Understanding medical insurance types and terminology

 

Medical Insurance Terminology:

Understanding medical insurance terminology is essential for navigating the complexities of healthcare billing and reimbursement. Here are key terms commonly used in medical insurance:

1. Premium: The amount paid by an individual or their employer to an insurance company to maintain coverage.
2. Deductible: The amount an insured person must pay out of pocket before their insurance plan starts covering costs.
3. Copayment (Copay): A fixed amount that a patient pays for specific medical services, often due at the time of the visit.
4. Coinsurance: The percentage of healthcare costs that a patient is responsible for after meeting their deductible.
5. Out-of-Pocket Maximum (OOPM): The maximum amount a patient is required to pay during a policy period, after which the insurance covers 100% of covered expenses.
6. Network: A group of healthcare providers, hospitals, and facilities that have contracted with an insurance company to provide services at negotiated rates.
7. Provider: A healthcare professional or facility that offers medical services, such as doctors, hospitals, and clinics.
8. Claim: A formal request for payment submitted to an insurance company by a healthcare provider on behalf of a patient.
9. Explanation of Benefits (EOB): A statement from the insurance company that explains how a claim was processed, detailing what was paid, denied, or is the patient’s responsibility.
10. Preauthorization: The process of obtaining approval from an insurance company before certain medical services or procedures are performed.After the provider orders the procedure, the assistant should obtain preauthorization after the provider creates an order and prior to the patient receiving the prescribed procedure.
11. In-Network: Refers to healthcare providers or facilities that have contracted with a specific insurance plan, often resulting in lower costs for the insured individual.
12. Out-of-Network: Healthcare providers or facilities that do not have a contract with a particular insurance plan, potentially leading to higher out-of-pocket costs for the insured person.
13. Beneficiary: The person covered by an insurance policy, often the patient.
14. Underwriting: The process by which an insurance company evaluates an applicant’s risk profile to determine coverage eligibility and premium rates.
15.  Indemnity insurance plans: Indemnity insurance plans allows patients to see the provider of their choice, with no regard to a newtwok, and requires 20% payment from the patient after the deductible has been met.

 (PRO TIP!)  Letting the patient know directly and exactly how much they owe, as well as the methods that are available to pay their copay, encourages the patient to make a payment while they are in the office, which is the best time to collect.

Performing Payment Collection

Collecting Copays and Outstanding Balances

The routine practice of collecting copays during the patient check-in process significantly impacts revenue cycle efficiency. To ensure a smooth and successful revenue cycle, it is advisable to collect copays at the time of the patient encounter. Generally, collecting payments during the service encounter results in a higher collection rate. Delaying patient collections until after the encounter consumes additional staff time and resources.

When recording patient or insurance payments, it is imperative to assign them to the correct fiscal period. Prior to inputting any payment, meticulous attention must be given to selecting the appropriate fiscal period. Failing to do so can lead to inaccuracies in month- and year-end financial reports. Typically, it is the office manager’s responsibility to initiate the opening and closing of fiscal periods within the Practice Management System (PMS).

It is essential that patient and insurance payments correspond to the date of service to prevent complications in balancing and posting the daily batch and ensuring fiscal period accuracy. Once a fiscal period has been closed, it cannot be reopened unless authorized personnel make the deliberate decision to do so. By maintaining a daily balancing routine, the process of closing fiscal periods becomes more manageable, enhancing the end-of-year reconciliation process.

 

Types of Insurance Used in a Hospital or Medical Office Setting:

1. Health Insurance: Health insurance provides coverage for medical expenses, including doctor visits, hospital stays, prescription medications, and preventive care. Common types include:
   • Private Health Insurance: Provided by private insurers and often offered through employers.
   • Medicare: Federal health insurance for individuals aged 65 and older and certain younger people with disabilities.
   • Medicaid: Joint federal and state program providing health coverage to low-income individuals and families.
2. Dental Insurance: Dental insurance covers a portion of the cost of dental care, including routine check-ups, cleanings, and more extensive procedures like fillings and extractions.
3. Vision Insurance: Vision insurance covers eye-related expenses, including eye exams, eyeglasses, and contact lenses.
4. Disability Insurance: Disability insurance provides income replacement in the event an employee is unable to work due to a covered disability.
5. Life Insurance: While not directly related to medical care, life insurance provides financial support to beneficiaries in the event of the insured person’s death.
6. Malpractice Insurance: Healthcare providers, including doctors and hospitals, typically carry malpractice insurance to protect against liability claims related to medical errors or negligence.
7. Liability Insurance: Medical facilities may have general liability insurance to cover claims related to accidents or injuries that occur on their premises.
8. Workers’ Compensation Insurance: This insurance provides wage replacement and medical benefits to employees who are injured or become ill due to work-related activities.

Understanding these insurance types and their associated terminology is crucial for healthcare professionals and administrators in managing financial matters within medical offices and hospitals. It ensures that patients receive appropriate coverage and that healthcare providers are reimbursed for their services accurately.

Medicare Part A is the part of Medicare that primarily pays for hospitalization. Part A is often referred to as “Hospital Insurance” because it covers inpatient hospital care, skilled nursing facility care, hospice care, and some home health care services.

Here’s a breakdown of what Medicare Part A covers related to hospitalization:

1. Inpatient Hospital Care: This includes services such as room and board, nursing care, meals, and various hospital services and supplies during a stay in a Medicare-certified hospital.
2. Skilled Nursing Facility Care: Medicare Part A can cover a portion of the costs for skilled nursing facility care following a qualifying hospital stay of at least three days.
3. Hospice Care: Part A covers hospice services for individuals with terminal illnesses who choose hospice care, including inpatient care if needed for pain and symptom management.
4. Some Home Health Care Services: Part A can cover limited home health care services, but these services are typically linked to a person’s need for skilled nursing or therapy services and must meet specific criteria.

Medicare Part B, on the other hand, is known as “Medical Insurance” and covers outpatient services, physician services, preventive care, and certain medical supplies. While Part B doesn’t directly cover hospitalization, it may cover certain outpatient services that you might receive before or after a hospital stay, such as doctor visits or outpatient surgeries.

Medicare Part C refers to Medicare Advantage plans, which are offered by private insurance companies approved by Medicare. These plans provide an alternative way to receive Medicare benefits, often combining Parts A and B, and may include additional benefits. Medicare Advantage plans may have their own coverage for hospitalization, and the specifics can vary by plan.

Medicare Part D is the prescription drug coverage portion of Medicare and is not directly related to hospitalization. However, it helps beneficiaries with the cost of prescription medications, which can be important for managing health conditions before or after a hospitalization.

In summary, for hospitalization-related expenses, Medicare Part A is the primary part of Medicare that provides coverage. Part B, Part C (Medicare Advantage), and Part D have roles in covering other aspects of healthcare and medical expenses.

More on Medicare:

Original Medicare (Part A and Part B)

Original Medicare — sometimes referred to as “traditional” Medicare — is administered by the federal government. It is divided into two parts: Part A (hospital insurance) and Part B (medical insurance).

Medicare Part A

Medicare Part A covers hospital care, including, skilled nursing facilities, hospice, and some home health care.

Medicare Part B

Medicare Part B is “optional” medical insurance that covers a range of outpatient services — including physician and specialist office visits, preventive care, lab work, medical equipment, physical therapy, mental health care and wellness visits.

Who is eligible?

Generally, a patient becomes eligible to receive Medicare benefits when they turn 65 years old ― assuming they meet certain citizenship or residency requirements. There are exceptions made to the age requirement for those with disabilities and End-Stage Renal Disease.

For those younger than 65, you are only eligible to receive Medicare benefits if you:

• Have received Social Security or Railroad Retirement Board (RRB) disability benefits for 24 months
• Have End-Stage Renal Disease (ESRD)
• Have been diagnosed with Lou Gehrig’s disease (ALS)

Signing up for Original Medicare

Some people qualify for automatic enrollment, and others have to enroll.

• If you’re already receiving Social Security or railroad retirement benefits — you’ll be enrolled in Part A and Part B automatically on your 65th birthday. If you’re under 65, it’s the 25th month you receive disability benefits.
• ALS patients are automatically enrolled in Medicare coverage when their Social Security disability benefits begin, regardless of age.If you have end-stage renal disease (ESRD), you must manually enroll.

 

Medicare Advantage plans (Part C)

Medicare Advantage (Part C) is an alternative to Original Medicare. It allows patients to receive Part A and Part B benefits — and in many cases, other benefits — from a private health insurance plan.

At the very least, the Medicare Advantage plan must offer the same benefits as Original Medicare. The only exception is hospice care, which is still covered by Medicare Part A. Medicare Advantage plans may also offer benefits not covered by Original Medicare.

If a patient is eligible for Medicare Part A and Part B, and do not have ESRD, they can join a Medicare Advantage Plan.

Medicare beneficiaries have the option of receiving health care benefits through either Medicare Advantage or Original Medicare — but not both. You need to enroll in Part A and Part B to sign up for a Medicare Advantage plan. The Medicare Advantage Plan is also referred to as Medicare Part C and covers the benefits of both Medicare Part A and B, as well as vision and dental services.

Because private insurance companies offer Medicare Advantage plans, costs can vary between policies.

They may have different premiums and out-of-pocket costs than Original Medicare. With a Medicare Advantage plan, you must pay your Part B premium in addition to the plan premium.

Medicare prescription drug coverage (Part D)

Medicare Prescription Drug Coverage (Part D) helps cover prescription drug costs.

Prescription Drug Plans (PDPs) can be purchased as stand-alone plans from private insurers in addition to Original Medicare or Medicare Advantage plans that don’t offer drug coverage.

 

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Billing Patients, Insurers, and Third-Party Payers for Services Rendered

CMS Billing and Documentation Requirements

The Centers for Medicare and Medicaid Services (CMS) have established stringent documentation prerequisites for services provided. Whether in electronic or paper format, the medical records must substantiate each diagnosis or service code reported to the insurance payer. The medical record must offer a comprehensive and accurate depiction of the patient encounter, including the patient’s name, date of service, medical history, physical examination, treatment plan, and the provider’s signature. In electronic health records (EHR), certain elements are auto-populated, but providers must electronically sign the encounter note to verify its accuracy and completeness. Written documentation must be legible to support the services delivered. In EHRs, while text is legible, the provider must ensure the correct content is selected from the drop-down or radio button options within the note. EHRs also provide the flexibility to include free-text additional notes about the encounter.

The documentation guidelines for Evaluation and Management (E/M) services outlined in the 1995 and 1997 guidelines pertain to services provided in various settings, such as a provider’s office, a nursing home, or a hospital. Each encounter note must include a chief complaint or reason for the encounter.

The details of the exam section of the encounter note are contingent on the provider’s preference for either the 1995 or 1997 documentation guidelines. Specialists frequently opt for the 1997 guidelines as they are more tailored to specific organ systems. For instance, a cardiologist’s focus will differ from that of a specialist in respiratory or gastrointestinal systems.

The assessment and plan section necessitates the documentation of conditions managed during the encounter, along with the appropriate ICD-10-CM codes. Procedures and services performed are reported using CPT or HCPCS codes, which are imperative for third-party claim processing.

In addition to the E/M documentation guidelines, CMS has established requirements for various other services. An example is the Annual Wellness Visit (AWV), a service with numerous specific requirements. Failure to meet any element can lead to a payment refund. To minimize the likelihood of missing elements requiring a refund, templates can be employed, which are readily available in EHRs for common services like sick calls, preventive care, and sports physicals. Organizations can customize templates to align with their specific services and meet payer-specific requirements.

CMS and other organizations have produced reference materials and template examples for the AWV. This service mandates the completion of a health risk assessment (HRA) by the patient, involving inquiries about fall risk, cognitive function, depression, and advanced directives. Providers must review the HRA, identify areas of risk, and establish a plan of action. Utilize CMS and other available resources to create templates encompassing all essential elements.

Documentation requirements are reinforced through the audit process. It is important to remember that any claim submitted to CMS or other payers is subject to potential audit. Audits may be random or triggered by anomalies in coding or billing patterns. For instance, if a provider consistently reports the same level of service for an excessive percentage of patient encounters, it may trigger an audit.

 

Medical coverage for military personnel and employees can vary depending on their specific status, branch of service, and employment conditions. Here is a list of some common types of medical coverage available to military personnel and employees:

Military Personnel:

1. TRICARE: TRICARE is the primary healthcare program for uniformed service members, retirees, and their families. It offers various plans, including TRICARE Prime, TRICARE Select, and TRICARE for Life, each with different coverage options and costs.
2. VA Healthcare: Veterans Affairs (VA) provides healthcare services to eligible veterans, including hospital care, outpatient care, and prescription medications.
3. Military Treatment Facilities (MTFs): Active-duty service members can receive medical care at military hospitals and clinics, often at no cost.
4. Deployment Health Support: Service members receive healthcare support during deployments, including pre-deployment health assessments and post-deployment health assessments.

 

Employees of the Military and Department of Defense (DoD):

1. Federal Employees Health Benefits Program (FEHBP): Federal civilian employees, including those in the Department of Defense, can access healthcare coverage through FEHBP. They can choose from various health plans to meet their needs.
2. Civilian Health and Medical Program of the Department of Veterans Affairs (CHAMPVA): CHAMPVA provides healthcare coverage to certain eligible dependents and survivors of veterans. It covers a range of medical services.
3. Defense Health Program (DHP): The DHP provides healthcare services to DoD employees, including civilians and contractors, to ensure the readiness and health of the military force.
4. Flexible Spending Accounts (FSAs): Many military and DoD employees can participate in FSAs, which allow them to set aside pre-tax dollars to cover eligible healthcare expenses.
5. Workers’ Compensation: Military and DoD civilian employees may be covered by workers’ compensation programs if they are injured on the job.
6. Occupational Health Services: Some military and DoD installations offer on-site occupational health services for employees, including physical exams and wellness programs.
7. Employee Assistance Programs (EAPs): EAPs provide counseling and support services to employees and their families for various issues, including mental health and substance abuse.
8. Dental and Vision Plans: Many military and DoD employees can access dental and vision coverage through their employment benefits.
9. Telemedicine Services: Some employers offer telemedicine services, allowing employees to access medical care remotely for certain conditions.

It’s important to note that the availability and specifics of these healthcare programs can vary depending on factors such as employment status, location, and individual circumstances. Eligibility and coverage details should be confirmed with the respective program or employer to ensure accurate information for each individual’s situation.

 

Electronic Remittance Advice (ERA) is a critical component of medical billing and administrative tasks for a Certified Medical Administrative Assistant (CMAA). ERA is an electronic document that provides details about payments, adjustments, and denials for healthcare claims submitted by a healthcare provider to insurance companies or payers. Here’s what ERA means for the CMAA:

1. Automated Payment Information: ERA replaces traditional paper explanation of benefits (EOB) documents. It electronically communicates information about how claims are processed and paid. This includes details about the patient, services rendered, allowed amounts, paid amounts, and any adjustments or denials.
2. Efficiency: ERA streamlines the payment reconciliation process. Instead of manually matching paper EOBs with claims, the CMAA can electronically receive and process this information, reducing errors and saving time.
3. Integration: Many healthcare management software systems integrate ERA directly, allowing for automatic posting of payments and adjustments to patient accounts. This integration enhances billing accuracy and reduces data entry.
4. Claims Follow-up: ERA provides insights into why claims were denied or adjusted. CMAAs can use this information to identify and address issues that might be causing repeated claim denials or payment discrepancies.
5. Payment Verification: CMAAs can use ERA to verify that payments match what was expected based on the submitted claims. Any discrepancies or underpayments can be promptly addressed.
6. Audit Trail: ERA provides an electronic record of all financial transactions related to a patient’s visit. This can be essential for audits, compliance, and financial reporting.
7. Communication: CMAAs may need to communicate with insurance companies or payers if there are discrepancies or issues with payments. ERA information can serve as a reference point during these communications.
8. Reconciliation: The CMAA is responsible for reconciling payments and ensuring that the healthcare provider receives appropriate reimbursement for services rendered. ERA plays a vital role in this process.
9. Data Security: Ensuring the security and confidentiality of ERA data is crucial. CMAAs should follow HIPAA guidelines and other relevant regulations to protect patient and financial information.

In summary, Electronic Remittance Advice (ERA) is a digital document that provides detailed information about payments, adjustments, and denials related to healthcare claims. For a Certified Medical Administrative Assistant (CMAA), ERA is a valuable tool for efficient payment processing, reconciliation, and communication with insurance companies or payers. It helps ensure accurate billing and financial management within a healthcare practice.

In medical office administration, the following four steps – Screening, Predetermination, Precertification, and Counseling – play a crucial role in ensuring that patients receive appropriate and efficient healthcare services while managing costs and administrative processes effectively:

1. Screening:
   • Purpose: The screening step involves evaluating patients’ insurance coverage, medical history, and healthcare needs before they receive medical services.
   • Process:
     • Patients provide their insurance information during registration or check-in.
     • Medical office staff review the insurance coverage to ensure it’s valid and up-to-date.
     • The patient’s medical history and current healthcare concerns may also be reviewed to identify any potential red flags or special requirements.
   • Outcome: Screening helps identify any potential issues with insurance coverage or specific healthcare needs, allowing the medical office to address them before providing medical services.
2. Predetermination:
   • Purpose: Predetermination involves seeking approval from the insurance provider before certain medical services or treatments are performed. This step helps ensure that the insurance company will cover the cost of the planned services.
   • Process:
     • After screening, if a patient’s treatment or procedure is deemed complex or costly, the medical office may initiate the predetermination process.
     • Medical staff or billing specialists submit a request to the insurance company detailing the proposed treatment and expected costs.
   • Outcome: Predetermination helps clarify the coverage and any potential out-of-pocket expenses for both the patient and the medical office. It minimizes unexpected billing issues and ensures that the patient can proceed with the treatment with confidence.
3. Precertification:
   • Purpose: Precertification is similar to predetermination but may be required for more routine medical services, tests, or procedures. It ensures that the patient’s insurance covers the specific services requested.
   • Process:
     • Before scheduling a particular service, the medical office may need to obtain precertification from the insurance company.
     • A request is submitted to the insurance provider, providing details about the service, its medical necessity, and expected costs.
   • Outcome: Precertification helps prevent claim denials and unexpected financial burdens for the patient. It confirms that the requested services are eligible for coverage and can proceed as planned.
4. Counseling:
   • Purpose: Counseling involves communicating with the patient to explain insurance coverage, financial responsibilities, and any potential barriers to treatment or services.
   • Process:
     • Medical office staff provide patients with information regarding their insurance coverage, including copayments, deductibles, and out-of-pocket expenses.
     • They may also discuss any additional steps needed, such as obtaining referrals or authorizations.
   • Outcome: Counseling helps patients make informed decisions about their healthcare. It ensures that they understand their financial responsibilities, making the healthcare experience more transparent and less stressful.

These steps are essential for both the patient’s peace of mind and the medical office’s administrative efficiency. By following these procedures, medical offices can manage costs, minimize insurance-related issues, and provide patients with the necessary information to make informed decisions about their healthcare.

Billing Patients, Insurers, and Third-Party Payers for Provided Services

Within the realm of responsibilities for a CMAA, it is crucial to grasp the intricacies of various insurance plans, distinguish between third-party payers, and accurately manage billing for patient outstanding balances.

The primary categories of payers encompass commercial and government health plans. Government insurance plans, in turn, fall under federal or state programs. Commercial health plans are typically employed by non-governmental employers for their workforce, while government plans hinge on specific qualifications. State insurance programs exhibit notable variations across regions. For instance, Medicare is a federal government program tailored for individuals of a certain age (typically 65 and older), those with qualifying disabilities, or individuals with end-stage renal disease. Medicaid, on the other hand, signifies state benefit programs accessible to eligible individuals, with qualifications varying from state to state, such as income levels or medical needs. TRICARE serves as a federal payer designed for military members and their eligible family members.

Additional insurers include auto insurance MedPay policies and workers’ compensation coverage, which come into play for particular conditions or injuries. It is incumbent upon the CMAA to establish contact with the patient’s auto insurance or workers’ compensation provider to verify coverage before the patient’s appointment. The selection of the correct insurance for a claim is pivotal; an incorrect choice can result in claim denial, thereby impeding the reimbursement process.

The collection of copayments during the patient encounter is instrumental in reducing the volume of monthly patient statements. Nevertheless, once the insurance processes the claim, any outstanding patient responsibility amount should be appropriately billed to the patient.

Types of Payers

1. Government:
   • State and Federal Programs
   • Examples: Medicare, Medicaid, TRICARE
2. Commercial:
   • Health Insurance Plans Offered by Commercial Companies
   • Examples: Aetna, United Healthcare, Cigna
3. Other Payers:
   • Plans Tailored to Specific Occurrences
   • Examples: Auto Insurance MedPay, Workers’ Compensation

 

 

Processing insurance claims and billing procedures

Performing financial procedures in a medical office involves handling payments from patients, creating invoices and receipts, and understanding basic financial terminology related to healthcare billing. Here’s a step-by-step guide on how to perform these financial procedures:

1. Collect Copayments:

• When a patient arrives for an appointment, greet them warmly and confirm their identity.
• Verify the patient’s insurance information to determine the required copayment.
• Politely request the copayment amount, either in cash, check, credit card, or another accepted payment method.
• Provide a receipt for the copayment, which includes details such as the date, patient’s name, amount paid, and payment method.

2. Create Statements (e.g., Office Visit Invoices, Pre-Invoices):

• Use your medical billing software or office management system to generate statements or invoices for services rendered.
• Include the patient’s name, contact information, date of service, a detailed list of services provided (including CPT codes), and the total amount due.
• Clearly indicate any insurance payments or adjustments made.
• Specify the payment due date and payment options (e.g., mailing a check, online payment portal).
• Provide contact information for billing inquiries.

3. Create Receipt for Payment:

• When a patient makes a payment, whether it’s a copayment or payment for a statement, issue a detailed receipt.
• The receipt should include the date, patient’s name, amount paid, description of services (e.g., copayment for office visit), payment method, and a unique receipt number.
• Both the patient and the office should retain a copy of the receipt for record-keeping purposes.

4. Knowledge of Basic Financial Terminology:

• Familiarize yourself with essential financial terms commonly used in healthcare billing:
  • Copayment: A fixed amount that patients are required to pay for certain healthcare services at the time of the visit.
  • Deductible: The amount a patient must pay out of pocket before their insurance coverage kicks in.
  • Co-insurance: The percentage of healthcare costs that a patient is responsible for after meeting their deductible.
  • Fee Schedule: A list of predetermined prices for medical services and procedures, often used by insurance companies to determine coverage and reimbursement rates.

Understanding these terms is crucial for accurate billing and explaining financial responsibilities to patients. It helps ensure that patients are informed about their insurance coverage and any out-of-pocket expenses they may incur.

Effective financial procedures in a medical office not only contribute to efficient billing but also help maintain positive patient relationships by providing clear and transparent information about costs and payments. Additionally, staying updated on healthcare billing regulations and coding practices is essential to ensure compliance and accuracy in financial procedures.

Patient aging accounts greater than 90 days can be turned over to a collection agency.

A contractual adjustment in patient billing refers to a reduction in the amount a healthcare provider charges a patient or their insurance company due to negotiated agreements with insurance companies or other third-party payers. These adjustments are a common part of the medical billing process and are designed to ensure that patients and insurers are billed the agreed-upon, contracted rates rather than the provider’s full list prices.

Here’s how contractual adjustments work in patient billing:

1. Negotiated Rates: Healthcare providers negotiate contracts with insurance companies, which specify the rates at which services will be reimbursed. These negotiated rates are often lower than the provider’s standard or “chargemaster” prices.
2. Billing Process: When a patient receives medical services, the provider generates a bill that reflects the full charge for the services rendered, based on their chargemaster rates. However, this full charge is rarely what the patient or their insurance company will actually pay.
3. Contractual Adjustment: The contractual adjustment is the difference between the provider’s full charge and the lower, negotiated rate specified in the contract with the insurance company. It is essentially a discount applied to the patient’s bill as a result of the contractual agreement. This adjustment is not a charge that the patient is responsible for.
4. Patient Responsibility: After the contractual adjustment is applied, the patient is typically responsible for their portion of the bill, which may include copayments, deductibles, or coinsurance as specified by their insurance plan.

Contractual adjustments serve several purposes:

• They ensure that patients and insurance companies are not billed the full, often much higher, list prices.
• They provide predictability and consistency in billing for both healthcare providers and insurers.
• They help facilitate network participation agreements between healthcare providers and insurance companies.

It’s important for patients to review their medical bills carefully, understand the contractual adjustments applied, and verify that their insurance company is billed correctly based on the negotiated rates. Additionally, patients should ensure that they are only responsible for the amounts specified in their insurance plan, which may include copayments, deductibles, and coinsurance, and not the full chargemaster prices.

 

Encoders are available to help find the appropriate diagnosis and procedure codes .They also identify age/gender edits, inappropriate principal diagnoses, and assist with sequencing diagnoses and procedures. Scrubbers are billing programs that do a final check before releasing the bill.

 

(Pro Tip!) Emergency services do not require an in-network provider to be reimbursed; the managed care would cover the services.

Reports

Medical administrative assistants often play a crucial role in managing billing processes within healthcare facilities. They can run various reports to ensure accurate billing, monitor revenue, and assist with financial management. Here’s a list of reports that can be run by a medical administrative assistant concerning billing:

1. Billing Summary Report: This report provides an overview of all billable services rendered during a specific period, typically on a daily, weekly, or monthly basis. It summarizes the total charges, payments received, outstanding balances, and adjustments.
2. Aging Report: An aging report categorizes outstanding accounts receivable by the length of time the balance has been outstanding (e.g., 30 days, 60 days, 90 days or more). It helps identify overdue accounts and potential collection issues. The assistant should use the aging of accounts report to determine the length of time that a patient has been delinquent on payments. The report indicates patients who are delinquent over 60, 90, or 120 days.
3. Daily Transaction Report: This report lists all financial transactions, including charges, payments, adjustments, and refunds, for a specific day. It provides a detailed breakdown of the day’s financial activities.
4. Insurance Claim Status Report: This report tracks the status of insurance claims submitted for reimbursement. It helps identify claims that are still pending, rejected, or denied, allowing for timely follow-up and resubmission if necessary.
5. Denied Claims Report: Specifically focusing on claims that have been denied by insurance payers, this report highlights the reasons for denials. It assists in identifying common denial patterns that need to be addressed.
6. Payment Posting Report: This report details all payments received, including checks, credit card payments, electronic transfers, and cash payments. It helps ensure that all payments are accurately recorded and deposited.
7. Adjustment Report: An adjustment report summarizes all adjustments made to patient accounts, such as discounts, write-offs, or corrections. It provides transparency regarding any changes to the balance owed.
8. Refund Report: This report tracks all refunds issued to patients or insurance companies. It includes information on the reason for the refund, the recipient, and the date issued.
9. Charge Entry Report: Lists all services or procedures that have been charged to patient accounts. It helps verify that all services provided have been properly documented and billed.
10. Revenue Analysis Report: Provides a comprehensive analysis of practice revenue, including a breakdown by service type, provider, or department. It helps identify areas of high and low revenue generation.
11. Patient Statements Report: Generates patient statements for outstanding balances. It includes details of charges, payments, and any amounts due, helping patients understand their financial obligations.
12. Collections Report: This report tracks the effectiveness of the collection process, including the amount collected from overdue accounts and the number of accounts sent to collections agencies.
13. Practice Productivity Report: Measures the productivity of healthcare providers based on factors like the number of patients seen, services provided, and revenue generated. It can be used for performance evaluations.
14. Write-Off Report: Summarizes any uncollectible debts that have been officially written off as bad debt. It helps in financial reporting and tax purposes.
15. Year-End Financial Summary: Provides an annual financial summary, including total revenue, expenses, and net income. It’s essential for financial planning and tax reporting.
16. Patient Payment History Report: Offers a detailed history of a patient’s payments, showing the dates and amounts of payments made over time. It’s useful for addressing patient payment inquiries.

These reports help medical administrative assistants and healthcare organizations maintain accurate financial records, track revenue, identify billing issues, and ensure compliance with billing regulations. Running these reports regularly contributes to effective financial management and revenue optimization.

 

Charge reconciliation in the context of healthcare refers to the process of comparing the charges for medical services and procedures with the actual services provided and documented. The primary goal of charge reconciliation is to ensure that the charges accurately reflect the services rendered and that any discrepancies or errors are identified and corrected. Here’s an overview of charge reconciliation and its frequency:

Charge Reconciliation Process:

1. Service Documentation: Healthcare providers and facilities document the services they provide for each patient. This documentation includes details such as the type of service, date of service, provider involved, and any associated diagnoses or procedures.
2. Billing: Based on the documentation, healthcare providers generate bills or claims for the services rendered. These bills include information on the services provided and the associated charges.
3. Charge Reconciliation: Charge reconciliation is the process of comparing the charges on the bills or claims with the documentation of services. This includes verifying that the services billed for are supported by the clinical documentation and are accurately coded with appropriate diagnosis and procedure codes.
4. Identification of Discrepancies: During charge reconciliation, any discrepancies, errors, or omissions are identified. This can include overbilling, underbilling, coding errors, missing charges, or other issues that may affect the accuracy of the billing.
5. Correction: When discrepancies are found, they are corrected as needed. Corrections may involve adjusting charges, modifying coding, or making changes to the billing based on the documented services.
6. Quality Assurance: Charge reconciliation is also an opportunity to ensure that billing practices adhere to regulatory and compliance requirements, including those related to coding and documentation.

Frequency of Charge Reconciliation:

The frequency of charge reconciliation can vary based on the policies and practices of the healthcare provider or facility. There are no strict rules regarding how often it should be performed, but it typically occurs on a regular basis, which may include:

1. Daily Reconciliation: In most all healthcare settings, charge reconciliation will be performed daily, especially in high-volume facilities or for services with complex billing.
2. Weekly or Monthly Reconciliation: Many healthcare organizations perform charge reconciliation on a weekly or monthly basis to review and correct charges for a specific time frame.
3. Quarterly or Periodic Audits: Some facilities may conduct more extensive audits and charge reconciliation on a quarterly or less frequent basis to ensure compliance and identify patterns or trends in billing accuracy.

The specific frequency of charge reconciliation is often determined by the healthcare facility’s policies and the nature of the services provided. Frequent reconciliation helps ensure that billing is accurate, reduces the risk of errors, and supports compliance with healthcare regulations and standards. It is an essential part of the healthcare revenue cycle management process.

 

Billing Patients, Insurers, and Third-Party Payers for Services Rendered

Healthcare Payment Models

Within the realm of healthcare payment models, a variety of approaches exist. The most well-known is the fee-for-service model, where providers receive payment for the services or procedures they deliver to patients. For instance, if a provider conducts an office encounter and performs an x-ray, the provider reports the relevant CPT, HCPCS, and ICD-10-CM codes. Payers then reimburse for each service based on a predetermined physician fee schedule.

In the current landscape, there’s a shift towards alternative reimbursement models, including pay-for-performance (P4P). This reimbursement approach aims to enhance the traditional fee-for-service model by emphasizing value-based care over volume-based care. P4P programs utilize quality and clinical measures tailored to the healthcare organization’s type and specialty to support their patient populations. For example, a pediatric clinic may focus on ensuring up-to-date vaccinations, while an internal medicine clinic may concentrate on managing chronic conditions like hypertension and diabetes.

Example of a P4P Measure for Blood Pressure Control:

This measure seeks to manage blood pressure levels in ABC Insurance DualChoice Members aged 18 to 85, diagnosed with hypertension. Providers are required to conduct blood pressure screenings and report those that meet the controlled levels, using appropriate codes and modifiers for each patient. The maximum incentive is one per member per year.

ICD-10-CM Codes:

• I10: Essential (Primary) Hypertension
• Most Recent Blood Pressure Reading Code
• Systolic less than 130 mm Hg – 3074F-ZZ
• Systolic 130 to 139 mm Hg – 3075F-ZZ
• Diastolic less than 80 mm Hg – 3078F-ZZ
• Diastolic 80 to 89 mm Hg – 3079F-ZZ

The value-based care model is a P4P program that rewards providers with incentives for meeting specific program performance standards. The aim is to enhance patient outcomes and reduce hospitalizations by delivering quality care. Value-based models set patient outcome goals as quality and clinical measures that promote disease prevention and the effective management of chronic conditions. For example, diabetic patients should have their A1C monitored, and chronic kidney disease patients require regular blood and urine tests. By achieving the outlined measures, providers or healthcare organizations can improve patient outcomes, reduce costs, and receive monetary rewards. Notable examples of value-based care models include accountable care organizations (ACOs) and patient-centered medical homes (PCMHs).

The CMAA must acquaint themselves with the various alternative reimbursement models their organization participates in and comprehend the associated reporting requirements. Developing standard operating procedures and workflows within the healthcare organization is crucial to meet patient needs, achieve incentive goals, and secure additional reimbursement.

Another payment model is capitation, where a managed care organization agrees to a predetermined reimbursement amount per patient per month. Capitation is typically applied to primary level care but can extend to other services. Under capitation, all charges for an encounter are bundled within the monthly payment, regardless of how frequently a patient seeks care within that month. Some services are “carved out” from capitation contracts, meaning they are billed and reimbursed separately. Carve-out services differ based on the payer and provider type and may include patients with specific acute or chronic conditions requiring enhanced medical decision-making and monitoring or specified services like simple fracture care at the primary care level.

 

                                                                                                                                    CMS-1500 Form for Paper Claims

When it comes to third-party billing, adhering to standard formats and code sets is crucial. For outpatient and professional service claims, the electronic format is 837P, while the paper format is CMS-1500. Inpatient claims are electronically submitted in the 837I format, and for paper claims, the UB-04 (CMS-1540) is utilized. These standard code sets, including CPT, ICD-10-CM, ICD-10-PCS (for inpatient claims), and HCPCS codes, are employed to articulate diagnoses, services, supplies, and procedures on the claim form.

Billing requirements can differ for each payer based on the specific circumstances or the type of encounter. In instances like automobile insurance or workers’ compensation claims, it is incumbent upon the CMAA to directly engage with the payer and secure authorization before providing care to the patient. This proactive approach ensures proper reimbursement. For example, a patient might assert that their employer will cover expenses related to an ankle sprain because it occurred at work. However, the claim must be communicated to the employer and endorsed by the workers’ compensation carrier before any reimbursement can be expected. In managed care plans, failure to obtain prior authorization prior to the patient’s visit can result in claim denials.

Payers have varying regulations, encompassing aspects like timely filing, bundled services, and modifier usage. Health Maintenance Organization (HMO) plans may necessitate claims to be filed within just 90 days, whereas other plan types could extend the filing window to up to a year from the date of service. The concept of bundled services can be applied to capitated services or as stipulated in the service code description. Modifier utilization might also be subject to payer-specific guidelines. For instance, some payers may establish precise criteria for the use of modifier -25 to prevent its overuse or misapplication. Adherence to payer policies, contingent on the plan type, is essential to ensure accurate claims billing.

 

 

 

Bookkeeping Terms

 

1. Accounts Receivable (AR): Accounts receivable is the money that a business or organization is owed by its customers or clients for products or services provided but not yet paid for. It represents the amount of money that is expected to be collected from customers in the future. AR is considered an asset on a company’s balance sheet until it is paid.
2. Accounts Payable (AP): Accounts payable is the opposite of accounts receivable. It refers to the amount of money a business owes to its suppliers or vendors for goods or services purchased on credit but not yet paid for. AP is considered a liability on a company’s balance sheet until it is settled.
3. Aging of Accounts: Aging of accounts, often referred to as an aging report, is a financial report that categorizes accounts receivable by the length of time they have been outstanding or unpaid. It typically breaks down receivables into age groups, such as current (0-30 days), 30-60 days, 60-90 days, and 90+ days. Aging reports help organizations monitor overdue accounts, identify potential collection issues, and prioritize follow-up efforts.
4. ATOS (Average Treatment of Sales): ATOS is a financial metric used to assess the efficiency of a company’s accounts receivable management. It measures the average number of days it takes for a company to collect payments from its customers after a sale has been made. A lower ATOS value generally indicates quicker collection of accounts receivable, which can be a positive sign of a company’s financial health and liquidity.

These financial terms are essential for managing a company’s finances effectively. Accounts receivable and accounts payable are integral parts of a company’s balance sheet, reflecting its short-term financial obligations and assets. Aging of accounts helps organizations track the aging of outstanding invoices, while ATOS provides insights into the efficiency of the accounts receivable process. Proper management of these elements is crucial for maintaining healthy cash flow and financial stability.

 

A clearinghouse, in the context of healthcare and medical billing, is an intermediary organization or service that facilitates the exchange of electronic healthcare information between healthcare providers, payers (such as insurance companies or government healthcare programs), and other entities involved in the healthcare revenue cycle. Clearinghouses play a crucial role in processing and transmitting various administrative and financial transactions in a standardized and secure manner. Here are the key functions and roles of healthcare clearinghouses:

1. Data Standardization: Clearinghouses help standardize and format electronic healthcare transactions, ensuring that data complies with industry standards and regulatory requirements, such as those defined by the Health Insurance Portability and Accountability Act (HIPAA).
2. Claims Processing: One of the primary functions of a clearinghouse is to receive, process, and transmit electronic healthcare claims submitted by healthcare providers to insurance companies or government payers. The clearinghouse reviews the claims for errors, such as missing or incorrect information, before forwarding them to the appropriate payer.
3. Eligibility Verification: Clearinghouses can perform real-time eligibility verification, allowing healthcare providers to check a patient’s insurance coverage and benefits before providing services. This helps prevent claim denials due to coverage issues.
4. Electronic Remittance Advice (ERA): Clearinghouses receive electronic remittance advice from payers, providing detailed information about how claims were processed and explaining any adjustments or denials. They can then forward this information to healthcare providers, facilitating the reconciliation of accounts.
5. Electronic Funds Transfer (EFT): Some clearinghouses offer electronic funds transfer services, allowing providers to receive payments from payers directly into their bank accounts. This accelerates the reimbursement process.
6. Coordination of Benefits (COB): Clearinghouses assist in coordinating benefits for patients who have multiple insurance policies to determine the primary and secondary payers, ensuring proper adjudication of claims.
7. Privacy and Security: Clearinghouses are responsible for ensuring the security and privacy of healthcare data. They use encryption and other security measures to protect sensitive patient information during transmission.
8. Code Set Translation: Clearinghouses can translate various code sets, such as diagnosis and procedure codes (ICD-10, CPT), to ensure that the information is transmitted in a format understood by both providers and payers.
9. Reporting and Analytics: Some clearinghouses offer reporting and analytics services to help healthcare providers track and analyze their revenue cycle performance and claim submissions.
10. Compliance: Clearinghouses help ensure that electronic transactions comply with healthcare industry regulations and standards, particularly HIPAA requirements.

By serving as intermediaries and facilitating the electronic exchange of healthcare data, clearinghouses streamline administrative processes, reduce errors, and expedite reimbursement for healthcare providers. They play a critical role in the efficient operation of the healthcare revenue cycle and help ensure that healthcare transactions are conducted securely and in compliance with industry regulations.

 

What is Double and Single Entry?

Basic knowledge of a bookkeeping system, such as double-entry or single-entry bookkeeping, is essential for keeping accurate financial records in a medical office or any business. These systems determine how financial transactions are recorded and tracked.

1. Single-Entry Bookkeeping:

• Single-entry bookkeeping is a simple and straightforward system used by small businesses or individuals to track financial transactions. It’s similar to maintaining a checkbook or a personal budget.
• In single-entry bookkeeping, only one entry is made for each transaction, typically recording the date, description of the transaction, and the amount.
• It is commonly used for tracking revenue and expenses but does not provide a detailed picture of a company’s financial health.
• Single-entry bookkeeping is not suitable for larger businesses or organizations with complex financial operations.

2. Double-Entry Bookkeeping:

• Double-entry bookkeeping is a more comprehensive and accurate system used by businesses of all sizes, including medical offices, to maintain their financial records.
• In double-entry bookkeeping, every financial transaction is recorded twice: once as a debit and once as a credit. Debits and credits must always balance, ensuring the books are in equilibrium.
• Debits and credits are recorded in specific accounts based on accounting principles. For example, an increase in assets is recorded as a debit, while an increase in liabilities or equity is recorded as a credit.
• Double-entry bookkeeping provides a complete and accurate picture of a company’s financial position and is essential for generating financial statements like balance sheets and income statements.
• It helps identify errors and discrepancies quickly, making it easier to detect fraud or inaccuracies.

In a medical office, double-entry bookkeeping is often preferred due to its accuracy and ability to provide a clear overview of the practice’s financial health. For instance, when a medical office receives payment from a patient, a double-entry system records both the increase in cash (debit) and the corresponding decrease in accounts receivable (credit). This maintains the balance between assets and liabilities.

Understanding the basics of a bookkeeping system is crucial for medical office administrators and financial staff to maintain accurate financial records, comply with tax regulations, and make informed financial decisions. Additionally, many medical offices use accounting software to streamline the bookkeeping process, ensuring efficiency and accuracy in their financial operations.

 

Who Is Responsible for the Bill?

The guarantor is typically responsible for paying a medical bill. In the context of medical billing and healthcare billing, the term “guarantor” refers to the person who is financially responsible for the medical expenses incurred. This is often the patient, but it can vary depending on the circumstances:

1. Patient: In most cases, the patient is the guarantor. This means they are responsible for paying their own medical bills. This includes copayments, deductibles, and any costs not covered by insurance.
2. Parent or Legal Guardian: In the case of minor patients, parents or legal guardians are usually the guarantors. They are financially responsible for their children’s medical bills.
3. Spouse: In some situations, a spouse may be the guarantor if the patient is unable to handle their own financial affairs.
4. Other Responsible Parties: In some cases, especially when dealing with an adult who cannot make decisions due to incapacitation or cognitive impairment, a legally appointed guardian or conservator may act as the guarantor.

 

These terms are related to various aspects of healthcare and health insurance:

1. Special Needs Plan (SNP): A Special Needs Plan is a type of Medicare Advantage plan designed to serve individuals with specific health needs. SNPs are tailored to provide specialized care for groups such as those with chronic conditions (Chronic Condition SNPs), those eligible for both Medicare and Medicaid (Dual Eligible SNPs), and individuals residing in long-term care facilities (Institutional SNPs). These plans offer benefits and services focused on the unique needs of the targeted population.
2. Sliding Scale: In the context of healthcare costs, a sliding scale refers to a flexible payment structure based on a person’s income or financial circumstances. Sliding scale fees are often used in healthcare facilities, particularly in clinics or community health centers, to make healthcare services more affordable for low-income individuals and families. The fees for medical services or treatments are adjusted on a sliding scale, with lower fees for those with lower incomes.
3. Hardship Waiver: A hardship waiver is a request for an exemption from specific requirements or penalties due to financial or personal hardship. In healthcare, a hardship waiver can be related to various matters, such as obtaining an exemption from the individual mandate penalty for not having health insurance under the Affordable Care Act (ACA). To qualify for a hardship waiver, an individual must demonstrate that they faced circumstances that made it challenging for them to obtain health insurance coverage.
4. TRICARE Plan: TRICARE is the healthcare program of the United States Department of Defense for active-duty military personnel, retirees, and their dependents. TRICARE offers several different health plans, including TRICARE Prime, TRICARE Select, and TRICARE for Life, which provide healthcare services to eligible military beneficiaries both in the United States and overseas. The specific TRICARE plan individuals qualify for can depend on factors such as their military status and location.

These terms are part of the complex landscape of healthcare and health insurance in the United States, each serving a unique role in providing healthcare access and support to specific groups or addressing particular situations.

 

It’s essential to clarify the guarantor’s responsibility and ensure that accurate billing information is provided during the registration process at a healthcare facility. This helps in billing the right party and reducing confusion about who is responsible for payment. Additionally, insurance coverage, if applicable, plays a significant role in determining how much the patient or guarantor is responsible for paying, as insurance may cover a portion or all of the medical expenses.

 

1. Preauthorization:
   • Preauthorization, also known as prior authorization or prior approval, is a process used in healthcare to determine if a specific medical treatment, procedure, medication, or service will be covered by a patient’s health insurance plan. It involves the healthcare provider obtaining approval from the insurance company before providing the service.
   • Preauthorization is typically required for expensive or elective procedures, as well as medications that may have lower-cost alternatives. Insurance companies use preauthorization to assess the medical necessity and appropriateness of the proposed treatment or service.
2. Explanation of Benefits (EOB):
   • An Explanation of Benefits (EOB) is a document that is sent to a policyholder by their health insurance company after a healthcare service or treatment has been provided. It explains the costs, payments, and benefits associated with the medical services received. The EOB typically includes details such as the date of service, the provider’s name, the billed amount, the allowed amount, the patient’s responsibility (e.g., copayment or coinsurance), and the insurance company’s payment.
   • EOBs help policyholders understand how their health insurance plan is covering their medical expenses and can be used to verify the accuracy of billing from healthcare providers.
3. Assignment of Benefits:
   • Assignment of Benefits (AOB) is a legal agreement that allows healthcare providers to receive payment directly from the patient’s insurance company. This means that the patient assigns their insurance benefits to the provider, who can then bill the insurance company and receive payment on behalf of the patient.
   • AOB is commonly used in medical settings to simplify the billing process for patients and providers. Without an AOB, patients would typically need to pay for services upfront and then seek reimbursement from their insurance company.
4. Advanced Beneficiary Notice (ABN):
   • An Advanced Beneficiary Notice (ABN) is a notice provided by healthcare providers to Medicare beneficiaries in situations where they believe that Medicare may not cover a specific medical service or procedure. It informs the patient that they may be financially responsible for the cost if Medicare denies the claim.
   • The ABN is used to inform patients of their potential financial liability and to obtain their acknowledgment of this responsibility before the service is provided. It helps patients make informed decisions about whether to proceed with services that may not be covered by Medicare.

These terms are important in the healthcare and health insurance industry, as they relate to the financial aspects of medical care, insurance coverage, and patient responsibility. Understanding these terms can help patients navigate the complex world of healthcare billing and insurance claims.

 

Explanation of benefits includes denials, billed amounts, allowed amounts, covered services, and patient financial responsibilities of deductible and coinsurance.

Coordination of benefits is the process to determine primary and secondary insurance.

 

Co-payments, deductibles, and patient financial responsibilities

 

 

Co-Payments (Co-Pays):

Co-payments, often referred to as co-pays, are fixed fees that patients are required to pay at the time of a medical appointment or when they receive specific healthcare services. Co-pays are a common feature in health insurance plans, and their purpose is to share the cost of healthcare between the patient and the insurance provider.

1. • Example: Let’s say a patient has a co-pay of $30 for a primary care office visit. When they visit their primary care physician for a check-up, they are expected to pay this $30 directly to the healthcare provider’s office on the day of the appointment.
   • Importance: Co-pays help patients access medical care while also ensuring that they have a financial stake in their healthcare expenses. They are typically defined in the insurance policy and may vary depending on the type of service or the provider visited.

Deductibles:

A deductible is the amount that a patient must pay out of their own pocket for covered healthcare services before their health insurance plan starts to contribute. Deductibles can vary widely depending on the insurance plan and are typically set annually.

1. • Example: Let’s say a patient has an annual health insurance deductible of $1,000. This means that they are responsible for covering the first $1,000 of eligible medical expenses for the year. Once the deductible is met, the insurance plan will begin covering a portion of the costs, such as through co-insurance.
   • Importance: Deductibles are designed to help control healthcare costs. They encourage patients to be more cost-conscious and seek necessary care while also protecting them from significant financial burdens in the event of a serious illness or injury.
2. Patient Financial Responsibilities:

Patient financial responsibilities encompass all the costs associated with their healthcare that are not covered by their insurance plan. These responsibilities can include co-payments, deductibles, co-insurance, and any expenses related to non-covered services or out-of-network care.

1. • Example: Suppose a patient has met their deductible for the year and has a 20% co-insurance responsibility for medical services. If they receive a covered service that costs $500, they would be responsible for paying 20% of that amount, which is $100, while their insurance plan covers the remaining $400.
   • Importance: Patients should be aware of their financial responsibilities to make informed decisions about their healthcare. It’s crucial for administrative medical assistants to communicate these responsibilities clearly to patients, ensuring they understand the potential costs associated with their care.

As a new administrative medical assistant, you’ll often interact with patients and handle billing and insurance-related tasks. Providing clear and accurate explanations of co-payments, deductibles, and patient financial responsibilities will help patients navigate their healthcare costs effectively and contribute to a positive patient experience.

 

Medical fee schedules and reimbursement methods

 Medical fee schedules and reimbursement methods are crucial aspects of healthcare billing and payment that an administrative medical assistant should understand. These concepts help ensure that healthcare providers are fairly compensated for their services and that patients receive appropriate care. Here’s an explanation of medical fee schedules and reimbursement methods:

Medical Fee Schedules:

• A medical fee schedule is a list of predetermined prices or fees that healthcare providers charge for specific medical services, procedures, and treatments. These schedules are used to establish uniform pricing for healthcare services, making it easier for insurance companies and patients to understand and anticipate costs.
• Fee schedules are often created by government agencies, such as Medicare and Medicaid, or by private insurance companies. They can vary widely depending on the type of healthcare service, the geographic region, and the specific insurance plan.
• Healthcare providers typically negotiate contracts with insurance companies that outline the reimbursement rates for various services based on the fee schedule. These negotiated rates are often lower than the provider’s standard charges.
• Example: Suppose a medical office performs a standard office visit, and the fee schedule sets the reimbursement rate for this service at $100. The healthcare provider may have negotiated a rate of $80 with a particular insurance company. If a patient covered by that insurance plan visits the office, the insurance company will reimburse the provider $80 for the visit.

 

Resource-Based Relative Value (RBRV) is a key component of the Medicare payment system in the United States, particularly for Medicare Part B, which covers physician and outpatient services. RBRV is designed to determine the payment rates for healthcare services provided by physicians and other healthcare professionals. Here’s an explanation of how RBRV works in Medicare:

Relative Value Units (RVUs): The RBRV system assigns a Relative Value Unit (RVU) to each specific medical service or procedure code. These RVUs are calculated based on three main components:

a. Physician Work RVU: This component reflects the time, skill, effort, and intensity required to perform a particular service. It considers factors like the complexity of the procedure, the risk involved, and the level of physician expertise needed.

b. Practice Expense RVU: This component accounts for the overhead costs associated with providing a service, such as rent, equipment, and staff salaries.

c. Malpractice RVU: This component takes into consideration the cost of malpractice insurance associated with a specific service.

Geographic Adjustment: Medicare adjusts the RVUs based on the geographic location where the service is provided. Areas with higher costs of living and practice expenses receive higher payment rates to compensate for increased overhead.

Conversion Factor: After calculating the RVUs, Medicare applies a conversion factor to determine the actual payment amount for a particular service. The conversion factor is a fixed dollar amount that is updated annually.

Medicare Payment Calculation: To calculate the Medicare payment for a specific service, you multiply the sum of the RVUs (physician work RVU, practice expense RVU, and malpractice RVU) by the annual conversion factor for that year.

Modifiers and Other Adjustments: Some services may require modifiers or additional adjustments that can affect the payment amount. Modifiers provide additional information about the service, such as whether it was performed in a facility or an office setting.

Fee Schedule: Medicare maintains a fee schedule that lists the payment rates for all covered services based on the RBRV system. This fee schedule is used to reimburse healthcare providers for services rendered to Medicare beneficiaries.

RBRV helps Medicare establish a standardized and equitable payment system that considers the complexity and resources required for different medical procedures. It aims to ensure that healthcare providers are fairly compensated for their services while controlling costs for the Medicare program.

It’s important to note that the RBRV system is subject to regular updates and revisions by the Centers for Medicare & Medicaid Services (CMS) to reflect changes in medical practice, technology, and resource utilization. These updates help keep Medicare payments aligned with current healthcare practices and costs.

Reimbursement Methods:

• Reimbursement methods refer to the ways in which healthcare providers receive payment for their services. Different methods are used depending on the type of insurance plan and the agreement between the provider and the payer. Common reimbursement methods include:

1. Fee-for-Service (FFS): In this traditional model, healthcare providers are paid a fee for each service or procedure they perform. The fees are typically based on the medical fee schedule. Providers bill the insurance company or patient directly for each service rendered.
2. Capitation: Under capitation, healthcare providers receive a fixed monthly payment per patient (often on a per-member, per-month basis) from a managed care organization. This payment is intended to cover all necessary services for that patient, regardless of the actual services provided. Providers are incentivized to deliver cost-effective care.
3. Bundled Payments: In bundled payment models, a single payment is made for a group of related services or treatments for a specific medical condition or episode of care. This encourages efficiency and coordinated care among providers.
4. Pay-for-Performance (P4P): In this model, healthcare providers are reimbursed based on the quality of care they deliver. Providers are rewarded for meeting certain performance metrics, such as improved patient outcomes or adherence to best practices.

• Example: A primary care physician participating in a capitation arrangement receives a fixed monthly payment of $100 per patient enrolled in the managed care plan. The physician is responsible for providing all necessary primary care services to each patient, regardless of the number of visits or services provided during the month.

Understanding medical fee schedules and reimbursement methods is essential for administrative medical assistants to facilitate accurate billing and reimbursement processes. It ensures that healthcare providers are compensated appropriately for their services while helping patients and insurance companies understand and manage healthcare costs.