Management of Health Insurance Claims Jeff Steele, LDO, ABOC, CPOT Spokane Community College

Objective Describe the management of health insurance claims Know methods of payment for care provided under health insurance plans List and know limitations which influence how much the carrier will pay and how much the patient must pay State how patient and carrier information should be gathered and organized Complete a claim form

Overview Health insurance is designed to reduce the patient’s share of the cost of medical care In most cases, the patient is still responsible for a share of the payment As a service to patients, and to facilitate claims management within the practice, it is important that all claims be completed accurately and submitted promptly

Computerized Claims Management A computerized bookkeeping system greatly simplifies and speeds the preparation of insurance claims The data necessary for producing the claim form is entered into the system as part of the account history and during posting

Electronic Claims Transmission To decrease the costs of re-entering data submitted in paper form into a computer, carriers prefer to have claims submitted electronically (the handling of paper claims increases the carrier’s cost of doing business Electronic filing eliminates the need for paper claim forms, delays in the mail, and the possibility of error when the data is entered into the carrier’s computer

Electronic Claims Transmission 1. During the day, claim information is posted into the computer. This completes both insurance and bookkeeping records 2. A copy of the claim may be printed for the office files 3. At the end of the day, the claims are electronically checked for errors 4. The computer claims are electronically prepared and transmitted via a modem 5. A report indicates which claims were successfully transmitted. (Those that were unsuccessful are sent with the next batch)

Patient Information Includes data about family members who are entitled to receive benefits under the plan and include: Full name Sex Relationship to the insured Date of birth This data must be complete and accurate or the claim cannot be processed= delay in receiving payment

Insured AKA the “subscriber” The person who represents the family unit in relation to the insurance plan The subscriber is usually the employee who is earning these benefits

Beneficiaries Someone entitled to receive benefits under the health care plan Usually includes the insured, spouse, and children Since not all plans cover family members, it is necessary to clarify on the patient registration form just which family members are covered and which are not

Children For purposes of eligibility, children are usually defined as being under age 18 and still dependant on their parents Exceptions include when the child is a full-time student or handicapped

Plan Information: Terminology Carrier: an insurance company Plan: an insurance contract which the carrier has written to provide specific benefits to those covered by the plan As the health care provided, it is advisable to make sure the patient understands exactly what their coverage is by explaining their benefits. This may help you to avoid a potential collection problem

Methods of Payment There are many different ways in which health care plans pay for the patient’s care It is important that you understand how these different methods of payment influence the amount of payment the doctor will receive from the carrier

Fee-For-Service Doctor is paid as services are rendered: Schedule of benefits: a list of specific amounts which the carrier will pay toward the health care costs (often not related in any way to the doctor’s fee schedule. The patient is responsible for the difference Usual and Customary: Usual fee is based on the doctors fee schedule, as it relates to other physicians in the area. (Carrier usually has a physician fee profile. Customary fee is set by the carrier (fees are determined as a percentile of usual fees charged by physicians with similar training and experience within the same geographic area)

HMO Health Maintenance Organization (HMO) System in which the patient pays a flat monthly premium to the HMO and covers all medical services as specified in the contract: Patient selects a primary care physician and all referrals go through that physician Capitation plan: doctors are paid a flat fee for each patient under the practice’s care, regardless of the amount of care provided Non-capitation plan: doctors are paid in accordance to the number of patient’s seen over a given amount of time In either plan, the patient is often required to make a co-pay at each visit

PPO Preferred Provider Organization (PPO) A formal agreement among health care providers to treat a specific patient population at an agreed upon rate This rate is usually a discounted fee-for- service Patient’s may select their own physician; however, they have the incentive to select a preferred provider, due to larger cost coverage

IPA Independent Practice Association (IPA) A type of HMO, generally formed and run by physicians who enter into agreements with organizations (usually employers) to provide medical services to a defined group of persons (employees) IPA physicians usually practice out of their own offices and may IPA physicians continue to see their regular patients on a fee-for- service basis- while seeing the IPA patients at the IPA rate

Medicaid Government program providing health care to the poor Governed by rules set forth in each state, therefore, coverage and eligibility vary from state to state Payment is based on a schedule of benefits and the physician must accept the amount paid by the carrier as payment in full (the patient can NOT be billed for the difference)

Medicare Government program providing health care to the elderly, controlled by the federal govt. Patients are responsible for a deductible and co-payment share Physician is responsible for submitting the Medicare claim

Workers’ Compensation Every state has a workers’ compensation law that provides coverage to employees who are injured or become ill during performance of their work Regulations vary from state to state

CHAMPUS Civilian Health and Medical Program of the Uniformed Services Program designed to provide eligible beneficiaries a supplement to medical care in military and Public Health Service facilities Beneficiaries include retired members and eligible dependents of the armed services

Eligibility There are factors to consider when determining a patient’s eligibility in receiving benefits. Always contact the carrier if there is any doubt, to prevent the patient form accumulating a large balance

Deductible The stipulated amount that the covered person must pay toward the cost of covered medical treatment before the benefits of the program go into effect This may be an individual or family deductible

Co-Insurance Also known as co-payment, co-insurance is a provision of a program by which the beneficiary shares in the cost of covered expenses on a percentage basis Co-insurance percentages are usually listed showing only the portion which the carrier will pay. The amount of the patient’s share various with each policy

Exclusions Some policies exclude certain services. For example, cosmetic surgery may be excluded except when it is a medical necessity The patient may still receive treatment, but they are responsible for the fee

Maximums The carrier may establish a maximum as to the amount that will be paid for medical benefits within a given year, or lifetime For example: a plan may have a $50,000 lifetime maximum per patient for in-patient psychiatric care. This means that the carrier will not pay for any treatment beyond that amount even if the treatment is a “covered service”

Second Opinion Some carriers require that patient get a second opinion before going ahead with procedures such as an elective surgery Should this be required, a copy of the second doctor’s consultation should be included in the patient’s file

Hospital Pre-certification AKA pre-authorization An administrative procedure whereby the insurance carrier authorizes treatment before it is provided Under many plans, this is required before certain hospital admissions, inpatient or outpatient surgeries and elective procedures Emergencies are usually exempt

Pre-certification If pre-certification is required, call the carrier as soon as possible and be prepared with the following information: Patient’s name and ID number Doctor’s name and ID number Name of hospital and planned admission date Patient’s diagnosis and symptoms Planned treatment and length of stay

Coordination of Benefits (COB) When a patient has insurance coverage under more than one group plan, this is known as dual coverage and it is necessary to coordinate the benefits The patient may not receive payment from both carriers that comes to more than 100% of the actual medical expenses In order to coordinate benefits, it is necessary to determine which carrier is primary (should pay first) and which is secondary 1. Submit the claim to the primary carrier. Upon payment, there will be a explanation of benefits (EOB) 2. Send the claim, along with the EOB, to the second carrier

Determining the Primary Carrier When the patient is also insured, the patient’s carrier is primary and the spouse’s carrier is secondary

The Birthday Rule When the children come in, the primary coverage is often determined by the birthday rule The carrier for the parent who has a birthday earlier in the year is primary (it has nothing to do with which parent is older)

Claim Steps Before the patient’s first visit, ask about insurance. If the patient is covered, be sure they bring that information with them At the first visit, verify coverage and photocopy the card for the patient’s record. Inform the patient of any deductible and of details of coverage that are pertinent to their visit At the end of the patient’s visit, all charges are entered into the patient’s account history. The patient may be asked to pay for any balances at this time. (Some offices may wait until the insurance has paid before asking for the balance)

File the Claim All claims must be neat, complete and easy to read They should be completed in duplicate, or photocopied, so that one copy goes to the carrier and the other remains with the office

Follow-up Unpaid insurance claims represent money owed to the practice, and it is necessary to follow up on them Unpaid claims should not be filed away in the patient’s chart, as it may get overlooked If the claim is not paid within 30 days, the carrier should be contacted to determine if there is a problem