Chapter 5

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Accounts receivable (A/R) management

Refers to functions required for the monitoring and follow-up on outstanding accounts to ensure that reimbursement is received in a timely manner.

Ambulatory Payment Classification (APC)

The OPPS utilized by Medicare and other government programs to provide reimbursement for hospital outpatient services. Under the APC system, the hospital is paid a fixed fee based on the procedure(s) performed.

Ambulatory surgery

Surgery is performed in a free-standing or hospital-based ambulatory surgery setting. Surgery is performed and the patient is discharged the same day.

Batch

A specified group of invoices or statements processed at one time.

Billing process

Involves all the functions required to prepare charges for submission to patients and third-party payers to obtain reimbursement.

Capitation

A reimbursement method utilized that provides payment of a fixed amount, paid per member per month.

Case mix

A term used to describe type patient cases treated by the hospital.

Case rate

A reimbursement method utilized that provides a set payment rate to the hospital for a case. The payment rate is based on the type of case and resources utilized to treat the patient.

Charge Description Master (CDM)

Computerized system used by the hospital to inventory and record services and items provided by the hospital. The CDM is commonly referred to as the chargemaster.

Claims process

The portion of billing that involves preparing claims for submission to payers.

Clean claim

A claim that does not need to be investigated by the payer. A clean claim passes all internal billing edits and payer specific edits and is paid without need for additional intervention.

Clearinghouse

A company that receives claim information from hospitals and other providers in various formats for conversion to a required format for submission to various payers.

Collections

Involves monitoring accounts that are outstanding and pursuing payment from patients and third party payers. Collections is also referred to as accounts receivable (A/R) management.

Contract rate

A reimbursement method utilized that provides a set payment rate to the hospital as agreed to by the hospital and payer.

Detailed itemized statement

A listing of all charges incurred during the patient visit.

Diagnosis Related Group (DRG)

The IPPS utilized by Medicare and other government programs to provide reimbursement for hospital inpatient services. Under the DRG system, the hospital is paid a fixed fee based on the patient's condition and relative treatment.

Electronic data interchange (EDI)

Term used to describe the process of sending information from one place to another via computer.

Electronic medica claim (EMC)

Term used to describe the claim form that is sent via EDI.

Encoder

A computer program utilized to assist with code assignment.

Facility charges

Charges that represent cost and overhead for providing patient care services, including space, equipment, supplies, drugs and biologicals, and technical staff. Facility charges represent the technical compponent of the services.

Fee-for-service

A reimbursement method that provides payment for hospital services based on an established fee schedule for each service.

Fee schedule

A listing of established allowed amounts for specific medical services and procedures.

Flat rate

A reimbursment method wherby the hospital is paid a set rate for a hospital admission regardless of charges accrued.

Form locator (FL)

The name used to refer to each of the 86 fields (form locator(s) 1 through 86) on the UB-92

Grouper

A computer program utilized for the assignment of a DRG or APC based on the information entered such as diagnosis, procedure, and other patient information like age, sex, and legth of stay.

Health Care Common Procedure Coding System (HCPCS)

The standard coding system used to report services and items to various payers. HCPCS consists of two levels: Level I, CPT codes, and Level II, Medicare National Codes.

Inpatient Prospective Payment System (IPPS)

A Prospective Payment System established as mandated by the Tax Equity and Fiscal Responsibility Act (TEFRA) in 1983 to provide reimbursement for acute hospital inpatient services. The system implemented under IPPS in known as Diagnosis Related Group (DRG)

Outpatient Prospective Payment System (OPPS)

Prospective payment system implemented (effective August 2000) by CMS that provides reimbursement for hospital outpatient services. The system implemented under OPPS is known as ambulatory payment classification (APC).

Participating provider agreement

A written agreement between the hospital and a payer that outlines the terms and specifications of participation for the hospital and the payer.

Patient invoice

A document prepared by the hospital to advise the patient of an outstanding balance that includes details regarding current services. It is generally sent out the first time a balance is billed to the patient.

Patient statement

A document prepared by the hospital that provides details regarding account activity, including the previous balance, recent charges, payments, and the current balance. The patient statement is generally sent monthly to notify the patient of a balance due.

Per diem

A reimbursement method that provides payment of a set rate, per day to the hospital, rather than payment based on total charges.

Percentage of accrued charges

A reimbursement method that calculates payment for charges accrued during a hospital stay. Payment is based on a percentage of approved charges.

Professional charges

Charges that represent the professional component of patient care services performed by physicians and other non-physician clinical providers.

Prospective Payment System (PPS)

A method of determining reimbursement to health care providers based on predetermined factors, not on individual services.

Reimbursement

Term used to describe amount paid to the hospital by patients or third-party payers for services rendered.

Relative value scale

A reimbursement method that assisgns a relative value to each procedure. It represents work, practice expense, and cost of malpractice insurance and is assigned to professional services.

Resource-based relative value scale (RBRVS)

A payment method utilized by Medicare and other government programs to provide reimbursement for physician and some outpatient services. The RBRVS system consists of a fee schedule of approved amounts calculated based on relative values assigned to each procedure.

Revenue code

A four-digit number assigned to each service or item provided by the hospital that designates the type of service or where the service was performed.

Third-party payer

An organization or other entity that provides coverage formedical services, such as insurance companies, managed care plans, Medicare, and other government programs.

Usual, customary, and reasonable

A reimbursement method whereby payment is determined by reviewing three fees: (1) the usual fee-the fee usually submitted by the provider of a service or item; (2) the customary fee--the fee that providers of the same specialty in the same geographic area charge for a service or item; and (3) the reasonable fee--the fee that is considered reasonable.

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