1. Insurance Payment Posting
When a Remittance Advice (RA) or Explanation of Benefits (EOB) is received from the insurance, each patient payment must be posted and reconciled with the patient’s account.

2. Balances
As you recall from the LEDGER exercise, any charges increase the patient’s account balance, and any payments decrease the patient’s account balance.
Adjustments or Write-Offs also decrease the patient’s balance.

3. Fields from the EOB/RA
BILLED. This is what you billed. It’s the doctor’s fee for the service.
ALLOWED. This is what the insurance determined was a reasonable charge or the contract rate on the provider’s contract.
PAID. This is the amount the insurance paid.

4. Out Of Pocket EOB/RA Fields
Deductible. Amounts applied to the patient’s deductible are owed by the patient to the doctor.
Co-Insurance. This is the percentage of the charges that the patient owes to the doctor.

5. Non-ALLOWED Amounts
Be VERY careful about non-allowed amounts. Sometimes they are to be written off (adjusted) and sometimes they are to be billed to the patient.

6. Non-ALLOWED Amounts
The difference between the BILLED charge and the ALLOWED charge is tricky!
Contracted network (participating or preferred) providers must WRITE OFF or ADJUST their bill to the ALLOWED charge which is the contract rate. On Medicare this will be listed as a CO-42 on the RA.
Non-contracted providers often do not have to do this write-off and can bill the patient for the difference. HOWEVER: on Medicare providers cannot bill the patient more than the Medicare Limiting Charge if they are non-participating.

7. Non-ALLOWED Amounts Medicare Participating Provider Example:
Billed $140
Allowed $100
Paid $80 (80%)
Co-insurance $20 (20%).
Write off the $40 difference between the billed and allowed.
Collect the $20 co-insurance from the patient.
Patient should now have a zero balance on this $140 bill.

8. Non-ALLOWED Amounts Medicare Non-Participating Example #1:
If provider “Accepts Assignment” it’s exactly the same as for the Participating:
Billed $140
Allowed $100
Paid $80 (80%)
Co-insurance $20 (20%).
Write off the $40 difference between the billed and allowed.
Collect the $20 co-insurance from the patient.
Patient should now have a zero balance on this $140 bill.

9. Non-ALLOWED Amounts Medicare Non-Participating Example #2:
If provider “Doesn’t Accept Assignment” the LIMITING CHARGE is all he can bill:
Doctor’s normal fee is $140
Medicare Limiting Charge is $115
Medicare Allowed is $100
Patient owes the doctor the Limiting Charge of $115 and NO MORE.
Provider bills Medicare on behalf of the patient and the PATIENT receives a check from Medicare, reimbursing patient for 80% of the allowed.

10. DENIALS - HMO DENIALS must be handled carefully.
If the patient is HMO, they only have co-payments for their HMO services. The only denials possible would be non-network non-emergency services that were not authorized.

11. Find Limiting Charge
Go to this link!

12. Finding Limiting Charge

13. Finding Limiting Charge

14. DENIALS - PPO
On a private PPO plan, denials should be appealed if possible before collecting the money from the patient. IF the service was denied because the provider failed to follow contract rules or obtain an authorization for service, some contracts forbid the provider from billing the patient for denied services.

15. DENIALS - Medicare Denials on Medicare must be handled with CARE!
If the RA has a “PR” (Patient Responsibility) code by the amount, it is possible to bill the patient for the denied amount. It may still be necessary to appeal the denial if the service should have been covered.
If the RA has a “CO” (Contractual Obligation) code by the amount, it MUST be written off as an adjustment to the patient. It may still be necessary to appeal the denial if the service should have been covered.

16. Denial Reasons Denial reasons fall into several categories:
Eligibility. Patient is not insured.
Coverage. Patient’s insurance doesn’t ever cover this type of service. Medicare calls this a Statutory Denial. Examples might be cosmetic surgery, intersex surgery, self-inflicted injury.
Lack of Medical Necessity or Lack of Authorization. These often can be appealed by explaining the situation or seeking authorization. True emergency services should not be denied for an authorization and should always be appealed explaining the situation and the “Prudent Layperson” rule.

17. Medicare Medical Necessity
Medicare has special rules about Medical Necessity. Under Medicare, the doctor cannot bill for services that Medicare thinks are unnecessary. These are denied as a “CO” by Medicare and must be written off. These can be appealed.

18. Medicare Medical Necessity
When a patient requests a service that likely will be considered not medically necessary by Medicare, the provider cannot charge the patient unless the patient signed an “Advanced Beneficiary Notice” prior to receiving the service.
If the ABN is signed by the patient, the patient may pay out of pocket for the service and if Medicare is billed, the charge should have a GA modifier (ABN was signed by patient).
Medicare will then either pay the charge or deny it with a “PR” which allows the provider to bill the patient. Without the ABN and modifier GA, Medicare would deny with “CO” and the service is a freebie to the patient!