CHAPTER

15
Health Insurance
Billing Procedures

© 2011 The McGraw -Hill Com panies, Inc. A ll rights reserv e d.


15-2

Learning Outcomes
15.1 Define Medicare and Medicaid.
15.2 Discuss TRICARE and CHAMPVA healthcare benefits programs.
15.3 Distinguish between HMOs and PPOs.
15.4 Explain how to manage a workers’
compensation case.

© 2011 The McGraw -Hill Com panies, Inc. A ll rights reserv e d.


15-3

Learning Outcomes (cont.)
15.5 List the basic steps of the health insurance
claim process.
15.6 Describe your role in insurance claims
processing.
15.7 Apply rules related to the coordination of
benefits.
15.8 Describe the health-care claim preparation

process.
© 2011 The McGraw -Hill Com panies, Inc. A ll rights reserv e d.


15-4

Learning Outcomes (cont.)
15.9 Explain how payers set fees.
15.10 Complete a Centers for Medicare and
Medicaid Service (CMS-1500) claim form.
15.11 Identify three ways to transmit electronic
claims.

© 2011 The McGraw -Hill Com panies, Inc. A ll rights reserv e d.


15-5

Introduction
• Health care claims = reimbursement
– Accuracy = maximum appropriate payment

• Medical assistant
– Prepare claims
– Review insurance coverage
– Explain fees
– Estimate charges for payers
– Prepare claims

© 2011 The McGraw -Hill Com panies, Inc. A ll rights reserv e d.



15-6

Basic Insurance Terminology
• Medical insurance – written contract between a
policy holder and a health plan
• First Party – the patient or policy holder
• Premium – the amount of money paid by the
policy holder to the insurance carrier
• Lifetime maximum benefit – a total sum that
the health plan will pay out over the patient’s life

© 2011 The McGraw -Hill Com panies, Inc. A ll rights reserv e d.


15-7

Basic Insurance Terminology (cont.)
• Second Party – the physician who provides
medical services
• Benefits – payment by the insurance carrier for
medical services provided
• Third-party payer – the health plan that agrees
to carry the risk of paying for services
• Deductible – a fixed dollar amount paid or met
once a year before third-party payers begin to
cover expenses
© 2011 The McGraw -Hill Com panies, Inc. A ll rights reserv e d.



15-8

Basic Insurance Terminology (cont.)
• Coinsurance – a fixed percentage of
coverage charges after the deductible is
met
• Copayment – a small fee that is collected
at the time of the visit
• Exclusions – uncovered expenses
• Formulary – a list of approved drugs
• Elective procedure – one not required to
sustain life
© 2011 The McGraw -Hill Com panies, Inc. A ll rights reserv e d.


15-9

Basic Insurance Terminology (cont.)
• Pre-authorization – approval in advance of the
need for a specific procedure
• Pre-certification – determination of whether
the proposed procedure is a covered service
under the patient’s insurance plan
• Liability insurance – covers injuries caused by
the insured or on their property
• Disability insurance – insurance that is
activated when the insured is injured or disabled

© 2011 The McGraw -Hill Com panies, Inc. A ll rights reserv e d.



15-10

Apply Your Knowledge
What is the difference between first party, second
party, and third-party payer?
ANSWER: The first party is the patient or owner of the policy;
the second party is the physician or facility that provides
services, and the third-party payer is the insurance company
that agrees to carry the risk of paying for approved services.

Good Job!
© 2011 The McGraw -Hill Com panies, Inc. A ll rights reserv e d.


15-11

Types of Health Plans
• Insurance companies
– Rules about benefits and
procedures
• Manuals, printed or online
• Representatives to assist

• Sources of health plans
– Group policies – through
employer
– Individual plans
– Government plans

© 2011 The McGraw -Hill Com panies, Inc. A ll rights reserv e d.


15-12

Fee-for-Service Plans
• Oldest and most expensive type of plan
• Covers costs of select medical services
• Amount charged for services is
determined by the physician
• Amount paid for services is controlled by
the insurance carrier

© 2011 The McGraw -Hill Com panies, Inc. A ll rights reserv e d.


15-13

Managed Care Plans
• Controls both the financing and
delivery of health care to policy holders
• Both policy holders and physicians
(participating physicians) are enrolled by the
Managed Care Organizations (MCOs)
• MCOs pay physicians in two ways
– Contracted fees
– Capitated fees – fixed amount per month to
provide contracted services to patients enrolled in
the plan
© 2011 The McGraw -Hill Com panies, Inc. A ll rights reserv e d.



15-14

Managed Care Plans (cont.)
• Preferred Provider Organization (PPO)
– A network of providers to perform services to plan
members
– Physicians in the plan agree to charge discounted
fees

• Health Maintenance Organization (HMO)
– Physicians who contract with HMOs are often paid a
capitated rate
– Patients pay premiums and a small copayment for
each office visit

© 2011 The McGraw -Hill Com panies, Inc. A ll rights reserv e d.


15-15

Government Plans
• Health care
– Retirees
– Low-income and disadvantaged
– Active or retired military
personnel and their families

• Maintain features of managed care plans


© 2011 The McGraw -Hill Com panies, Inc. A ll rights reserv e d.


15-16

Medicare
• The largest federal program that provides
health care to citizens aged 65 and older
• Managed by the Centers for Medicare
and Medicaid Services (CMS)
• Part A
– Hospital insurance available to anyone
receiving social security benefits
– No premium unless ineligible for social
security benefits
© 2011 The McGraw -Hill Com panies, Inc. A ll rights reserv e d.


15-17

Medicare (cont.)
• Part B
– Covers physician services,
outpatient services, and many
other services
– Available to United States
citizens and permanent
residents 65 and older
– Participants must pay a

premium
© 2011 The McGraw -Hill Com panies, Inc. A ll rights reserv e d.


15-18

Medicare (cont.)
• Part C – 1997
– Provides choices in
types of plans
– Medicare Advantage
plans
• PPO
• HMO
• Private Fee for Service
(PFFS)
• Special Needs Plans
• Medicare Medical
Savings plan (MSA)

• Part D –
– Passed in 2003
– Coverage began in
2006
– Prescription drug plan

© 2011 The McGraw -Hill Com panies, Inc. A ll rights reserv e d.


15-19


Medicare Plans
• Fee-for-Service: The Original Medicare
Plan
– Allows the beneficiary to choose any licensed
physician certified by Medicare
– An annual deductible fee
– Medicare pays 80 percent and the patient
pays 20 percent
• Medigap plan – secondary insurance
© 2011 The McGraw -Hill Com panies, Inc. A ll rights reserv e d.


15-20

Medicare Advantage Plans

© 2011 The McGraw -Hill Com panies, Inc. A ll rights reserv e d.


15-21

Medicare Plans (cont.)
• Recovery Audit Contractor (RAC) Program
– Designed to guard the Medicare Trust Fund
– Identify improper payments
Overpayment
Underpayment

© 2011 The McGraw -Hill Com panies, Inc. A ll rights reserv e d.



15-22

Medicaid
• A health-benefit program designed for:
– Low-income
– Blind
– Disabled patients
– Temporary assistance to needy families
– Foster children
– Children born with disabilities

• Not an insurance program
© 2011 The McGraw -Hill Com panies, Inc. A ll rights reserv e d.


15-23

Medicaid (cont.)
• Funded by the federal and state
governments
• Provides assistance such as:
–
–
–
–
–
–


Physician services
Emergency services
Laboratory and x-rays
Skilled nursing facility (SNF) care
Vaccines
Early diagnostic screening and treatment for minors

© 2011 The McGraw -Hill Com panies, Inc. A ll rights reserv e d.


15-24

Medicaid (cont.)
Medi/Medi

Accepting
Assignment
Physicians
agreeing to treat
Medicaid
patients also
agree to the set
amount for
reimbursements

Medicaid

Older or disabled
patients unable to
pay the difference

between the bill
and the Medicaid
payment may
qualify for both
Medicaid and
Medicare

© 2011 The McGraw -Hill Com panies, Inc. A ll rights reserv e d.


15-25

Medicaid (cont.)
• Comply with state guidelines
– Verify Medicaid eligibility
– Ensure that the physician signs all claims
– Authorization must be received in advance for
medical services except in an emergency
– Verify deadlines for claim submissions
– Treat Medicaid patients with the same
professionalism and courtesy that you extend
to other patients
© 2011 The McGraw -Hill Com panies, Inc. A ll rights reserv e d.