Claims

Lesson 1 - The Claim Form

After you finish this lesson, you will be able to:

• Describe a claim form and its purpose
• Explain the importance of a clean claim
• Identify the parts of the claim form

What You’ll Learn

Claim

A claim is a document sent to an insurance carrier demanding payment for services provided to insured patients and their beneficiaries. It can be submitted in hard-copy or electronic form.

The claim is, essentially, a form of communication between the health care provider and the insurance carrier. It includes information on the patient and the treating physician or supplier. It also records the physician's diagnosis and procedures.

The Claim Form

The CMS-1500 (02-12) is the universal claim form. It is the standard for government program claims. It is also accepted by most private insurance carriers.

Hospital services use the Uniform Bill 04, or UB-04, to process claims. This form is used for inpatient admissions, emergency services, home health, hospice, and long-term care. It is only encountered in the inpatient hospital medical office setting.

Optical Character Recognition (OCR) Rules

Follow these rules to ensure that nothing obstructs the optical character recognition when the claim form is scanned:

• Enter all information in a monospaced font, such as Courier New,
• Use all capital letters,
• Leave out all punctuation,
• Do not use any special formatting,
• Do not include any handwritten information,
• Do not fold or damage the form,
• Do not staple anything to the form.

Claim Rules

While there are many more specific rules for filling out the claim form, there are some general rules that will apply to all claims.

1. Fill in all required blank spaces: Insurance carriers require the claim form to be as complete as possible. If required information is missing, find it out. However, if there are spaces that do not apply, many carriers want them to be left blank. Check with the carrier for specific rules.

Claim Rules

2. Be specific: If the diagnoses and procedures are not coded to the highest level of specificity, the reimbursement levels could be lower, or the claims could be returned. For example, if Medicare finds a code to be unclear or outdated, they will downcode the entry and reimburse the provider at the lowest possible level.

Claim Rules

3. Use standard abbreviations: While the use of abbreviations will be necessary, they must be standard and consistent so that the insurance carrier can accurately translate them.

Claim Rules

4. Apply managed care policies: If the patient is a managed care enrollee, find out which managed care organization that patient belongs to. Have all specific claim instructions on hand, and make sure that organization accepts claims on the CMS-1500. Some managed care organizations have their own claim forms, or they may require additional forms to be submitted with the claim.

Clean Claims

The goal is to submit a "clean" claim. A clean claim is one that includes all information necessary for processing. This information must be complete and correct.

Clean claims are reimbursed in a more timely fashion than dirty claims, or claims with missing or incorrect information. Sometimes, dirty claims are permanently denied.

HIPAA Guidelines

To be in compliance with HIPAA guidelines, �the patient must authorize the release of information to the insurance carrier.

Most offices have the patient sign a Release of Information form upon the first visit. This form will then go in the patient's record.

If the patient has signed the authorization form, then the assistant can simply enter SOF in the signature box, for Signature on File.

Preparing to Complete the Claim Form

Before completing the claim form, there are a couple of steps to take to ensure compliance with third-party guidelines.

First, review the specific guidelines applicable to the patient's insurance plan. Each carrier may have different policies about how to fill out the claim form.

1.

Preparing to Complete the Claim Form

Take a second look at the procedures and services to be billed on the claim. Make sure that these procedures are covered under the patient's insurance plan. If they are not, they do not belong on the claim form.

2.

Preparing to Complete the Claim Form

Confirm the address to which the claim must be submitted. It may be sent directly to the insurance carrier, fiscal intermediary, or a claims clearinghouse.

3.

Completing the Claim Form

The top section, blocks 1 - 13, contains a patient's demographic information and insurance policy information. If the patient is not the policyholder, or the insured, then the insured's information also goes in this section.

The second section, blocks 14 - 33b, has information on the physician or supplier of goods or services. Filling out this section requires the assistant to collect information from the patient's superbill, the medical record, or both.

In this lesson, you:

• Described a claim form and its purpose
• Explained the importance of a clean claim
• Identified the parts of the claim form

Summary

Claims

Lesson 3 - Claims Processing

After you finish this lesson, you will be able to:

• Describe electronic claims processing
• List the steps an insurance carrier takes after receiving a claim
• Maintain a log of submitted claim forms
• Explain the actions to be taken in response to delinquent claims

What You’ll Learn

Claim Submission

Once the claim has been deemed complete, accurate, and clean, it can be submitted to the insurance carrier or the carrier's fiscal intermediary (FI).

The claim is almost always submitted by the medical office. Medical offices are required to submit Medicare claims for the patient. A few insurance carriers will allow the patient to submit claims, but this is rare.

Claim Attachments

For a claim to be approved, it must prove to be medically necessary. Sometimes, attachments are necessary to help verify the claim. They should be used when they support the procedure to be medically necessary. Attachments also help show that the service or procedure was performed just as the claim states.

Some examples of possible attachments include:

• Lab reports
• Physician notes
• Patient superbill

Claim Attachments

Remember that attachments should not be stapled to the claim form. This can obstruct the OCR scanning process. Instead, make sure the attachments can be identified if separated from the claim.

On every attachment, include the following information:

• Medical practice name
• Provider/group number
• Address
• Telephone number

Time Limits

Time limits will apply for submitting claims. Each insurance carrier establishes its own time limit, so office assistants must be clear on when claims must be submitted.

Time Limits

Medicare claim time limits are standard within the Medicare program:

​

• If a patient receives services between January 1 and September 30, the claim must be filed by December 31 of that same year.
• If a patient receives service between October 1 and December 31, the claim must be filed by December 31 of the following year.

Time Limits

Medicaid claims must be filed within 90-95 days from the date of the service. For example, if a patient was treated on September 19, the claim must be filed before December 19. Otherwise it will not be paid.

Time Limits

The time limits in which to file claims will vary greatly depending on the insurance to which you are sending the claim.

If a claim is sent past the time limit, insurance will not pay for the claim.

Logging the Claim Form

To keep track of all insurance claims submitted and paid, it is a good idea to keep a claim log.

The claim log should include the following information:

• Date the claim was filed
• Name of patient
• Name of insurance carrier
• Amount of claim
• Amount paid by the patient
• Date of billing
• Date for follow-up

Logging the Claim Form

When a claim is submitted, the physician's computer system will keep an electronic record of the claim that was sent.

​

This electronic record includes the patient's name, the specifics of the claim, the insurance company that it was sent to, and the date it was filed.

Claim Processing

After a claim is scanned, it is submitted for utilization review. Utilization review is the process of approving reimbursement.

First, the company will verify the patient's coverage and eligibility.

Then, the claim will be investigated for medical necessity, exclusions, and �pre-existing conditions.

Explanation of Benefits (EOB)

After the claim has been through the utilization review process, the insurance carrier will send payment, if approved, and the Explanation of Benefits.

An Explanation of Benefits (EOB) form is provided for every claim submitted. Both the patient and the health care provider receive a copy of the EOB.

​

The EOB:

• shows the date and charges for each service.
• shows the amount paid for the claim and if there were any charges not covered by the policy.
• documents the amounts of the charges applied toward the patient's deductible.

​

Unpaid Claims

• Hard-copy claims are usually reimbursed within 30 - 60 days.

• Electronically filed claims take approximately 15 - 30 days.

Unpaid claims will fall into three categories:

• Returned
• Denied
• Delinquent

Returned Claims

Returned claims often contain a simple error which can be corrected. Once the claim is correct, it can be re-filed. Some insurance carriers have special forms to use when re-filing a corrected claim. Other carriers require the CMS-1500 to be completed again.

When submitting a corrected claim, note on the form that it is not a duplicate. If needed, attach a note explaining the original error and how it has been corrected.

Denied Claims

Denied claims are those which the insurance carrier declines to pay. Unlike returned claims, denied claims cannot be corrected and re-filed.

​

To further attempt to receive reimbursement on a denied claim, the medical office must undergo an appeals process.

Delinquent Claims

Delinquent claims are those which have not been paid, returned, or denied after a reasonable amount of time, usually about 60 days, or 30 days if filed electronically.

​

Follow-up action should be taken on these delinquent claims.

Reasons for Delinquent Claims

A claim will not be processed if information is missing or more documentation is needed.

Sometimes, claims are delinquent because the insurance carrier mistakenly sent the reimbursement check to the patient rather than the provider's office. If this is the case, the assistant must bill the patient for the amount due.

Underpaid Claims

Sometimes an insurance carrier will reimburse the health care provider for less than the amount on the claim.

If an old CPT-4 code is used rather than a current one, the carrier will assign a code it feels is appropriate to the service performed. This is downcoding.

Downcoding might also occur if the carrier feels the procedural code used is too vague and does not sufficiently link to the diagnosis.

Appeals

Other times, underpayment may be a mistake. As with denied claims, there is an appeals process which may correct the payment issue.

1. Draft an appeal letter.
2. Make a case for why the claim should be approved.
3. Be sure to clearly identify the claim in question.
4. Include a copy of the original claim and of the EOB sent by the carrier.
5. If there is any additional documentation which may further support the case for appeal, such as written comments, documents, or medical records, include it as well.

​

Appeals

The insurance carrier will usually respond to the written appeal within 30 days.

The review board may request a face-to-face or telephone interview to further discuss the details of the claim.

The outcome of this appeal is usually final. However, some carriers will allow second- or third-level appeals.

Medicare Appeals

The Medicare appeals process has five possible levels:

1. The appeal request is much like any other appeals process. �Part B appeals can also be made by filling out the HCFA 1964 Request for Review Form.

2. A fair hearing can be requested if the results of the appeal request are unsatisfactory. A hearing may only be requested if the amount of the claim exceeds $100.

3. An administrative law judge review is the third stage of the appeals process. It can only be requested if the amount of the claim exceeds $500.

4. A departmental appeals board review may be requested if the results of the previous appeal stage are unsatisfactory.

5. A judicial review in a United States district court is the highest level of the Medicare appeals process. It may only be requested if the amount of the claim exceeds $1,000.

Electronic Claims Processing

Electronic claims processing can be done through a practice-management software system, to improve cash flow.

• Office expenses are reduced because the process for completing a claim is faster.

​

• Reimbursement is received more quickly: typically around 15 days, �rather than 45 days.

Electronic Claims Processing

Electronic claims processing increases the likelihood of sending clean claims.

The software is designed so that when a code needs additional modifiers, the user is warned. Also, the software is constantly updated so the latest code revisions are always taken into account.

Disadvantages of electronic claims include the expense of a new software system and training the medical staff to use it.

Electronic Claims Submission

There are two ways electronic claims can be submitted:

Electronic claims clearinghouse

This is a company that receives claims from various providers and sends them in batches to insurance carriers. They also edit the claims for validity and accuracy before sending them to carriers, reducing claim denial.

Direct Data Entry (DDE)

Submitting electronic claims by sending them directly to the carrier. This method is slightly more complex than using a clearinghouse. With DDE, the health care provider must enroll with each carrier.

In this lesson, you:

• Described electronic claims processing
• Listed the steps an insurance carrier takes after receiving a claim
• Maintained a log of submitted claim forms
• Explained the actions to be taken in response to delinquent claims

Summary

Claims

Lesson 4 - Reimbursement

After you finish this lesson, you will be able to:

• Identify the four main methods of reimbursement
• Define usual, customary, and reasonable (UCR) fees
• Describe how Resource-Based Relative Value Units (RBRVUs) are determined
• Describe the significance of diagnosis-related code groups in Prospective Payment Systems (PPS)

What You’ll Learn

Insurance Reimbursement

There are several insurance reimbursement systems. How and when the office is reimbursed affects billing, claims, and the practice's cash flow.

Reimbursement Methods

There are four main methods of reimbursement:

Fee-for-service

Discounted fee-for-service

Capitation

Prospective Payment System (PPS)

Fee-for-service

The fee-for-service method of reimbursement is found in most fee-for-service insurance plans. According to the fee-for-service method, the insurance carrier will pay the provider for each covered service that is performed.

However, the carrier does not just pay whatever the physician charges. Each carrier has a fee schedule of allowed charges, or fees the carrier is willing to reimburse for a service.

The physician's charges may be higher, but insurance will only reimburse its allowed charge.

Fee-for-service

Many insurance companies determine their allowed charges according to Usual, Customary, and Reasonable (UCR) fees.

​

Medicare, however, uses the Resource-Based Relative Value Scale.

UCR Fee Schedule

Many insurance carriers determine their allowed charges using a Usual, Customary, and Reasonable (UCR) fee schedule. Insurance carriers use different methods for determining UCR rates. There is no universal list of UCR rates that all carriers use to pay claims.

A usual fee is the fee that a physician charges most often for a specific service.

A customary fee is the range of usual fees charged for the same service by similar physicians in similar areas.

A reasonable fee is one that is appropriate to the difficulty of a procedure or service.

Resource-Based Relative Value Scale

Medicare's fee schedule is not based on UCR fees, but on the Resource-Based Relative Value Scale (RBRVS). The RBRVS evolved from a previous system, the Relative Value Scale.

The Relative Value Scale (RVS) took into account three areas for each procedure:

• Physician’s work
• Practice expense
• Malpractice risk

Each of these three areas was assigned a Relative Value Unit (RVU). �There were, however, some shortcomings of the RVS system:

• There was no set formula for determining the extent of a physician's work.
• It did not address geographic variations in practice expenses.

Determining Relative Value Units

Under the RBRVS, the Relative Value Unit (RVU) assigned to physician work is determined by the following six factors:

Determining Relative Value Units

The RVU assigned to practice expense takes into account not only overhead costs such as building expenses, supplies, and staff wages, but also what is called the Geographic Practice Cost Index (GPCI). Operating costs will differ based on geographic location.

Whether a practice is in a rural or an urban setting will affect the expenses of running the office. The GPCI allows these variances to be factored into the practice expense RVU.

Discounted Fee-for-Service

Discounted fee-for-service reimbursement is found in certain types of managed care. According to the discounted fee-for-service method, a fee will be paid for each service performed. However, these fees will be lower than UCR fees.

When a provider and a managed care organization enter into a contract, they agree upon a fee schedule at reduced rates. This is called a contracted fee schedule. These contracted rates only apply to members of the PPO. Providers will still have their own office fee schedules, but participating provider members will pay reduced rates.

Contractual Write-offs

It is illegal for physicians to charge different rates for the same service.

So, members of PPOs will be charged the same rate as everyone else.

However, after the provider receives the insurance contribution, the rest of the fee will be written off. This is known as a contractual write-off. The provider has a contract with the managed care organization, which eliminates balance billing.

Fee-for-Service vs. Discounted Fee-for-Service

• With both types of fee-for-service payment, a fee is paid to the provider for each service performed.
• Both the medical practice and the carrier have their own fee schedules.
• The practice always charges according to its �fee schedule.
• The insurance carrier always pays according to �its fee schedule.

Fee-for-Service vs. Discounted Fee-for-Service

There are two main differences:

An insurance carrier that bases payments according to the fee-for-service method usually determines its fees according to UCR fees. Payment according to the discounted fee-for-service method is based on a schedule of contracted fees that are lower than UCR fees.

If a practice is paid according to the fee-for-service method, the patient can be balance billed. If a practice is paid according to the discounted fee-for-service method, the remainder of the charge must be subtracted

as a contractual write-off.

Capitation

Capitation is a payment system primarily used by Health Maintenance Organizations (HMO). The insurance carrier pays the provider a set fee per patient, despite how much or how little service is provided to that patient. For this method to be cost-effective, the physician must focus on preventive care to avoid costly treatment.

In this lesson, you:

• Identified the four main methods of reimbursement
• Defined usual, customary, and reasonable (UCR) fees
• Describe how Resource-Based Relative Value Units (RBRVUs) are determined
• Described the significance of diagnosis-related code groups in Prospective Payment Systems (PPS)

Summary

Claims

Lesson 6 - Legal Issues

After you finish this lesson, you will be able to:

• Explain the effects of HIPAA on the insurance and claims process in the medical office
• Compare the meanings of fraud and abuse
• Describe the Medicare audit process

What You’ll Learn

Malpractice

Physicians can be sued if they make a mistake. Thus, they are required to purchase malpractice insurance. Malpractice refers to a health care worker's inappropriate or negligent conduct resulting in the injury of a patient.

The cost of malpractice insurance is always increasing. In some states, the premiums for certain specialties can total over $200,000 per year. These expenses have an impact on certain reimbursement schedules. The Relative Value Unit of a procedure takes into account the risk of malpractice.

HIPAA

The Health Insurance Portability and Accountability Act (HIPAA) is a law that was enacted to protect certain aspects of people's health care. The first part of HIPAA ensures continued health coverage for individuals when they change jobs.

Under HIPAA, a person may change from group enrollment to individual enrollment without changing policies. The premiums and deductibles may be higher, but the insurance company is not allowed to deny coverage of a pre-existing condition.

Fraud

Fraud is a deliberate deception on a claim form that could result in unauthorized reimbursement from an insurance carrier. This means that, somehow, the information on the claim was manipulated or falsified so the provider could receive more money.

The penalties for fraud can equal up to $10,000 per fraudulent claim form, plus three times the amount of the fraudulent claim.

Fraud

There are several types of misrepresentations that are considered fraud:

​

• Upcoding
• Misrepresenting diagnoses
• Unbundling codes
• Billing for service never provided
• Receiving compensation for referrals

Upcoding

Upcoding means to code a level higher than the service actually performed. It can be detected easily by computer software. By misrepresenting a diagnosis, the procedure can be up-coded to receive more compensation.

Unbundling

Some services often performed together are bundled for billing purposes. When these services are performed, they are charged as one code.

Unbundling codes means to separate a service's components and bill each separately. This increases the level of payment. Billing these codes separately is fraudulent.

Unbundling

For example, when a routine surgical procedure is performed, often the services within are bundled.

A pre-operative visit, the procedure itself, and post-operative care would be bundled under one code. Billing separately for each of these components is termed unbundling.

Abuse

Abuse is not as severe as fraud, but it is still a serious matter. Abuse is conduct that conflicts with accepted business practices. All medical office staff should follow all policies and guidelines to avoid being charged with fraud or abuse.

Some examples of abuse include:

• Overcharging for services or equipment
• Billing improperly
• Violating participating provider agreements with insurance carriers

Legislation

There are several legislative acts which support the prevention and detection of insurance fraud and abuse.

Federal False Claim Amendment Act of 1986 expands the government's ability to detect fraud and abuse. It also supports the prosecution of such acts.

Fraud and Abuse Act clearly outlines the definitions of both fraud and abuse. It also allows for civil or criminal penalties to be enacted against those who commit fraudulent activity.

Avoiding Fraud and Abuse

Physicians and assistants must adhere to policies and guidelines to avoid fraud and abuse.

Here are three tips:

The assistant must keep current with billing and coding practices, and use only up-to-date coding manuals. Every new edition contains important changes and updates.

1. Keep current with billing and coding practices

Code only what is found in the patient record. Lack of documentation can be a serious problem if audited.

2. Procedure and diagnosis must be documented

in the medical record

Medicare offers regular training sessions and also sends out monthly newsletters. Continuing education will help keep office staff informed of any new coding regulations.

3. Continuing education

Responsibility for Fraud and Abuse

It is not only the physician who may be held responsible for committing fraud or abuse. The medical office assistant who performed the coding and submitted the claim may also be charged by the court. This means the assistant must be cautious when performing coding tasks.

Responsibility for Fraud and Abuse

Even though the physician is the boss, the assistant must not do anything that could be construed as illegal. If asked to commit fraud, the assistant must politely refuse.

Even if threatened with termination, the assistant should avoid committing fraud or abuse. If the assistant is fired for doing so, this matter may be taken to the state's medical society or licensing board.

Internal Audits

Medical offices are advised to have HIPAA compliance plans. Part of these compliance plans is performing internal audits. An internal audit is like a self-check to make sure that regulations are being followed.

Someone with appropriate expertise in billing and office procedures should be in charge of internal audits. Several medical records will be chosen at random.

Internal Audits

The records will be examined to determine the following:

• Is coding performed correctly and accurately?
• Is additional documentation complete and correct?
• Are the services billed both necessary and reasonable?

Regular internal audits are helpful in both preventing and detecting cases of fraud and abuse. If the internal auditor discovers any problems or inconsistencies, they should be addressed at once.

Medicare Audits

Medicare audits are a very serious matter.

They can result in fines or constraints against �the practice.

Medicare audits, also called Comprehensive Medical Reviews (CMR), are never random. The Medicare system has methods of constant data analysis in place to watch for signs of fraud and abuse.

For example, a physician found guilty of fraud may be forbidden to file Medicare claims for a specified period of time. Criminal penalties may result if serious fraudulent activity is found.

Types of Medicare Audits

There are two types of Medicare audits:

Prepayment audits analyze claims before they are reimbursed. These audits usually occur when the carrier believes the health care provider has a universal billing problem.

Post payment audits analyze claims after reimbursement. They usually occur when inconsistencies are found in the data of a practice compared to other, similar practices. If a physician uses a certain code much more or much less than other physicians, this could trigger an audit.

Prepayment

Post payment

Types of Medicare Audits

Another Medicare audit trigger could be a whistle-blower. A �whistle-blower is someone within the health care practice who reports wrongdoing to Medicare. Medicare offers rewards to whistle-blowers who report fraud and abuse by health care providers or other staff.

In this lesson, you:

• Explained the effects of HIPAA on the insurance and claims process in the medical office
• Compared the meanings of fraud and abuse
• Described the Medicare audit process

Summary