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Management of Health
Insurance Claims
Jeff Steele, LDO, ABOC, CPOT
Spokane Community College
Describe the management of health insurance
Know methods of payment for care provided
under health insurance plans
List and know limitations which influence how
much the carrier will pay and how much the
patient must pay
State how patient and carrier information
should be gathered and organized
Complete a claim form
Health insurance is designed to reduce the
patient’s share of the cost of medical care
 In most cases, the patient is still responsible
for a share of the payment
 As a service to patients, and to facilitate claims
management within the practice, it is important
that all claims be completed accurately and
submitted promptly
Computerized Claims Management
A computerized bookkeeping system
greatly simplifies and speeds the
preparation of insurance claims
 The data necessary for producing the
claim form is entered into the system as
part of the account history and during
Electronic Claims Transmission
To decrease the costs of re-entering data
submitted in paper form into a computer,
carriers prefer to have claims submitted
electronically (the handling of paper claims
increases the carrier’s cost of doing business
 Electronic filing eliminates the need for paper
claim forms, delays in the mail, and the
possibility of error when the data is entered
into the carrier’s computer
Electronic Claims Transmission
During the day, claim information is posted into the
computer. This completes both insurance and
bookkeeping records
A copy of the claim may be printed for the office files
At the end of the day, the claims are electronically
checked for errors
The computer claims are electronically prepared and
transmitted via a modem
A report indicates which claims were successfully
transmitted. (Those that were unsuccessful are sent
with the next batch)
Patient Information
Includes data about family members who are
entitled to receive benefits under the plan and
Full name
Relationship to the insured
Date of birth
This data must be complete and accurate or
the claim cannot be processed= delay in
receiving payment
AKA the “subscriber”
 The person who represents the family
unit in relation to the insurance plan
 The subscriber is usually the employee
who is earning these benefits
Someone entitled to receive benefits
under the health care plan
 Usually includes the insured, spouse,
and children
 Since not all plans cover family
members, it is necessary to clarify on the
patient registration form just which family
members are covered and which are not
For purposes of eligibility, children are
usually defined as being under age 18
and still dependant on their parents
 Exceptions include when the child is a
full-time student or handicapped
Plan Information: Terminology
Carrier: an insurance company
 Plan: an insurance contract which the carrier
has written to provide specific benefits to those
covered by the plan
As the health care provided, it is advisable to
make sure the patient understands exactly
what their coverage is by explaining their
benefits. This may help you to avoid a
potential collection problem
Methods of Payment
There are many different ways in which
health care plans pay for the patient’s
 It is important that you understand how
these different methods of payment
influence the amount of payment the
doctor will receive from the carrier
Doctor is paid as services are rendered:
 Schedule of benefits: a list of specific amounts which
the carrier will pay toward the health care costs (often
not related in any way to the doctor’s fee schedule.
The patient is responsible for the difference
 Usual and Customary: Usual fee is based on the
doctors fee schedule, as it relates to other physicians
in the area. (Carrier usually has a physician fee profile.
Customary fee is set by the carrier (fees are
determined as a percentile of usual fees charged by
physicians with similar training and experience within
the same geographic area)
Health Maintenance Organization (HMO)
System in which the patient pays a flat monthly premium to
the HMO and covers all medical services as specified in the
 Patient selects a primary care physician and all referrals go
through that physician
 Capitation plan: doctors are paid a flat fee for each patient
under the practice’s care, regardless of the amount of care
 Non-capitation plan: doctors are paid in accordance to the
number of patient’s seen over a given amount of time
In either plan, the patient is often required to make a co-pay
at each visit
Preferred Provider Organization (PPO)
 A formal agreement among health care
providers to treat a specific patient population
at an agreed upon rate
 This rate is usually a discounted fee-forservice
 Patient’s may select their own physician;
however, they have the incentive to select a
preferred provider, due to larger cost coverage
Independent Practice Association (IPA)
A type of HMO, generally formed and run by
physicians who enter into agreements with
organizations (usually employers) to provide
medical services to a defined group of persons
 IPA physicians usually practice out of their own
offices and may IPA physicians continue to see
their regular patients on a fee-for-service
basis- while seeing the IPA patients at the IPA
Government program providing health care to
the poor
 Governed by rules set forth in each state,
therefore, coverage and eligibility vary from
state to state
 Payment is based on a schedule of benefits
and the physician must accept the amount
paid by the carrier as payment in full (the
patient can NOT be billed for the difference)
Government program providing health
care to the elderly, controlled by the
federal govt.
 Patients are responsible for a deductible
and co-payment share
 Physician is responsible for submitting
the Medicare claim
Workers’ Compensation
Every state has a workers’ compensation
law that provides coverage to employees
who are injured or become ill during
performance of their work
 Regulations vary from state to state
Civilian Health and Medical Program of
the Uniformed Services
 Program designed to provide eligible
beneficiaries a supplement to medical
care in military and Public Health Service
 Beneficiaries include retired members
and eligible dependents of the armed
There are factors to consider when
determining a patient’s eligibility in
receiving benefits.
 Always contact the carrier if there is any
doubt, to prevent the patient form
accumulating a large balance
The stipulated amount that the covered
person must pay toward the cost of
covered medical treatment before the
benefits of the program go into effect
 This may be an individual or family
Also known as co-payment, co-insurance
is a provision of a program by which the
beneficiary shares in the cost of covered
expenses on a percentage basis
 Co-insurance percentages are usually
listed showing only the portion which the
carrier will pay.
 The amount of the patient’s share
various with each policy
Some policies exclude certain services.
For example, cosmetic surgery may be
excluded except when it is a medical
 The patient may still receive treatment,
but they are responsible for the fee
The carrier may establish a maximum as to
the amount that will be paid for medical
benefits within a given year, or lifetime
 For example: a plan may have a $50,000
lifetime maximum per patient for in-patient
psychiatric care. This means that the carrier
will not pay for any treatment beyond that
amount even if the treatment is a “covered
Second Opinion
Some carriers require that patient get a
second opinion before going ahead with
procedures such as an elective surgery
 Should this be required, a copy of the
second doctor’s consultation should be
included in the patient’s file
Hospital Pre-certification
AKA pre-authorization
 An administrative procedure whereby the
insurance carrier authorizes treatment
before it is provided
 Under many plans, this is required
before certain hospital admissions,
inpatient or outpatient surgeries and
elective procedures
 Emergencies are usually exempt
If pre-certification is required, call the carrier
as soon as possible and be prepared with the
following information:
Patient’s name and ID number
Doctor’s name and ID number
Name of hospital and planned admission date
Patient’s diagnosis and symptoms
Planned treatment and length of stay
Coordination of Benefits (COB)
When a patient has insurance coverage under more than one
group plan, this is known as dual coverage and it is necessary
to coordinate the benefits
The patient may not receive payment from both carriers that
comes to more than 100% of the actual medical expenses
In order to coordinate benefits, it is necessary to determine
which carrier is primary (should pay first) and which is
Submit the claim to the primary carrier. Upon payment, there will
be a explanation of benefits (EOB)
Send the claim, along with the EOB, to the second carrier
Determining the Primary Carrier
When the patient is
also insured, the
patient’s carrier is
primary and the
spouse’s carrier is
The Birthday Rule
When the children come in, the primary
coverage is often determined by the
birthday rule
 The carrier for the parent who has a
birthday earlier in the year is primary (it
has nothing to do with which parent is
Claim Steps
Before the patient’s first visit, ask about insurance. If
the patient is covered, be sure they bring that
information with them
At the first visit, verify coverage and photocopy the
card for the patient’s record. Inform the patient of any
deductible and of details of coverage that are pertinent
to their visit
At the end of the patient’s visit, all charges are entered
into the patient’s account history. The patient may be
asked to pay for any balances at this time. (Some
offices may wait until the insurance has paid before
asking for the balance)
File the Claim
All claims must be neat, complete and
easy to read
 They should be completed in duplicate,
or photocopied, so that one copy goes to
the carrier and the other remains with the
Unpaid insurance claims represent
money owed to the practice, and it is
necessary to follow up on them
 Unpaid claims should not be filed away
in the patient’s chart, as it may get
 If the claim is not paid within 30 days, the
carrier should be contacted to determine
if there is a problem