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CHAPTER

© 2012 The McGraw-Hill Companies, Inc. All rights reserved.

McGraw-Hill

11

Posting Payments and Creating Statements

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© 2012 The McGraw-Hill Companies, Inc. All rights reserved.

Learning Outcomes

When you finish this chapter, you will be able to:

11.1 List the six steps for checking a remittance advice.

11.2 Describe the procedures for entering insurance payments.

11.3 Explain how to apply insurance payments to charges.

11.4 Explain how to enter capitation payments.

11.5 Discuss the purpose of appeals and postpayment audits.

11.6 Compare standard patient statements and remainder patient statements.

11-2

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© 2012 The McGraw-Hill Companies, Inc. All rights reserved.

Learning Outcomes (Continued)

When you finish this chapter, you will be able to:

11.7 Explain the difference between once-a-month and cycle billing.

11.8 Explain the procedure for processing a nonsufficient funds payment.

11-3

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© 2012 The McGraw-Hill Companies, Inc. All rights reserved.

Key Terms

  • appeal
  • appellant
  • autoposting
  • capitation payments
  • claim adjustment group code (CAGC)
  • claim adjustment reason code (CARC)
  • claimant
  • claim control number
  • cycle billing

11-4

  • electronic funds transfer (EFT)
  • electronic remittance advice (ERA)
  • explanation of benefits (EOB)
  • nonsufficient funds (NSF) check
  • once-a-month billing
  • overpayment
  • patient statement
  • postpayment audit

Teaching Notes: There are a lot of key terms, but many of them might already be familiar to your students. Give a pop quiz of the terms to see how many students know. Grade the quiz in class and use the results to focus your lecture on terms that most or all students missed.

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© 2012 The McGraw-Hill Companies, Inc. All rights reserved.

Key Terms (Continued)

  • Recovery Audit Contractor (RAC)
  • remainder statements
  • remittance advice (RA)
  • remittance advice remark code (RARC)
  • standard statements
  • takeback
  • X12 835 Electronic Remittance Advice (835)

11-5

Teaching Notes: See notes on Slide 4.

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© 2012 The McGraw-Hill Companies, Inc. All rights reserved.

11.1 Working with the Remittance
Advice (RA)

11-6

  • Remittance advice (RA)—document describing a payment resulting from a claim adjudication
  • Six steps for checking a remittance advice:

Check the patient’s name, claim control number, and date of service against the claim.

Verify that all billed CPT codes are listed.

Check the payment for each CPT code against the expected amount, which may be an allowed charge or a percentage of the usual fee.

Analyze the payer’s adjustment codes to locate all unpaid, downcoded, or denied claims for closer review.

Learning Outcome: 11.1 List the six steps for checking a remittance advice.

Teaching Notes: Direct students’ attention to the sample RA, Figure 11.1, in the text (or better yet, provide handouts of it for quick reference during lecture). If possible, bring in sample RAs and have students/groups analyze them using the 6 steps for checking an RA.

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© 2012 The McGraw-Hill Companies, Inc. All rights reserved.

11.1 Working with the Remittance
Advice (RA) (Continued)

11-7

  • Six steps for checking a remittance advice (continued):

Pay special attention to RAs for claims submitted with modifiers.

Decide whether there are any items on the RA that need clarification from the payer, and follow up as necessary.

  • Electronic remittance advice (ERA)—electronic document that lists patients, dates of service, charges, and the amount paid or denied by the insurance carrier

Learning Outcome: 11.1 List the six steps for checking a remittance advice.

Teaching Notes: See notes on Slide 6; discuss what additional information/what benefits are available when using an electronic remittance advice.

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© 2012 The McGraw-Hill Companies, Inc. All rights reserved.

11.1 Working with the Remittance
Advice (RA) (Continued)

11-8

  • X12 835 Electronic Remittance Advice (835)—electronic transaction for payment explanation
  • Claim control number—unique number assigned to a claim by the sender
  • Autoposting—software feature enabling automatic entry of payments from a remittance advice

Learning Outcome: 11.1 List the six steps for checking a remittance advice.

Teaching Notes: Here are some options for covering the key terms on this slide and Slide 9; complete as many as desired or as time allows:

  • List the terms on the board or on a worksheet. Ask students to discuss where they have used or heard these terms before.

  • Provide sample insurance documents and ask students (in a group activity, possibly) to identify the pieces of information found in the document.

3.Put students in groups and have them research the history of RAs, incorporating the terms from the slides; or, have them choose one of the terms themselves and research its origins, why it is used, etc. Students or groups can then report on their findings, if desired.

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© 2012 The McGraw-Hill Companies, Inc. All rights reserved.

11.1 Working with the Remittance
Advice (RA) (Continued)

11-9

  • Claim adjustment group code (CAGC)—used on an RA/EOB to indicate the general type of reason code for an adjustment
  • Also abbreviated GRP
  • Claim adjustment reason code (CARC)—used on an RA/EOB to explain why a payment does not match the amount billed
  • Remittance advice remark code (RARC)—code that explain a payer’s payment decision

Learning Outcome: 11.1 List the six steps for checking a remittance advice.

Teaching Notes: See notes on Slide 8.

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© 2012 The McGraw-Hill Companies, Inc. All rights reserved.

11.2 Entering Insurance Payments

11-10

  • Insurance payments are entered in the Deposit List dialog box of MNP
  • To enter insurance payments:
  • Select Enter Deposits/Payments on the Activities menu, or click the Enter Deposits and Apply Payments button; the Deposit List dialog box opens.
  • Complete the fields in the Deposit List dialog box.
  • Click the New button; the Deposit dialog box appears.
  • Complete the fields in the Deposit dialog box.
  • Click the Save button, and the deposit will be recorded.

Learning Outcome: 11.2 Describe the procedures for entering insurance payments.

Teaching Notes: Ask students to speculate about why, if patient payments are entered in the Transactions List dialog box, insurance payments must be entered in the Deposit List dialog box.

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© 2012 The McGraw-Hill Companies, Inc. All rights reserved.

11.2 Entering Insurance Payments (Continued)

11-11

  • Electronic funds transfer (EFT)—electronic routing of funds between banks
  • Capitation payments—payments made to physicians on a regular basis for providing services to patients in a managed care plan

Learning Outcome: 11.2 Describe the procedures for entering insurance payments.

Teaching Notes: Contrast insurance payments and capitation payments.

Have students complete Exercise 11.1.

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© 2012 The McGraw-Hill Companies, Inc. All rights reserved.

11.3 Applying Insurance Payments to Charges

11-12

To apply insurance payments to charges in MNP:

  • Highlight the payment in the Deposit List dialog box.
  • Click the Apply button; the Apply Payment/Adjustments to Charges dialog box opens.
  • Enter the payment in the middle section of this dialog box.
  • Click the Save Payments/Adjustments button to save an entry; click OK when an information dialog box is displayed.
  • Repeat as needed, then use the Close button to exit.

Learning Outcome: 11.3 Explain how to apply insurance payments to charges.

Teaching Notes: Use Figure 11.9 in the textbook to walk through the dialog box students will use for this task; explain and provide examples as needed.

Assign students Exercises 11.2, 11.3, and 11.4.

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© 2012 The McGraw-Hill Companies, Inc. All rights reserved.

11.4 Entering Capitation Payments

11-13

To enter capitation payments in MNP:

  • Open the Deposit List dialog box, then the Deposit Window.
  • Select capitation from the Payor Type drop-down list in the Deposit window.
  • Enter the appropriate deposit information.
  • Enter a second deposit as an insurance payment with a zero amount and click Save; the deposit appears in the Deposit List window.
  • Use the List Only Claims That Match dialog box to locate patients who have claims covered by the capitation payment.

Learning Outcome: 11.4 Explain how to enter capitation payments.

Teaching Notes: Explain that capitation payments are NOT applied to individual patient accounts/charges; rather, a health plan pays the practice a set fee to help cover insured patients. Ask students if they think it makes sense that a practice receives this payment regardless of the frequency of patient visits.

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© 2012 The McGraw-Hill Companies, Inc. All rights reserved.

11.4 Entering Capitation Payments (Continued)

11-14

To enter capitation payments in MNP (continued):

  • Once patients have been identified, the Claim Management dialog box is closed and the Deposit List dialog box is opened.
  • Apply the zero payment to the patient accounts using the Apply button.
  • In the Apply Payment/Adjustments to Charges dialog box, enter an adjustment equal to the outstanding balance.
  • Click the Save button to record the payments.

Learning Outcome: 11.4 Explain how to enter capitation payments.

Teaching Notes: Ask students to speculate why there appear to be so many more steps in applying capitation payments than applying insurance payments.

Have students complete Exercises 11.5, 11.6, and 11.7.

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© 2012 The McGraw-Hill Companies, Inc. All rights reserved.

11.5 Appeals, Postpayment Audits, Overpayments, and Billing Secondary Payers

11-15

  • Appeal—request for reconsideration of a claim adjudication
  • Used to challenge a payer’s decision to deny, reduce, or otherwise downcode a claim
  • Claimant—person or entity exercising the right to receive benefits
  • Appellant—person who appeals a claim decision
  • Postpayment audit—review conducted after a claim is adjudicated

Learning Outcome: 11.5 Discuss the purpose of appeals and postpayment audits.

Teaching Notes: Walk students through the various postpayment processes, incorporating the key terms on Slides 15-16 as needed. Discuss again with students the importance of proper billing and coding up front to avoid situations like these.

Note that most payers have a three-step escalating process of appeals, which must be started within a specific timeframe. The process usually involves steps such as the following: 1. Complaint; 2. Appeal; 3. Grievance.

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© 2012 The McGraw-Hill Companies, Inc. All rights reserved.

11.5 Appeals, Postpayment Audits, Overpayments, and Billing Secondary Payers (Continued)

11-16

  • Recovery Audit Contractor (RAC)—entity that audits Medicare claims to determine where there are opportunities to recover incorrect payments from previously paid but noncovered services, erroneous coding, and duplicate services
  • Overpayment—improper or excessive amount received by provider from payer
  • Takeback—balance that a provider owes a payer following a postpayment audit

Learning Outcome: 11.5 Discuss the purpose of appeals and postpayment audits.

Teaching Notes: See notes on Slide 15. Have students complete Exercise 11.8.

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© 2012 The McGraw-Hill Companies, Inc. All rights reserved.

11.6 Creating Statements

11-17

  • Patient statement—list of the amount of money a patient owes, the procedures performed, and the dates the procedures were performed
  • Sent to patients to collect an account balance that is the patient’s responsibility
  • Explanation of benefits (EOB)—document showing how the amount of a benefit was determined

Learning Outcome: 11.6 Compare standard patient statements and remainder patient statements.

Teaching Notes: Have students create a compare/contrast sheet of two of the four main types of patient statements. Have them (individually or in groups) complete this exercise in class, and then discuss the results as a large group.

Provide examples to demonstrate when each type of statement is likely to be created and why.

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© 2012 The McGraw-Hill Companies, Inc. All rights reserved.

11.6 Creating Statements (Continued)

11-18

  • Standard statements—statements that show all charges regardless of whether the insurance carrier has paid on the transactions
  • Remainder statements—statements that list only charges that are not paid in full after all insurance carrier payments have been received

Learning Outcome: 11.6 Compare standard patient statements and remainder patient statements.

Teaching Notes: See notes on Slide 17.

Have students complete Exercises 11.9 and 11.10.

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© 2012 The McGraw-Hill Companies, Inc. All rights reserved.

11.7 Editing and Printing Statements

11-19

  • In MNP, the Edit button in the Statement Management dialog box is used to perform edits on account statements.
  • Once-a-month billing—type of billing in which statements are mailed to all patients at the same time each month
  • Cycle billing—type of billing in which statement printing and mailing is staggered throughout the month

Learning Outcome: 11.7 Explain the difference between once-a-month and cycle billing.

Teaching Notes: Explain that there are three tabs within the Statement Management dialog box: General, Transactions, and Comment. Provide examples of items/information that might go in each tab; ask students what types of comments might need to be entered about a statement.

Have students complete Exercises 11.11, 11.12, and 11.13.

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© 2012 The McGraw-Hill Companies, Inc. All rights reserved.

11.8 Nonsufficient Funds (NSF)

11-20

  • Nonsufficient funds (NSF) check—check that is not honored by the bank because the account lacks funds to cover it
  • When a practice receives an NSF notice from a bank, an adjustment is made in the patient’s account.
  • The patient owes the practice the amount of the returned check.
  • Most practices charge a fee for a returned check.

Learning Outcome: 11.8 Explain the procedure for processing a nonsufficient funds payment.

Teaching Notes: An NSF check is more commonly known as a “bounced” check. Ask students why most practices charge a fee for a returned check.

Have students complete Exercise 11.14.

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