Reimbursement - Quiz 1

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What is insurance?

Insurance is a system of reducing a person's exposure to risk of loss by having another party (insurance company or insurer) assume the risk Insurance company assumes the risk and reduces its own risk by distributing the risk among a larger group of persons (insured's) Group of persons having similar risks of loss and is known as a risk pool. Premium is the payment in return for assuming the insured's exposure to risk of loss. Premium payments for all of the insured's are in the group and are combined into a pool of money

What is a First Party Payer?

First Party Payer - The patient himself or herself or the person, such as a parent, responsible for the patient's health bill

What is a Second Party Payer?

Second Party Payer - The physician, clinic, hospital, nursing home, or other healthcare entity rendering the care

What is a Third Party Payer?

Third Party Payer - Is the uninvolved insurance company or health agency that pays the physician, clinic or the other second party provider for the care or services rendered to the first party (patient)

What are the types of healthcare Reimbursement Methodologies?

Fee-for service reimbursement and episode-of care reimbursement?

What is a Fee-for-Service reimbursement?

Healthcare payment method in which provider retrospectively receives payment for each service rendered. A fee is set amount or a set price. A healthcare organization or fractioned bills for each service provided on a claim that lasts the fees or charges for each service. People who have health insurance that reimburses on the basis of fee-for-service have the advantage of great independence. They are allowed to make almost all health decisions about which physician to see and about which conditions to have treated. Disadvantage is that they often have higher deductibles or copayments.

What is a fee?

A set amount or a set price.

Types of Fee-for-Service?

Self-Pay, Traditional Retrospective Payment; Managed Care Methods

Describe Self-Pay

Self-Pay - Patients or their guarantors (responsible persons such as parents for children) pay a specific amount for each service received. Self-insured plan is one in which the employer eliminates the "middle man" the employer administers its own health insurance benefits. Rather than shift the risk to a health insurance entity.

Describe Traditional Retrospective Payment

Traditional Retrospective Payment - Traditional retrospective reimbursement is a type of fee-for-serve because the providers are reimbursed for each service rendered. Retrospective reimbursement is a type of fee-for service because the providers are reimbursed for each service rendered. Based on the charges for the services provided.

Describe Managed Care methods

Managed Care Methods (9) - Third-party payers "manage" both the costs of healthcare and the outcomes of care. Common features of managed care include: Comprehensiveness; coordination and planning; education of patients and providers; assessment of quality; and control of quality Purpose of managed care are to reduce costs and ensure continuing quality of care Forms of Managed care - Health maintenance organizations (HMOs, Exclusive provider organizations (EPO); Point-of-service plans (POS) and preferred provider organization (PPO)

What is the Purpose of Managed Care.

Management or control to reduce the costs of healthcare for which the third-party payer must reimburse the providers and to ensure continuing quality of care.

Describe Episode-of-Care Reimbursement?

Episode of Care - A healthcare payment method in which providers receive on lump sum for all the services they provide related to a condition or disease. One amount is set for all the care associated with the condition or illness.

What are the different Episode-of-Care Reimbursements?

Capitated, Global Payment Method and Prospective Payment Methods

What is a capitated payment

Capitated - A method of payment for health services in which the third-party payer reimburses providers a fixed, per capita amount for a period. "Per capita" means "per head" or per person. There is no adjustment for the complexity or extent of the health services. Advantage is that third-party payer has no uncertainty and that provider has a guaranteed customer base. And knows the cost of healthcare for the group.

What is a global Payment Method

Global Payment Method - Makes one combined payment to cover the services of multiple providers who are treating a single episode of care

What is a block grant?

A block grant is a fixed amount of money given or allocated for a specific purpose. In the global payment method, there is no additional payment for higher volumes of services or more expensive or complex services.

What is the most comprehensive version of the global payment system into the total-episode-of-care.

The total-episode-of-care payment is a single price that covers costs across the continuum of care.

What is a Prospective Payment Method

Prospective Payment Method - Method of reimbursement ion which payment rates for healthcare services are established in advance for a specific time period. The predetermined rates are based on average levels of resource use for certain types of healthcare. Payment is determined by the resources needs of the average patient for a set period of time or given set of conditions or diseases.

What are the two prospective payment method that are normally used.

Per diem payment and case-based payment

What is per diem payment

Per Diem (per day) payment policy - Type of prospective payment method in which the third-party payer reimburses the provider a fixed rate for each day a covered member is hospitalized. Uses historical data.

What is case-based payment.

Case-based Payment - Type of prospective payment method in which the third-party payer reimburses the provider fixed pre-established payment for each case. Case-based payment can be one flat rate per case or can be multiple rates that represent categories of cases.

What case-base payment system does Medicare use for inpatient hospital Services

Medicare severity diagnosis-reacted groups (MS-DRGs)

What is a MS-DRG

Medicare refinement to the diagnosis-related group (DRG) classification system, which allows for payment to be more closely aligned with resources intensity. Each MS-DRG categorizes patients who are homogenous in terms of clinical profiles and requisite resources. Each MS-DRG has a payment rate called a "weight". Weights are relative to one another. Higher weights are associated with groups in which more resources are need for care and treatment. Lower weights are associated with groups in which less resource is needed for care and treatment. Higher weights get higher payments, lower weights get lower payments

What is some of the criticisms of Episode-of-Care Reimbursement

The impact of the case-based payment method is that it rewards effective and efficient deliver of health services and penalizes ineffective and inefficient delivery. Some advocates have noted that the payment method creates incentives to substitute less expensive diagnostic and therapeutic procedures and laboratory and radiologic tests and to delay or deny procedures and treatments. Other say the savings associated with eliminating wasteful or unnecessary procedures and tests and that volume and expense do not necessarily define quality.

Resource Based Relative Value Scale (RBRVS)

RBRVS is a discounted fee schedule for Medicare uses to reimburse physicians. The RBRVS is a payment method that classifies health services based on the cost providing physician services in terms of effort, practice expenses (overhead), and malpractice insurance. As a schema used to determine how much money medical providers should be paid. It is partially used by Medicare in the United States and by nearly all Health maintenance organizations (HMOs). RBRVS assigns procedures performed by a physician or other medical provider a relative value which is adjusted by geographic region (so a procedure performed in Manhattan is worth more than a procedure performed in Dallas). This value is then multiplied by a fixed conversion factor, which changes annually, to determine the amount of payment.

The form UB04, What provider use this

Healthcare facilities submit claims via the electronic format (screen 8371) which replaces the UB-04 paper billing form. The UB04 claim form is used by facilities rather than physicians for their health insurance billing. Hospitals, rehabilitation centers, ambulatory surgery centers, clinics, etc need to bill their services on the UB04 form in order to get paid.

The form CMS1500, What provider uses this

Physicians submit claims via the electronic format (screen 837P), which takes the place of the CMS-1500 billing form. The Form CMS-1500 is the standard paper claim form used by health care professionals and suppliers to bill Medicare Carriers or Part A/B and Durable Medical Equipment Medicare Administrative Contractors (A/B MACs and DME MACs).

Describe Managed Care methods

In managed care reimbursement methods, Third-party payers "manage" both the costs of healthcare and the outcomes of care. Common features of managed care include: Comprehensiveness; coordination and planning; education of patients and providers; assessment of quality; and control of quality

Why did manage care come about in the first place

"The reason it came about was to address the criticism of the traditional fee-for-service retrospective reimbursement. It was believed that it encourage physicians to inflate costs with extra tests and charges. It came about to control cost the costs of healthcare while maintaining quality care. "

What are some of the forms of Managed care

Forms of Managed care - Health maintenance organizations (HMOs, Exclusive provider organizations (EPO); Point-of-service plans (POS) and preferred provider organization (PPO). In managed care reimbursement methods, third-party payers "manage" both the costs of healthcare and the outcomes of care

What is retrospective Payment

Retrospective - The Payer learns of the costs of the health services after the patient has already received the services. The provider also receives payment after the services have been provided.

What is prospective Payment

Prospective - The payments are preset before care is delivered. Method of reimbursement ion which payment rates for healthcare services are established in advance for a specific time period. The predetermined rates are based on average levels of resource use for certain types of healthcare.

What HIPPA did for us besides Privacy Act

"Title 1 - Healthcare Access, Portability, and Renewability
Title 2 - Preventing Health Care Fraud & Abuse. Medical Liability Reform; Administrative Simplification: (Privacy; Security, Identifiers, Code Sets)
Title 3 - Tax-Related Health Provision
Title 4 - Group Health Plan Requirements
Title 5 - Revenue Offsets"

Describe 5. Healthcare Current Procedural Coding System (HCPCS)

a two-tiered system of procedural codes used primarily for ambulatory care and physician services. A third tier, pertaining to codes developed by local payers, was eliminated as of December 31, 2003, in compliance with HIPAA standard procedure code requirement.

What is Healthcare Access, Portability and Renewabity About

HIPAA addresses issues related to the portability of health insurance after leaving employment, establishment of national standards for electronic healthcare transactions and national identifiers for providers, health plans, and employees. (

HIPAA is widely known for its security and privacy provisions, a large portion of the Act focused on fraud and abuse prevention

The key fraud and abuse areas targeted are: Medical necessity; Upcoding; Unbundling; Billing for services not provided. Also created the Medicare Integrity program. Not only did Medicare continue to review provider's claims for fraud and abuse, but the focus expanded to cost reports, payment determination and the need for ongoing compliance education

What are some of the different Code sets?

ICD-9-CM, ICD-10-CM/PCS, HCPCS

What is ICD-9-CM

ICD-9-CM - Designates the International Classification of Diseases, 9th Revision, Clinical Modifications (ICD-9-CM). Used to report diagnoses in all healthcare settings and procedures for inpatient encounters. Centers for Medicare and Medicaid Services (CMS) are responsible for maintaining the U.S. clinical modification version of the ICD-9-CM.

What is ICD-10-CM/PCS

ICD-10-CM/PCS - The current international version of ICD is the 1-th revision and is referred to ICD-10. We are slated to replace ICD-9-CM with this on or after October 1, 2014. The new structure will provide greater detail and granularity that will allow more accurate code submission. It will also benefit healthcare facilities but will also allow payers to better measure quality outcomes and expand pay-for-reporting and pay-for-performance.

When does CMS add new codes to ICD-9-CM

Normal October 1, but there is an option to add new codes in April of every year

What does HCPCS stand for?

Healthcare Current Procedural Coding System

Describe HCPCS?

A two-tiered system of procedural codes used primarily for ambulatory care and physician services. A third tier, pertaining to codes developed by local payers was eliminated.

What are the levels of HCPCS

CPT or HCPCS Level II System

What is CPT

Current Procedural Terminology (CPT) Level 1 of HCPCS, used throughout the Untitled states to report diagnostic and surgical services and procedures. Coding system was created and maintained by the American Medical Association that is used to report diagnostic and surgical services and procedures. Divided into 6 main sections,

Who created CPT and for whom?

American Medical Association (AMA) and is used by physicians to report services and procedures performed in the hospital inpatient and outpatient setting and by facilities for outpatient services and procedures.

Who uses CBT

The code set was adopted into the Healthcare Common Procedure Coding System and became HCPCS Level I code set for Medicare reporting. It is used for reimbursement. You need to remember that ICD-9 does not generate the revenue. CBT generates revenue and ICD-9 is the proof the work is done.

What is the structure of CPT

Has six man sections know as Category I codes plus two types of supplementary codes (Category II and Category III codes), and modifiers

What is Category I in CPT

Category I - codes describe a procedure or service that is consistent with contemporary medical practice and is performed by many physicians in clinical practice in multiple locations.

What is Category II in CPT

Category II codes were created to facilitated data collection for certain services and/or test results that contribute to positive health outcomes and quality patient care. Is option and may not be used as substitute for Category I codes.

What is Category III in CPT

Category III codes represent emerging technologies. Used for data collection and assessment of new services and procedures. Good for 5 years.

What is a CPT Modifier

Modifiers is a two digit numeric or alphanumeric character designed to give Medicare and other third-party payers additional information needed to process a claim. A physician or facility uses a modifier to flag, a service provided to a patient that has been altered by some special circumstances but for which the basic code description itself has not changed.

Who does CPT Maintenance

AMA - Publishes the official guidelines and advice. CPT Assistant

What is HCPCS Level II

Healthcare Common Procedure Coding System Level 2 codes. They use A-V except I and O to represent a wide variety of procedures. . Represent supplies and services and procedures that are not represented in CPT (HCPCS Level 1) code set but are submitted for reimbursement. Medicaid and many other insurance companies use them

What are the two types of HCPCS Level II codes

Permanent and Temporary

Describe the HCPCS Level II codes that are Permanent

Permanent - Permanent codes are alphanumeric, with five digits with an alpha character in the first position. The alpha character designates the category to which the code is classified.

Describe the HCPCS Level II codes that are Temporary

Temporary - Used to meet the immediate and short-term operational needs of individual insurers, public and private. Temporary codes are also alphanumeric, with five digits and an alpha character. Temporary codes may remain as such for an indefinite period of time.

Does HCPCS Level II use Modifiers

Yes. Are two-digit alpha r alphanumeric codes. A modifier is designed to give Medicare and other third-party payers addition information needed to process a claim

HCPCS Maintenance

Permeant - Updated annually, National Panel (American's Health Insurance Place, Blue Cross and Blue shield Association, CMS) and Temporary - Updated quarterly, Maintained by individual member of the National Panel

HCPCS Coding Advice

AHA - Central Office on HCPCS, Coding Clinic and Only official resource for HCPCS Level II reporting for Medicare coverage determination issued by CMS and its fiscal intermediaries.

What is big HCPCS

Big HCPCS is the Level 1 (CBT), Level II (HCPCS) and Modifiers

What is little HCPCS

CPT or HCPCS Level II System

What is Fraud and Abuse

- An intention representation that an individual knows to be false or does not believe to be true and makes knowing that the reorientation could result in some unauthorized benefit to himself/herself or some other person. Abuse occurs when a healthcare provider unknowingly or unintentionally submits an inaccurate claim to for payment,. Generally results from unsound medical, business, or fiscal practices that directly or indirectly result in unnecessary costs to the Medicare program

What is Case Mix Index (CMI)

Case mix index (CMI) - Single number that compares the overall complexity of the healthcare organization's patients to the complexity of the average of all; hospitals. Typically, the CMI is for a specific period and is derived from the sum of all diagnosis-related group (DRG) weights, divided by the number of Medicare cases.

What is Case mix Group (CMG)

Managing coding or billing department according to the laws, regulation and guidelines that govern it. It is indicates that, as a professional, the person is able to perform at an acceptable level and ethical standard.

what is Coinsurance

Cost-sharing in which the policy or certificate holder pays a reestablished percentage of eligible expenses after the deductible has been met. The percentage may vary by type or site of service.

What is Co-Payment

Cost-sharing measure in which the policy or certificate holder pays for a fixed dollar amount (flat fee) per service, supply, or procedure that is owed to the healthcare facility by the

Describe a Group Premium?

Employer-based healthcare plans are group plans for groups of employees or members. Employer-based healthcare plans have lower premiums and deductibles and greater benefits than private healthcare plans. Persons with preexisting conditions and who cannot obtain private healthcare insurance can obtain coverage (after a period of time) under an employer-based care plan. Group premium is usually less than an individual plan and you get more benefits as you are buying for a large group instead of an individual so the risk is spread out more

Describe a Individual Plan?

Also called private (individual) Healthcare plans. For individuals and self-employed business persons that purchase insurance for themselves and their families. Private healthcare plans are sometimes termed individual plans because individuals purchase them. Individual healthcare insurance plans provide fewer covered services at a higher cost than group healthcare insurance plans. Must provide evidence of insurability which includes completing a survey about current and past health status and undergoing a psychical examination. Stop-loss benefit (maximum amount the plan will pay) is usually lower than the stop-loss benefit that employer-based healthcare plans will pay. Private healthcare plans may place more restrictions on coverage for preexisting conditions that employer-based healthcare insurance plans.

What is a Deductible?

Annual amount of money that the policy holder must incur (and pay) before the health insurance will assume liability for the remaining charges or covered expenses

Know the difference between how an in inpatient claim will be paid compared to an outpatient claim when you are looking at the code sets. What code sets are used for what

You need to remember that the ICD-9 does not generate the revenue. The CBT code generates the revenue and the ICD-9 justifies what you are billing. HCPCS Level II - Healthcare Common Procedure Coding System Level 2 codes. They use A-V except I and O to represent a wide variety of procedures and represent supplies and services and procedures that are not represented in CPT (HCPCS Level 1) code set. The CPT (HCPCS Level 1) is submitted for reimbursement. Medicaid and many other insurance companies use them

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