Chapter 2

Billing and Coding for Health Services

Topics Covered

• Healthcare Claims

• Registration

• Medical Record/Coding

• Charge Entry/Chargemaster

• Billing/Claims Preparation

• Claims Editing

1. Describe the revenue cycle for health care firms.

2. Understand the role of coding information in health care organizations in claim generation.

3. Define the basic characteristics of charge masters.

4. Define the two major bill types used in health care firms.

5. Appreciate the role of claims editing in the bill submission process.

Objectives

Figure 2–1 Revenue

Cycle

Billing Process Claims Generation Process

Overview of Process

ServicesOutpatientInpatient

Charge Codes Charge MasterInformation

CPT/HCPCS(Dynamic)

and ICD-9-CMCode Development

UB-04HCFA-1500

ClaimsGeneration

Detailed BillStatementGeneration

Activities1. Services Provided2. Services Documented3. Charges Developed4. Coding Performed5. Bill/Claim Produced6. Payment Received

Charge MasterCharge Codes

Revenue CodesCharges

CPT/HCPCS Codes

Medical

Record

Charge SlipsOrder Entry

Major Revenue Cycle Steps

Registration

Medical Record/Coding

Charge Entry/Chargemaster

Billing/Claims Preparation

Claims Editing

Registration Basic information collected on the patient

3 major activities:

1. Insurance verification, including patient’s health plan identification number

2. Amount due from patient for co-payment or deductible

3. Financial counseling For patients with no insurance coverage or who are

unable to pay co-payment or deductible Financing Medicaid and other governmental programs

Medical Record/Coding

Health Insurance Portability and Accountability Act (HIPAA) of 1996

Two coding systems

1. International Classification of Diseases, Ninth Revision, Clinical Modification (ICD-9-CM)

2. Healthcare Common Procedure Coding System (HCPCS)

Medical Record/Coding

Diagnosis codes are 3 digits, sometimes followed by a decimal point and a 4th digit or 4th and 5th digits

Procedure codes

Used to report inpatient procedures

Up to 4 digits in length, with a decimal point after the first two digits

Diagnosis and procedure codes are used for DRG assignment, which is often used to determine payment

ICD-9

ICD-9-CM Diagnosis Codes Example003 Other Salmonella Infections

003.0 Salmonella Gastroenteritis

003.1 Salmonella Septicemia

003.2 Localized Salmonella Infections

003.20 Localized Salmonella Infection, Unspecified

003.21 Salmonella Meningitis

003.22 Salmonella Pneumonia

003.23 Salmonella Arthritis

003.24 Salmonella Osteomyelitis

003.29 Other Localized Salmonella Infection

003.8 Other specified salmonella infections

003.9 Salmonella infection, unspecified

HCPCS Used by physicians for reporting both inpatient and

outpatient procedures Used by facilities for reporting outpatient

procedures Two tiers

Level I—Current Procedural Terminology (CPT), a 5-digit code (maintained by AMA)

Level II HCPCS codes

These codes are often a major determinant of provider payment for both facilities and physicians.

Level I—CPT Codes

Six Main Categories

Evaluation & Management

Anesthesia

Surgery

Radiology

Pathology and Laboratory

Medicine

May also contain modifier code that provides additional information essential to the claim

Level II HCPCS Codes

Used to report products, services, supplies, materials, or procedures that are not present in the Level I (CPT) codes.

5-digit codes beginning with an alphabetic character followed by 4 numeric characters

Two groups of codes: Permanent Temporary

• Used for needs not covered by the permanent codes• Can remain “temporary” indefinitely and sometimes

replaced by a permanent code

Charge Entry

Represent the “capture” of products and services provided

Three greatest concerns in billing: Capture of charges for services performed Incorrect billing Billing late charges

• Charge capture methods: Charge slips posted as batch process Order entry system

• Charge explosion can be used when a uniform set of supplies is used

Chargemaster

Also referred to as Charge Description Master (CDM) A list of all the goods and services provided by a hospital,

and the price (or prices) the hospital charges for each of those goods and services

Six elements: Charge code Item description Department number Charge (price) Revenue code CPT/HCPCS code

Chargemaster Sample Extract

Item Code Item Description

Dept Num

Standard Price

Revenue Code HCPCS

3023001 DAILY CARE FOURTH NORTH 13030 $665.50 111

3120000 DAILY CARE ICU 13120 1,172.50 200

4156159 MINERAL OIL 30ML 13190 11.50 250

4400206 SINGLE TOWEL 14430 2.25 270

4440302 HEP C ANTIBODIES-0288 14440 53.50 300 86803

4470220 HAND XRAY-0183 14470 102.50 320 73130

4472538 C/T PELVIS W & W/O ENHANCEMENT 14302 1,069.75 350 72194

4416000 LASIK SURGERY - PER EYE 13190 2,105.25 360 66999

Billing/Claims Preparation CMS-1500: the uniform professional claim form

Used by non-institutional providers (e.g., physicians) to submit claims to Medicare and many other payers

• CMS-1450 (aka UB-04): the uniform institutional claim form Used by institutional providers to submit claims to

Medicare and most other payers Data from this form is used to determine DRGs

(diagnosis-related groups) and APCs (ambulatory payment classifications)

One or more HCPCS codes must be present on the claim form if an APC is to be assigned (outpatient only).

• Most claims now submitted electronically

Sample UB-04 Form

Sample CMS-1500

Form

Claims Editing

Software designed to find errors in claims Providers use to maximize appropriate payment and to

speed payment Payers use to determine minimum payment obligation

and to delay payment for valid reasons Error checking:

Spelling errors Missing data (e.g., date of service and diagnosis

codes) Internal validity (e.g., procedure consistent with

gender)

CMS developed the National Correct Coding Initiative (NCCI) to promote correct coding methodologies

NCCI edits are incorporated within the Outpatient Code Editor (OCE) Ensures that the most comprehensive

groups of codes are billed rather than the component parts

Check for mutually exclusive code pairs 83 edits as of March 2010

Claims Editing

Each OCE edit results in one of six dispositions Claim-level dispositions

• Rejection—Claim must be corrected and resubmitted• Denial—Claim cannot be resubmitted but can be appealed• Return to provider (RTP)—Problems must be corrected and

claim resubmitted• Suspension—Claim requires further information before it can be

processed

Line-item-level dispositions• Rejection—Claim is processed but line item is rejected and can

be resubmitted later• Denial—Claim is processed but line item is rejected and cannot

be resubmitted

Claims Editing

Summary

Accurate billing and coding are essential to a healthcare provider’s financial viability

Very complex area requiring specialized professionals

Many providers fail to capture all charges to which they are entitled