1. Chapter 15
HOSPITAL INSURANCE

2. HOSPITAL INSURANCE Learning Objectives
Compare inpatient and outpatient hospital services.
List the major steps relating to hospital claims processing.
Describe two differences in coding diagnoses for hospital inpatient cases and physician office services.
Describe the procedure codes used in hospital coding.
Discuss the important items that are reported on the HIPAA hospital claim, the 837I.
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3. Key Terms Admitting diagnosis Ambulatory care Attending physician
Charge master or Charge ticket
CMS-1450
Emergency care
Health information management (HIM)
Inpatient
Master patient index
Principal diagnosis
Principal procedure
Prospective Payment System (PPS)
Registration
837I
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4. Inpatient Care Patient stays overnight or longer Includes:
Inpatient hospital care
Skilled nursing facilities
Long-term care facilities
Hospital emergency departments
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5. Outpatient or Ambulatory Care
No overnight stay
Includes:
Same-day surgery
Care provided in patients’ homes
Home Health Agencies
Skilled nursing care, physical therapy, etc.
Assistance with Activities of Daily Living (ADLs)
Home health aides
Hospice care
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6. HIM Department Health Information Management
Organizes and maintains patient medical records
Three Major Steps in a Patient’s Hospital Stay:
Admission
Treatment and Charges
Discharge and Billing
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7. Admission Registration Process Create/update patient’s medical record
Verify insurance coverage
Secure consent for release of information
Collect advance payments, as appropriate
Emergency departments usually have separate registration/admission
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8. Admission (cont’d) Registration Process
Medicare patients receive one-page printout
Entitled “An Important Message from Medicare”
Explains rights as hospital patient
All patients receive copy of hospital’s privacy practices
Based on the HIPAA Privacy Rule
Receipt is acknowledged with signature
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9. Confidentiality is important - Why
Treatment and Charges
Medical record contains
Notes, ancillary documents, and correspondence from attending physician and all other physicians/providers
Patient data, including insurance information
Charges for all treatments and tests; supplies and equipment used; medication; room and board; and time spent in special facilities
Confidentiality is important - Why
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10. Discharge and Billing
Goal is to file a claim within 7 days of discharge
Items recorded on charge master
Similar to practice’s encounter form
Hospital’s computer system tracks patient’s services
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11. Inpatient (Hospital) Coding
HIM (Health information Management)
Responsible for diagnostic & procedural of patient’s medical records.
Coding is done as soon as the patient is discharged.
Inpatient Coders:
Generalists
Maybe skilled as surgical coders or Medicare Coders.
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12. Inpatient (Hospital) Coding
Cont.
ICD-9 Volumes 1 and 2 used for inpatient diagnoses codes
ICD-9 Volume 3 used for inpatient procedure codes
HCPCS may be used for some claims
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13. Hospital Diagnosis Coding
Admitting Diagnosis
Condition identified at time of admission
Principal Diagnosis
Condition responsible for this admission established after study
Listed first in medical record and insurance billing
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14. Hospital Diagnosis Coding (cont’d)
Suspected or unconfirmed diagnosis
Usually used as an admitting diagnosis
Often referred to as “rule outs”
The admitting diagnosis may not match the principal diagnosis once the patient has been treated
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15. Hospital Diagnosis Coding (cont’d)
Comorbidities and Complications
Comorbidities (co-existing conditions) are other conditions that affect a patient’s stay or course of treatment
Complications are conditions that develop as a result of surgery or treatment
Shown in patient medical record as “CC”
May list up to 8 on claim
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16. Hospital Procedural Coding
ICD-9 Volume 3 used
Includes an Alphabetic Index and a Tabular List similar to those in Volumes 1 and 2
Codes are 3 or 4 digits
Principal Procedure
Most closely related to the treatment of the principal diagnosis
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17. Medicare Inpatient Payment System
Diagnosis Related Groups (DRGs) – Cost reimbursement method developed by Medicare for its prospective payment system (PPS) for reimbursement of medical fees for a patient.
DRG system analyze conditions and treatment for similar groups of patients used to establish Medical fees for hospital inpatient services.
Under the DRG classification system:
Groupings were created based on relative value of the resources that physicians and hospitals nationally used for patients with similar conditions.
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18. Medicare Inpatient Payment System
Cont.
The Calculations
Each DRG category is based on patient characteristics (e.g., age, sex), diagnosis, and medical procedures all of which are condensed into a single DRG that applies to a specific patient.
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19. Medicare Inpatient Payment System
Cont.
Prospective Payment System (PPS)
At the same time the DRG system was created, Medicare changed the way hospitals were paid.
Payment changed from a fee-for-service approach to Medicare Prospective Payment System (PPS).
Payment set ahead of time based on DRG.
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20. Medicare Inpatient Payment System
Cont.
Quality Improvement Organization
Made up of practicing physicians and other health care experts contracted by CMS in each state to review Medicare & Medicaid claims for appropriateness of hospitalization and clinical care.
QIO’s goal is to ensure that payment is made only for medically necessary services.
Set up when DRG was established,
The program replaced the “Peer Review Organization”.
Monitor and improve the usage and quality of care for Medicare beneficiaries.
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21. Medicare Outpatient Payment System
DRGs (Diagnosis Related Groups)
Implemented for outpatient hospital services, previously were paid on a fee-for-service basis
Hospital Outpatient Prospective Payment System (PPS) is used to pay for hospital outpatient services.
In place of DRGs, patients are grouped under an Ambulatory Patient Classification
Reimbursement made according to preset amounts based on the value of each APC (ambulatory Patient Classification).
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22. Private Insurers
Often use standardized number of days allowed for condition
Many private insurers have adapted the DRG system for their billing
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23. Filing Claims Medicare Part A HIPAA 837I claim is mandated by CMS
Electronic claim
I in 837I stands for Institutional
Paper claim, UB-92, is accepted under some circumstances
Uniform Billing 1992 (UB-92) form
Also known as CMS-1450
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24. The HIPAA 837I and the UB-92 Contain:
Principal and other diagnosis codes
Admitting diagnosis
Principal procedure code
Attending and other physician
Charges
Contain:
Patient data
Information on insured
Facility/patient type
Source of admission
Various conditions that affect payment
Whether Medicare is primary payer
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25. Remittance Advice Received when payment is transmitted to account
HIM (Health Information Management) Department coordinates with Patient Accounting Department
Remittance Advice reviewed to assure payment received matches payment anticipated
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26. Quiz ICD-9 Volume 3 is used by ______________.
hospital coders
In the hospital medical record, CC refers to
_____________________________.
comorbidities and complications
Medicare ___________ pays for inpatient and outpatient hospital costs.
Part A
The I in 837I stands for ____________.
institutional
An encounter form is created for hospital services. (T/F)
False, the charge master is used in hospitals.
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27. Critical Thinking
What is the difference between the admitting diagnosis and the principal diagnosis?
The admitting diagnosis is usually the reason identified at the time of admission.
The principal diagnosis is determined after study and is listed first in the medical record and insurance claim.
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