Assignment 1 summer

Chapter 2

Billing and Coding

for Health

Services

Topics Covered

• Healthcare Claims

• Registration

• Medical Record/Coding

• Charge Entry/Chargemaster

• Billing/Claims Preparation

• Claims Editing

• Describe the revenue cycle for healthcare

firms.

• Understand the role of coding information

in healthcare organizations in claim

generation.

• Define the basic characteristics of charge

masters.

• Define the two major bill types used in

healthcare firms.

• Appreciate the role of claims editing in the

bill submission process.

Objectives

Figure 2-1 Revenue Cycle

FIGURE 2-1 Revenue Cycle

Major Revenue Cycle Steps

Registration

Medical Record/Coding

Charge

Entry/Chargemaster

Billing/Claims Preparation

Claims Editing

Registration  Basic information collected on the patient

 Three major activities:

1. Insurance verification, including patient’s health plan

identification number

2. Amount due from patient for copayment or

deductible

3. Financial counseling

 For patients with no insurance coverage or who are

unable to pay co-copayment or deductible

 Financing

 Medicaid and other governmental programs

Medical Record/Coding

 Health Insurance Portability and

Accountability Act (HIPAA) of 1996

 Two coding systems

1. International Classification of Diseases,

Tenth Revision, Clinical Modification (ICD-

10-CM)

2. Healthcare Common Procedure Coding

System (HCPCS)

Medical Record/Coding, cont.

 Diagnosis codes are three to seven

digits, providing greater specificity at the

sixth- and seventh-character level

 Procedure codes

 Used to report inpatient procedures

 Diagnosis and procedure codes are

used for DRG assignment, which is

often used to determine payment

ICD-10

ICD-9-CM Diagnosis Codes Example

003 Other Salmonella Infections 003.0 Salmonella Gastroenteritis

003.1 Salmonella Septicemia

003.2 Localized Salmonella Infections

003.20 Localized Salmonella Infection, Unspecified

003.21 Salmonella Meningitis

003.22 Salmonella Pneumonia

003.23 Salmonella Arthritis

003.24 Salmonella Osteomyelitis

003.29 Other Localized Salmonella Infection

003.8 Other specified salmonella infections

003.9 Salmonella infection, unspecified

HCPCS

 Used by physicians for reporting both

inpatient and outpatient procedures

 Used by facilities for reporting outpatient

procedures

 Two tiers

 Level I: Current Procedural Terminology (CPT),

a five-digit code (maintained by AMA)

 Level II HCPCS codes

 These codes are often a major determinant

of provider payment for both facilities and

physicians.

Level I: CPT Codes  Six main categories

 Evaluation and Management

 Anesthesia

 Surgery

 Radiology

 Pathology and Laboratory

 Medicine

 May also contain modifier code that provides

additional information essential to the claim

Level II HCPCS Codes

 Used to report products, services, supplies,

materials, or procedures that are not present

in the Level I (CPT) codes.

 Five-digit codes beginning with an alphabetic

character followed by four numeric characters

 Two groups of codes:

 Permanent

 Temporary

• Used for needs not covered by the

permanent codes

• Can remain “temporary” indefinitely and is

sometimes replaced by a permanent code

Charge Entry

 Represents the “capture” of products

and services provided

 Three greatest concerns in billing:

 Capture of charges for services performed

 Incorrect billing

 Billing late charges

• Charge capture methods:

 Charge slips posted as batch process

 Order entry system

• Charge explosion can be used when a uniform set of

supplies is used

Chargemaster

 Also referred to as Charge Description Master

(CDM)

 A list of all the goods and services provided by a

hospital, and the price (or prices) the hospital

charges for each of those goods and services

 Six elements:

 Charge code

 Item description

 Department number

 Charge (price)

 Revenue code

 CPT/HCPCS code

Chargemaster Sample Extract

Item Code Item Description

Dept Num

Standard Price

Revenue Code HCPCS

3023001 DAILY CARE FOURTH NORTH 13030 $665.50 111

3120000 DAILY CARE ICU 13120 1,172.50 200

4156159 MINERAL OIL 30ML 13190 11.50 250

4400206 SINGLE TOWEL 14430 2.25 270

4440302 HEP C ANTIBODIES-0288 14440 53.50 300 86803

4470220 HAND XRAY-0183 14470 102.50 320 73130

4472538 C/T PELVIS W & W/O ENHANCEMENT 14302 1,069.75 350 72194

4416000 LASIK SURGERY - PER EYE 13190 2,105.25 360 66999

Billing/Claims Preparation

• CMS-1500: the uniform professional claim form

 Used by noninstitutional providers (e.g., physicians) to

submit claims to Medicare and many other payers

• CMS-1450 (a.k.a. UB-04): the uniform institutional

claim form

 Used by institutional providers to submit claims to

Medicare and most other payers

 Data from this form are used to determine DRGs

(diagnosis-related groups) and APCs (ambulatory

payment classifications)

 One or more HCPCS codes must be present on the

claim form if an APC is to be assigned (outpatient only).

• Most claims now submitted electronically

Sample

UB-04 Form

Sample

CMS-1500

Form

Claims Editing

 Software designed to find errors in claims

 Providers use it to maximize appropriate

payment and to speed payment

 Payers use it to determine minimum payment

obligation and to delay payment for valid

reasons

 Error checking:

 Spelling errors

 Missing data (e.g., date of service and diagnosis

codes)

 Internal validity (e.g., procedure consistent with

gender)

 CMS developed the National Correct

Coding Initiative (NCCI) to promote

correct coding methodologies.

 NCCI edits are incorporated within the

Outpatient Code Editor (OCE).

 Ensures that the most comprehensive

groups of codes are billed rather than the

component parts

 Checks for mutually exclusive code pairs

Claims Editing, cont.

 Each OCE edit results in one of six dispositions

 Claim-level dispositions

• Rejection: Claim must be corrected and resubmitted

• Denial: Claim cannot be resubmitted but can be appealed

• Return to provider (RTP): Problems must be corrected and

claim resubmitted

• Suspension: Claim requires further information before it

can be processed

 Line-item-level dispositions

• Rejection: Claim is processed but line item is rejected and

can be resubmitted later

• Denial: Claim is processed but line item is rejected and

cannot be resubmitted

Claims Editing, cont.

Summary

 Accurate billing and coding are

essential to a healthcare provider’s

financial viability.

 Very complex area requiring

specialized professionals

 Many providers fail to capture all

charges to which they are entitled.