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How to report health insurance fraud and penalties for those that participate in such behavior.
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6-1
CHAPTER
6
VISIT CHARGES AND
COMPLIANT BILLING
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distribution without the prior written consent of McGraw-Hill Education.
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Chapter 6
Visit Charges and Compliant Billing
6-2
Observe the illustration of the ten-step Revenue Cycle at
the beginning of the chapter.
This chapter focuses on the following steps:
1. Preregister patients.
2. Establish financial responsibility.
3. Check in patients.
4. Review coding compliance.
5. Review billing compliance.
6. Check out patients.
7. Prepare and transmit claims.
8. Monitor payer adjudication.
9. Generate patient statements.
10. Follow up payments and collections.
Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or
distribution without the prior written consent of McGraw-Hill Education.
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6-3
Learning Outcomes (1)
When you finish this chapter, you should be able
to:
6.1
6.2
6.3
6.4
Explain the importance of code linkage on
healthcare claims.
Describe the use and format of Medicare’s Correct
Coding Initiative (CCI) edits and medically unlikely
edits (MUEs).
Discuss types of coding and billing errors.
Appraise major strategies that help ensure compliant
billing.
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distribution without the prior written consent of McGraw-Hill Education.
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6-4
Learning Outcomes (2)
When you finish this chapter, you should be able
to:
6.5
6.6
6.7
6.8
Discuss the use of audit tools to verify code
selection.
Describe the fee schedules that physicians create
for their services.
Compare the methods for setting payer fee
schedules.
Calculate RBRVS payments under the Medicare
Fee Schedule.
Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or
distribution without the prior written consent of McGraw-Hill Education.
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6-5
Learning Outcomes (3)
When you finish this chapter, you should be able
to:
6.9
6.10
6.11
Compare the calculation of payments for
participating and nonparticipating providers, and
describe how balance billing regulations affect the
charges that are due from patients.
Differentiate between billing for covered versus
noncovered services under a capitation schedule.
Outline the process of patient checkout.
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distribution without the prior written consent of McGraw-Hill Education.
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6-6
Key Terms (1)
•
•
•
•
•
•
•
•
adjustment
advisory opinion
allowed charge
assumption coding
audit
balance billing
capitation rate (cap rate)
CCI column 1/column 2
code pair edit
• CCI modifier indicator
• CCI mutually exclusive
code (MEC) edit
• charge-based fee
structure
• code linkage
• computer-assisted coding
(CAC)
• conversion factor
• Correct Coding Initiative
(CCI)
• documentation template
• downcoding
• edits
Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or
distribution without the prior written consent of McGraw-Hill Education.
.
6-7
Key Terms (2)
• excluded parties
• external audit
• geographic practice cost
index (GPCI)
• internal audit
• job reference aid
• medically unlikely edits
(MUEs)
• Medicare Physician Fee
Schedule (MPFS)
• OIG Work Plan
• professional courtesy
• prospective audit
• provider withhold
• Recovery Audit
Contractor (RAC)
• relative value scale
(RVS)
• relative value unit (RVU)
• resource-based fee
structure
• resource-based relative
value scale (RBRVS)
• retrospective audit
Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or
distribution without the prior written consent of McGraw-Hill Education.
.
6-8
Key Terms (3)
• truncated coding
• upcoding
• usual, customary, and
reasonable (UCR)
• usual fee
• walkout receipt
• write off
• X modifiers
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distribution without the prior written consent of McGraw-Hill Education.
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6-9
6.1 Compliant Billing
Diagnoses and procedures must be correctly
linked on healthcare claims so payers can analyze
the connection and determine the medical
necessity of charges.
Code linkage is the connection between a service
and a patient’s condition or illness:
• The diagnosis must support the billed service as
necessary to treat or investigate the patient’s
condition.
• See Figure 6.1.
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distribution without the prior written consent of McGraw-Hill Education.
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6-10
6.2 Knowledge of Billing Rules (1)
• To prepare correct claims, it is important to know
payers’ billing rules as stated in patients’
medical insurance policies and participation
contracts.
• Correct Coding Initiative (CCI)—computerized
Medicare system that controls improper coding
that would lead to inappropriate payment for
Medicare claims.
• Edits—computerized system that identifies
improper or incorrect codes.
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distribution without the prior written consent of McGraw-Hill Education.
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6-11
6.2 Knowledge of Billing Rules (2)
CCI edits—code combinations used by computers
in the Medicare system to check claims:
• CCI column 1/column 2 code pair edit–-Medicare
code edit where CPT codes in column 2 will not be
paid if reported on the same day as the column 1
code (see Figure 6.2).
• CCI mutually exclusive code (MEC) edit—both
services represented by MEC codes that could not
have been done during one encounter.
CCI modifier indicator—number showing if the
use of a modifier can bypass a CCI edit.
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distribution without the prior written consent of McGraw-Hill Education.
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6-12
6.2 Knowledge of Billing Rules (3)
Medically unlikely edits (MUEs)—units of service (UOS)
edits used to lower the Medicare fee-for-service paid claims
error rate:
• An example of an MUE edit is one that rejects a claim for a
hysterectomy on a male patient.
OIG Work Plan—OIG’s annual list of planned projects:
• http://oig.hhs.gov/publications/workplan.asp.
• Helps determine billing problems through sampling.
Advisory opinion—opinion issued by CMS or the OIG that
becomes legal advice.
Excluded parties—individuals or companies not permitted
to participate in federal healthcare programs (after being
found guilty of fraud).
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distribution without the prior written consent of McGraw-Hill Education.
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6-13
6.3 Compliance Errors (1)
Frequent reasons claims are rejected:
• Medical necessity errors (to be medically necessary,
services must be deemed necessary and consistent
with the diagnosis).
• Truncated coding—diagnoses not coded at the
highest level of specificity.
• Mismatch between the gender or age of the patient
and the selected code when the code involves
selection for either criterion.
• Assumption coding—reporting undocumented
services the coder assumes have been provided due
to the nature of the case or condition.
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6-14
6.3 Compliance Errors (2)
Frequent reasons claims are rejected (continued):
• Altering documentation after services are reported.
• Coding without proper documentation.
• Reporting services provided by unlicensed or
unqualified clinical personnel.
• Coding a unilateral service twice instead of choosing
the bilateral code.
• Not satisfying the conditions of coverage for a
particular service, such as the physician’s direct
supervision of a physician assistant’s work.
• Billing noncovered services.
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distribution without the prior written consent of McGraw-Hill Education.
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6-15
6.3 Compliance Errors (3)
Frequent reasons claims are rejected (continued):
• Billing overlimit services.
• Unbundling.
• Using an inappropriate modifier or no modifier when
one is required.
• Always assigning the same level of E/M service.
• Billing a consultation instead of an office visit.
• Billing invalid/outdated codes.
• Upcoding—using a procedure code that provides a
higher reimbursement rate than the correct code—may
lead to the payer downcoding (payer’s review and
reduction of a procedure code).
• Billing without proper signatures on file.
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distribution without the prior written consent of McGraw-Hill Education.
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6-16
6.4 Strategies for Compliance (1)
Major strategies to ensure compliant billing:
• Carefully define bundled/packaged codes and know
global periods.
• Benchmark the practice’s E/M codes with national
averages.
• Use modifiers appropriately, including X modifiers
(HCPCS modifiers that define specific subsets of
modifier 59).
• Be clear on professional courtesy and discounts to
uninsured and low-income patients.
• Maintain compliant job reference aids and
documentation templates.
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distribution without the prior written consent of McGraw-Hill Education.
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6-17
6.4 Strategies for Compliance (2)
• Professional courtesy—providing free services
to other physicians and their families.
• Job reference aid—list of a practice’s frequently
reported procedures and diagnoses.
• Computer-assisted coding (CAC)—feature
that allows a software program to assist in
assigning codes.
• Documentation template—form used to prompt
a physician to document a complete review of
systems (ROS) and a treatment’s medical
necessity.
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distribution without the prior written consent of McGraw-Hill Education.
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6-18
6.5 Audits (1)
• The coding and billing processes are closely
monitored to ensure adherence to established
policies and procedures.
• Audit—a formal examination or methodical
review.
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distribution without the prior written consent of McGraw-Hill Education.
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6-19
6.5 Audits (2)
External audit—audit conducted by an outside
organization.
• Private-Payer Postpayment Audits:
• Payer’s auditor reviews medical records.
• The Recovery Audit Contractor (RAC) is a program
designed to audit Medicare claims. RAC looks for the
following when performing an audit:
• obvious “black and white” coding errors.
• medically unnecessary treatment or wrong setting of care
where information in the medical record does not support the
claim.
• multiple or excessive number of units billed.
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distribution without the prior written consent of McGraw-Hill Education.
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6-20
6.5 Audits (3)
Internal audit—self-audit conducted by a staff
member or consultant:
• Prospective audit—internal audit of claims
conducted before transmission.
• Retrospective audit—internal audit
conducted after claims are processed and
RAs (remittance advice) have been received.
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distribution without the prior written consent of McGraw-Hill Education.
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6-21
6.6 Physician Fees
Physicians set their fee schedules in relation to the
fees that other providers charge for similar services.
Usual fee—normal fee charged by a provider.
Be prepared to answer these patient questions about
provider fees:
• What services are covered?
• What are the billing rules?
• What is the patient responsible for paying?
Be prepared to update the practice’s fee schedule (list
of charges for each service) when new codes are
released.
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distribution without the prior written consent of McGraw-Hill Education.
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6-22
6.7 Payer Fee Schedules (1)
Payers use two main methods to establish the
rates they pay providers:
1. charge-based fee structure.
2. resource-based fee structure.
Charge-based fee structure—fees based on typically
charged amounts:
• Based on the fees that providers of similar training
and experience have charged for similar services.
• Creates a schedule known as usual, customary, and
reasonable (UCR) fees—setting fees by comparing
usual fees, customary fees, and reasonable fees for
each geographic area.
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distribution without the prior written consent of McGraw-Hill Education.
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6-23
6.7 Payer Fee Schedules (2)
Resource-based fee structure—setting fees based on
relative skill and time required to provide similar services.
• Relative value scale (RVS)—system of assigning
unit values to medical services based on their
required skill and time:
• In an RVS, each procedure in a group of related
procedures is assigned a relative value based on
the complexity of related procedures.
• The relative value system can be used to assign a
relative value unit (RVU), a factor assigned to a
medical service based on the relative skill and
required time.
• Conversion factor—amount used to multiply a
relative value unit to arrive at a charge.
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distribution without the prior written consent of McGraw-Hill Education.
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6-24
6.7 Payer Fee Schedules (3)
The resource-based relative value scale
(RBRVS) is a relative value scale for establishing
Medicare charges (calculating a value based on what each
service really costs to provide). RBRVS fees have three
parts:
1. The nationally uniform RVU: The relative value is based
on three cost elements—the physician’s work, the
practice cost (overhead), and the cost of malpractice
insurance.
2. A geographic adjustment factor: The geographic
practice cost index (GPCI) is a Medicare factor used
to adjust providers’ fees in a particular geographic area.
3. A nationally uniform conversion factor: Medicare uses
this factor to make adjustments according to changes in
the cost of living index.
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distribution without the prior written consent of McGraw-Hill Education.
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6-25
6.8 Calculating RBRVS Payments (4)
• Each part of the RBRVS (relative values, GPCI,
and conversion factor) is updated every year by
CMS.
• Medicare Physician Fee Schedule (MPFS)—
the RBRVS-based allowed fees.
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distribution without the prior written consent of McGraw-Hill Education.
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6-26
6.8 Calculating RBRVS Payments (5)
Follow these steps to calculate Medicare
payments under the MPFS (see Figure 6.6):
• Determine the procedure code for the service.
• Use the MPFS to find three RVUs—work, practice
expense, and malpractice—for the procedure.
• Use the Medicare GPCI list to find the three
geographic practice cost indices.
• Multiply each RVU by its GPCI to calculate the
adjusted value.
• Add the three adjusted totals, and multiply the sum by
the annual conversion factor to determine the
payment.
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distribution without the prior written consent of McGraw-Hill Education.
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6-27
6.9 Fee-Based Payment Methods
Payers use one of three methods to pay providers:
1. Allowed charges—maximum charge a plan pays
for a service or procedure.
• Balance billing is billing the patient to collect
the difference between a provider’s usual fee
and a payer’s lower allowed charge.
• A Write off is to deduct an uncollectible
amount from a patient’s account.
2. Contracted fee schedule—established fixed fee
schedule with participating providers.
3. Capitation—per-member charge for each patient in
the plan.
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6-28
6.10 Capitation
Capitation rate (or cap rate)—periodic
prepayment to a provider for specified services to
each plan member:
• Prepaid fixed monthly payment to the provider for
each plan member (patient) in a capitation contract,
for all covered services.
Provider withhold—amount withheld from a
provider’s payment by an MCO:
• Covers the capitated plan’s unanticipated medical
expenses.
• Returned to the provider at the end of year if the
plan’s financial goals are achieved.
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distribution without the prior written consent of McGraw-Hill Education.
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6.11 Collecting TOS Payments and
Checking Out Patients (1)
6-29
Financial transactions recorded in the PMP:
• Charges – amount of bill for services performed by
provider.
• Payments – monies received from health plans and
patients.
• Adjustments – changes, positive or negative, such as
returned check fees, to correct a patient’s account
balance.
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distribution without the prior written consent of McGraw-Hill Education.
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6.11 Collecting TOS Payments and
Checking Out Patients (2)
6-30
Payments can be made with cash, check, or
credit/debit card (must follow Payment Card Industry
Data Security Standards).
Time-of-service (TOS) payments—fees collected from
the patient before he/she leaves the office:
• TOS payments are entered in the PMP and the
patient is given a walkout receipt.
• Walkout Receipt:
• Summarizes services and charges as well as any
payments made that day.
• Patients can use a walkout receipt to report
charges to their insurance company.
*end of presentation*
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