CHAPTER © 2013 The McGraw-Hill Companies, Inc. All rights reserved. 1 Introduction to Health Information Technology and Medical Billing

CHAPTER

© 2013 The McGraw-Hill Companies, Inc. All rights reserved.

1Introduction to Health

Information Technology and Medical Billing


Learning Outcomes

When you finish this chapter, you will be able to:1.1 Explain why the use of technology in healthcare is

increasing.

1.2 Describe the functions of practice management programs.

1.3 Identify the core functions of electronic health record programs.

1.4 List the steps in the medical documentation and billing cycle that occur before a patient encounter.

1.5 List the steps in the medical documentation and billing cycle that occur during a patient encounter.

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Learning Outcomes (continued)

When you finish this chapter, you will be able to:1.6 List the steps in the medical documentation and

billing cycle that occur after a patient encounter.

1.7 Discuss how the HIPAA Privacy Rule and Security Rule protect patient health information.

1.8 Explain how the Health Information Technology for Economic and Clinical Health (HITECH) Act and

the Affordable Care Act (ACA) promote health information technology and explore new models of delivering healthcare.

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• accountable care organization (ACO)

• adjudication• Affordable Care Act

(ACA)• audit trail• clearinghouse • coding• Current Procedural

Terminology (CPT®)• diagnosis• diagnosis code

• documentation• electronic data

interchange (EDI)• electronic health record

(EHR)• electronic medical

records (EMRs)• electronic prescribing• encounter form• explanation of benefits

(EOB)• HCPCS

Key Terms1-4


Key Terms (continued)

• health information exchange (HIE)

• health information technology (HIT)

• Health Information Technology for Economic and Clinical Health (HITECH) Act

• Health Insurance Portability and Accountability Act of 1996 (HIPAA)

• HIPAA Privacy Rule

• HIPAA Security Rule• International

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

• International Classification of Diseases, Tenth Revision, Clinical Modification (ICD-10-CM)

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Key Terms (continued)

• meaningful use• medical documentation

and billing cycle• National Health

Information Network (NHIN)

• National Provider Identifier (NPI)

• patient-centered medical home (PCMH)

• patient information form • personal health records

(PHRs)

• practice management programs (PMPs)• procedure• procedure code• protected health information (PHI)• regional extension centers (RECs)• remittance advice (RA)• revenue cycle management (RCM)

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1.1 The Increasing Use of Technology in Healthcare

Healthcare costs are rising for several reasons:• The use of new medical technologies

Procedures and treatments have increased patient survival and the cost of medical care.

• The aging populationAs the population ages, spending on healthcare rises.

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1.1 The Increasing Use of Technology in Healthcare (continued)

• Technology is being used to track patient treatments and outcomes, which leads to the development of quality standards.

• Technology makes it possible for primary care providers and specialists to confer while looking at the same CT scan on a computer, even when they are miles apart.

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1.1 The Increasing Use of Technology in Healthcare (continued)

• Health information technology (HIT) is technology that is used to record, store, and manage patient healthcare information.

• Technology is used to perform these tasks:– clinical tasks such as recording vital signs or ordering

medications,– administrative tasks such as scheduling appointments

or creating insurance claims.

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1.2 Functions of Practice Management Programs

• A practice management program (PMP) is a software program that automates many of the administrative and financial tasks in a medical practice including:– Verifying insurance eligibility and benefits.– Organizing patient and payer information.– Generating and transmitting insurance claims.– Monitoring the status of claims.– Recording payments for payers.– Generating patients’ statements, posting payments, and

updating accounts.– Managing collections activities.– Creating financial and productivity reports.

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1.2 Functions of Practice Management Programs (continued)

• Creating and Transmitting Claims– One of the most important functions of a PMP is to

create and transmit healthcare claims. – The PMP collects information from various databases.

A database is simply an organized collection of information about the patient, the provider, the health plan, the facility, and more.

• Monitoring Claim Status– Monitoring claim status is necessary to ensure prompt

payment of claims.– A PMP is used to follow up on the status of claims. An

electronic message can be send to the health plan.

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1.2 Functions of Practice Management Programs (continued)

• Receiving and Processing Payments– A PMP receives a document that lists the amount that

has been paid on each claim and reasons for nonpayment or partial payment of claims.

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1.3 Functions of Electronic Health Record Programs

• An electronic health record (EHR) is a computerized lifelong healthcare record for an individual that incorporates data from all providers who treat the individual.

• Documentation is a record of healthcare encounters between the provider and the patient.

• An electronic medical record (EMR) is the computerized record of one physician’s encounter with a patient over time.

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1.3 Functions of Electronic Health Record Programs (continued)

• Personal health records (PHRs) are private, secure, electronic files that are created, maintained, and owned by the patient.

• The Institute of Medicine suggests that an EHR include:

1. Health information and data elements

2. Results management

3. Order management

4. Decision support

5. Electronic communication and connectivity

6. Patient support

7. Administrative support

8. Reporting and population health

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1.3 Functions of Electronic HealthRecord Programs (continued)

• Health Information and Data Elements– Demographic information

(address, phone numbers, patient name)

– Clinical information about the patient’s past and present health concerns (problem list, signs and symptoms, diagnosis, procedures, treatment plan, medications list, allergies, diagnostic test results, radiology results, health maintenance status, and advance directives)

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• Results Management– Computerized results can be accessed by multiple

providers when and where they are needed.

• Order Management- Staff members in different offices and facilities can

access orders which eliminates unnecessary delays and duplicate testing.

• Decision Support– An EHR gives physicians immediate access to clinical

research on diagnosis, treatment, and medications.

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• Electronic Communication and Connectivity– Physicians, nurses, medical assistants, referring

doctors, testing facilities, and hospitals can communicate with one another through a number of mechanisms within the EHR.

• Patient Support– The EHR offers patients access to educational

materials and instructions for tests, as well as the ability to report home monitoring.

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• Administrative Processes– PMPs and EHRs streamline billing, scheduling, and

other administrative tasks.• Reporting and Population Management

– EHRs also enhance reporting capabilities to make it easier to comply with federal, state, and private reporting requirements.

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• Advantages of Electronic Health Records

– Safety• Reduced medication and physician order errors• Instant alerts about patient allergies and drug interactions• Alerts when medications are unsafe • No risk of records being lost due to a natural disaster• Improved communication related to an outbreak of a disease

– Quality• Patients are reminded about preventive care screenings.• Patients are able to monitor chronic disease at home and

report results via the Internet.• Patients can review data about quality and performance of

providers prior to obtaining healthcare.

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• Advantages of Electronic Health Records (continued)

– Efficiency• Improved workflow in the physician practice or hospital• Speedy delivery of diagnostic test results• Ability for two or more people to work with a patient’s record

at the same time• Never need to search for a misplaced or lost patient chart• Summary of patient’s health information available at a glance• Reduced time to refill prescriptions through electronic

prescribing• All information available in one place • Payment for services received more quickly

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1.4 The Medical Documentation and Billing Cycle : Pre-Encounter

• Medical documentation and billing cycle – a 10-step process that results in timely payment for medical services

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1.4 The Medical Documentation and Billing Cycle : Pre-Encounter

• Step 1: Preregister Patients– Gather the following information to preregister patients

before the office visit.• Name• Contact information; address and phone number• Reason for visit • Patient status (new or established)

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1.5 The Medical Documentation and Billing Cycle: Encounter

• Step 2: Establish Financial Responsibility– Determine whether the patient has insurance and

obtain the identification number, plan name, and name of policyholder. If the patient does not have insurance, establish the patient’s planned method of payment.

• Step 3: Check In Patients– A patient information form is a form that includes a

patient’s personal, employment, and insurance data needed to complete an insurance claim.

– Verify identity by photocopying or scanning the patient’s insurance card and photo ID.

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1.5 The Medical Documentation and Billing Cycle: Encounter (continued)

• Step 3: Check in Patients (continued)– Distribute Financial Policy and Privacy Policy.– Collect time-of-service payments.

• Step 4: Review Coding Compliance– Diagnoses and Procedures

• A diagnosis is the physician’s opinion of the nature of the patient’s illness or injury.

• Procedures are the medical services provided.• Coding is the process of translating a description of a

diagnosis or procedure into a standardized code.– A diagnosis code is a standardized value that

represents a patient’s illness, signs, and symptoms.

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• Step 4: Review Coding Compliance (continued)– A procedure code is a code that identifies a medical service

and is obtained using the Current Procedural Terminology (CPT). The CPT is the standard classification system for reporting medical procedures and services.

– HCPCS codes are codes used for supplies, equipment, and services not included in the CPT codes.

– ICD-9-CM is the source of the diagnosis codes used for reporting until October 1, 2014, and ICD-10-CM will be used beginning October 1, 2014.

– An encounter form is a list of common procedures and diagnoses for a patient’s visit.

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• Step 5: Review Billing Compliance– Each charge, or fee, for a visit is represented by a

specific procedure code.– The provider’s fees for service are listed on the

medical practice’s fee schedule.– Medical billers use their knowledge to analyze what

can be billed on healthcare claims.

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• Step 6: Check Out Patients– Medical codes have been assigned and checked.– Types of charges usually collected at the time of

service include:• Previous balance• Copayments or coinsurance• Noncovered services• Charges of nonparticipating providers• Charges for self-pay patients• Deductibles

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1.6 The Medical Documentation and Billing Cycle: Post-Encounter

• Step 7: Prepare and Transmit Claims– Once patient and transaction information is entered

into the PMP, the software is used to create insurance claims.

– A clearinghouse is a company that collects electronic insurance claims from medical practices and forwards the claims to the appropriate health plans.

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1.6 The Medical Documentation and Billing Cycle: Post-Encounter (continued)

• Step 8: Monitor Payer Adjudication– When a claim is received by a payer, it is reviewed

following a process known as adjudication—a series of steps designed to judge whether it should be paid.

– The document explaining the results of the adjudication process is called a remittance advice (RA) or explanation of benefits (EOB).

• Each payment, RA and EOB is checked to see that:– All procedures are listed on the claim.– Unpaid charges are explained.– Codes match the claim.– Payment is as expected.

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1.6 The Medical Documentation and Billing Cycle: Post-Encounter (continued)

• Step 9: Generate Patient Statements– Statements list the services performed and the

remaining balance that is the responsibility of the patient.

• Step 10: Follow Up Payments and Collections– Revenue cycle management is managing the

activities associated with a patient encounter to ensure that the provider receives full payment for services .

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1.7 The Impact of Legislation: HIPAA

• The Health Insurance Portability and Accountability Act of 1996 (HIPAA) contains a number of rules, including:– HIPAA Electronic Transaction and Code Sets

standards– HIPAA Privacy Rule– HIPAA Security Rule– Final Enforcement Rule

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1.7 The Impact of Legislation: HIPAA (continued)

• HIPAA Electronic Transaction and Code Sets standards– These describe an electronic format that providers

and health plans must use to send and receive health care transactions.

– The electronic transmission of data is called electronic data interchange (EDI).

– Payment may be via electronic funds transfer (EFT).

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• Claim Formats– The HIPAA-standard X12-837 Health Care Claim, or

837P for short– The CMS-1500 (08/05) paper claim

• The National Provider Identifier (NPI) is a ten-position numerical identifier consisting of all numbers.

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• HIPAA Privacy Requirements– The HIPAA Privacy Rule protects individually

identifiable information about a patient’s health and payment for healthcare that is created or received by a healthcare provider.

– Rule mandates that• A set of privacy practices are adopted.• Patients are notified about their privacy and how their

information can be used or disclosed.• Employees are trained to understand the privacy practices.• A staff member is appointed as the privacy official.• Patient records that contain health information are secured.

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• Protected health information (PHI) is information about a patient’s health or payment for healthcare that can be used to identify the person.

• The HIPAA Security Rule regulates the protection of individually identifiable information about a patient’s health and payment for healthcare that is created or received by a healthcare provider.

• An Audit Trail is a report that traces who has accessed electronic information, when information was accessed, and whether any information was changed.

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1.8 The Impact of Legislation: HITECH and ACA

• The Health Information Technology For Economic and Clinical Health Act (HITECH) provides financial incentives to physicians and hospitals to adopt EHRs and strengthens HIPAA privacy and security regulations.– Act introduced additional privacy and security

regulations, including:• Breach notification• Monetary penalties• Advanced enforcement

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1.8 The Impact of Legislation: HITECH and ACA (continued)

• Meaningful Use is the utilization of certified EHR technology to improve quality, efficiency, and patient safety in the healthcare system.

• Regional Extension Centers (RECs) are centers that offer information, guidance, training, and support services to providers transitioning to an EHR system.

• A Health Information Exchange (HIE) is a network that enables the sharing of health-related information among provider organizations according to nationally recognized standards.

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• The National Health Information Network (NHIN) is a common platform for health information exchange across the country.

• The Affordable Care Act (ACA) is federal legislation that includes provisions designed to increase access to healthcare, improve the quality of healthcare, and explore new models of delivering and paying for healthcare.

• An accountable care organization (ACO) is a network of doctors and hospitals that shares responsibility for managing the quality and cost of care provided to a group of patients.

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• The patient-centered medical home (PCMH) is a model of primary care that provides comprehensive and timely care to patients, while emphasizing teamwork and patient involvement. – Core Features include

• Personal Physicians• Clinician Directed Medical Practice• Whole Person Orientation• Coordinated/Integrated Care• Quality and Safety• Enhanced Access• Payment

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Documents

CHAPTER © 2013 The McGraw-Hill Companies, Inc. All rights reserved. 1 Introduction to Health Information Technology and Medical Billing