Presentation on Medical Insurance

Medical Insurance A Revenue Cycle Process Approach

Eighth Edition

Joanne D. Valerius, RHIA, MPH Oregon Health & Science University

Nenna L. Bayes, AAS, BBA, M.Ed., CPC Ashland Community and Technical College, Retired

Cynthia Newby, CPC, CPC-P

Amy L. Blochowiak, MBA, ACS, AIAA, AIRC, ARA, FLHC, FLMI, HCSA, HIA, HIPAA, MHP, PCS, SILA-F

Northeast Wisconsin Technical College

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MEDICAL INSURANCE: A REVENUE CYCLE PROCESS APPROACH, EIGHTH EDITION

Published by McGraw-Hill Education, 2 Penn Plaza, New York, NY 10121. Copyright ©2020 by McGraw-Hill Education. All rights reserved. Printed in the United States of America. Previous editions ©2017, 2014, and 2012. No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written consent of McGraw-Hill Education, including, but not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning.

Some ancillaries, including electronic and print components, may not be available to customers outside the United States. Presentation on Medical Insurance

This book is printed on acid-free paper.

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ISBN 978-1-259-60855-1 (bound edition) MHID 1-259-60855-7 (bound edition) ISBN 978-1-260-48911-8 (loose-leaf edition) MHID 1-260-48911-6 (loose-leaf edition)

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Library of Congress Cataloging-in-Publication Data

Names: Valerius, Joanne, author. Title: Medical insurance : a revenue cycle process approach / Joanne D.  Valerius, RHIA, MPH [and three others]. Description: Eighth edition. | New York, NY : McGraw-Hill Education, [2020] Identifiers: LCCN 2018043777| ISBN 9781259608551 (alk. paper) | ISBN  1259608557 (alk. paper) Subjects: LCSH: Health insurance. | Health insurance claims—United States. |  Health insurance—United States. Classification: LCC HG9383 .B39 2020 | DDC 368.38/2014—dc23 LC record available at https://lccn.loc.gov/2018043777

The Internet addresses listed in the text were accurate at the time of publication. The inclusion of a website does not indicate an endorsement by the authors or McGraw-Hill Education, and McGraw-Hill Education does not guarantee the accuracy of the information presented at these sites. Presentation on Medical Insurance

mheducation.com/highered

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iii

Preface ix

Part 1 WORKING WITH MEDICAL INSURANCE AND BILLING 1

Chapter 1 Introduction to the Revenue Cycle 2

Chapter 3 Patient Encounters and Billing Information 71

Part 2 CLAIM CODING 105

Diagnostic Coding: ICD-10-CM 106

Procedural Coding: CPT and HCPCS 137

Visit Charges and Compliant Billing 189

Chapter 4

Chapter 5

Chapter 6

Part 3 CLAIMS 217

Chapter 7 Healthcare Claim Preparation and Transmission 218

Chapter 8 Private Payers/ACA Plans 259

Chapter 9 Medicare 302

Chapter 10 Medicaid 338

Chapter 11 TRICARE and CHAMPVA 360

Chapter 12 Workers’ Compensation and Disability/Automotive Insurance 377

Part 4 CLAIM FOLLOW-UP AND PAYMENT PROCESSING 401

Chapter 13 Payments (RAs), Appeals, and Secondary Claims 402

Chapter 14 Patient Billing and Collections 434

Chapter 15 Primary Case Studies 458

Chapter 16 RA/Secondary Case Studies 495

Brief Contents

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Chapter 2 Electronic Health Records, HIPAA, and HITECH: Sharing and Protecting Patients’ Health Information 33

Part 5 HOSPITAL SERVICES 509

Chapter 17 Hospital Billing and Reimbursement 510

Appendix A: Place of Service Codes A-1

Appendix B: Professional Websites B-1

Appendix C: Forms C-1

Abbreviations AB-1

Glossary GL-1

Index IN-1

iv Brief Contents

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v

Contents

Preface ix

Part 1 WO NSURANCE RKING WITH MEDICAL I BILLING

AND 1

Chapter 1 Introduction to the Revenue Cycle 2  1.1 Working in the Medical Insurance Field 3  1.2 Medical Insurance Basics 6  1.3 Healthcare Plans 8  1.4 Health Maintenance Organizations 11  1.5 Preferred Provider Organizations 15  1.6 Consumer-Driven Health Plans 15  1.7 Medical Insurance Payers 16  1.8 The Revenue Cycle 18  1.9 Achieving Success 23 1.10 Moving Ahead 26 Chapter Review 27

Cha Patie Infor 3.1 N 3.2 In 3.3 In 3.4 V

In 3.5 D

R 3.6 D 3.7 W

pter 3 nt Encounters and Billing mation 71 ew Versus Established Patients 72 formation for New Patients 72 formation for Established Patients 81

erifying Patient Eligibility for surance Benefits 83 etermining Preauthorization and Referral equirements 86 etermining the Primary Insurance 89 orking with Encounter Forms 91

Chapter 2 Electronic Health Records, HIPAA, and HITECH: Sharing and Protecting Patients’ Health Information 33  2.1 Medical Record Documentation: Electronic

Health Records 34  2.2 Healthcare Regulation: HIPAA, HITECH,

and ACA 40  2.3 Covered Entities and Business Associates 43  2.4 HIPAA Privacy Rule 45  2.5 HIPAA Security Rule 53  2.6 HITECH Breach Notification Rule 54  2.7 HIPAA Electronic Health Care Transactions

and Code Sets 56  2.8 Omnibus Rule and Enforcement 58  2.9 Fraud and Abuse Regulations 60 2.10 Compliance Plans 61 Chapter Review 63

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vi Contents

3.8 Understanding Time-of-Service (TOS) Payments 93

3.9 Calculating TOS Payments 95 Chapter Review 99

Part 2 CLAIM CODING

Chapter 4 Diagnostic Coding: ICD-10-CM 106  4.1 ICD-10-CM 107  4.2 Organization of ICD-10-CM 108  4.3 The Alphabetic Index 109  4.4 The Tabular List 112  4.5 ICD-10-CM Official Guidelines for Coding and

Reporting 116  4.6 Overview of ICD-10-CM Chapters 123  4.7 Coding Steps 127  4.8 ICD-10-CM and ICD-9-CM 129 Chapter Review 131

Chapter 5 Procedural Coding: CPT and HCPCS 137  5.1 Current Procedural Terminology (CPT),

Fourth Edition 138  5.2 Organization 140  5.3 Format and Symbols 144  5.4 CPT Modifiers 147  5.5 Coding Steps 150  5.6 Evaluation and Management Codes 152  5.7 Anesthesia Codes 165

105  5.8 Surgery Codes 167  5.9 Radiology Codes 171  5.10 Pathology and Laboratory Codes 173  5.11 Medicine Codes 174  5.12 Categories II and III Codes 175  5.13 HCPCS 176 Chapter Review 183

Chapter 6 Visit Charges and Compliant Billing 189  6.1 Compliant Billing 190  6.2 Knowledge of Billing Rules 190  6.3 Compliance Errors 194  6.4 Strategies for Compliance 195  6.5 Audits 198  6.6 Physician Fees 201  6.7 Payer Fee Schedules 202  6.8 Calculating RBRVS Payments 204  6.9 Fee-Based Payment Methods 205 6.10 Capitation 208 6.11 Collecting Time of Service (TOS) Payments and

Checking Out Patients 209 Chapter Review 211

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Part 2

Contents vii

Part 3 CLAIMS

Chapter 7

217

2Healthcare Claim Preparation and Transmission 218  7.1 Introduction to Healthcare Claims 219  7.2 Completing the CMS-1500 Claim: Patient

Information Section 220  7.3 Types of Providers 227  7.4 Completing the CMS-1500 Claim: Physician/

Supplier Information Section 227  7.5 The HIPAA 837P Claim 240  7.6 Completing the HIPAA 837P Claim 243  7.7 Checking Claims Before Transmission 249  7.8 Clearinghouses and Claim Transmission 250 Chapter Review 252

Chapter 8 Private Payers/ACA Plans 259  8.1 Group Health Plans 260  8.2 Types of Private Payers 263  8.3 Consumer-Driven Health Plans 267  8.4 Major Private Payers and the BlueCross

BlueShield Association 270  8.5 Affordable Care Act (ACA) Plans 273  8.6 Participation Contracts 275  8.7 Interpreting Compensation

and Billing Guidelines 279  8.8 Private Payer Billing Management: Plan

Summary Grids 285  8.9 Preparing Correct Claims 287 8.10 Capitation Management 293 Chapter Review 294