Medical Billing Facts

Medical Billing Fact: Insurance carriers spend in excess of $19 billion annually processing paper claims.

Fact: Healthcare providers spend more than $7 billion annually just submitting claims to carriers.


Fact: According to the New England Journal of Medicine, the U.S. Healthcare System wastes up to 24 cents out of every dollar on administrative and billing costs, or in excess of $6 billion annually.


Fact: 30 to 35% of all paper claims are rejected due to typo's, errors and omissions.


Fact: Less than 1% of electronic claims are rejected.

 

Medical billing fact An electronic claim takes just seconds to prepare.

Fact: Most electronic claims are processed for payment by carriers within 24 hours.



Fact: Electronic claims cost healthcare providers between $1.50 and $3.00 depending on volume, specialty and other factors.

Fact: Using paper claims submission, reimbursement takes an average of 90 to 120 days.

Fact: Electronic claims are paid within 7-21 days.


Fact: Reports show that the average healthcare provider has more than $150,000 in outstanding accounts receivables.


Fact: Electronic Claims Submission can reduce outstanding accounts receivables by more than 60%.


Fact: Coding errors for surgical procedures eats up about $6 billion annually in unneeded costs.


Fact: Medicare provides healthcare coverage to some 35 million people over age 65.


Fact: The social Security Administration estimated some 2.2 million people turned 65 in the year 2003.


Fact: That number will rise to 4.2 million in the year 2027. In all, 74.9 million people will turn 65 during the next 25 year period, creating a future of opportunity.

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What is ClearingHouse ?

In Medical billing Clearinghouses are a major part of a billing service's ability to conduct business. Your professionalism and reputation depend on aligning yourself with a reputable clearinghouse.


What exactly does a clearinghouse do? Well, for one thing, they check claims for accuracy. But, the biggest thing they do is re-format the data you send to them to a format that a given carrier can read.


Clearinghouses charge fees in many ways. Some charge an initial start up fee to the billing service ranging from $125 to $300. Others are free to sign-up with initially. Some charge a provider enrollment fee for every healthcare provider you enroll, while others don't. Most of them charge a per claim fee of some sort, depending upon the carrier.


In the last couple of years, clearinghouses have adjusted their fees to the advantage of billing services. Many only charge for Medicare, Medicaid and Blue Cross/Blue Shield claims, while major commercial carrier claims are free in some cases.


If the company you are considering purchasing from is not able to offer you free NEIC claims, you may be able to find a better alternative by obtaining your own claims clearinghouse connection.


If a company tells you they are their own clearinghouse, BEWARE!!! That means you are tied into them, and can't use any other clearinghouse. What happens to you if they go out of business? You'll have to buy new software so you can make your own connection with a different clearinghouse.


These days, you can find a company that offers you many choices in clearinghouses. You may need two or more for medical claims and another for dental claims. The point is, be sure your options are many, not few.

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Medicare

Know about Medicare

• Medicare EOB
• Payment Floor
• Waiver of Liability
• Crossover
• Freelook (Medigap)
• Development letter

Medicare EOB:

Medicare used to mail Remittance Advice (RA) to providers and the patient receives a Beneficiary RA. RA has been replaced by Medicare Remittance Advice also called the Medicare Summary Notice. Electronic Claim sending offices receive Electronic Remittance Advice (ERA), The ERA post payments automatically

Payment Floor:

The timeframe established for carrier payment Of Medicare Part B claims. As of October 1,1993, electronically submitted claims will be paid 14 days after the date of receipt, while paper claims will be paid 27 days after the date of receipt. All clean claims (claims which do not require additional development or other documentation for processing), whether electronic or paper, must be processed within 30 days of receipt or the carrier will be required to pay interest in addition to allowances for covered services

ABN(Advance Beneficiary Notice) (Waiver of Liability):

A written notice given to the patient by the Provider in advance of any service or supply furnished for which payment may be denied or reduced by Medicare as not reasonable and medically necessary. This notification serves as protection for both the Provider and the patient. GA modifier is used to denote waiver of liability. It is also called as Advance Beneficiary Notice

Crossover:

A situation whereby gaps in coverage for the medical expenses for a Medicare Beneficiary are forwarded by the Medicare contractor to the Patient’s medigap insurer for payment. Medigap crossovers occur only if correct Medigap information is completed on the Medicare claim form and if the patient has previously signed a Medigap crossover authorization form through a participating Medicare provider. Crossover takes place only in case of Medicare, Medicaid and Medigap Plans.

Free look (Medigap):

A period of time (usually 30 days) when you can try out a Medigap policy. During this time, if you change your mind about keeping the policy, it can be cancelled. If you cancel, you will get your money back.

Development Letter:

A notice from Medicare that a claim submitted by a provider organization cannot be processed without additional information/documentation. The letter identifies the additional information needed and the date by which the information must be received by Medicare .

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Glossary (A-C)

What is ABN(Advance Beneficiary Notice) (Waiver of Liability)

A written notice given to the patient by the Provider in advance of any service or supply furnished for which payment may be denied or reduced by Medicare as not reasonable and medically necessary. This notification serves as protection for both the Provider and the patient. GA modifier is used to denote waiver of liability. It is also called as Advance Beneficiary Notice

Assignment of insurance benefits

An authorization granted by the patient to allow the insurance company to pay claim benefits directly to the provider of care. It is to the provider's benefit to have the patient sign the "assignment of benefits" statement on each claim form. All benefits due to the provider will be mailed directly to the provider rather than to the patient.

Attending physician

The physician in charge of the patient's care; this physician may or may not be the physician who admitted the patient to the hospital.

Capitation

A reimbursement system used by HMOs and some other managed care plans to pay the health care provider a fixed fee on a per capita basis that has no relationship to type of services performed or the number of services each patient receives.

Catastrophic Limit

For services with co-payments or coinsurance, this is the maximum amount out-of-pocket charges you have to pay in a calendar year. Separate limits are usually applied on a per person and per family basis.

Clearing House

It is also referred to as Third Party Administration (TPA). It is an entity that receives, sorts, transmit, edit claims and send each one to correct insurance payer.

Coordination of benefits (COB)

A clause written into an insurance policy or stipulated by state law that requires insurance companies to coordinate the reimbursement of benefits when a policyholder has two or more medical insurance policies. The benefits from the combined policies may pay up to, but may not exceed, 100 percent of the covered benefits of the combined policies for all medical expenses submitted.

Crossover

Medigap crossovers occur only if correct Medigap information is completed on the Medicare claim form and if the patient has previously signed a Medigap crossover authorization form through a participating Medicare provider.

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Glossary D-M

What is Durable Medical Equipment

Equipment that can withstand repeated use, is primarily and usually used to serve a medical purpose, is generally not useful to a person in the absence of illness or injury, and is appropriate for use in the home. To be covered, durable medical equipment must be medically necessary and prescribed by a contracting physician for use in the home. Examples are oxygen equipment, wheelchairs, hospital beds, and other items that the insurance company determines are medically necessary, in accordance with Medicare laws, regulations and guidelines.


E Codes:


E Codes are supplementary classification of coding in which you look for external causes of injury rather than disease. The use of an E code after the primary or secondary diagnosis tells the insurance carrier what caused the injury.

V Codes:


V codes are used when a person who is not currently sick encounters health services for some specific purpose, such as to act as a donor of an organ, receive vaccination, seek consultation regarding family planning, allergies etc.,

•V codes are also a supplementary classification of coding.


End-stage renal disease (ESRD)

A chronic kidney disorder that requires long-term hemo dialysis or kidney transplantation because the patient's filtration system in the kidneys has been destroyed. Workers who have paid into the Social Security/ Medicare Fund and their dependents with ESRD who meet specific ESRD requirements are covered by Medicare.


Fee-for-service (a medical office bookkeeping and insurance term):

A method whereby the physician or other health care provider bills for each visit or service rendered rather than on an all-inclusive or prepaid fee basis.


Gatekeeper

Primary physician or other health care professional assigned by the insurer to review the medical management of plan enrollees.


Global fee

The fee for total care of a surgical case including all pre/postoperative care. This applies to surgical cases listed in the CPT code book which do not have an asterisk (*) at the end of the code number.

Global surgery:

A Medicare billing term that requires an all-inclusive fee for the following services: preoperative services performed by the surgeon within 24 hours of surgery, all interoperative procedures, treatment of surgical complications not requiring a return to the operating room, and 90 days of surgery related postoperative care.


Home healthcare


If a patient is confined to his/her home and requires skilled care for an illness or injury, Medicare can pay for care provided by a home health agency. Your physician should provide the home health agency with a plan of treatment. The services may be provided either on part-time or intermittent bases, not full time.


Hospice

A hospice is a public agency or private organization that is primarily engaged in providing pain relief, symptom management, and supportive services to terminally ill people and their families.

Medical Necessity Denials.

In simple terms is whenever a carrier determines that the service rendered was not necessary, or unreasonable. They feel that this particular service was not needed since it comprises as being part of the major procedure.


Two Ways to Deny Services as Medically Unnecessary.

For example, John sees Dr. Humphries because she has a sore throat. Dr.Humphries looks at her throat and ears, takes a throat culture, tells her to get some rest and prescribes an antibiotic. Dr.Humphries spends quite a bit of time talking with the lonely patient and therefore charges for a Level 4 office visit. The carrier subsequently reduces the visit level to a Level2 and pays based on the level2 office visit, because a level 4 visit (according to the definitions in CPT) was not reasonable or necessary to diagnose and treat a sore throat. This is termed a medical necessity reduction.


Medicare

A federal health insurance program for people 65 years of age or over and retired on Social Security, Railroad Retirement, or federal government retirement programs, individuals who have been legally disabled for more than 2 years, and persons with end-stage renal disease.

Medicare Fee Schedule (MFS)

Schedule of Medicare fees based on RBRVS factors. Non PARs are restricted to the limiting fees on this schedule.

Medicare/Medicaid Crossover Program (MCD

A combination of the Medicare and Medicaid/MediCal Programs that is available to Medicare-eligible persons with income below the federal poverty level.

*Medicare Part A: Benefits covering inpatient hospital and skilled nursing facility services, hospice care, home health care, and blood transfusions.

*Medicare Part B: Benefits covering outpatient hospital and health care provider services.

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Glossary N - P

What is Non-Participating.

In this scenario then the AR needs to identify if out-of-network benefits would be given to a particular patient under this Insurance in some cases the Insurance does not pay for out of network benefits, whereas in other instances there is a penalty of low reimbursement rate, and a slower processing time. Therefore these considerations need to be looked at critically in order to effectively coordinate the collection level.

What is NPI?

The National Provider Identifier (NPI) is another key initiative, which will help in the prevention of fraud and abuse.

NPI is an industry wide unique identifier for providers and suppliers created under the authority of the Health Insurance Portability and Accountability Act of 1996.

CMS developed the NPI effective from 1st Jan 1997.

The NPI is a single block of 10 characters.

The one and only advantage of a NPI over PIN numbers are they are unique for all health plans. NPI are used in the administrative and financial transactions specified by HIPAA

Primary care physician

A Physician who is a member of a Medical group. In which the member has selected to provide health care service. A primary care physician is responsible for authorizing, coordinating and controlling the delivery of covered services to the member. He is also called as Gate Keeper.

Provider Identification Number

PIN is the individual provider number issued by the local Medicare carriers. This number helps the provider in receiving the reimbursement for claims filed to Medicare carrier. The format of PIN is unique and varies from carrier to carrier. If this number is not indicated on all Medicare carrier claims (paper/electronic) will result in a denial as “Unprocessable Claims”.

Unique Physician Identification Number

UPIN is a six digit numeric / alphanumeric number allotted to all Medicare Providers. UPIN is issued by HCFA. A UPIN is required if the service is requested by a referring physician or an ordering physician.

Pre-Admission Certification:

Before being admitted as inpatient in a hospital certain criteria are used to determine whether the inpatient care is necessary.


Pre-authorization:

Is when the Insurance needs to be contacted prior to rendering of any medical service. Some type of treatments which are of big dollar value for example Radiation Therapy (for cancer treatment) would be very expensive, therefore the carrier would request the doctors office to obtain previous approval from their Utilization Management department before treating any patient, in this way they could track their expenditure as well as keep track on all big dollar accounts. If the doctor's office fails to get this authorization then the claim would be denied.

Under Managed Care we have HMO's, PPO's, EPO's.


Pre-Existing Condition:

A health problem that existed or was treated before the date your insurance became effective. Most health insurance contracts have a pre existing condition clause that describes under what condition they will cover medical expense related to a pre-existing condition.


Provider Enrollment Forms

These forms would be given by the carrier which needs to be filled in correctly so that the Insurance could then update their records of who is the doctor/Provider his UPIN number his mailing address the location of his facility, and is he/she treating in more than one facility. All these details would be fed into their system to maintain accurate records.

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Medicare payment for lab cpt code 83036 - important points to consider

Medicare Payment for Clinical Laboratory Services

Before Medicare pays for any test or diagnostic service, two basic criteria must be met:
(1) the service must be covered by Medicare (e.g., certain procedures such as
routine screening tests are not covered) and
(2) the service must be medically necessary or indicated.

Once these two criteria are met, Medicare pays for most clinical laboratory tests based on
the Laboratory Fee Schedule. Each carrier publishes a unique laboratory fee schedule and
adjusts payment levels annually on January 1st based on Congressional budget
recommendation.

Medicare payment for clinical laboratory tests is always the lesser of the fee schedule
amount or the actual amount billed. The provider must accept the Medicare reimbursement
as payment in full for a laboratory test. Medicare patients may NOT be billed for any
additional amounts. Tests must be billed directly to Medicare by the laboratory or physician
performing the test. If an outside laboratory performs a test on a referral from a physician,
only the reference laboratory may legally bill Medicare for the procedure.
Procedure (CPT) Codes and Modifiers

The CPT codes for Glycated Hemogobin (A1c) determinations are:
83036 Hemoglobin; glycated (A1c)
83036QW Hemoglobin; glycated (A1c) using CLIA waived method

Medicare reimbursement for CPT codes 83036 and 83036QW is $13.42 in all states
except:
Idaho: $9.66 Maryland: $12.66 Oklahoma: $11.95
Rhode Island: $12.09 South Dakota: $12.86 Wyoming: $10.49

Diagnosis (ICD-9) Codes
An appropriate diagnosis (ICD-9) code (or narrative description) must be indicated for each
service or supply billed under Medicare Part B. ICD-9-CM is an acronym for International
Classification of Diseases, 9th Revision, Clinical Modification.

When a patient presents with an undiagnosed illness, the ICD-9 code is determined by the
"signs and symptoms" present. Symptoms are defined as what the patient tells the
physician. Signs are what the physician observes as part of his examination of the patient.
Definitive ICD-9 codes should only be assigned and recorded in the medical record after a
diagnosis is clearly determined. Terms such as "rule out", "probable", and "suspected"
should NOT be used since they can not be coded as such and may be interpreted as a firm
diagnosis by a third party payer.

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