INSURANCE AND CODING Chapter 6 © 2012 THE MCGRAW-HILL COMPANIES, INC. ALL RIGHTS RESERVED 6-1

LEARNING OUTCOMES: WHEN YOU FINISH THIS CHAPTER YOU WILL BE ABLE TO 6.1Define medical insurance and coding terminology 6.2Explain the differences among the types of insurance plans 6.3Compare and contrast PAR and nonPAR and the methods insurance companies use to determine how much a provider is paid 6.4Explain diagnostic coding, procedural coding, and coding compliance 6.5Identify structural changes in coding with the implementation of ICD-10 and explain the advantages of the changes © 2012 THE MCGRAW-HILL COMPANIES, INC. ALL RIGHTS RESERVED 6-2

accepting assignment carrier allowed chargeCenters for Medicare and Medicaid Services (CMS) assignment of benefits CHAMPVA balance billingcode linkage birthday rulecoinsurance Blue Cross and Blue Shield (BCBS) coordination of benefits (COB) capitationcopayment (copay) CPTfee-for-service customary feeHCPCS deductibleHMO (health maintenance organization) Defense Enrollment Eligibility Reporting System (DEERS) diagnosis-related groups (DRGs) © 2012 THE MCGRAW-HILL COMPANIES, INC. ALL RIGHTS RESERVED KEY TERMS 6-3

KEY TERMS (CONTINUED) accepting assignment -- A PAR provider who agrees to accept the allowed charge set forth by the insurance company as payment in full for a service and not bill the patient for the balance allowed charge -- is the most the insurance company will pay any provider for that work and may not be the same as the charged amount assignment of benefits -- agrees to receive payment directly from the patient’s insurance carrier © 2012 THE MCGRAW-HILL COMPANIES, INC. ALL RIGHTS RESERVED 6-4

KEY TERMS (CONTINUED) balance billing -- If the physician decides the patient should absorb the cost, the physician bills the patient for the unclaimed amount birthday rule -- is used as a guideline for determining which of two parents with medical coverage has the primary insurance for a child Blue Cross and Blue Shield (BCBS) -- one of the largest private sector payers in the United States, has both for-profit and nonprofit components capitation -- is the prepayment by the insurance carrier of a fixed (per capita, or per head) amount to a physician to cover the healthcare services for each member of one of its plans for a specified period of time, such as for a month © 2012 THE MCGRAW-HILL COMPANIES, INC. ALL RIGHTS RESERVED 6-5

KEY TERMS (CONTINUED) carrier – Insurance companies that provide the service Centers for Medicare and Medicaid Services (CMS) -- is responsible for setting up the terms of the plan CHAMPVA -- which stands for Civilian Health and Medical Program of the Veterans Administration, is a government health insurance program that covers the expenses of the families of veterans with total, permanent, service-connected disabilities. It also covers surviving spouses and dependent children of veterans who died in the line of duty © 2012 THE MCGRAW-HILL COMPANIES, INC. ALL RIGHTS RESERVED 6-6

KEY TERMS (CONTINUED) CPT -- most commonly used system of procedure codes is found in the Current Procedural Terminology customary fee -- determined by what physicians with similar training and experience in a certain geographic location typically charge for a procedure deductible -- is a certain amount of allowable or covered medical expense the insured must incur before the insurance carrier will begin paying benefits Defense Enrollment Eligibility Reporting System (DEERS) -- used to verify eligibility diagnosis-related groups (DRGs) – Diagnostic groupings are based on the resources that physicians and hospitals have used nationally for patients with similar conditions, taking into account factors such as age, gender, and medical complications © 2012 THE MCGRAW-HILL COMPANIES, INC. ALL RIGHTS RESERVED 6-7

6.3. COMPARE AND CONTRAST PAR AND NONPAR AND THE METHODS INSURANCE COMPANIES USE TO DETERMINE HOW MUCH A PROVIDER IS PAID.  PAR  NONPAR © 2012 THE MCGRAW-HILL COMPANIES, INC. ALL RIGHTS RESERVED 6-8