rendered

Cost Containment Measures for Health Care • • Peer Review Organization (PRO) – Occurred when Congress amended the Social Security Act of 1972 and created the Professional Standards Review Organization (PSRO) Diagnosis-related groups (DRGs) – Developed in the late 1960s – Used by hospitals to determine their Medicare reimbursement rates – Not used for to calculate outpatient payments

Federal Register

• • • Published daily by the National Archives and Records Administration (NARA) Used by MAs to obtain information on: – Federal rules, regulations, and notices – Executive orders and proclamations – Presidential documents Can be viewed by going on the Internet

• Managed Care

Discussion

Role Play

• Insurance Authorization

Medical Insurance Claims

Purpose of the Health Insurance Claim Form • • • Report patient procedures and services to the insurance carrier Help standardize reporting Improve communication between the medical facility and the insurance carrier

Main Elements to Improve Communication Process • • • Use of the correct health insurance claim form Accuracy of information provided in the health insurance claim form Submission of the health insurance claim form to the correct insurance carrier

Types of Health Insurance Claim Forms • • CMS-1500 – Most common health insurance claim form – Used to file claims for physician services – Submitted to the insurance carrier electronically or by standard mail UB-92 (also referred to as the CMS-1450) – Used to report services related to hospitalization

Submitting a Blue Cross/Blue Shield Claim • • • May provide their own health insurance form Forms can be obtained online CMS-1500 may be accepted

Submitting a Claim for a Managed Care Organization • • • Form used will depend on managed care organization Most will accept the CMS-1500 Use of incorrect form may cause claim to be rejected causing delayed or no payment

Submitting a Medicare Claim

• • • • • Covered benefits change Keeping up-to-date is important for accurate claims submission Critical to know: – Coverage – Benefit period CMS-1500 used for Medicare claims Claims to Medicare can be sent electronically or by standard mail

Submitting a Medicaid Claim

• • • • Claim submission varies from state to state Typically patients must qualify for benefits monthly. Eligibility is not automatic. Preauthorization is required for some services Critical to verify patient eligibility at each visit

Submitting a TRICARE Claim

• • • DD Form 2642: – Form completed and sent by patient or family member – Payment sent to patient who is responsible to then pay the provider CMS-1500: – Form completed and sent by the physician’s office – Payment is sent directly to the provider’s office UB-92: – Form completed and sent by the hospital – Payment is sent directly to the hospital

Submitting a Workers’ Compensation Claim • • • • • Claim form depends on the state and insurance carriers in that state Typically the CMS-1500 is accepted Important for MA to call and verify what form must be used for claims submission Patient does not pay for procedures and services provided by workers’ comp Employer is ultimately responsible

Methods to Submitting Claims

• • • No matter the method the same information is provided Method is dependent on insurance carrier Two methods used today: – Faxing or mailing paper claim – Submitting claim electronically

Advantages of Paper Claims

• • Basic costs are minimal Materials needed for paper claims: – – Claim forms Coding books

Disadvantages of Paper Claims

• • Costs to complete the paper claim process can be costly These costs include costs for: – Time required to complete the form – Higher chance of errors – Storage space – Postage – Copies of claim forms

Advantages of Electronic Claims • • • • Decreases turnaround time in the processing of claims Increases speed of claims processing by both the insurance carrier and the provider Provides the capability for direct electronic deposit of payments in provider account Saves money on postage and labor costs for the provider

Disadvantages of Electronic Claims • • Initial start-up expenses: – Internet service provider – Computer – Software – Training of those who will be using the system – Printer – Backup or storage devices Computer down times

Three Ways Claims are Transmitted • • • Sent directly to payer via EDI (electronic data interchange) Transmitted through a clearinghouse DDE (direct data entry)

Statuses of a Claim

• • Clean claims: – Form is completed without any errors or omissions and submitted on time Dirty claims: – Form is incorrect because of missing data or errors, causing the claim to be rejected

Statuses of a Claim

• • Invalid claims: – Form is complete but has some type of incorrect information Denied claims: – Procedure or services are not covered by the insurance policy or the patient has not met his/her deductible. Ineligible procedures or services can also cause a claim to be denied.

Information Needed to Complete the CMS-1500 • • • • • Name of insured’s insurance company Insured’s name Insured’s ID# Insured’s address Telephone # of insured

Reading the CMS-1500

• • Boxes (Blocks) 1-13: – Patient data Boxes (Blocks) 14-33: – Provider information – Information on services provided to patient – Reason for services

Completion of the CMS-1500: Boxes 1-8

Completion of the CMS-1500: Boxes 9-13

Completion of the CMS-1500: Boxes 14-23

Completion of the CMS-1500: Box 24 A-J

Completion of the CMS-1500: Boxes 25-33

Prior to Submitting a Claim

• • • • Check for accuracy on the claim form If a paper claim, make a copy for the patient’s file Enter data on the insurance claims log Send the completed CMS-1500 with required documentation to the insurance carrier

Confidentiality and the CMS-1500

• • • • As with all patient data, information must remain confidential Release of information must be signed by the patient Signed standard release form may be used Form is placed in patient file

Signature and Payment of Benefits • • Box 12: – Patient signature indicates permission for releasing information on the claim form Box 13: – If signed by patient, payment will go directly to service provider – If not signed, payment is sent to the insured – SIGNATURE ON FILE can also be used for this box

Assignment of Benefits

• • • • • Allowed by Medicare and other carriers One time form signed by patient Provides authorization for patient information to be released Once signed, usage of SIGNATURE ON FILE can be used Form must be permanently kept in the patient’s record

Participating vs. Nonparticipating Providers • • Advantage: – Payment sent directly to the practice, typically in a timely manner Disadvantage: – Reimbursement might be at a less desirable rate leading to write-offs

Materials Needed to Complete the CMS-1500 • • • • • • Patient’s medical record Patient’s ledger card Superbill CMS-1500 Black ink pen Computer with a printer or typewriter

The Superbill

• Contains: – – Patient’s name Diagnoses – Treatments – Space for claim information

The Birthday Rule

• • • • • Used to determine which parent’s insurance plan is primary Only used for parents who are legally married Primary plan is the one held by the parent whose birthday falls first in the year If parents have birthday on the same day, parent who has had the coverage the longest would hold the primary plan Primary plan of divorced parents is determined by court

Prior to Submitting a Claim

• • • • Check for accuracy on the claim form If a paper claim, make a copy for patient’s file Enter data on the insurance claims log Send the completed CMS-1500 with required documentation to the insurance carrier

Maintaining Confidentiality of Patient Information • • Responsibility of all health care workers Breach of confidentiality occurs when information is provided to individuals who have not been authorized to receive it

How to Keep Patient Information Secure • • • • Ensure information is only provided to approved individuals Limit access to patient information in work areas Create work areas where confidential information can be discussed privately Follow rules established by HIPAA

Documentation of Permission

• • • Authorization for Release of Medical Information Block 12 on CMS-1500 Release form created by medical practice

Insurance Claims Log

• • • • Used to track claim forms Can be done manually or electronically Data entered when claim form is completed Information on log: – Patient’s name – – Date of service Insurance carrier – – Date of claim submission Amount of the claim submitted

Most Common Reasons for Claim Rejection • • • • • Missing or incorrect information Missing or incorrect patient registration information (name, address, insurance number) Missing or incorrect name of referring physician Missing or incorrect diagnosis code Overlapping, incorrect, or duplicate dates of service

Most Common Reasons for Claim Rejection • • • • Incorrect place of service Invalid, missing, or incorrect procedure code Incorrect or missing number of days or units Incorrect or missing modifier

Resubmitting Claims

• • • • Information must be corrected and resubmitted Use of patient data and other resources is important for accuracy Accuracy on claims is critical!

Time limits for re-filing must be met!

Ways to Minimize the Number of Rejected Claims • • • • • • Review the claim for accuracy prior to submitting it Pay close attention to detail Keep current reference materials, books and equipment readily available and use them Limit distractions that can occur in the medical office Have a specific time of the day to focus solely on claims processing Have another medical office staff member review each claim

• CMS-1500 Form

Discussion

Small Group Activity

• Critical Thinking Scenarios

Discussion

• Financial Impact of Rejected Claims

• Topics Covered

Summary