Billing and Coding for Health Services Chapter 2 Billing and Coding for Health Services

Topics Covered Healthcare Claims Registration Medical Record/Coding Charge Entry/Chargemaster Billing/Claims Preparation Claims Editing

Objectives 1. Describe the revenue cycle for health care firms. 2. Understand the role of coding information in health care organizations in claim generation. 3. Define the basic characteristics of charge masters. 4. Define the two major bill types used in health care firms. 5. Appreciate the role of claims editing in the bill submission process.

Figure 2–1 Revenue Cycle

Charge Slips Order Entry Billing Process Claims Generation Process Overview of Process CPT/HCPCS (Dynamic) and ICD-9-CM Code Development Medical Record Services Outpatient Inpatient UB-04 HCFA-1500 Claims Generation Detailed Bill Statement Charge Slips Order Entry Charge Codes Charge Master Information Charge Master Charge Codes Revenue Codes Charges CPT/HCPCS Codes Activities 1. Services Provided 2. Services Documented 3. Charges Developed 4. Coding Performed 5. Bill/Claim Produced 6. Payment Received

Major Revenue Cycle Steps Registration Medical Record/Coding Charge Entry/Chargemaster Billing/Claims Preparation Claims Editing

Registration Basic information collected on the patient 3 major activities: Insurance verification, including patient’s health plan identification number Amount due from patient for co-payment or deductible Financial counseling For patients with no insurance coverage or who are unable to pay co-payment or deductible Financing Medicaid and other governmental programs

Medical Record/Coding Health Insurance Portability and Accountability Act (HIPAA) of 1996 Two coding systems International Classification of Diseases, Ninth Revision, Clinical Modification (ICD-9-CM) Healthcare Common Procedure Coding System (HCPCS)

Medical Record/Coding

ICD-9 Diagnosis codes are 3 digits, sometimes followed by a decimal point and a 4th digit or 4th and 5th digits Procedure codes Used to report inpatient procedures Up to 4 digits in length, with a decimal point after the first two digits Diagnosis and procedure codes are used for DRG assignment, which is often used to determine payment

ICD-9-CM Diagnosis Codes Example 003 Other Salmonella Infections 003.0 Salmonella Gastroenteritis 003.1 Salmonella Septicemia 003.2 Localized Salmonella Infections 003.20 Localized Salmonella Infection, Unspecified 003.21 Salmonella Meningitis 003.22 Salmonella Pneumonia 003.23 Salmonella Arthritis 003.24 Salmonella Osteomyelitis 003.29 Other Localized Salmonella Infection 003.8 Other specified salmonella infections 003.9 Salmonella infection, unspecified

HCPCS Used by physicians for reporting both inpatient and outpatient procedures Used by facilities for reporting outpatient procedures Two tiers Level I—Current Procedural Terminology (CPT), a 5-digit code (maintained by AMA) Level II HCPCS codes These codes are often a major determinant of provider payment for both facilities and physicians.

Level I—CPT Codes Six Main Categories Evaluation & Management Anesthesia Surgery Radiology Pathology and Laboratory Medicine May also contain modifier code that provides additional information essential to the claim

Level II HCPCS Codes Used to report products, services, supplies, materials, or procedures that are not present in the Level I (CPT) codes. 5-digit codes beginning with an alphabetic character followed by 4 numeric characters Two groups of codes: Permanent Temporary Used for needs not covered by the permanent codes Can remain “temporary” indefinitely and sometimes replaced by a permanent code

Charge Entry Represent the “capture” of products and services provided Three greatest concerns in billing: Capture of charges for services performed Incorrect billing Billing late charges Charge capture methods: Charge slips posted as batch process Order entry system Charge explosion can be used when a uniform set of supplies is used

Chargemaster Also referred to as Charge Description Master (CDM) A list of all the goods and services provided by a hospital, and the price (or prices) the hospital charges for each of those goods and services Six elements: Charge code Item description Department number Charge (price) Revenue code CPT/HCPCS code

Chargemaster Sample Extract

Billing/Claims Preparation CMS-1500: the uniform professional claim form Used by non-institutional providers (e.g., physicians) to submit claims to Medicare and many other payers CMS-1450 (aka UB-04): the uniform institutional claim form Used by institutional providers to submit claims to Medicare and most other payers Data from this form is used to determine DRGs (diagnosis-related groups) and APCs (ambulatory payment classifications) One or more HCPCS codes must be present on the claim form if an APC is to be assigned (outpatient only). Most claims now submitted electronically

Sample UB-04 Form

Sample CMS-1500 Form

Claims Editing Software designed to find errors in claims Providers use to maximize appropriate payment and to speed payment Payers use to determine minimum payment obligation and to delay payment for valid reasons Error checking: Spelling errors Missing data (e.g., date of service and diagnosis codes) Internal validity (e.g., procedure consistent with gender)

Claims Editing CMS developed the National Correct Coding Initiative (NCCI) to promote correct coding methodologies NCCI edits are incorporated within the Outpatient Code Editor (OCE) Ensures that the most comprehensive groups of codes are billed rather than the component parts Check for mutually exclusive code pairs 83 edits as of March 2010

Claims Editing Each OCE edit results in one of six dispositions Claim-level dispositions Rejection—Claim must be corrected and resubmitted Denial—Claim cannot be resubmitted but can be appealed Return to provider (RTP)—Problems must be corrected and claim resubmitted Suspension—Claim requires further information before it can be processed Line-item-level dispositions Rejection—Claim is processed but line item is rejected and can be resubmitted later Denial—Claim is processed but line item is rejected and cannot be resubmitted

Summary Accurate billing and coding are essential to a healthcare provider’s financial viability Very complex area requiring specialized professionals Many providers fail to capture all charges to which they are entitled