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Chapter 17

Hospital Billing

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Learning Objectives

Name qualifications necessary to work in the financial section of a hospital.

Explain the purpose of the appropriateness evaluation protocols.

Describe criteria used for admission screening.

Define the 72-hour rule.

Describe the quality improvement organization and its role in the hospital reimbursement system.

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Learning Objectives

(cont’d.)

Define common terms related to hospital billing.

List instances of breach of confidentiality in a hospital setting.

State the role of ICD-9-CM Volume 3 in hospital billing.

Identify categories in ICD-9-CM Volume 3. State reimbursement methods used when paying for hospital services under managed care contracts.

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Learning Objectives

(cont’d.)

Explain the basic flow of an inpatient hospital stay from billing through receipt of payment.

Describe the charge description master.

State when the CMS-1450 (UB-04) paper or electronic claim form may and may not be used.

Edit and complete insurance claims in both hospital inpatient and outpatient settings to minimize their rejection by insurance carriers.

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Learning Objectives

(cont’d.)

State the general guidelines for completion of the CMS-1450 (Uniform Bill [UB-04]) claim form.

Describe the history and purpose of diagnosis-related groups.

Identify how payment is made based on diagnosis-related groups.

State how payment is made based on the ambulatory payment classification system.

Name the four types of ambulatory payment classifications.

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Chapter 17

Lesson 17.1

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Patient Service Representative Qualifications

Knowledge and competence in:

ICD-9-CM diagnostic codes CPT and HCPCS procedure codes CMS-1500 insurance claim form Uniform Bill (UB-92) insurance claim form Explanation of benefits and remittance advice document Medical terminology Major health insurance programs Managed care plans Insurance claim submission Denied and delinquent claims

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Patient Service Representative

Patient Service Representative Slide 9 Copyright © 2008, 2006, 2004 by Saunders an imprint of Elsevier

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ICD-9-CM Inpatient Coding

ICD-9-CM Inpatient Coding Slide 10 Copyright © 2008, 2006, 2004 by Saunders an imprint of Elsevier

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Medicolegal Confidentiality Issues

Documents

May not be released unless a patient has signed an authorization form.

Verbal communication

New employees may have to sign a confidentiality statement.

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Medicolegal Confidentiality

Issues (cont’d.)

Computer security

Use of passwords Policies for email and faxes

Downloading of data from one department to another

Length of time documents may be retained on hard drive

Procedures for deletion of confidential information Closing out when leaving a workstation or desk

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Appropriateness

Evaluation

Protocol

Appropriateness Evaluation Protocol Slide 13 Copyright © 2008, 2006, 2004 by Saunders an imprint of Elsevier

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Admitting Procedures for Major Insurance Programs

Private insurance Managed care

Emergency inpatient admission

Nonemergency inpatient admission

Admission to a participating hospital

Admission to a nonparticipating hospital

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Admitting Procedures for Major Insurance Programs

(cont’d.)

Medicaid Medicare TRICARE and CHAMPVA Workers’ compensation

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Preadmission Testing

Preadmission testing (PAT) includes:

Diagnostic studies Laboratory tests Chest x-ray Electrocardiography

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Medicare 72-Hour Rule

Also called 3-day payment window rule

If patient receives diagnostic tests and hospital outpatient services within 72 hours of admission to hospital, all such tests and services are combined with inpatient services.

Preadmission services become part of the DRG payment to hospital and may not be billed separately.

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Exceptions to the 72-Hour Rule

Services provided by home health agencies, hospice, nursing facilities, and ambulance services

Physician’s professional portion of a diagnostic service

Preadmission testing at an independent laboratory when the laboratory has no formal agreement with the health care facility

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Utilization Review

Department conducts an admission and concurrent review and prepares a discharge plan on all cases.

Utilization review (UR) companies exist for self-insured employers, third-party administrators, and insurance companies.

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Quality Improvement Organization (QIO)

Admission review Readmission review Procedure review Day outlier review Cost outlier review DRG validation Transfer review

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Chapter 17

Lesson 17.2

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Coding Hospital Procedures

Outpatient hospital insurance claims use Current Procedural Terminology (CPT) and International Classification of Diseases, Ninth Revision, Clinical Modification (ICD-9-CM), Volumes 1 and 2

Inpatient hospital insurance claims use ICD-9-CM, Volumes 1 and 2, for diagnoses and Volume 3 for procedures

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Inpatient - Principal Diagnosis

Principal diagnosis: condition assigned a code representing the diagnosis established after study that is chiefly responsible for patient admission

Diagnostic code sequence in correct order is very important in billing of hospital inpatient cases.

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Rules for Coding Inpatient Diagnoses

Some differences exist between coding diagnoses for inpatient and outpatient cases.

Codes for signs and symptoms of ICD-9-CM are not reported as principal diagnoses.

When two or more conditions are principal diagnosis, either condition may be sequenced first.

When a symptom is followed by a contrasting comparative diagnosis, sequence symptom code first.

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Principal Diagnoses Subject to 100% Review

Arteriosclerosis heart disease (ASHD) Diabetes mellitus without complications Right or left bundle branch block Coronary atherosclerosis

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ICD-9-CM Volume 3 Procedures

Used for inpatient hospital billing

Tabular list divided into chapters that relate to operations or procedures for various body system.

Alphabetic index is arranged by procedure and not anatomic site.

Alphabetic index used to locate procedure referred to as main term.

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Coding Outpatient Procedures

Use up-to-date Current Procedural Terminology (CPT).

Use HCPCS to obtain medical procedural codes for Medicare and some non- Medicare patients on outpatient hospital insurance claims that are not in CPT code book.

Use modifiers as noted in CPT/HCPCS guidelines.

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Inpatient Billing Process

Inpatient Billing Process Slide 28 Copyright © 2008, 2006, 2004 by Saunders an imprint of Elsevier

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Charge Description Master

Services and procedures are checked off and coded internally Data includes

Procedure code Charge Revenue code

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Reimbursement Methods

Ambulatory payment classifications Bed leasing Capitation or percentage of revenue Case rate Diagnosis-related groups Differential by day in hospital Differential by service type

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Reimbursement Methods

(cont’d.)

Fee schedule Flat rate Per diem Periodic interim payments (PIPs) and cash advances Withhold Managed care stop loss outliers

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Reimbursement Methods

Charges

(cont’d.)

Discounts in the form of sliding scale

Sliding scales for discounts and per diems

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Elements of the Reimbursement Process

Electronic data interchange

Allows computer to help in scrubbing bill

Hard copy billing

Used for insurance companies that are not capable of receiving electronic claims

Receiving payment

After receipt of payment, patient sent net bill listing any owed deductible, coinsurance amount, and charges not covered

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Chapter 17

Lesson 17.3

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Outpatient Insurance Claims

Emergency department visits Elective surgeries

Only outpatient services provided by the hospital should be submitted by the hospital unless the hospital is billing for physicians.

Using the hospital for surgical or medical consultations that could be done in a physician’s office should be avoided.

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Billing Errors and Problems

Incorrect name on form Wrong subscriber, patient name listed in error Covered days vs. non-covered days Duplicate statements Double billing Phantom charges

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Uniform Bill (UB-04)

Used since 1982 for inpatient and outpatient hospital claims Updated in 2007 Considered as a summary document supported by an itemized bill Printed in red ink on white paper Dates of service and monetary amounts entered without spaces or decimal points

Dates of birth are entered using two sets of two- digit numbers for the month and day, four-digit number for the year

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Uniform Bill (UB-04) Form

Uniform Bill (UB-04) Form Slide 38 Copyright © 2008, 2006, 2004 by Saunders an imprint of

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Diagnosis-Related Groups System

Patient classification method that categorizes patients who are medically related with respect to diagnosis and treatment and statistically similar in length of stay

Used to classify and measure past cases and to classify current cases to determine payment

25 basic major diagnostic categories

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Seven Variables Responsible for DRG Classifications

Principal diagnosis Secondary diagnosis (up to eight) Surgical procedures (up to six) Comorbidity and complications

Age and sex Discharge status Trim points

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Sample Case History

Sample Case History Slide 41 Copyright © 2008, 2006, 2004 by Saunders an imprint of Elsevier

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Cost Outliers

Clinical outliers include:

Unique combinations of diagnoses and surgeries causing high costs Long length of stay (day outliers) Low-volume DRGs

Inliers include:

Death Leaving against medical advice (AMA) Admitted and discharged on same day

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DRG Common Terms

DRG creep Downcoding Comorbidity Most-resource-intensive

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DRGs and the Physician’s Office

When calling the hospital to admit a patient, give all of the diagnoses authorized by the physician.

Ask the physician to review the treatment or procedure in question when a hospital representative calls with questions.

Get to know hospital personnel on a first-name basis.

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Ambulatory Payment Classification System

Developed as outpatient classification systems by Health System International

Based on patient classification rather than disease classifications

More than 500 APCs are continually being modified; updated and released twice a year in the Federal Register

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APC Applications

Ambulatory surgical procedures Chemotherapy Clinic visits Diagnostic services and diagnostic tests Emergency department visits Implants Outpatient services furnished to nursing facility patients not packaged into nursing facility consolidated billing

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APC Applications (cont’d.)

Partial hospitalization services for community mental health centers (CMHCs)

Preventive services (colorectal cancer screening) Radiology including radiation therapy

Services for patients who have exhausted Part A benefits

Services to hospice patient for treatment of a non-terminal illness

Surgical pathology

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Hospital Outpatient Prospective Payment System

Procedure code is primary axis of classification, not the diagnostic code.

Reimbursement methodology based on median costs of services and facility cost to determine charge ratios and copayment amounts.

Adjustment for area wage differences based on the hospital wage index currently used for inpatient services.

OPPS may be updated annually.

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Types of APCs

Surgical procedure APCs Significant procedure APCs Medical APCs Ancillary APCs

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