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Unit 8 Medical Insurance Class Overview Medical Insurance Purpose of Medical Insurance • Provides protection from risk and financial loss • Money is paid to the insured • Premiums are paid for by the insured • Assists patients in covering costs incurred for medical treatment • Expenses covered by insurance include: – – – – Regular medical expenses Hospitalization Surgery Major medical expenses Coverage Offered Through Hospitalization Insurance • • • • • Cost of hospital room Cost of meals Use of the operating room X-ray and lab fees Usually limited to a total dollar amount or a maximum number of days Insurance Coverage for Surgery • Charges typically based on “reasonable and customary” charges • Costs vary by region • Copays and deductibles may apply Fixed Payment Plans • Payment of a fixed fee provides monthly coverage • The fixed fee is known as the premium • Reimbursement is available once the premium has been paid Types of Health Care Insurance Health Care Insurance Description Managed care Fixed, prepaid-fee plans GroupPurchased through commercial sponsored or insurance companies individual policies Governmentsponsored programs Plans financed and regulated by federal and state governments Managed Care Organizations • Payment of fixed fee provides monthly coverage • Fixed fee is known as the premium • Reimbursement is available once the premium has been paid • Plans referred to as prepaid plans Why Managed Care? • Advantages – Lowers expenses for patients – Requires nominal copayments for patients – Offers plans with no deductibles – Contains health care costs – Provides payment for authorized services – Ensures established fee schedules – Usually covers preventive care Why Managed Care? • Disadvantages – Increases amount of paperwork – Requires preauthorization – Lowers reimbursement rates – Limits physician choices – Lacks guarantee of coverage – Limits specialized care – Limits referrals – Limits flexibility Health Maintenance Organization (HMO) • Type of managed care plan • Original concept was to control health care costs • Membership limited to certain providers • Services provided on a predetermined fee • Patients must see physicians who participate in the plan • Emphasizes maintenance of health Closed Panel Model • The clinic is owned by the HMO and the providers are employees of the HMO Open Panel HMO • The health care providers are not employees of the HMO and do not belong to a medical group owned or managed by the HMO Preferred Provider Organization (PPO) • • • • • Type of managed care plan Purpose is to contain costs Patient must use contracted provider Fee-for-service program Members not restricted to designated physicians or hospitals Point-of-Service Plan (POS) • Type of managed care plan • Offers more flexibility than some HMOs & PPOs • Out-of-network or innetwork provider may be seen Exclusive Provider Organization (EPOs) • Managed care system • Patients select physicians from a list • Providers are reimbursed on a modified fee-for service basis Integrated Delivery System (IDS) • Organization of provider sites contracted to offer services to subscribers • Example: – Physician-hospital organization (PHO) – Medical foundation – Management service organization (MSO) – Group practice without walls (GPWW) – Integrated provider organization (IPO) Commercial Insurance Carriers • Typically for-profit organizations • Often offer both traditional fee-for-service plans and managed care plans • Require subscribers to pay a premium for membership The Health Insurance Card Blue Cross/Blue Shield • Largest prepayment medical insurance system in U.S. • Exist in every state • Operate locally under state laws • Provide coverage for medical procedures and services • Offer various types of health care plans Government Programs • • • • • • Medicare Medicaid TRICARE CHAMPVA Worker’s compensation Disability insurance Coverage Provided by Basic Insurance Policies • • • • • Office visits Hospitalization Emergency room Surgery Wellness exams Major Medical Insurance • Provides coverage for: – Catastrophic illnesses or injuries – Prolonged illnesses – Typically a supplemental policy – Usually increases insurer’s premiums Surgical and Long-Term Care Insurance • Surgical insurance: – Provides coverage for surgical services – Uncommon policies since most basic insurance plans cover these costs • Long-term care insurance: – Provides coverage for the costs of nursing home care – Common policies since most basic insurance plans do not cover these costs Dental Insurance • Typically provides coverage for: – Dental examinations – Cleaning – Polishing – Fillings – Certain extractions • Often requires a deductible • 50% to 100% coverage offered by plans Coverage Provided by Vision Insurance • • • • • Eye examination Contact lens Prescription frames Prescription lenses Laser corrective eye surgery UCR Method • UCR = usual, customary, reasonable • Used to determine the portion that an insurance company is obligated to pay • Takes into consideration: – The usual fee a provider charges for most patients for a certain service/procedure – The geographic location and specialty of the practice – Any complications or unusual services or procedures Indemnity Schedules • Another method used to determine insurance carrier payment • Based on the maximum amount charged for a specific service • Payment is determined on the lowest charge submitted by physician or by the physician’s fee schedule • Common method used in managed care Relative Value Studies (RVS) • A method to determine pricing factors in reimbursement • Areas considered in the accounting include: – Time of the provider – Skill of the provider – The provider’s overhead expenses • Each area is then turned into unit counts that are applied to a specific service Medicare and RVS • Medicare payments based on resource-based RVS (RBRVS) • Resource-based RVS: – Utilizes the RVS – Allows for increases in charges due to economic changes and other factors Filing Requirements • Claims must be filed in a timely manner • If deadline is not met than no money can be retrieved from the insurance carrier • Filing deadlines vary by carrier • Correct claim form must be used for each carrier. Most will accept the CMS-1500. • Supporting materials with claims may be required. These must be turned in correctly and on time. Preauthorization • Also called precertification • To obtain permission from the insurance carrier to provide services to a patient • Must be acquired prior to patient appointment unless an emergency • Patient may or may not be aware of need for preauthorization • Failure may delay treatment • If service is provided without preauthorization insurance carrier may refuse to pay Calling the Insurance Carrier for Precertification • If possible obtain at least 24 hours prior to patient services being provided • Gather all pertinent patient information prior to calling Pertinent Information • Patient’s insurance information • Precertification form • Procedure or service request with specifics regarding number of treatments and for how long • Documentation by the physician requesting the procedure or service • Information on the provider who will be performing the procedure or service Acquired Information When Approval is Obtained • Precertification or preauthorization information • Preauthorization numbers are often provided • Any precertification numbers that are obtained must be included on the insurance claim form • Copy of completed precertification form must be placed in the patient’s medical record Steps to Take When Preauthorization is Rejected • Physician can write a letter to the carrier providing rationale for the treatment • Subscriber of the insurance can send a letter of appeal • Any letters sent to the insurance company should be kept in the patient’s file Guidelines for Verifying Insurance • Obtain all insurance information from patient at initial contact • Provide the patient with a copy of the practice’s written policies and procedures for dealing with insurance carriers • Discuss the patient’s insurance benefits prior to services rendered Cost Containment Measures for Health Care • Peer Review Organization (PRO) – Occurred when Congress amended the Social Security Act of 1972 and created the Professional Standards Review Organization (PSRO) • Diagnosis-related groups (DRGs) – Developed in the late 1960s – Used by hospitals to determine their Medicare reimbursement rates – Not used for to calculate outpatient payments Federal Register • Published daily by the National Archives and Records Administration (NARA) • Used by MAs to obtain information on: – Federal rules, regulations, and notices – Executive orders and proclamations – Presidential documents • Can be viewed by going on the Internet Discussion • Managed Care Role Play • Insurance Authorization Medical Insurance Claims Purpose of the Health Insurance Claim Form • Report patient procedures and services to the insurance carrier • Help standardize reporting • Improve communication between the medical facility and the insurance carrier Main Elements to Improve Communication Process • Use of the correct health insurance claim form • Accuracy of information provided in the health insurance claim form • Submission of the health insurance claim form to the correct insurance carrier Types of Health Insurance Claim Forms • CMS-1500 – Most common health insurance claim form – Used to file claims for physician services – Submitted to the insurance carrier electronically or by standard mail • UB-92 (also referred to as the CMS-1450) – Used to report services related to hospitalization Submitting a Blue Cross/Blue Shield Claim • May provide their own health insurance form • Forms can be obtained online • CMS-1500 may be accepted Submitting a Claim for a Managed Care Organization • Form used will depend on managed care organization • Most will accept the CMS-1500 • Use of incorrect form may cause claim to be rejected causing delayed or no payment Submitting a Medicare Claim • Covered benefits change • Keeping up-to-date is important for accurate claims submission • Critical to know: – Coverage – Benefit period • CMS-1500 used for Medicare claims • Claims to Medicare can be sent electronically or by standard mail Submitting a Medicaid Claim • Claim submission varies from state to state • Typically patients must qualify for benefits monthly. Eligibility is not automatic. • Preauthorization is required for some services • Critical to verify patient eligibility at each visit Submitting a TRICARE Claim • DD Form 2642: – Form completed and sent by patient or family member – Payment sent to patient who is responsible to then pay the provider • CMS-1500: – Form completed and sent by the physician’s office – Payment is sent directly to the provider’s office • UB-92: – Form completed and sent by the hospital – Payment is sent directly to the hospital Submitting a Workers’ Compensation Claim • Claim form depends on the state and insurance carriers in that state • Typically the CMS-1500 is accepted • Important for MA to call and verify what form must be used for claims submission • Patient does not pay for procedures and services provided by workers’ comp • Employer is ultimately responsible Methods to Submitting Claims • No matter the method the same information is provided • Method is dependent on insurance carrier • Two methods used today: – Faxing or mailing paper claim – Submitting claim electronically Advantages of Paper Claims • Basic costs are minimal • Materials needed for paper claims: – Claim forms – Coding books Disadvantages of Paper Claims • Costs to complete the paper claim process can be costly • These costs include costs for: – Time required to complete the form – Higher chance of errors – Storage space – Postage – Copies of claim forms Advantages of Electronic Claims • Decreases turnaround time in the processing of claims • Increases speed of claims processing by both the insurance carrier and the provider • Provides the capability for direct electronic deposit of payments in provider account • Saves money on postage and labor costs for the provider Disadvantages of Electronic Claims • Initial start-up expenses: – Internet service provider – Computer – Software – Training of those who will be using the system – Printer – Backup or storage devices • Computer down times Three Ways Claims are Transmitted • Sent directly to payer via EDI (electronic data interchange) • Transmitted through a clearinghouse • DDE (direct data entry) Statuses of a Claim • Clean claims: – Form is completed without any errors or omissions and submitted on time • Dirty claims: – Form is incorrect because of missing data or errors, causing the claim to be rejected Statuses of a Claim • Invalid claims: – Form is complete but has some type of incorrect information • Denied claims: – Procedure or services are not covered by the insurance policy or the patient has not met his/her deductible. Ineligible procedures or services can also cause a claim to be denied. Information Needed to Complete the CMS-1500 • Name of insured’s insurance company • Insured’s name • Insured’s ID# • Insured’s address • Telephone # of insured Reading the CMS-1500 • Boxes (Blocks) 1-13: – Patient data • Boxes (Blocks) 14-33: – Provider information – Information on services provided to patient – Reason for services Completion of the CMS-1500: Boxes 1-8 Completion of the CMS-1500: Boxes 9-13 Completion of the CMS-1500: Boxes 14-23 Completion of the CMS-1500: Box 24 A-J Completion of the CMS-1500: Boxes 25-33 Prior to Submitting a Claim • Check for accuracy on the claim form • If a paper claim, make a copy for the patient’s file • Enter data on the insurance claims log • Send the completed CMS-1500 with required documentation to the insurance carrier Confidentiality and the CMS-1500 • As with all patient data, information must remain confidential • Release of information must be signed by the patient • Signed standard release form may be used • Form is placed in patient file Signature and Payment of Benefits • Box 12: – Patient signature indicates permission for releasing information on the claim form • Box 13: – If signed by patient, payment will go directly to service provider – If not signed, payment is sent to the insured – SIGNATURE ON FILE can also be used for this box Assignment of Benefits • Allowed by Medicare and other carriers • One time form signed by patient • Provides authorization for patient information to be released • Once signed, usage of SIGNATURE ON FILE can be used • Form must be permanently kept in the patient’s record Participating vs. Nonparticipating Providers • Advantage: – Payment sent directly to the practice, typically in a timely manner • Disadvantage: – Reimbursement might be at a less desirable rate leading to write-offs Materials Needed to Complete the CMS-1500 • • • • • • Patient’s medical record Patient’s ledger card Superbill CMS-1500 Black ink pen Computer with a printer or typewriter The Superbill • Contains: – – – – Patient’s name Diagnoses Treatments Space for claim information The Birthday Rule • Used to determine which parent’s insurance plan is primary • Only used for parents who are legally married • Primary plan is the one held by the parent whose birthday falls first in the year • If parents have birthday on the same day, parent who has had the coverage the longest would hold the primary plan • Primary plan of divorced parents is determined by court Prior to Submitting a Claim • • • • Check for accuracy on the claim form If a paper claim, make a copy for patient’s file Enter data on the insurance claims log Send the completed CMS-1500 with required documentation to the insurance carrier Maintaining Confidentiality of Patient Information • Responsibility of all health care workers • Breach of confidentiality occurs when information is provided to individuals who have not been authorized to receive it How to Keep Patient Information Secure • Ensure information is only provided to approved individuals • Limit access to patient information in work areas • Create work areas where confidential information can be discussed privately • Follow rules established by HIPAA Documentation of Permission • Authorization for Release of Medical Information • Block 12 on CMS-1500 • Release form created by medical practice Insurance Claims Log • • • • Used to track claim forms Can be done manually or electronically Data entered when claim form is completed Information on log: – – – – – Patient’s name Date of service Insurance carrier Date of claim submission Amount of the claim submitted Most Common Reasons for Claim Rejection • Missing or incorrect information • Missing or incorrect patient registration information (name, address, insurance number) • Missing or incorrect name of referring physician • Missing or incorrect diagnosis code • Overlapping, incorrect, or duplicate dates of service Most Common Reasons for Claim Rejection • • • • Incorrect place of service Invalid, missing, or incorrect procedure code Incorrect or missing number of days or units Incorrect or missing modifier Resubmitting Claims • Information must be corrected and resubmitted • Use of patient data and other resources is important for accuracy • Accuracy on claims is critical! • Time limits for re-filing must be met! Ways to Minimize the Number of Rejected Claims • Review the claim for accuracy prior to submitting it • Pay close attention to detail • Keep current reference materials, books and equipment readily available and use them • Limit distractions that can occur in the medical office • Have a specific time of the day to focus solely on claims processing • Have another medical office staff member review each claim Discussion • CMS-1500 Form Small Group Activity • Critical Thinking Scenarios Discussion • Financial Impact of Rejected Claims Summary • Topics Covered