1. The Medical Billing Cycle1
The Medical Billing Cycle

2. When you finish this chapter, you will be able to:
Learning Outcomes
1-2
When you finish this chapter, you will be able to:
1.1 Identify four types of information collected during preregistration.
1.2 Compare fee-for-service and managed care health plans, and describe three types of managed care approaches.
1.3 Discuss the activities completed during patient check-in.
1.4 Discuss the information contained on an encounter form at check-out.
1.5 Explain the importance of medical necessity.

3. Learning Outcomes (Continued)
1-3
When you finish this chapter, you will be able to:
1.6 Explain why billing compliance is important.
1.7 Describe the information required on an insurance claim.
1.8 List the information contained on a remittance advice.
1.9 Explain the role of patient statements in reimbursement.
1.10 List the reports created to monitor a practice’s accounts receivable.

4. Key Terms accounting cycle accounts receivable (A/R) adjudication
1-4
accounting cycle
accounts receivable (A/R)
adjudication
capitation
coding
coinsurance
consumer-driven health plan (CDHP)
copayment
deductible
diagnosis
diagnosis code
documentation
electronic health records (EHRs)
encounter form
explanation of benefits (EOB)
fee-for-service
health maintenance organization (HMO)
health plan
managed care

5. Key Terms (Continued) medical coder medical necessity medical record
1-5
medical coder
medical necessity
medical record
modifier
patient information form
payer
policyholder
practice management program (PMP)
preferred provider organization (PPO)
premium
procedure
procedure code
remittance advice (RA)
statement

6. Step 1 in the Medical Billing Cycle: Preregister Patients
1-6
Patient information gathered via phone or Internet before visit:
Name
Contact information
Reason for the visit
Whether patient is new to practice
Learning Outcome: 1.1 Identify four types of information collected during preregistration.
Pages: 4-5
Information for preregistration can also be obtained by mailing the patient paperwork before the actual visit. The patient can bring it in on the day of the appointment or mail it back prior to the appointment . All these ways help speed up the process of registering a new patient. It lessens the patient’s time in the waiting room. It keeps your day from getting backed up if patients do not arrive a little before their actual appointment time.

7. Step 2 in the Medical Billing Cycle: Establish Financial Responsibility for Visit
1-7
Many patients have medical insurance, which is an agreement between a policyholder and a health plan
To secure medical insurance, policyholders pay premiums to payers, which are health plans such as government plans and private insurance
Learning Outcome: 1.2 Compare fee-for-service and managed care health plans, and describe three types of managed care approaches.
Pages: 5-7

8. Fee-for-Service Health Plans
Step 2 in the Medical Billing Cycle: Establish Financial Responsibility for Visit (Continued)
1-8
Fee-for-Service Health Plans
Policyholders are repaid for medical costs
Requires payment of coinsurance
Usually a deductible must be paid before benefits begin
Managed Care Health Plans
Managed care organizations control both financing and delivery of health care
Have contracts with both patients and providers
Learning Outcome: 1.2 Compare fee-for-service and managed care health plans, and describe three types of managed care approaches.
Pages: 5-7

9. Types of managed care health plans
Step 2 in the Medical Billing Cycle: Establish Financial Responsibility for Visit (Continued)
1-9
Types of managed care health plans
Preferred provider organization (PPO): provider network for plan members; discounted fees
Health maintenance organization (HMO): pays fixed amounts called capitation payments to contracted providers; patients must pay a small fixed fee called a copayment per visit
Consumer-driven health plan (CDHP): combines a health plan with a high deductible with a policyholder's savings account
Learning Outcome: 1.2 Compare fee-for-service and managed care health plans, and describe three types of managed care approaches.
Pages: 5-7
Kaiser Foundation Health Plan/Northern California is the largest HMO with 2,722,738 enrollees; followed by Kaiser Foundation Health Plan/Southern California with 2,591,555 enrollees; then PacifiCare of California with 2,260,334 enrollees.  
Total HMO enrollment in the US reached 670 million for the first time while eight plans passed the million-member mark, according to a study by The Interstate Competitive Edge HMO Industry Report.
  Some of the largest PPO’s are Blue Cross and Blue Shield of California, Pacific Foundation for Medical Care, Aetna US Healthcare, Cigna.
  Some of the largest CDHP’s are UnitedHealth Group, Inc. , Aetna Inc., Cigna Healthcare, Humana, Inc., Meritain Health.

10. Step 3 in the Medical Billing Cycle: Check In Patients
1-10
Patients complete the patient information form that contains personal, employment, and medical insurance information
Patient identity is verified
Time-of-service payments due before treatment are collected
Learning Outcome: 1.3 Discuss the activities completed during patient check-in.
Pages: 8-10

11. Step 4 in the Medical Billing Cycle: Check Out Patients
1-11
Every time a patient is treated by a health care provider, a record, known as documentation, is made of the encounter
This chronological medical record, or chart, includes information that the patient provides
Learning Outcome: 1.4 Discuss the information contained on an encounter form at check-out.
Pages: 10-13

12. Step 4 in the Medical Billing Cycle: Check Out Patients (Continued)
1-12
Diagnoses and Procedures
A diagnosis is the physician’s opinion of the nature of the patient’s illness or injury
Procedures are the services performed
Coding is the process of translating a description of a diagnosis or procedure into a standardized code
A patient’s diagnosis is communicated to a health plan as a diagnosis code
A procedure code stands for a particular service, treatment, or test
A modifier is a two-digit character that is appended to a CPT code to report special circumstances
Learning Outcome: 1.4 Discuss the information contained on an encounter form at check-out.
Pages: 10-13

13. Step 4 in the Medical Billing Cycle: Check Out Patients (Continued)
1-13
The diagnosis and procedure codes are recorded on an encounter form, also known as a superbill
A practice management program (PMP) is a software program that automates the administrative and financial tasks required to run a medical practice
Learning Outcome: 1.4 Discuss the information contained on an encounter form at check-out.
Pages: 10-13

14. Step 5 in the Medical Billing Cycle: Review Coding Compliance
1-14
A physician, medical coder, or medical insurance specialist assigns codes
The documented diagnosis and medical services should be logically connected, so that the medical necessity of the charges is clear to the insurance company
Medical necessity is treatment by a physician for the purpose of preventing, diagnosing, or treating an illness, injury, or its symptoms in an appropriate manner
Learning Outcome: 1.5 Explain the importance of medical necessity.
Pages: 13-15
Discuss how medical necessity is related to payment.

15. Step 6 in the Medical Billing Cycle: Check Billing Compliance
1-15
Each charge, or fee, for a visit is represented by a specific procedure code
The provider’s fees for services are listed on the medical practice’s fee schedule
Medical billers use their knowledge to analyze what can be billed on health care claims
Learning Outcome: 1.6 Explain why billing compliance is important.
Page: 15
Explain why an insurance company will not pay for a strep test performed on a patient with a diagnosis of urinary tract infection.

16. Step 7 in the Medical Billing Cycle: Prepare and Transmit Claims
1-16
Medical practices produce insurance claims to receive payment
PMPs generate health care claims for electronic transmittal
Learning Outcome: 1.7 Describe the information required on an insurance claim.
Pages: 15-16
Explain the relationship between accurate information on claim forms and prompt payment.

17. Step 8 in the Medical Billing Cycle: Monitor Payer Adjudication
1-17
When a claim is received by a payer, it is reviewed following a process known as adjudication—a series of steps designed to judge whether it should be paid
The document explaining the results of the adjudication process is called a remittance advice (RA) or explanation of benefits (EOB)
Learning Outcome: 1.8 List the information contained on a remittance advice.
Pages: 16-18
Refer to Figure 1.7 in the text. Go over it now in detail. This will help students later when they have to use the RA in the Medisoft exercises.

18. Step 9 in the Medical Billing Cycle: Generate Patient Statements
1-18
A statement lists all services performed, along with the charges for each service
Statements list the amount paid by the health plan and the remaining balance that is the responsibility of the patient
Learning Outcome: 1.9 Explain the role of patient statements in reimbursement.
Page: 18
Refer to Figure 1.8. Dissect it for the students.

19. Step 10 in the Medical Billing Cycle: Follow Up Patient Payments and Handle Collections
1-19
The accounting cycle is the flow of financial transactions in a business
PMPs are used to track accounts receivable (AR)—monies that are coming into the practice
PMPs are also used to create day sheets, monthly reports, and outstanding balances reports
Learning Outcome: 1.10 List the reports created to monitor a practice’s accounts receivable.
Pages: 18-20
Refer to Figure 1.9 while discussing this slide.