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Chapter 2
Billing and Coding for Health Services
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Topics Covered
• Healthcare Claims
• Registration
• Medical Record/Coding
• Charge Entry/Chargemaster
• Billing/Claims Preparation
• Claims Editing
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1. Describe the revenue cycle for health care firms.
2. Understand the role of coding information in health care organizations in claim generation.
3. Define the basic characteristics of charge masters.
4. Define the two major bill types used in health care firms.
5. Appreciate the role of claims editing in the bill submission process.
Objectives
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Figure 2–1 Revenue
Cycle
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Billing Process Claims Generation Process
Overview of Process
ServicesOutpatientInpatient
Charge Codes Charge MasterInformation
CPT/HCPCS(Dynamic)
and ICD-9-CMCode Development
UB-04HCFA-1500
ClaimsGeneration
Detailed BillStatementGeneration
Activities1. Services Provided2. Services Documented3. Charges Developed4. Coding Performed5. Bill/Claim Produced6. Payment Received
Charge MasterCharge Codes
Revenue CodesCharges
CPT/HCPCS Codes
Medical
Record
Charge SlipsOrder Entry
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Major Revenue Cycle Steps
Registration
Medical Record/Coding
Charge Entry/Chargemaster
Billing/Claims Preparation
Claims Editing
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Registration Basic information collected on the patient
3 major activities:
1. Insurance verification, including patient’s health plan identification number
2. Amount due from patient for co-payment or deductible
3. Financial counseling For patients with no insurance coverage or who are
unable to pay co-payment or deductible Financing Medicaid and other governmental programs
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Medical Record/Coding
Health Insurance Portability and Accountability Act (HIPAA) of 1996
Two coding systems
1. International Classification of Diseases, Ninth Revision, Clinical Modification (ICD-9-CM)
2. Healthcare Common Procedure Coding System (HCPCS)
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Medical Record/Coding
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Diagnosis codes are 3 digits, sometimes followed by a decimal point and a 4th digit or 4th and 5th digits
Procedure codes
Used to report inpatient procedures
Up to 4 digits in length, with a decimal point after the first two digits
Diagnosis and procedure codes are used for DRG assignment, which is often used to determine payment
ICD-9
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ICD-9-CM Diagnosis Codes Example003 Other Salmonella Infections
003.0 Salmonella Gastroenteritis
003.1 Salmonella Septicemia
003.2 Localized Salmonella Infections
003.20 Localized Salmonella Infection, Unspecified
003.21 Salmonella Meningitis
003.22 Salmonella Pneumonia
003.23 Salmonella Arthritis
003.24 Salmonella Osteomyelitis
003.29 Other Localized Salmonella Infection
003.8 Other specified salmonella infections
003.9 Salmonella infection, unspecified
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HCPCS Used by physicians for reporting both inpatient and
outpatient procedures Used by facilities for reporting outpatient
procedures Two tiers
Level I—Current Procedural Terminology (CPT), a 5-digit code (maintained by AMA)
Level II HCPCS codes
These codes are often a major determinant of provider payment for both facilities and physicians.
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Level I—CPT Codes
Six Main Categories
Evaluation & Management
Anesthesia
Surgery
Radiology
Pathology and Laboratory
Medicine
May also contain modifier code that provides additional information essential to the claim
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Level II HCPCS Codes
Used to report products, services, supplies, materials, or procedures that are not present in the Level I (CPT) codes.
5-digit codes beginning with an alphabetic character followed by 4 numeric characters
Two groups of codes: Permanent Temporary
• Used for needs not covered by the permanent codes• Can remain “temporary” indefinitely and sometimes
replaced by a permanent code
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Charge Entry
Represent the “capture” of products and services provided
Three greatest concerns in billing: Capture of charges for services performed Incorrect billing Billing late charges
• Charge capture methods: Charge slips posted as batch process Order entry system
• Charge explosion can be used when a uniform set of supplies is used
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Chargemaster
Also referred to as Charge Description Master (CDM) A list of all the goods and services provided by a hospital,
and the price (or prices) the hospital charges for each of those goods and services
Six elements: Charge code Item description Department number Charge (price) Revenue code CPT/HCPCS code
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Chargemaster Sample Extract
Item Code Item Description
Dept Num
Standard Price
Revenue Code HCPCS
3023001 DAILY CARE FOURTH NORTH 13030 $665.50 111
3120000 DAILY CARE ICU 13120 1,172.50 200
4156159 MINERAL OIL 30ML 13190 11.50 250
4400206 SINGLE TOWEL 14430 2.25 270
4440302 HEP C ANTIBODIES-0288 14440 53.50 300 86803
4470220 HAND XRAY-0183 14470 102.50 320 73130
4472538 C/T PELVIS W & W/O ENHANCEMENT 14302 1,069.75 350 72194
4416000 LASIK SURGERY - PER EYE 13190 2,105.25 360 66999
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Billing/Claims Preparation CMS-1500: the uniform professional claim form
Used by non-institutional providers (e.g., physicians) to submit claims to Medicare and many other payers
• CMS-1450 (aka UB-04): the uniform institutional claim form Used by institutional providers to submit claims to
Medicare and most other payers Data from this form is used to determine DRGs
(diagnosis-related groups) and APCs (ambulatory payment classifications)
One or more HCPCS codes must be present on the claim form if an APC is to be assigned (outpatient only).
• Most claims now submitted electronically
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Sample UB-04 Form
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Sample CMS-1500
Form
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Claims Editing
Software designed to find errors in claims Providers use to maximize appropriate payment and to
speed payment Payers use to determine minimum payment obligation
and to delay payment for valid reasons Error checking:
Spelling errors Missing data (e.g., date of service and diagnosis
codes) Internal validity (e.g., procedure consistent with
gender)
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CMS developed the National Correct Coding Initiative (NCCI) to promote correct coding methodologies
NCCI edits are incorporated within the Outpatient Code Editor (OCE) Ensures that the most comprehensive
groups of codes are billed rather than the component parts
Check for mutually exclusive code pairs 83 edits as of March 2010
Claims Editing
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Each OCE edit results in one of six dispositions Claim-level dispositions
• Rejection—Claim must be corrected and resubmitted• Denial—Claim cannot be resubmitted but can be appealed• Return to provider (RTP)—Problems must be corrected and
claim resubmitted• Suspension—Claim requires further information before it can be
processed
Line-item-level dispositions• Rejection—Claim is processed but line item is rejected and can
be resubmitted later• Denial—Claim is processed but line item is rejected and cannot
be resubmitted
Claims Editing
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Summary
Accurate billing and coding are essential to a healthcare provider’s financial viability
Very complex area requiring specialized professionals
Many providers fail to capture all charges to which they are entitled