Healthcare finance paper

Health Care Finance Navigate 2 Scenario: Critical Case for Billing and Coding

January 2, 2018

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Critical Case for Billing and Coding

Introduction:

In this scenario, the Student is a CFO at a community Hospital where there has been a reduction in revenue reported over the last three months. The Student must determine where the source of this problem lies and what can be done about it. As the scenario opens, the Student discusses with friend and mentor, Cheryl Noki, the former CFO of the Hospital, the revenue problem and how it is most pronounced in the outpatient arena. The Student sends a message to Controller, Michael Dean, who runs a volume report. They discuss and realize that the outpatient volume has been up over the last year, and this is not the problem. After another discussion with the Cheryl, the Student asks Michael to look at the revenue and usage summary for the current and past year. They discover a low level indicated in the charge master for the hospital, where it should be up. They pinpoint the problem is due to improper coding. The CEO of the hospital, Meredith Lynn, doubts the results, though, and the Student must resolve the doubt by learning and reporting back on the different types of Medicare billing and payments. In the end, the Student will review the key points learned in the scenario through a natural assessment that will be simulated through either a discussion with Cheryl, or through a multiple choice or drag-and-drop exercise.

Characters:

1. Cheryl Noki

2. Michael Dean

3. Meredith Lynn

Locations:

1. Hospital Lobby

2. Cafeteria

3. Conference Room

4. Student’s Home

5. Coffee Shop

6. Finance Copy Room

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Scene 1: Meeting Your Mentor

As this scene begins, the Student talks with mentor, Cheryl, in the hospital lobby where they talk

about a problem in revenue.

Location Hospital Lobby

Scene setup Student is standing, facing Cheryl

On-screen characters Cheryl Noki

Off-screen characters None

On-screen Text: You run into former CFO, Cheryl Noki, in the lobby…

CHERYL: Hi there! How’s the new CFO? I see the place hasn’t fallen apart without me… yet…

<smiles>

STUDENT: Hi, Cheryl! I haven’t seen you for a while! Well, it hasn’t fallen apart yet, but everyone

misses you. What brings you here today?

CHERYL: I’m here to get coffee with an old friend. I work right down the street . . . I’m on the

faculty at the University, an adjunct, actually. I keep trying to retire, but I just can’t seem to stop

working!

STUDENT: That’s great to hear. Are you going to be here long today?

CHERYL: No, just picking her up – why, what’s up?

STUDENT: Not a huge deal, but there has been a reduction in revenue, just over the last quarter,

and I’m having a problem finding the cause.

CHERYL: Yes, that could be from any number of things. Where is it showing up?

STUDENT: It’s most pronounced in outpatient visits. Compared to last year, it’s down 15%,

which means that right now we’re operating at a loss, because the margins were so thin to

begin with.

CHERYL: Oh, don’t I know it! Between lower state and federal revenues, high labor and liability costs, not to mention rising costs for regulatory compliance, it’s a huge challenge to be a CFO nowadays. I have to be honest – I don’t miss the stress.

STUDENT: I can imagine. And if I don’t get on top of it now, the next quarter will be down too.

CHERYL: True, true. What are you doing to research it?

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Student must choose both options to continue.

STUDENT 1: First, I am having the Controller run a volume report.

STUDENT 2: I would like to talk to you about it later, when you have time.

CHERYL RESPONSE 1: That’s where I would start too. And you know Michael is great. He always

goes the extra mile. I really miss working with him.

CHERYL RESPONSE 2: Of course. Why don’t you email me and we can set up a time to meet?

STUDENT: If you’re not tired of coffee, can we meet at the Corner Café tomorrow? I’ll tell

Michael you said hello.

CHERYL: Perfect. And don’t worry, you’ll figure it out. Remember, have all your ducks aligned

before you approach the CEO with a solution. Meredith likes it when you have the answer ready

before she’s even heard the problem.

STUDENT: I am still getting used to her style. She’s just very direct.

CHERYL: That’s a very diplomatic way to put it! You’ll do well here. <smiles> If you need help at

any time, please let me know.

Scene 2: Meeting with the Controller

In this scene, the Student discusses the results of the volume report with Michael Dean, the

Controller. The results are not what the Student hoped for. The scene concludes when an email

from Cheryl appears on the computer screen.

Location Student’s Office

Scene setup Student faces Michael who sits in the chair on the other side of the desk.

On-screen characters Michael Dean

Off-screen characters None

On-screen text: Meeting with the Controller . . .

MICHAEL: I like what you’ve done with the office. Very nice. I chatted with Cheryl earlier today.

STUDENT: Yes – she said to say hello.

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MICHAEL: Great. Did she go on a rant about healthcare reform? I mean, I know she’s right . . . all

the wrong things are negatively impacting our outlook. But she can really go on about it.

STUDENT: No, she just mentioned the challenges that we deal with all the time. So did you get a

chance to run the volume report?

MICHAEL: Oh yeah, I have it right here. I ran it comparing this year to last year. It’s not what we

expected, though.

STUDENT: What do you mean? How does the outpatient volume look?

MICHAEL: Here’s the thing. The total number of outpatient visits was actually up. And not only

that, volume seems to have increased across the board. So it doesn’t appear that volume is the

problem.

STUDENT: Okay. So we know that we’re providing the services and that they’re getting

documented. We’re going to have to look at the rest of the revenue cycle. Any ideas?

MICHAEL: I hope you don’t mind, but when the volume report didn’t show any issues, I went

ahead and did a collections and accounts receivable analysis, but just on one month, not on a

quarter . . . didn’t have time. There are no discrepancies there, no outliers or big accounts that

are not caught up. Sometimes we have a problem with Green Shield, but not in this quarter.

Student can select either option to proceed.

STUDENT 1 : I guess the next thing we have to look at is billing. Is that right?

STUDENT 2: We should probably look at federal reimbursements.

MICHAEL RESPONSE 1: The answer is going to come from, yes, part of the billing cycle: it’s

possible that charges are not being generated, or that there’s some sort of problem in claims.

For that matter, it could even be a computer glitch. I really don’t know what to look at next.

MICHAEL RESPONSE 2: Federal reimbursements are not part of the revenue cycle. I can check

into it, but obviously the problem lies in revenue. It can only be in the charge generation stage.

It’s possible that charges are not being generated, or there could be a problem in claims. For

that matter, it could even be a computer glitch. I really don’t know what to look at next.

STUDENT: Okay – well thanks for this. We can just eliminate one issue at a time. I’ll do some

research and get back to you. Sound good?

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MICHAEL: Yes, please do! You know, it’s not just YOUR job on the line for these numbers.

STUDENT: I know. It’s my top priority. Please don’t worry about it. We’ll get it figured out.

MICHAEL: Hey, it distracts me from worrying about the economy in general, so that’s actually a

good thing. I’ll wait to hear from you on what you want me to do next, though. Thanks! See you

soon!

STUDENT: Thank you, Michael!

NOTE: After this response, screen changes to blue background with a flashing email icon (for

user to select).

After selecting the email icon, an email from Cheryl appears onscreen.

EMAIL Hi,

If you’re still up for it, I can meet you for coffee in the morning before my class,

which is at 9. I have been thinking about it and I may have an idea about your

revenue issue.

Let me know!

Cheryl

NOTE: Reply icon flashes. Student must click on the flashing Reply icon, and then can see the

return email.

EMAIL Cheryl,

Definitely – I can be there at 8:15.

Thank you! See you then!

NOTE: Send icon flashes. Student selects the Send icon to end scene.

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Scene 3: Getting Some Input

In this scene, the Student meets Cheryl for coffee. Cheryl has an idea about the revenue

problem.

Location Corner Café coffee shop

Scene setup Student sits facing Cheryl at a table.

On-screen characters Cheryl

Off-screen characters None

On-screen text: Getting some help from the former CFO . . .

CHERYL: Hi there. Good to see you again.

STUDENT: Thanks for agreeing to meet me. I don’t know who else to ask for help with this!

CHERYL: Of course! Ask what? Did you already look at the volume report?

STUDENT: Yes, and volume is obviously not the problem. In fact, volume is up in outpatient, and

in almost all categories.

CHERYL: Really? Okay. A 15% reduction over one quarter is sort of unprecedented. I couldn’t

stop thinking about it last night. Do you have any ideas about it?

NOTE: Student can choose either option to continue.

STUDENT CHOICE 1: Michael thinks it’s in the billing cycle somewhere. He already looked at

collections and accounts receivable, and those areas are not an issue.

STUDENT CHOICE 2: I think it could be a computer glitch. If the charges are not being generated,

or there is some gap between submitting claims and getting payment, it could be an IT problem.

CHERYL RESPONSE 1: I think it’s in the billing cycle too, and I have an idea about how to look for

it, but first, I want to back up a bit and make sure we’re on the same page.

CHERYL RESPONSE 2: I wouldn’t be too quick to blame IT. think it’s in the billing cycle too and I

have an idea about how to look for it. But first, I want to back up a bit and make sure we’re on

the same page.

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STUDENT: Okay, great. I’m just glad you have some ideas.

CHERYL: We’ll see soon enough if I’m right. Okay, stop me if you have any questions. If you

already know that documentation isn’t the issue, we have to look at the data around charge

capture. Even though the data is collected for clinical reasons, that same data goes to billing.

The clinical information is assigned a diagnosis and procedure code, and that links to the DRG,

you know, the diagnosis-related group assignment. Most of our healthcare payers provide

payment based on those codes.

STUDENT: Yes, right. The whole claim is based on the medical record.

CHERYL: Right. I mean, we’re oversimplifying it a bit, but that’s the flow. So, that’s how we

capture the charges for billing. The billing department posts charges through charge slips, ours

are automated of course, so there’s no room for data entry errors there. But here’s where it

gets tricky. Our charge master lists all the items for which the hospital has established prices,

and it’s a very long list, something like 15,000 entries. I forget exactly.

STUDENT: Yes, I was on the team that did the internal charge master audit last quarter.

CHERYL: Good, so you’re with me so far. So now, the information from the medical record is

captured, and the items compared to the charge master, and this must flow into the actual

claim. Let’s say you have more than one claims person who is sort of new. The processor is

editing a claim, and makes an error either in properly identifying the patient, or is posting

charge slips manually because they are afraid of the new system. If there’s a problem either

capturing the correct charge from the master, or making a data entry error, you can run into

significant issues.

STUDENT: You’re saying that clerical error could cause a 15% reduction in revenue?

CHERYL: Oh, it could get even worse if it’s unchecked. I know, because it happened right before I

became CFO. I watched my predecessor struggle with the same issues, but that loss was closer

to 18, 19%. It took 2 quarters to rectify the problem and catch up.

NOTE: Student can choose either option to continue.

STUDENT CHOICE 1: So where would I look to find out if that’s what the problem is?

STUDENT CHOICE 2: Do you think I should start by going back and reviewing the CDM audit?

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CHERYL RESPONSE TO 1 and 2: I would start with the revenue and usage summary, and

compare this year to last year. That would show you the quantity of items billed by charge code

and payer, and break out the volumes by inpatient and outpatient areas.

STUDENT: This is great. Thank you so much. Can I keep you posted on what happens?

CHERYL: Definitely! I want to know how it works out. See you soon!

NOTE: After Cheryl’s line ends, she disappears and an onscreen “timed” text message appears.

On-screen text: After you talk with Cheryl you decide to contact Michael…

The Student’s phone appears with a text message to Michael:

TEXT Hey, Michael – try running the revenue and usage summary report for this year

compared to last year. We’re looking for discrepancies in billing. And please, try

to do it within the hour.

Thanks!

“Send” icon flashes. When selected, the text message moves to the “sent” position on phone.

“Hang Up” icon flashes.

When Hang Up selected, scene ends.

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Scene 4: Analyzing the Data

As a result of the discussion with the Cheryl, the Student asks Michael to look at the revenue and usage summary for the current and past year. They pinpoint the problem to improper coding.

Location Finance Copy Room

Scene setup Michael is at the copy machine and turns around to talk to the Student.

On-screen characters Michael

Off-screen characters None

On-screen text: Going through the data . . .

MICHAEL: Oh, hi there. I was just making a copy for you so we could look at it together.

STUDENT: Great idea. So, what did you find?

MICHAEL: Well, I found something that might explain it. Earlier we had just looked at total

volume for outpatient, as that was a simple solution. But we didn’t look at volume in terms of

procedures.

STUDENT: That’s true.

MICHAEL: But as soon as you mentioned the report, it came to me, so I started by looking at

types of procedures for any numbers that were widely different. I found that drug

administration codes were way off; the codes for both injectable and infusible drugs were well

below prior year levels.

STUDENT: I’m not sure if I follow you.

MICHAEL: Well, check this out. The important discrepancy is this: even though the codes used

for those procedures were down, according to the usage summary, the number of those drugs

used in the Hospital had actually increased!

Note: Student must select Option 2 to proceed.

STUDENT CHOICE 1: So, what you’re saying is, someone is using drugs illegally and not coding

them?

STUDENT CHOICE 2: So, we have a huge revenue problem because of administrative coding

errors.

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MICHAEL RESPONSE 1: That’s possible, but not likely. I think it points to administrative coding

errors.

MICHAEL RESPONSE 2: Yes, exactly. I’m almost positive it’s administrative coding errors.

STUDENT: Nice work! I need to let Meredith know this as soon as possible.

MICHAEL: If it was me, I would look through the reports and see if there are any other

possibilities, before I talked to Meredith. I’ll give you a copy with my notes on it. Let me know if

you have any questions.

STUDENT: Ok, thanks! Talk to you later. Thanks for hopping on this so quickly, Michael.

MICHAEL: That’s fine. I love tracking down revenue problems.

Scene 5: Talking to the Boss

In this scene, the Student calls the CEO, excited to share the solution. But Meredith, the CEO,

does not agree that this is the issue.

Location Student’s Office

Scene setup Student is facing computer, and using cell phone with video chat.

On-screen characters Meredith (via video call)

Off-screen characters None

On-screen text: Calling Meredith, the CEO . . .

MEREDITH: Hello? Meredith Lynn speaking.

STUDENT: Hello, Meredith, how are you?

MEREDITH: I’m good. Just busy. What can I do for you?

STUDENT: Well, I just wanted to let you know I found the reason for the revenue reduction.

MEREDITH: Oh, really? What is it?

Student can select either option to proceed.

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STUDENT CHOICE 1: It comes down to administrative errors in coding. Even though the use of

injectable and infusible drugs was up over the last quarter, the procedures were not coded as

such.

STUDENT CHOICE 2: It comes down to the charge master. We weren’t assigning codes properly

in the charge list for infusible and injectable drugs.

MEREDITH RESPONSE 1: You’re saying that miscoding those two items caused a 15% revenue

reduction? That doesn’t sound right. How did you arrive at that conclusion?

MEREDITH RESPONSE 2: That doesn’t sound right. We haven’t changed the charge master list in

over a year. How did you arrive at that conclusion?

Student can select either option to proceed.

STUDENT CHOICE 1: We ran the volumes report and then looked specifically at drug codes.

STUDENT CHOICE 2: We ran the revenue and usage summary, and then compared this year to

last year to look at the quantity of items billed by charge code and payer. And then we broke out

the volumes by inpatient and outpatient areas.

MEREDITH RESPONSE 1: What would make you think of that? I’m sorry; it just doesn’t sound

right. Why did you look at drug codes?

MEREDITH RESPONSE 2: Okay, I see. How did you get from there to the drug code issues?

STUDENT: Well, Michael helped with that. In his analysis, he saw that the codes for those two

types of drugs were way off from last year.

MEREDITH: It’s a good theory, and it may be part of the problem, but I don’t think it accounts

for the whole amount. Did you run the numbers or just look at the outliers?

STUDENT: We haven’t compared them to the financials. We were going to do that next. I just

wanted to let you know we found the reason.

MEREDITH: You know, I would prefer that you come to me with facts rather than theories. In

this case, I don’t think the bundled payments we get for inpatients or APC outpatients would be

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affected by a failure to document the procedure, and bundled payments account for a majority

of the revenue.

STUDENT: Oh. Good point. I hadn’t considered that. I will check into it further and get back to

you.

MEREDITH: Okay, but please don’t get back to me until it’s solved. Thank you. <hangs up>

NOTE: The Student’s call ends and then the Student’s cell phone appears with a text message

to Cheryl:

TEXT FROM STUDENT Hey, Cheryl – Is there any way you can meet for lunch today in the cafeteria?

Let me know!

NOTE: The send icon flashes. When selected, the text “virtually” sends and after a short pause,

Cheryl’s response appears on screen:

TEXT FROM CHERYL Sure, sounds good. I’ll be there at noon.

NOTE: The Hang Up icon flashes. When selected, the scene ends.

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Scene 6: Digging Deeper

In this scene, the Student has lunch with Cheryl and shares the results of the reports, as well as

the results of the conversation with Meredith.

Location Hospital Cafeteria

Scene setup Student sits across the table from Cheryl, facing her.

On-screen characters Cheryl

Off-screen characters None

On-screen text: Meeting Cheryl at lunch . . .

CHERYL: Hi ! How’s it going?

STUDENT: It’s been better!

CHERYL: What do you mean? I thought you figured out the problem.

STUDENT: I thought so too. We found a discrepancy in the coding of certain drug types versus

the usage volume, and I figured that was that. Meredith disagrees. And condescendingly, I might

add.

CHERYL: Oh, don’t let her attitude bother you. She’s so busy, sometimes she forgets to show her

human side. So, did she say why she disagreed? It looks this may be very similar to the same

problem we had nearly 5 years ago.

STUDENT: She said that improper coding for those procedures wouldn’t affect the bundled

payments we get for inpatients or APC outpatients.

CHERYL: Oh right, the bundled payments. <Sighs> We’ll have to go a little deeper into the coding

then.

STUDENT: I’m not sure what you mean. Do you mind taking me through it?

CHERYL: Well, let’s talk about the different claim categories; see if we can figure it out together.

Maybe we were just looking in the wrong places. So, there are two basic categories of claims:

the UB-04s, which cover claims for both inpatient and outpatient, and the CMS-1500, for

physician and professional claims. And then, HIPAA requires that we use both diagnosis and

procedure codes. We use HCPCS codes for procedure reporting for outpatient services and also

for physicians.

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<NOTE: CMS-1500 pronounced CMS-fifteen-hundred. HCPCS pronounced “hick-picks”>

STUDENT: I think I can see where you’re going with this. We’re going to have to do a lot more

cross-referencing.

CHERYL: Yes, but there’s more. The HCPCS codes are usually included in the charge master. If it’s

not in the charge master, data entry clerks have to be sure that the appropriate charge codes

are used at each entry.

STUDENT: So, we’re back to clerical error.

CHERYL: That’s one possibility. But we have to narrow it down. Claims are usually sent to a clearinghouse where they are grouped together, and then sent to the appropriate payer. Meredith may be talking about Medicare bundle payments. See, Medicare groups payments together using algorithms, including Diagnosis Related Groups, which we talked about earlier, and APCs. APCs are ambulatory patient claims. We have to use these codes for every machine or procedure used to care for a Medicare or Medicaid patient. So you see, there’s a lot of room for error. NOTE: Student can choose either option to continue.

STUDENT CHOICE 1: Okay. So, it could still be problems in billing and payment, but because of

the bundled payments, it may be Medicare patients only?

STUDENT CHOICE 2: Can I just hire you as a consultant and you figure it all out, and then I take

all the credit?

CHERYL: Don’t worry, we’ll figure it out together! It will just take some time. For example, on

the claims the wrong procedure could be listed, or the right procedure but no code listed for a

product that coincides with the procedure; like, blood transfusion, but no blood product code.

STUDENT: Can you tell me what reports to run for this?

CHERYL: I still think the same reports will reveal the answer; we were just looking in the wrong

places. Also, I think if you see the actual claims forms, and see how codes are used, look for

patterns there that might do it. I’ll send you the forms tonight.

STUDENT: Okay, great. That will help a lot. Thanks for all your help, Cheryl.

CHERYL: Of course. I love figuring this stuff out. I actually miss it sometimes, especially when it’s

not my job on the line! <smiles>

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Scene 7: Finally, the Solution

In this scene, the Student is at home and gets the promised email from Cheryl. The Student

forwards the email to Michael, and then calls him on the computer to talk about the reports

using this new information.

Location Student’s Home

Scene setup Student faces coffee table, computer is on the coffee table. The Student also

uses Skype or some other program to call Michael on the computer.

On-screen characters Michael Dean

Off-screen characters None

On-screen text: You get the forms from Cheryl…

NOTE: The Student receives an email with attachments and then brings the attachments up on

the computer screen.

EMAIL Here are the forms as promised. I included a section of the charge master as

well. Pay close attention to the 6th column on the right – if there are HCPCS

codes missing, it could be that it is not a procedure, but it could also mean a

mistake.

The two different billing forms will show where the codes go that we were

talking about.

I also copied Michael, in case you two want to sort through it all together. Let

me know what you find! And, don’t tell Meredith I still have hospital forms at

home, okay? ;)

Thanks - Cheryl

Attachments:

UB-04 <attached>

CMS-1500 <attached.>

Charge Master <attached.>

When “x” icon is selected, screen changes to Michael sitting on a couch.

Onscreen text: After reviewing the attachments, you contact Michael…

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MICHAEL: Oh, hi there. You’re still up, I see.

STUDENT: Yes. I really want to figure this out tonight. Did you get the email Cheryl sent with the

attachments?

MICHAEL: Yeah, and I still have the reports handy. Let me bring them up on my end while you

fill me in on what’s been going on.

STUDENT: I talked to Meredith, and she didn’t think we found the answer, and so I asked Cheryl

for more input. She thinks our problem might be around how Medicare pays and how we code.

MICHAEL: Okay, so it sounds like it’s an issue related to bundled claims or bundled payments for

Medicare patients. Did she narrow it down at all? We have to have something to look for.

NOTE: Student can choose either option to continue.

STUDENT CHOICE 1: She wants us to look for where procedure codes are missing, or a

procedure is listed, but has no product attached to it. Basically, an error in what Medicare

expects on their forms.

STUDENT CHOICE 2: I think we have to cross reference the two types of claims to see where

codes are missing.

MICHAEL RESPONSE 1: Good! That narrows it down a little.

MICHAEL RESPONSE 2: They would use either one or the other claim. It makes more sense to

see what codes are missing in the reports, what Medicare expects. That would change the

payments.

STUDENT: So let’s take a look at the reports you ran earlier, and specifically look at them

through the Medicare lens.

MICHAEL: If we’re talking Medicare, we have to think about what they require that is different

from other payers.

STUDENT: They require both procedure and diagnostic codes because of HIPAA.

MICHAEL: Yes. Medicare also requires APC codes for every machine or procedure used to care

for Medicare outpatients. So that’s an additional code. I didn’t look at that the other day, only at

the difference in volumes for all patients. So we would need to look at all Medicare outpatients

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who had a procedure and see if it includes the extra code. Medicare wouldn’t pay unless both

codes are provided – they probably only pay for the outpatient visit itself.

STUDENT: If you say so. I haven’t dealt with any Medicare-specific problems since I started.

MICHAEL: That might even explain the differences we found between the injectable and

infusible drug volumes, from what they were actually using and the procedures. They weren’t

billing for the procedure, just the drug. Let’s see if those codes are missing. If they’re missing,

we need to look at all undocumented drug administration procedures.

NOTE: Student must choose both options to continue.

STUDENT CHOICE 1: Would that account for that much loss in revenue?

STUDENT CHOICE 2: Does that still relate back to administrative errors in coding?

MICHAEL 1: It will take me a little while to do the calculations, but yes. If the average loss for

each undocumented procedure is around $100 or $125, that may explain the discrepancy

between this year’s revenue and usage compared to last year, specifically for Medicare

outpatients. That is a huge majority of our patients.

MICHAEL 2: It is definitely due to administrative errors. Apparently the staff thought that if they

were billing for an outpatient visit that the injectable or infusible drug procedure would be

covered by the APC code. They could have also overlooked the HCPCS code for the procedure. I

guess the question is why that would start happening now . . . but thank goodness, that’s not

my problem.

STUDENT: So, bottom line, it’s a matter of losing money simply because Medicare was not billed

for these procedures?

MICHAEL: Yes, that’s the short version. There are also volume discounts that would cause a

further reduction in revenue, but that will take some research to give you in-depth figures.

STUDENT: Am I safe in presenting this information to Meredith?

MICHAEL: Yes, definitely. Tell her you will have the exact numbers by the end of the day on

Thursday. I want to take some time to be sure we have this right.

STUDENT: Great. Thank you so much!

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MICHAEL: Hey, it’s my job. Just wish I had thought of that angle a little bit earlier! Have a good

night!

Scene 8: Getting the Credit

In this scene, the Student presents the results to Meredith, and also offers a couple of

suggestions regarding recording charges correctly.

Location Conference Room

Scene setup Student is facing the screen and Meredith is on the right.

On-screen characters Meredith

Off-screen characters None

On-screen text: Meeting Meredith again . . .

MEREDITH: You know, I ran into Cheryl at the coffee shop and she spoke very highly of you. She

said you were a good replacement for her.

STUDENT: Did she? That’s really nice.

MEREDITH: So, I take it you’ve solved our revenue problem?

STUDENT: We found the reason for it. Solving it is the next step.

MEREDITH: You know I didn’t want you to come back to me until it was solved.

STUDENT: I realize that, but I will need your help to solve the ongoing problem. You’ll see when

I explain it.

MEREDITH: Okay, so what’s the reason?

STUDENT: You were right about the bundling – the problem resides with the APC outpatient

billing. We found that the claims included an APC code, but not the specific procedure code. So,

all of the Medicare payments were off. We looked just at drugs as a snapshot – they are billing

for the drug itself, but not for its administration.

MEREDITH: So, YOU were also right in that it’s coding errors. <Sigh> How could this happen?

Why would it start happening now? This is a new issue.

Health Care Finance Navigate 2 Scenario: Critical Case for Billing and Coding

January 2, 2018

19

NOTE: Student must choose both options to continue.

STUDENT CHOICE 1: It could be a matter of training. There’s a pretty high turnover in that

department. If a couple of full-time medical billers or claims reviewers were making the same

mistakes, that would add up quickly.

STUDENT CHOICE 2: The software we’re using may not be catching those specific types of

problems.

MEREDITH RESPONSE 1: That’s true. We usually do an extra training just to deal with Medicare

and Medicaid requirements. It’s possible some people missed that, although it is mandatory. So,

how do you think we should solve it?

MEREDITH RESPONSE 2: We use software that automatically checks for many possible errors;

plus we have claims reviewers spot-checking 10% of the claims for our claims editing process.

Obviously that’s not solving this kind of issue. At this loss rate, I could have hired 2 more full-

time people!

STUDENT: Well, I would cover both bases. I would increase the training, and increase the

percentage of claims that are reviewed. I would also suggest moving to cloud computing for our

editing program.

MEREDITH: I was with you until you said cloud computing. I doubt that Medicare would approve

that, or for that matter, if it would make it through HIPAA. It’s just not secure enough. HIPAA is

very strict about patient confidentiality, you know.

STUDENT: Actually, I researched this before we met, because my first concern is cost, of course.

Every time we upgrade the software, we have to reinstall it on every machine, and pay for each

license. Very time-consuming.

MEREDITH: Yes, true. That’s why we haven’t upgraded in two years.

STUDENT: There are a number of applications based in the cloud that are already HIPAA-

approved. And if we move to the cloud, we could also allow people to telecommute, which

means we would save space, and could possibly add more beds to the facility.

MEREDITH: Oh, I like the way you think! Good job. I mean, I’m not agreeing to change all this

right now . . . obviously we have to get on the claims issue right away. But I will take some time

to think about it. Would you mind sending me what you found when you were researching?

Health Care Finance Navigate 2 Scenario: Critical Case for Billing and Coding

January 2, 2018

20

STUDENT: Of course. And Michael will have the exact figures by the end of the day tomorrow.

Thank you, Meredith!

MEREDITH: Thank you!

Scene 9: Coffee, Cake and Re-cap

In this scene, the Student runs into Cheryl at the coffee shop and fills her in on all the details.

Cheryl asks the Student several questions.

Location Coffee Shop

Scene setup The Student faces Cheryl across the table.

On-screen characters Cheryl

Off-screen characters None

On-screen text: You run into Cheryl at the Corner Café …

CHERYL: Oh – hi! How’s it going? You must come here almost every day too. I can’t believe it,

but I just ordered a double shot with my cappuccino AND a piece of chocolate cake. I never do

this.

STUDENT: I think I will do the same, to treat myself after this tough, stressful week.

CHERYL: You should take more than cake, I think! You did a great job, I hear. Meredith filled me

in earlier. And, I’m sure you did learn a lot, even if it was stressful. That information will serve

you well later. For example, you learned which stages of the revenue cycle are directly related

to coding errors, right?

Must select option 1 to proceed

STUDENT CHOICE 1: Well, that’s true. Preparing claims and billing were the stages in which

these mistakes were made.

STUDENT CHOICE 2: Yes, for sure. Preparing and submitting claims were the stages where

mistakes were made.

CHERYL RESPONSE 1: Yes, and you know how coding relates to claim generation now?

CHERYL RESPONSE 2: Uh, not quite. Try again.

Health Care Finance Navigate 2 Scenario: Critical Case for Billing and Coding

January 2, 2018

21

Must select Option 1 to proceed

STUDENT CHOICE 1: Yes. Clinical information is assigned a diagnosis and procedure code, and

that links to the DRG, or APC, and the insurers pay based on those codes, which are entered into

a claim.

STUDENT CHOICE 2: Of course. HIPAA requires that we use both diagnosis and procedure codes.

We use HCPCS codes for procedure reporting for outpatient services and also for physicians, and

put those codes on claims.

CHERYL RESPONSE 1: Right, and between your audit and your research, you should really

understand how charge masters work!

CHERYL RESPONSE 2: No, that’s not really it.

Must select Option 2 to proceed:

STUDENT CHOICE 1: Indeed! Our charge master lists all the extra codes that Medicare requires

for its outpatients.

STUDENT CHOICE 2: Right. Our charge description master lists all the items for which the

hospital has established prices.

CHERYL RESPONSE 1: No, not really. Try again!

CHERYL RESPONSE 2: Yes, and it sounds like you learned how important claims editing is!

Must select option 1 to proceed.

STUDENT CHOICE 1: So true. If the claims had been properly reviewed and edited, those

mistakes would have been caught up front and we wouldn’t have had this big loss.

STUDENT CHOICE 2: Definitely. The right software is so important in claims editing. We’re

probably going to move to the cloud.

CHERYL RESPONSE 1: See? Now, you deserve to relax. Enjoy your cake! I know I am!

CHERYL RESPONSE 2: Okay, but I think there’s a better answer here.

STUDENT: Cheryl, thanks so much for all your help. I couldn’t have done it without you.

Health Care Finance Navigate 2 Scenario: Critical Case for Billing and Coding

January 2, 2018

22

CHERYL: Any time! See you soon!

FADE OUT.

Scene 10: Assessment

If all previous scenes have been completed, a 10-question assessment is presented to the

student.

Answer the following 10 questions to show what you know about health care ethics for

equipment purchasing. Good luck!

The student answers the questions and then sees the assessment results.

Assessment Results

Here are your results. Click Save Results if you are satisfied with the outcome. Or you can click

Try Again if you want to try and improve your score.

NOTE: The student can retry the assessment by clicking the Try Again button, or can continue to

final scene by clicking the Continue button.

THE END