Chapter 17 Hospital Billing

1. Insurance Handbook for the Medical Office 13th edition Chapter 17 Hospital Billing

2. Hospital Billing Basics Define common terms related to hospital billing. Name qualifications necessary to work as a hospital patient service representative. List instances of breach of confidentiality in a hospital setting. Explain the purpose of the appropriateness evaluation protocols. Lesson 17.1

3. Hospital Billing Basics (cont’d) Describe criteria used for admission screening. Define the 72-hour rule. Describe the quality improvement organization and its role in the hospital reimbursement system. Describe the International Classification of Diseases, Tenth Revision, Procedure Coding System (ICD-10-PCS). Lesson 17.1

4. Hospital Billing Basics (cont’d) State the role of International Classification of Diseases, Tenth Revision, Procedure Coding System (ICD-10-PCS) in hospital billing. Explain the basic flow of the inpatient hospital stay from billing through receipt of payment. Describe the charge description master. Lesson 17.1

5. Patient Accounts Representative • Qualifications • Knowledge and competence in: • ICD-9-CM, ICD-10-CM, and ICD-10-PCS diagnostic codes • CPT and HCPCS procedure codes • CMS-1500 insurance claim form • Uniform Bill (UB-04) insurance claim form • Explanation of benefits and remittance advice document • Medical terminology • Major health insurance programs • Managed care plans • Insurance claim submission • Denied and delinquent claims

6. Appropriateness Evaluation Protocols

7. Admitting Procedures for Major Insurance Programs • Preauthorization • Private insurance (group or individual) • Commercial insurance and managed care • Emergency inpatient admission • Nonemergency inpatient admission/elective admission

8. Admitting Procedures for Major Insurance Programs • Medicaid • Medicare • TRICARE • Workers’ Compensation

9. Preadmission Testing • Diagnostic studies • Laboratory tests • Chest x-ray • Electrocardiography

10. Medicare 3-Day Payment Window Rule or 72-Hour Rule • Also called 3-day payment window rule • If patient receives diagnostic tests and hospital outpatient services within 72 hours of admission to hospital, all such tests and services are combined with inpatient services • Preadmission services become part of the DRG payment to hospital and may not be billed separately

11. Medicare 3-Day Payment Window Rule or 72-Hour Rule • Exceptions to the 72-hour rule • Services provided by home health agencies, hospice, nursing facilities, and ambulance services • Physician’s professional portion of a diagnostic service • Preadmission testing at an independent laboratory when the laboratory has no formal agreement with the healthcare facility

12. Utilization Review • Department conducts an admission and concurrent review and prepares a discharge plan on all cases • Utilization review (UR) companies exist for self-insured employers, third-party administrators, and insurance companies

13. Quality Improvement Organization Program • Admission review • Readmission review • Procedure review • Day outlier review • Cost outlier review • DRG validation • Transfer review

14. Coding Hospital Diagnoses and Procedures • Diagnosis codes come from ICD-9-CM or ICD-10-CM • Procedure codes come from CPT, HCPCS, ICD-9-CM (Volume 3) or ICD-10-PCS

15. Coding Hospital Diagnoses and Procedures • Principal diagnosis • First listed diagnosis • Reason patient is seeking medical care • On outpatient claims, known as: • Reason for the encounter

16. Coding Hospital Diagnoses and Procedures • Principal diagnoses subject to 100% review • Arteriosclerosis heart disease (ASHD) • Diabetes mellitus without complications • Right or left bundle branch block • Coronary atherosclerosis

17. Coding Inpatient Procedures • Procedural coding systems • ICD-9-CM, Volume 3 • ICD-10-PCS

18. Character Definitions • Character 1: Medical Section • Character 2: Body Systems • Character 3: Root Operation • Character 4: Body Part • Character 5: Approach • Character 6: Device • Character 7: Qualifier

19. Coding Hospital Outpatient Procedures • Healthcare Common Procedure Coding System Level I Current Procedural Terminology Coding System • Use up-to-date Current Procedural Terminology (CPT) • Use HCPCS to obtain medical procedural codes for Medicare and some non-Medicare patients on outpatient hospital insurance claims that are not in CPT code book • Use modifiers as noted in CPT/HCPCS guidelines

20. Inpatient Billing Process

21. Charge Description Master • Services and procedures are checked off and coded internally • Data includes: • Procedure code • Charge • Revenue code

22. Practice Hospital Billing State when the CMS-1450 (UB-04) paper or electronic claim form may and may not be used. State reimbursement methods used when paying for hospital services under managed care contracts. Describe the purpose of diagnosis-related groups. Discuss the electronic claim filing guidelines as stated in the Administration Simplification Act of 1996. Identify how payment is made on the basis of diagnosis-related groups. Lesson 17.2

23. Practice Hospital Billing (Cont’d) State how payment is made on the basis of the ambulatory payment classification system. Name the four types of ambulatory payment classifications. Complete insurance claims in both hospital inpatient and outpatient settings to minimize their rejection by insurance carriers. State the general guidelines for completion of the paper CMS-1450 (UB-04) and transmission of the electronic claim form. Lesson 17.2

24. Reimbursement Methods • Ambulatory payment classifications • Bed leasing • Capitation or percentage of revenue • Case rate • Contract rate • Diagnosis-related groups (DRGs) • Differential by day in hospital • Differential by service type

25. Reimbursement Methods • Fee-for-service • Fee schedule • Flat rate • Per diem • Percentage of accrued charges • Periodic interim payments (PIPs) and cash advances • Relative value studies or scale (RVS) • Resource-based relative value scale (RBRVS)

26. Reimbursement Methods • Usual, customary, and reasonable (UCR) • Withhold • Managed care stop loss outliers • Charges • Discounts in the form of sliding scale • Sliding scales for discounts and per diems

27. Reimbursement Methods • Hard copy billing • Used for insurance companies that are not capable of receiving electronic claims • Receiving payment • After receipt of payment, patient sent net bill listing any owed deductible, coinsurance amount, and charges not covered

28. Outpatient Insurance Claims • Emergency department visits • Elective surgeries • Only outpatient services provided by the hospital should be submitted by the hospital unless the hospital is billing for physicians • Using the hospital for surgical or medical consultations that could be done in a physician’s office should be avoided

29. Billing Problems • Incorrect name on form • Wrong subscriber, patient name listed in error • Covered days vs. noncovered days • Duplicate statements • Double billing • Phantom charges

30. Uniform Bill Inpatient and or Electronic Claim Form • Used since 1982 for inpatient and outpatient hospital claims • Updated in 2007 • Considered as a summary document supported by an itemized bill • Printed in red ink on white paper • Dates of service and monetary amounts entered without spaces or decimal points • Dates of birth are entered using two sets of two-digit numbers for the month and day, four-digit numbers for the year

31. The Medicare Severity Diagnosis-Related Group System • Designed to increase reimbursement for sicker patients • Diagnoses are assigned values that commensurate with severity of illness • Split into a maximum of three payment tiers • Reimbursement crosswalk will identify ICD-9 and corresponding ICD-10 codes and MS-DRGs

32. The Medicare Severity Diagnosis-Related Group System • Clinical outliers • Unique combinations of diagnoses and surgeries causing high costs • Very rare conditions • Long length of stay, or day outliers, no longer apply • Low-volume DRGs • Inliers (hospital case falls below the mean average or expected length of stay) • Death • Leaving against medical advice • Admitted and discharged on the same day

33. Diagnosis-Related Groups and the Physician’s Office • When calling the hospital to admit a patient, give all of the diagnoses authorized by the physician • Ask the physician to review the treatment or procedure in question when a hospital representative calls with questions • Get to know hospital personnel on a first-name basis

34. Ambulatory Payment Classification System • Developed as outpatient classification systems by Health System International • Based on patient classification rather than disease classifications • More than 500 APCs are continually being modified; updated and released twice a year in the Federal Register

35. Ambulatory Payment Classification System • APCs are applied to the following: • Ambulatory surgical procedures • Chemotherapy • Clinic visits • Diagnostic services and diagnostic tests • Emergency department visits • Implants • Outpatient services furnished to nursing facility patients not packaged into nursing facility consolidated billing

36. Ambulatory Payment Classification System • APCs are applied to the following: • Partial hospitalization services for community mental health centers (CMHCs) • Preventive services (colorectal cancer screening) • Radiology including radiation therapy • Services for patients who have exhausted Part A benefits • Services to hospice patient for treatment of a non-terminal illness • Surgical pathology

37. Hospital Outpatient Prospective Payment System • Procedure code is primary axis of classification, not the diagnostic code • Reimbursement methodology based on median costs of services and facility cost to determine charge ratios and copayment amounts • Adjustment for area wage differences based on the hospital wage index currently used for inpatient services • OPPS may be updated annually

38. Types of Ambulatory Payment Classifications • Surgical procedure APCs • Significant procedure APCs • Medical APCs • Ancillary APCs

39. Questions?