1. Introduction to the Medical Billing Process Chapter 1
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2. Learning Outcomes After studying this chapter, you should be able to:
1.1 Describe the basic features of medical insurance policies.
1.2 Compare indemnity and managed care plans.
1.3 Discuss the fee-for-service and the capitation methods of payment for medical services.
1.4 Compare health maintenance organizations, point-of-service plans, and preferred provider organizations.
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3. Learning Outcomes (Continued)
1.5 Describe the key features of a consumer- driven health plan.
1.6 Describe the major types of payers for medical insurance.
1.7 List the ten steps in the medical billing process.
1.8 Identify the most important skills of medical insurance specialists.
1.9 Discuss the types of health care organizations that employ medical insurance specialists.
1.10 Compare medical ethics and etiquette.
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4. Key Terms Accounts receivable (A/R) Adjudication Benefits Capitation
Coinsurance
Compliance
Consumer-driven health plan (CDHP)
Copayment
Covered services
Deductible
Diagnosis code
Ethics
Etiquette
Excluded services
Fee-for-service
Health care claim
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5. Key Terms (Continued) Health maintenance organization (HMO)
Health plan
Indemnity plan
Managed care
Managed care organization (MCO)
Medical coder
Medical insurance
Medical insurance specialist
Medical necessity
Network
Noncovered services
Open-access plans
Out-of-network
Out-of-pocket
Participation
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6. Key Terms (Continued) Patient Ledger Payer Per member per month (PMPM)
Point-of-service (POS) option
Policyholder
Practice management program (PMP)
Preauthorization
Preexisting condition
Preferred provider organization (PPO)
Premium
Preventive medical services
Primary care physician (PCP)
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7. Key Terms (Continued) Procedure code Professionalism Provider Referral
Schedule of benefits
Self-funded health plan
Third-party payer
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8. Increasing Employment Opportunities For Medical Insurance Specialists!
Medical insurance specialists are valuable because they help ensure
Top-quality service, and
increased revenue
for health care practices and facilities
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9. Rising Spending on Health Care
Cost of advances in medical technology
Aging population of the United States
RAPIDLY GROWING OPPORTUNITIES FOR EMPLOYMENT IN THE MEDICAL ADMINISTRATIVE AREA

10. Medical insurance specialists display value to their employers by
Verifying compliance with various medical insurance guidelines and governmental regulations
Completing health care claims accurately and in a timely manner
Understanding billing regulations and filing procedures
Using interpersonal skills
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11. A medical insurance specialist’s work contributes to
Patient
satisfaction
Financial success
of the practice
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12. Insurance Basics
Medical Insurance: Financial plan (the payer) that covers the cost of hospital and medical care
Policyholder: Person who buys an insurance plan; the insured, subscriber, or guarantor
Health Plan: Individual or group plan that provides or pays for the cost of medical care
Benefits: What a health plan pays for services covered in an insurance policy; listed in the schedule of benefits.
Medical Necessity: Reasonable services of provider (doctor or facility) consistent with professional medical standards.
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13. Health Care Benefits Covered Services: Noncovered Services:
Listed on the schedule of benefits
May include primary care, emergency care, medical specialists’ services, and surgery
Coverage may be mandated
Noncovered Services:
Most policies do not cover dental services, eye examinations or eyeglasses, employment-related injuries, cosmetic procedures, or experimental procedures
- May also not cover specific items, drugs, or preexisting conditions
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14. Two Types of Medical Insurance Policies
Individual
contract between individual and the plan
known as direct pay
Group
contract between an employer or organization and the plan
the group members are insured as “subscribers” or “enrollees”
The insured
(individual)
is the policyholder
The insured
(employer or
organization)
is the policyholder
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15. Other Insurance Types Disability Insurance:
Replaces income lost because the insured cannot work
Workers’ Compensation Insurance:
Provides benefits for an insured injured on the job

16. Health Care Plans Indemnity
Payment method is fee-for-service based on the contract’s schedule of benefits.
Managed Care
Payment method is typically based on capitation or a discounted fee-for-service.
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17. Health Care Plans Indemnity
The contract is between the insured and the plan.
Managed Care
The plan has a contract with both the policyholder and provider.
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18. Health Care Plans Indemnity
Patients receive care from the providers of their choice.
Managed Care
Patients receive care from a limited panel of providers.
The contracted providers have agreed to a discounted reimbursement.
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19. Indemnity Plans Key Terms:
Premium: Periodic payment the patient is required to make to keep the policy in effect
Deductible: Amount that the insured pays on covered services before benefits begin
Coinsurance: Percentage of each claim that the insured pays; states the health plan’s percentage of the charge, followed by the insured’s percentage
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20. Indemnity Plans (Continued)
Example:
An indemnity policy states that the deductible is the first $200 in covered annual medical fees and that the coinsurance rate is A patient whose first medical charge of the year was $2,000 would owe $560.
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21. Health Maintenance Organizations (HMOs)
Combines coverage of medical costs and delivery of health care for prepaid premium.
Prospective Payment: Payment paid before the patient visit; covers a specific period of time
Capitation Method: Fixed prepayment to a medical provider for all necessary contracted services provided to each patient who is a plan member
PMPM (per member per month): The capitated rate
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22. Health Maintenance Organizations (HMOs) (Continued)
Cost Containment
An HMO uses the following containment methods:
Restricting patients’ choice of providers
Requiring preauthorization for services
Controlling the use of services
Controlling drug costs
Cost-sharing
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23. Health Maintenance Organizations (HMOs) (Continued)
Health Care Quality Improvement
The quality improvements made by HMOs are illustrated by these features, which most plans contain:
Disease/case management
Preventive care
Pay-for-performance (P4P)
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24. Point-of-Service Plan
Also called an “open access HMO”
Allows members to see providers in or out of HMO’s network
Members pay more for out-of-network providers
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25. Preferred Provider Organizations (PPOs)
Another health care delivery system
Requires payment of a premium and often of a copayment for visits
PPOs control the cost of health care by:
Directing patients’ choices of providers
Controlling use of services
Requiring preauthorization for services
Requiring Cost-sharing
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26. Consumer-Driven Health Plans (CDHP)
Combine two elements:
A health plan, usually a PPO, that has a high deductible (such as $1,000) and low premiums
A special “savings account” that is used to pay medical bills before the deductible has been met
Cost containment plan based on consumerism:
Idea that patients who pay for health care services become more careful consumers
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27. Private Payers For-Profit Aetna Cigna United Healthcare Group
Health Net
Humana
Pacificare Health Systems
Nonprofit
Kaiser Permanente (the largest nonprofit HMO)
Blue Cross/Blue Shield Associations (have both profit and nonprofit components)
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28. Self-Funded Health Plans
Health insurance provided by employers
Organization assumes the risk of paying directly for medical services and sets up a fund from which it pays for claims
Organization establishes the benefit levels and the plan types it will offer
May set up their own provider networks or use existing networks from managed care organizations
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29. Government-Sponsored Plans
Medicare: Coverage for those age 65 and older, people with certain disabilities, and people with permanent kidney failure
Medicaid: Coverage for low-income people who cannot afford medical care
TRICARE (was CHAMPUS): Coverage for active-duty military personnel, their spouses, children, and other dependents; also retired military personnel and their dependents, as well as family members of deceased active-duty personnel
CHAMPVA: Coverage for veterans with permanent service-related disabilities and their dependents
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30. The Medical Billing Process
Job functions of medical insurance specialists:
Understand patients’ responsibilities for paying for medical services
Analyze charges and insurance coverage to prepare accurate, timely claims
Collect payment for medical services from health plans and from patients
To complete their duties, medical insurance specialists follow a medical billing process
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31. The Medical Billing Process (Continued)
Step 1: Preregister Patients
There are two main tasks:
Schedule and update appointments
Collect preregistration demographic and insurance information
Both new and returning patients are asked about the medical reason for the visit
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32. The Medical Billing Process (Continued)
Step 2: Establish Financial Responsibility for the Visit
Questions and procedures to follow:
Questions about covered services, billing rules, and patient responsibility
Verify patients’ eligibility and health plan coverage, determine the first payer, and meet payers’ conditions for payment
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33. The Medical Billing Process (Continued)
Step 3: Check In Patients
Check in individuals as the practice’s patients:
Collect or confirm detailed and complete demographic and medical information with the patient
Copy and file insurance cards and other identification cards, such as drivers’ licenses, into the patient’s record
Complete any other necessary forms
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34. The Medical Billing Process (Continued)
Step 4: Check Out Patients
Tasks following a patient’s encounter:
Assign medical codes to medical diagnoses and procedures
Assign a diagnosis code to the patient’s primary illness
Assign a procedure code that stands for the particular service, treatment, or test
Enter transaction information in the patient ledger
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35. The Medical Billing Process (Continued)
Step 5: Review Coding Compliance
Follow official guidelines when codes are assigned:
After diagnosis and procedure codes are selected, they must be checked for errors
Link the diagnosis and the medical services that are documented in the patient’s medical record, so that the payer understands the charges’ medical necessity
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36. The Medical Billing Process (Continued)
Step 6: Check Billing Compliance
Each charge, or fee, for a visit is related to a specific procedure code
Provider’s fees for services are listed on the medical practice’s fee schedule
Whether a code can be billed depends on the payer’s rules; following these rules when preparing claims results in billing compliance
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37. The Medical Billing Process (Continued)
Step 7: Prepare and Transmit Claims
The preparation of accurate, timely health care claims
Communicates information about the diagnosis, procedures, and charges to a payer
May be for reimbursement for services or to report an encounter to an HMO
Follow the practice’s schedule
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38. The Medical Billing Process (Continued)
Step 8: Monitor Payer Adjudication
Payers review claims by following the adjudication process
Puts the claim through a series of steps designed to judge whether it should be paid or not
The payer’s decision is explained on a report sent back to the provider with the payment
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39. The Medical Billing Process (Continued)
Step 9: Generate Patient Statements
Bills mailed to patients listing the dates and services provided, any payments made by the patient and the payer, and the balances now due
The amount paid by all payers (the primary insurance and any other insurance) plus the amount to be billed to the patient should equal the expected fee
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40. The Medical Billing Process (Continued)
Step 10: Follow Up Patient Payments and Handle Collections
Analyze patient payments and follow the collections process
Patient medical records and financial records are filed and retained according to the medical practice’s policy
Collection process begins when patient payments are later than permitted
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41. Procedures, Communication, and Information Technology
Medical insurance specialists should follow the office procedures:
Communicate effectively
Use information technology (IT)
Learn to use electronic health records (EHR) as they are introduced into the industry
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42. Procedures, Communication, and Information Technology
Most medical practices use information technology throughout the medical billing process to:
Store patient and insurance information
Schedule patient appointments
Create encounter forms for patient encounters
Generate and transmit health care claims
Post payments to patient’s accounts
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43. Procedures, Communication, and Information Technology
WHAT INFORMATION TECHNOLOGY CANNOT DO:
Change inaccurate data entry
If the data entered are wrong, the information based on them is wrong as well.
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44. Employment as a Medical Insurance Specialist
The health care industry offers many career paths for well-qualified employees (with varied tasks or specialized work):
Positions in physician practices, clinics, hospitals or nursing homes, and insurance companies
Positions are also available in government and public health agencies
Self-employment as a claims assistance professional
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45. Medical Insurance Specialist Skills
Knowledge of medical terminology, anatomy, physiology, and medical coding
Communication skills
Attention to detail
Flexibility
Information technology (IT) skills
Honesty and integrity
Ability to work as a team member
Think about your skills…
& the skills you need to develop
to become an insurance
specialist.
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46. Medical Insurance Specialist Attributes
Factors that mostly have to do with the quality of professionalism, which is key to getting and keeping employment, include:
Appearance
Attendance
Initiative
Courtesy
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47. Medical Ethics and Etiquette
Standards of behavior shared by those in the medical profession.
Etiquette
Describes proper protocol and behavior in a medical practice.
Values
Manners
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48. Certification and Credentials
Certified
Medical Assistant
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49. Certification and Credentials
Registered
Medical Assistant
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50. Certification and Credentials
Registered
Health Information
Technology
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51. Certification and Credentials
Coding Certification
From AHIMA or AAPC
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