Transcript Slide 1

CHAPTER
1
Introduction to the
Medical Billing Cycle
© 2012 The McGraw-Hill Companies, Inc. All rights reserved.
1-2
Learning Outcomes
When you finish this chapter, you will be able to:
1.1
1.2
1.3
1.4
1.5
Explain the reason that employment opportunities
for medical insurance specialists in physician
practices are increasing rapidly.
Describe covered services and noncovered
services under medical insurance policies.
Compare indemnity and managed care approaches
to health plan organization.
Cite three examples of cost containment under
health maintenance organizations.
Define a preferred provider organization.
© 2012 The McGraw-Hill Companies, Inc. All rights reserved.
1-3
Learning Outcomes (Continued)
When you finish this chapter, you will be able to:
1.6
1.7
1.8
1.9
1.10
State the two elements that are combined in a
consumer-driven health plan.
Recognize the three major types of medical
insurance payers.
List the ten steps in the medical billing cycle.
Define professionalism.
Explain the purpose of certification.
© 2012 The McGraw-Hill Companies, Inc. All rights reserved.
1-4
Key Terms
• accounts receivable
(A/R)
• adjudication
• benefits
• capitation
• coinsurance
• compliance
• consumer-driven health
plan (CDHP)
• copayment
• covered services
•
•
•
•
•
•
•
•
deductible
diagnosis code
ethics
etiquette
excluded services
fee-for-service
health care claim
health maintenance
organization (HMO)
• health plan
• indemnity plan
• managed care
© 2012 The McGraw-Hill Companies, Inc. All rights reserved.
1-5
Key Terms (Continued)
• managed care
organization (MCO)
• medical coder
• medical insurance
• medical insurance
specialist
• medical necessity
• network
• noncovered services
• open-access plan
• out-of-network
• out-of-pocket
• participation
• patient ledger
• Patient Protection and
Affordable Care Act
(PPACA)
• payer
• per member per month
(PMPM)
• point-of-service (POS)
plan
• policyholder
• practice management
program (PMP)
© 2012 The McGraw-Hill Companies, Inc. All rights reserved.
Key Terms (Continued)
• preauthorization
• preexisting condition
• preferred provider
organization (PPO)
• premium
• preventive medical
services
• primary care physician
(PCP)
• procedure code
• professionalism
• provider
1-6
• referral
• schedule of benefits
• self-funded (self-insured)
health plan
• third-party payer
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1-7
1.1 The Medical Insurance Field
• Spending on health care in the United States is
rising due to the cost of advances in medical
technology and an aging population
• There are many job opportunities in the health
care field as a result
• A TRILLION DOLLAR industry!
– 12 zeros!
© 2012 The McGraw-Hill Companies, Inc. All rights reserved.
1.2 Medical Insurance Terms
1-8
• Medical insurance is a written policy that states
the terms of an agreement between a
policyholder (an individual) and a health plan
(an insurance company, plan or program that
provides some form of medical insurance)
– Dependents
• Person other than the insured who is covered under a health
plan
– Wife, children…?
• Health plans provide benefits (payments for
medical services)
• Health plans are often referred to as payers
• A third-party payer is a private or government
organization that insures or pays for health care
on behalf of beneficiaries
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1.2 Medical Insurance Terms (Continued)
1-9
• Insurance policies contain a schedule of
benefits that summarizes payments that may be
made for medical services
• Payer’s definition of medical necessity
determines coverage and payment
• A provider must meet the payer’s professional
standards
– Providers include physicians, nurse-practitioners,
physician assistants, therapists, hospitals,
laboratories, long-term care facilities, and suppliers
such as pharmacies and medical supply companies
• May be individuals, groups, or organizations
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1.2 Medical Insurance Terms (Continued)
1-10
• Covered services may include primary care,
emergency care, medical specialists’ services,
and surgery. These are listed in the policy.
• Preventive medical services include physical
examinations, pediatric and adolescent
immunizations, prenatal care, and routine
screening procedures
• Not all covered services have the same benefits
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1.2 Medical Insurance Terms (Continued)
1-11
• Noncovered services are
– those not paid for by a health plan
• Excluded services may include:
– Dental services, eye care, employment-related
injuries, cosmetic procedures, or experimental
procedures
– Some other specific items
– A preexisting condition
• a medical condition diagnosed before the policy took effect
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1-12
1.3 Health Care Plans
• An indemnity plan provides protection against
loss
• Physicians send the health care claim—a
formal insurance claim that reports data about
the patient and the services provided—to the
payer on behalf of the patient
• Patients pay a premium
– the periodic payment they are required to make to
keep a policy in effect
© 2012 The McGraw-Hill Companies, Inc. All rights reserved.
1.3 Health Care Plans (Continued)
1-13
• Most policies have a deductible
– the amount that the insured pays on covered services
before benefits begin
• Coinsurance is the percentage of each claim
that the insured pays
• Some patients must pay out-of-pocket
expenses prior to benefits
– Example on page 9
• Fee-for-service is a charging method based on
each service performed
– Figure 1.2, page TEN
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1-14
1.3 Health Care Plans (Continued)
• Managed care offers a more restricted choice of
providers and treatments in exchange for lower
premiums, deductibles, and other charges
• Managed care organizations (MCOs) establish
links between provider, patient, and payer
– How many MCOs may a doctor choose to participate
in?
• Thinking it Through, page 10
© 2012 The McGraw-Hill Companies, Inc. All rights reserved.
1.4 Health Maintenance Organizations
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• A health maintenance organization (HMO)
combines coverage of medical costs and
delivery of health care for a prepaid premium
• Participation means that a provider has
contracted with a health plan to provide services
to the plan’s beneficiaries
• Capitation is a fixed prepayment to a provider
for all necessary contracted services provided to
each plan member
– Per member per month (PMPM) is the capitated rate
– Figure 1.3, page 11
© 2012 The McGraw-Hill Companies, Inc. All rights reserved.
1.4 Health Maintenance Organizations
(Continued)
1-16
• A network is a group of providers having
participation agreements with a health plan
– Visits to out of-network providers are not covered
• HMOs…
– Health Maintenance Organization…
• often require preauthorization before the patient
receives many types of services
• When HMO members see a provider, they pay a
specified charge called a copayment
• HMO members choose a primary care physician
(PCP), who directs all aspects of their care
© 2012 The McGraw-Hill Companies, Inc. All rights reserved.
1.4 Health Maintenance Organizations
(Continued)
1-17
• Open-access plans are those HMOs…
– Health Maintenance Organization…
• that allow visits to specialists in the plan’s
network without a referral
• A point-of-service (POS) plan permits patients
to receive medical services from non-network
providers for a greater charge
• Thinking it Through, page 14
© 2012 The McGraw-Hill Companies, Inc. All rights reserved.
1.5 Preferred Provider Organizations
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• A preferred provider organization (PPO) is an
MCO…
– Managed Care Organization…
• where a network of providers supply discounted
treatment for plan members
– Most popular type of health plan
– Creates a network of physicians, hospitals, and other
providers with negotiated discounts
– Requires payment of a premium and often of a copayment
for visits
– Does NOT require referrals or PCPs…
• Primary Care Physicians
• Thinking it Through, page 16
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1-19
1.6 Consumer-Driven Health Plans
• A consumer-driven health plan (CDHP)
combines a high-deductible health plan with a
medical savings plan
– The health plan is usually a PPO…
• Preferred Provider Organization…
– with a high deductible and low premiums
– The savings account is used to pay medical bills
before the deductible has been met
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1.7 Medical Insurance Payers
• Three major types of medical insurance payers:
1. Private payers—dominated by large insurance
companies
2. Self-funded (self-insured) health plans—
organizations that pay for health insurance directly
and set up a fund from which to pay
3. Government-sponsored health care programs—
includes Medicare, Medicaid, TRICARE, and
CHAMPVA
• The Patient Protection and Affordable Care
Act (PPACA) is health system reform legislation
that introduced significant benefits for patients
© 2012 The McGraw-Hill Companies, Inc. All rights reserved.
1-21
1.8 The Medical Billing Cycle
• A medical insurance specialist is a staff
member who handles billing, checks insurance,
and processes payments
• To complete their duties, medical insurance
specialists follow a 10-step medical billing cycle
– This cycle is a series of steps that leads to maximum,
appropriate, timely payment
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1.8 The Medical Billing Cycle (Continued)
1-22
• Step 1 – Preregister patients
• Step 2 – Establish financial responsibility for
visits
– Who is primary payer?
• Step 3 – Check in patients
• Step 4 – Check out patients
– A medical coder is a staff member with specialized
training who handles diagnostic and procedural
coding
– The patient’s primary illness is assigned a diagnosis
code
© 2012 The McGraw-Hill Companies, Inc. All rights reserved.
1.8 The Medical Billing Cycle (Continued)
1-23
• Step 4 – Check out patients (continued)
– Each procedure the physician performs is assigned a
procedure code
– Transactions are entered in a patient ledger—a
record of a patient’s financial transactions
• Step 5 – Review coding compliance
– Compliance means actions that satisfy official
requirements
• Step 6 – Check billing compliance
• Step 7 – Prepare and transmit claims
© 2012 The McGraw-Hill Companies, Inc. All rights reserved.
1.8 The Medical Billing Cycle (Continued)
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• Step 8 – Monitor payer adjudication
– Accounts receivable (A/R) is the monies owed to a
medical practice
– Adjudication is the process of examining claims and
determining benefits
• Step 9 – Generate patient statements
• Step 10 – Follow up patient payments and
handle collections
• A practice management program (PMP) is
business software that organizes and stores a
medical practice’s financial information
© 2012 The McGraw-Hill Companies, Inc. All rights reserved.
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1.9 Working Successfully
• Professionalism is acting for the good of the
public and the medical practice
• Medical ethics are standards of behavior
requiring truthfulness, honesty, and integrity
– Thinking it Through, page 29
• Etiquette is comprised of the standards of
professional behavior
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1.10 Moving Ahead
• Certification is the recognition of a superior
level of skill by an official organization
– Provides evidence to prospective employers that the
applicant has demonstrated a superior level of skill on
a national test
© 2012 The McGraw-Hill Companies, Inc. All rights reserved.