What is the Reimbursement system?

Healthcare Reimbursement is the charging of and receiving payment for provider services rendered to a patient.

History of the US healthcare reimbursement system

In the beginning of the 1900s, patients paid providers directly for services

History of the US healthcare reimbursement system

Health insurance was created in the 1930s.

History of the US healthcare reimbursement system contd

Today, a large percentage of the US population has health insurance through their employer.

Today, many US residents also have health insurance through the government instead of a private company.

What is a provider?
Providers: Are individuals, corporations, institutions, or facilities who are licensed by government to provide medical care, services, goods, and suppliers to patients. Examples of providers: physicians, nurses, hospitals, and nursing homes.

What is a payor?
Payors: A payor is an organization that has contracted with a patient to pay for a patients healthcare services. Payors may be either government agencies or private companies. Private companies who pay for patients healthcare services are called insurance companies. Examples of payors: Medicare, Medicaid, Blue Cross, Blue Shield, and Aetna-US Healthcare, etc.

What is a supplier?

Suppliers: Are organizations that sell healthcare products to providers to be used in the delivery of healthcare. Examples of suppliers: Merck, Johnson & Johnson.

What is a researcher?

Healthcare Researchers: Are persons or organizations that use scientific methods to discover new causes of morbidity, methods of treatment, or ways to avert illness. This research leads to technological advances in the healthcare.

Examples of healthcare researchers: National Institute of Health (NIH), The University of Michigan (U of M), and Pharmacia Corporation.

What is a health Insurance?

With health insurance. A person pays periodic payments (i.e. premium) to an insurance company to cover future medical expenses. The insurance coverage is referred to as an insurance plan. These premium payments allow that person to be enrolled with the company; that person is then referred to as an enrollee, insured, or covered.

How is a provider paid by health insurance?

Clinical and charge information is closed A claim is generated and submitted to the insurance carrier The insurance carrier reviews bill/claim and reimburses provider according to contract or reimbursement agreements

Once patient receives treatment or evaluation, the provider complies diagnostic and insurance information.

Provider receives payment as per contractual or reimbursement arrangement

A Closer look at providers

A Closer look at providers contd

Providers can be: - individuals such as doctors, nurses, or emergency room technicians - Facilities such as hospitals, nursing homes, or ambulatory surgery centers All Providers must be licensed (usually by a state licensing board) to provide medical care, services, goods, and supplies

Three types of provider care

All the various providers are arranged to provide three types of care: - Primary Care: Involves common health problems; accounts for 80-90% of all patient care; usually provided at a physicians private office (e.g. immunizations, sore throat) - Secondary Care: Involves illnesses/sickness that requires somewhat specialized care; usually provided at a local hospital (e.g. stroke, new born delivery) - Tertiary Care: Involves the most complex and/or rare diseases that require the most specialized, provider expertise; usually provided at a university teaching hospital or medical center

One type of individual providers: physicians

In the US, there are two main types of physicians: primary care and specialty care. - Primary Care: A physician who is trained in general medical care and treats routine problems. - Specialty Care: A physician who has more advanced medical training than a primary care physician and is certified to practice in a specific field. A specialist treats complicated medical conditions in his specific area of training and is generally more expensive than a primary care doctor. With certain types of insurance, patients are required to first see a primary care physician before the patient can see a specialist. In these cases, the primary care physician serves as the initial contact between a patient and the medical

Types of facility providers

Because the CBO primarily is contracted by facility providers, the training will focus on these The following list contains the most common facility providers in the US: - Hospitals - Ambulatory Surgery Center - Skilled Nursing Facility - Home Health - Hospice

What is a hospital?

A facility that provides the most comprehensive and intensive medical services available Two main types of hospitals - Acute: Serves patients on a short term basis (Example: childrens, adult, and specialty hospitals) - Chronic: Serves patients on a long term basis (Example: Skilled nursing, rehabilitative hospital)

What is a hospital contd?

Three types of care are extended at hospitals:

- Inpatient: a person who is admitted to the hospital so that he may receive care overnight - Outpatient: a person who receives hospital services but does not need to receive care overnight; because care is not needed overnight, outpatients are not admitted - Emergency: a person who requires immediate service because their illness is severe of life-threatening

What is an Ambulatory Surgery Center?

A freestanding facility, other than a physicians office, that operates exclusively to provide surgical services to patients who do not require hospitalization. These centers may either be affiliated with a hospital or have no affiliation with a hospital.

What is a Skilled Nursing Facility (SNF)?

A facility that primarily provides inpatient, skilled nursing care and related services to patients at a lesser intensity than an acute facility (i.e. hospital). SNFs are used for patients who need medical, nursing care, or rehabilitation services. Patients are usually treated on a long-term basis, and care is usually less expensive than in a hospital. The most common SNF facility is a nursing home.

What is home health?

Services (medical and nonmedical) provided to patients and their families in their home or place or residence. Home health is more a type of care than a facility where care takes place because services are provided at a patients home.

What is Hospice?

A facility, other than patients home, in which palliative and supportive care are provided to terminally ill patients and their families. Hospices can be hospital-based or free-standing. Only terminally ill patients are eligible for hospice care. Hospices emphasize counseling, pain relief, and symptom management. Treatment of the terminal illness ceases when a patient chooses hospice care; only symptom management remains and treatments for any other illness besides the one causing death.

A Closer look at payors

A closer look at payors contd

Payors are third parties who pays for most, if not all, of an enrollees healthcare through direct payments to the enrollees provider. Payors helps individuals reduce personal financial risk. Payors may be either private companies or government agencies Each payor has its own set of covered benefits, payment mechanism, and regulations.

Types of payors

The following list shows the most common payors with which the CBO works:
Medicare Medicaid Commercial insurance companies Managed Care companies Blue Cross Blue Shield organizations No fault/Liability Workers Compensation

What is Medicare?

Medicare is a US federal government program which pays for certain healthcare services for: - persons 65 years and over, - disabled, or - diagnosed with permanent kidney failure. - Persons with AIDS Because many US employees stop working between age 62-65, Medicare mostly insures those no longer eligible for an employers health coverage.

Medicare contd

Medicare is funded in various ways - Part A funded by employer/employee taxes

(i.e. a beneficiary and/or a beneficiarys spouse must have paid a certain level of social security taxes or premiums for at least 10 years) - Part B is funded by premiums paid by those eligible for Part A

Medicare originated from a federal law, Title XVIII of the Social Security Act - Thus, improper billing is a federal
violation!!!

Medicare contd
Medicare consists of two parts: Part A and Part B

Part A

- Supplementary medical insurance Hospital insurancethat planpays for physician services financed mostly through and other services not covered taxes on employers and Part A. Persons who under employees. Persons qualify for Medicare do not who qualify for automatically receive Part B Medicare receive Part A individuals must purchase these automatically (they Part B. dont need to purchase Part A)

Part B

Persons who have both Part A and Part B coverage will still not have all possible healthcare services covered. At time, Medicare enrollees will also purchase additional insurance from a private company to fill in the gaps of Medicare coverage. This additional insurance is called Medigap.

Medicare contd
Medicare Managed Care (Medicare Part C) Insurance plan provided by private organizations. Need to purchase this plan. Covers services that are covered by Part A, Part B and more (i.e. Prescription drugs, Eye glasses, Dental care and Hearing aids)

Medicaid

Originate from Title XIX of SSA of 1965 Federal-State matching entitlement program that pays for medical assistance for certain vulnerable and needy individuals and families with low incomes and resources Medicaid is funded by state and federal taxes Within certain federal guidelines, each state operates its own Medicaid program. Thus, each states Medicaid program has its own features, benefits, costs, and regulations.

Medicaid contd

Medicaid does not provide medical assistance for all poor persons Eligibility depends on a familys income Family income vs. Federal Poverty Level (FPL), for 2000 is $17,050 for a family of 4 members Generally state offers coverage to one or more of the following groups: - Mandatory - Categorically Needy - Medically Needy

Medicaid contd

Mandatory
To be eligible for federal funds, States are required to provide Medicaid coverage for certain individuals and/or groups of people, examples of mandatory cases are:
Recipients of Aid to Families with Dependant Children (AFDC) Children under six who meet the states AFDC requirements of whose family income is at or below 133% of the FPL ($22,676.50) Pregnant woman whose family income is below 133% FPL Recipients of Supplemental Security Income

Medicaid contd

Categorically needy
- Represent same conditions or problems addressed on the mandatory eligibles but have higher income - States are not required to offer Medicaid coverage to this group

Medically needy
- Persons who have significant healthcare expenses but have family income in excess of whats allowed under the mandatory or categorically needy guidelines - When the medical expenses are subtrate from the family income, the remaining income would qualify for Medicaid - States are not required to offer Medicaid

Medicaid contd

Medicaid Coverage
-

Medical coverage has mandatory and optional services that may vary from state to state - State may limit the amount and duration of services offered - Coverage can go back up to the third month prior to the application

Payment for Medicaid Services

- State may pay providers directly or through prepayment arrangement (HMO) - Provider must accept Medicaid payment rates as payment in full - State can impose nominal deductible, coinsurance and/or co-payments on some Medicaid recipients for certain services

New Jersey Medicaid Program

Has the three basic categories; Mandatory, Categorically and Medically Needy 1st two are considered regular components - Pregnant woman with family income below 185% FPL - Aged people (> or = 65 y/o), blind, permanent or totally disable with family income below 100% FPL Services and coverage depends on Medicaid category (regular vs. medically needy) Fiscal Intermediary process the claim (UNISYS)

New Jersey Medicaid Program

Billing guidelines may vary from state to state. In NJ there are some cases that are required to be billed on hardcopy Timely filing may also vary from state to state. The time limit for NJ Medicaid is:

- 1 year of the date of discharge from an IP or OP claim - 1 year of the earliest date on OP recurrent accounts - 30 days from the date of service for participants of Early & Periodic Screening, Diagnosis and Treatment Program (ESPDT) and Pediatric Health Start

What is Commercial insurance?

1.

Commercial insurance has two meanings: 1. Type of company 2. Type of plan offered by company Are private, for-profit (those companies whose goal is to Commercial insurance company (i.e. carrier)

make money) companies. Offer more than just health insurance; they may also offer auto, life, home, etc Commercial insurance is financed by enrollee premiums.

What is Commercial insurance contd

2.
Commercial insurance plan (i.e. indemnity) - Typically, the insurance co. will pay 80% of a claim while the patient pays 20%; another common arrangement is where company pays 70% of claim while the patient pays 30% - Two types of commercial plans: Group and Individual Group plans: When the same type of commercial plan is collectively purchased by a group of people. Group insurance is usually purchased by employers for their employees Individual plans: When a commercial insurance is purchased by only one person

What is Managed Care?

Managed Care also has two meanings:

1. Type of company 2. Type of plan offered by company

Managed Care Companies - Are both for-profit and non-profit companies - Offer only managed care plans - Also financed by premiums and sell both group and individual plans.

What is Managed Care? contd

2.

Managed Care Plan

Managed care is different from Commercial insurance because it attempts to manage a persons care by restricting the providers an enrollee can visit. Managed care usually has cheaper premiums than Commercial Insurance. In general, managed care pays a larger portion of a patients bill than commercial insurance by limiting a patients choice in providers to those providers who discount services

What is the reimbursement system?

Healthcare Reimbursement is the charging of and receiving payment for provider services rendered to a patient.

Managed Care contd

There are three common types of managed care plans: - Health Maintenance Organization (HMO) plans - Point of Service Organization (POS) plan - Preferred Provider Organizations (PPO) plans Other types of plans exist but are beyond the scope of training Each type of plan has a different balance of patients choice in providers versus a patients cost for the plan. In general, the more choice a patient has in which provider he can see, the more expensive the plan.

Managed Care: HMO

A Health Maintenance Organization (HMO) consists of a network of physicians, hospitals, and other healthcare providers that have contracted with an insurance company to manage an enrollees care Services rendered by providers outside of the network are not eligible for coverage With an HMO, a patient care must first seek care from a primary care physician (PCP); the PCP then manages the patients care and may refer that patient to other providers if necessary. HMOs are generally the least expensive managed care plan for enrollees because this type of plan has the most restrictions on provider choice.

Managed Care: POS

In a Point of Service plan, patients have the option of using in-network providers (like an HMO) or out-of-network providers (like a PPO-discussed next). A POS plan will reimburse services received from in-network providers at a higher rate than out-of-network providers If the patient remains in-network, the patient must still use a PCP to coordinate care; a patient who seeks out-of-network care does not need to go through a PCP This form of managed care offers more provider choice than an HMO and less provider choice than a PPO; for this reason, this plan generally costs between what is charged for an HMO or PPO.

Managed Care: PPO

A Preferred Provider Organization (PPO) is made up of a group of providers who have simply agreed to discount their services for a specific insurance plan; this provider group is generally much larger than the network in an HMO and POS. With PPOs, a patients care is not managed by a PCP or even the group of providers; a patient can see any physician he wants to among the providers offering discounts. Out of all managed care plans, PPOs give patients the most choice in which providers they can use; for this reason, PPOs are usually the most expensive managed care plan.

Managed Care
PCP
HMO POS x X (if in network) X (at a lesser reimburseme nt)

Out of Network

PPO

What is Blue Cross Blue Shield (BCBS)?

Blue Cross Blue Shield (BCBS) is a not-forprofit entity that offers health insurance through more than 70 different organizations locating in every state. Within general guidelines, each individual organization operates as a separate company with its own benefits and payment policies. BCBS offers both individual and group plans; BCBS also offers commercial and managed care plans (although BCBS is not a commercial managed care company BCBS was one of the first private health insurance organizations; therefore, it has a large enrollee population.

What is No Fault/Liability?

No Fault

Liability

- Insurance system in some states whereby automobile accident victims who need medical care automatically receive coverage from their automobile insurance carrier - No Fault is governed by state governments; for this reason, each state has its own coverage stipulations and regulations.

- Insurance system that provides personal injury or medical expense coverage through automobile, homeowner, or property insurance

What is Workers Compensation?

Workers Compensation is an insurance system for employees who have become ill or injured from their job. Employees are eligible to receive a percentage of their wages and medical care depending on the time needed before they can work again and the extent of medical treatment needed. Workers Compensation is funded by employer taxes; employees cannot be charged any premiums Workers Compensation is required by the government but varies by state; each state has its own regulations governing the Workers Compensation system in that state.

Healthcare Payment Systems:

Payment Basics

Payors pay providers according to a contract that they both have signed; in absence of a contract, reimbursement is based on 100% of billed charges With rising healthcare costs, payors are constantly seeking payment methods which encourage providers to reduce healthcare expenses. Providers are constantly seek payment methods which cover their costs of service and allow them to treat patients according to whats medically necessary (but not necessarily less expensive)

Payment Basics contd

In general, payors use the following four bases to calculate provider payments.
Charges Cost Flat Rate Capitation

Contractual Terms

In addition to the different payments methodologies agreed we will also find in the contracts key contractual terms or elements that may affect the follow up and collection process. Some of these are:
Mother baby clause Commercial vs. Managed Care rates Carve outs Level of Accommodations Prompt payment discounts

Contractual Terms cont.

Bundled physician rates (global payment) Approved amount Time Limit Explanation of Benefits (EOBs) Remittance Advice (RA) Contractual Allowance Bill Hold DNFB Stop Loss Clause Auto renewal clause

Contractual Terms cont.

Pre-certification/Authorization Co-insurance Co-payment Deductible Referral Premiums Payments Settlement Payment Mechanism Reimbursement Methodology Bundling Coordination of Benefits

Patient Payments

While payors cover the majority of an enrollees cost of health care, patients are sometimes responsible for paying some of the cost. Common patient responsibilities: - Premium: the regular payment a person makes to an insurance company to obtain health coverage - Deductible: a fixed amount per contractual period that a patient pays before health insurance will begin to pay; this is only paid if provider for specific services - Copayment: a small, fixed amount a patient directly pays a provider for specific services - Coinsurance: a fixed percentage a patient pays for services received after a deductible and

Hospital Revenue

Revenue

The term revenue means amounts earned by an organization from the provision of service or sale of goods. Because the CBO primarily has hospital clients, training will focus on hospital revenue. Thus, hospital revenue includes money the hospital earns from patient care. To earn revenue, a series of tasks must be performed; this series of tasks is termed the revenue generation cycle.

Admission/Registration

Admission/Registration is the point of entry for a hospital. This department - Admits patients into the hospital and/or registers them for specific services - Collects patient insurance and other information, authorizations, and referrals so that hospital services will be covered - Performs processes before a patient is admitted or receives services in most cases The information collected from patients at this department are using in billing

Eligibility Determination

This department verifies the accuracy of the patients information, particularly regarding insurance. The department may contact an insurance company or check a companys enrolled file to verify that a future patient is covered for expected services. For patients without insurance, hospitals will work with patients to find appropriate coverage.

Charge Capture

After a patient has received hospital services, charge capture is the point where charges for services rendered are compiled. Hospitals do this through a Charge Description Master (CDM). - A CDM assigns a charge, description, and appropriate codes to every service, supply, or procedure performed by a hospital. In essence, the CDM is how a hospital tracks what services it has rendered and how much money it has earned (before adjustments).

Utilization management is responsible for: - Certification of Admissions - LOS Monitoring - Utilization Monitoring - Discharge Planning Utilization review may be done while a patient is receiving services (i.e. concurrently) or after a patient has completed receiving services (i.e. retrospectively). These services are performed to insure - That a patient can continue recommended care (if care has not been completed) - That a patients insurance will reimburse

Utilization Management & Case Management

Utilization Management & Case Management cont.

With the creation of the Managed Care Programs the Utilization Management activities are required to be monitored daily in coordination with the Payors Case Manager (management of patient care) At the end of each IP admission the Case Management Department will know the LOS approved and the level of accommodation approved per case. This information must be provided to the Patient Accounts Department in order to validate the appropriateness of the payment

Medical Records

Medical Records is the point where codes are assigned to all hospital services provided (ICD-9-CM and HCPCS) These codes are used by payors to determine the cause of illness, the necessity of care, and how much a provider should be paid. Assigning the appropriate codes is extremely important as it has a direct effect on how much a hospital will be paid.

Billing

After a patient has completed care and codes have been assigned to a patients account, the billing department assigns charges, (according to specific contractual agreements) sends out the bill, and follows the bill until payment is received or other final action is taken. The billing department insures that bills (i.e. claims) are sent out correctly and that payors appropriately process claims.This the part of the revenue cycle that the CBO performs!

Collections

If a bill has been sent but payment has not been received for an extended period of time, Collections attempts to find this revenue. Collection processes may be performed by the hospital or an outside entity with which the hospital contracted. Collections enter into the revenue cycle for claims that have not been paid after an extended period; most hospital claims are paid before Collection processes are needed.

Collections cont.

Tools and CBO relation - A/R work station - EOBs - Rejection reports Failed bill report Scrubbing systems Clearing House Payors - Correspondence