Compliance and Regulatory

Objectives:
Introduction to Medical Billing
- Medical billing cycle
- Provider types
- Insurances
Billing terminologies
-COBRA act
-Stark act
-Code sets
- HIPAA
Medical billing:
Medical billing is the process of submitting and following up on claims with health
insurance companies in order to receive payment for services rendered by a healthcare
provider.
Term Explanation
Patient A person who receives health care services
Provider A person or entity which provides medical services
Insurance or anyone who pays for the medical
Payer service
Insured A person who is covered by insurance
Insurer Insurance company
Subscriber/Policy holder Owner of the policy
Family member covered under the subscribers
Dependent policy
Participating provider A provider who has a contract with the insurance
Non- participating A provider who does not have a contract with the
provider insurance
Client Customer
Sub-client Our client's client
Introduction to US Healthcare
◦ The payer provides coverage to the patient for a particular period, particular amount,
particular type of medical conditions and treatments.

◦ Insurance will process the claims and make payment to the provider based on the
patient’s coverage.

◦ Patient pays the premium to the payer to get the policy coverage from the payer.

◦ For patient’s who have insurance coverage, providers will submit the claim to the
patient’s insurance.
 Payer

Provide
Patient
r
Revenue Cycle Management
◦ Revenue Cycle Management is a term that includes the entire life of a patient account
from creation to payment.

◦ Revenue cycle includes various processes that flow into and affect one another.
◦ The process includes keeping track of claims in the system, making sure payments are
collected and addressing denied claims, which can cause upto 90 percent of missed
revenue opportunity.
◦ RCM encompasses everything from determining patient insurance eligibility and
property coding claims.
Components of medical billing
The US Medical Billing industry comprises of the following major components:
◦ Providers and patient
◦ Insurance companies
◦ Billing office
◦ Transcription agencies
◦ Coding companies
◦ Clearing houses
◦ Federal Government Bodies
Process involved in billing cycle:

Patient: A person receiving or registered to receive medical treatment.

Demo info: Demographic information is the data about the patient such as the
Patient’s name, address, phone number, date of birth, sex, religion and employer.

File transfer protocol: It is a standard network protocol used to transfer files from one host to
another over a transmission control protocol based network such as internet.

Provider: Who helps in identifying or preventing or treating illness or disability.

Assignment Of Benefits (AOB): An arrangement by which a patient requests that their
health benefit payments be made directly to a designated person or facility, such as
physician or hospital.

Demo info: Release of information: An arrangement by which a patient authorises the

release of his/her medical information to insurance or billing companies.

Transcription: Medical transcription or MT is an allied health profession, which deals in

the process of transcription or converting voice recorded reports as dictated by
physicians or other healthcare professionals into text format.
Process involved in Billing cycle
Coding:
Assigning numerical form for the diagnosis and service rendered by the
provider/physician. Converting a physician’s encounter to those codes allows a
physician or hospital to bill the payer, for the services rendered upon him.

Charge Entry:
Charge entry is entering any information received from the Physician’s office onto the
medical billing software’s base.

Clearing House:
It is a private or public company that provides connectivity and often serves as a
middleman between physicians and billing entities, payers and other health care
partners for transmission and translation of claims information into the specific format
required by the payers.
Adjudication:
Claims adjudication is a term used in the insurance industry to refer to the process of
paying claims submitted or denying them after comparing claims to the benefit or
coverage requirements.

Cash posting:
Posting of the payment details contained in the explanation of the benefits.

Accounts Receivable:
Accounts receivable are money owned on patient accounts to be payable by insurance
companies or the patients.
Provider types

Primary Care Provider or Physician (PCP):

PCP serves as a gatekeeper into a managed health care system and usually specialises
in family medicine, internal medicine, pediatric medicine or obstetrics and gynecology.

Physician extender:
Physician extender pertains to providers such as nurse practitioners (NP), advanced
practice registered nurses (APRN), Physician assistant (PA) and clinical nurse specialists
(CNS). They work along with physicians to deliver health care services, with medical
direction and appropriate supervision as required by the law of the state in which the
services are furnished.
Non participating provider or non par:
Non participating provider describes a provider who elects not to participate with a
given health care plan. Non par providers have declined entering into a contract with
your insurance company. One reason may be the fee offered by your carrier is less than
what they are willing or able to accept.

Participating provider or Par provider:

Participating provider or par provider is contracted with a third party payer to
participate with the policies, procedures and fees for a healthy plan.
Par providers are healthcare providers who have entered into an agreement with your
insurance carrier. Your insurance carrier agrees to direct clients to the provider and in
exchange, the provider accepts a lower fee for their services.
How it works:
Again we will use the example of your unfortunate skiing accident. Let’s look at your
orthopedic surgeon’s clinic. He/she has submitted a claim for what she/he feels is a
reasonable rate of $7500 for surgery. Because he/she has a contract with your
insurance company, he/she can pay only change $5000.

You might wonder what happens to the remaining $2500. Will the surgeon expect you
to pick of the remainder of the claim? The surgeon may want you to pick up the
remaining $2500 but, because of the contract in place, he/she is not able to back bill
you for the remaining amount.
What happens if you decide to use a non participating provider ?
Continuing with the example of your skiing accident, we will look at the claim for the
company that provided you with your cane, wheelchair and commode (durable medical
equipment also known as DME).

In this case, the company did not have a contract with your insurance carrier. They
submit a claim totaling $2500. Your insurance provider researches their charges and
determines the usual and customary amount to charge for the equipment provided is
$1500.
Because you used a non-contracting or non-participating provider, your insurance carrier
will only be responsible for 50% of the usual and customary amount of $1500 instead of
the 75%. It would have paid if you used a participating provider. The total amount paid
by your insurance carrier is $750, half of the usual and customary rate of $1500.

After receiving your insurance company’s co-payment, the DME provider submits their
bill to you for the remaining $1750 (the 50% co-payment of $750 plus the $1000 above
the usual and customary rate. Because they are not contracted with your provider, you
are not protected from the agency going back to bill you for the amount over what is
considered usual and customary.
Traditional health
care insurance

Traditional health care plans

allow you to choose any doctor
(some specialists may require
pre-approval), but the patient
pays more out of pocket
expenses (co-pays and
deductibles).
Managed care organisation
Managed care organization:
◦ A general term that refers to health plans that attempt to control the cost and quality of
care by co-ordinating medical and other health related services.
◦ Responsible for health care services to an enrolled group or person.
◦ Coordinate various health care services
◦ Negotiate with providers and groups
Comparison
Traditional Care Managed care
◦ No network benefits ◦ Network benefits available
◦ No PCP referral required ◦ PCP referral required
◦ Optional- Preventive care program ◦ Mandatory- Preventive care Program
Types of managed care
Health Maintenance Organization (HMO):
◦ Refers to a health care plan where all care is guided by a primary care physician (PCP).
◦ Assigned physician that acts as a gate keeper to refer patient outside organization.
◦ Out of pocket expenses are minimal.

Preferred Provider Organizatin (PPO):

◦ PPO is one that contracts with physician to provide services at a reduced rate in
exchange for patient volume associated with the organization.
◦ Patients must use a provider in the PPO network or be subject to higher out of pocket
expenses.
Point of Service (POS):
◦ In network or out of network providers may be used.
◦ Benefits are paid at a higher rate to in-network providers.
◦ Subscribers are not limited to providers, but to amount covered by plan.

Exclusive Provider Organisation (EPO):

◦ A managed care plan where services are covered only if you go to doctors, specialist,
or hospitals in the plan’s network (except in an emergency).
◦ It involves a network of medical care providers, which provide healthcare to the
subscribers of the health insurer, wherein the subsribers are required to chose a
primary care physician from within the network.
◦ EPO’s are beneficial because of their cost effectiveness, since the insurer can
negotiate low premiums and co-payments with their providers based on the
guarantee that policy holders will visit network doctors only.
 4 block comparison
Features HMO POS PPO EPO

Individual
Type Individual plan plan Group plan Group plan

No PCP and No PCP and

PCP and Need PCP and Need PCP referral referral
referral referral and referral required required

No out of Have out of Have out of No out of

Network network network network network
benefits benefits benefits benefits benefits
Insurance
Federal Insurance- Government insurance
Examples for federal insurance are Medicare, Medicaid, CHAMPVA, CHAMPUS

Non Federal Insurance- Private Insurance

Examples for private insurance are BCBS, Aetna, WC
MEDICARE
Medicare:
◦ A federal insurance program which primarily serves those over 65 years or disabled
people and people with End- Stage Renal Disease
(permanent kidney failure treated with dialysis or a transplant).
◦ CMS administers the Medicare program and works in partnership with states to
administer the Medicaid and State Children’s Health Insurance Program (SCHIP).
◦ The agency also oversees health related federal level legislation such as aspects of
the Health Insurance Portability and Accountability Act (HIPAA) of 1996.
Types of Medicare Coverage
Medicare part A:
◦ Pays for inpatient hospitalization, many outpatient services and procedures, skilled
nursing facility care and home health care.
◦ A local Medicare Fiscal Intermediary administers the funds for this program.

Medicare part B:
◦ Pays for outpatient and provider services.
◦ A local or regional Part B Medicare carrier will administer payment for Medicare Part B
claims.
Medicare part C:
◦ It is also known as Medicare Advantage.
◦ Beneficiaries entitled to Medicare part A and B are eligible to switch to a Medicare
Advantage Plan, provided the beneficiary resides in the plan’s service area.

Medicare part D:
◦ Medicare part D is the prescription drug benefit.
◦ The decision to sign up for Medicare prescription drug coverage depends on how the
beneficiary pays for prescription drugs and the type of Medicare coverage.
 Medicare Physician Fee Schedule

◦ Medicare physician fee schedule lists all of the fees associated with the services
rendered by the providers.
◦ The fee schedule is based on the resources required to provide the services.
◦ There are three units to a physician’s services and each one is called
Relative Value Unit (RVU).
◦ The three units are physician work expense, practice expense and professional liability
insurance.
◦ These three values are added together and adjusted using the Geographic Practice Cost
Indices (GPCI) assigned by CMS for the geographic location where the services are
rendered.
◦ The final outcome is multiplied by a national conversion factor (CF) to arrive at the
amount that CMS will pay for each service under the fee schedule.
Officiating Office

US congress

Department of
Health and
Human services
(DHHS)

Center for
Social Security Railroad
Medicare and
Administration Retirement
Medicaid
(SSA) Board (RRB)
Services (CMS)
◦ DHS delegated to CMS
◦ CMS runs Medicare and Medicaid
◦ CMS delegates daily operations to Medicare Administrative Contractors (MAC) or fiscal
intermediaries (FI).
◦ MAC/FI are usually insurance companies.
Funding for Medicare:
◦ Social security taxes
◦ Equal match from government
◦ CMS sends money to MAC/FI.
◦ MAC/FI handle paperwork and pay claims.

Medicare coverage:
◦ Medical necessity and frequency limitations are defined in
LCD- Local coverage determination
NCD- National coverage determination
◦ Beneficiary pays:
Part B- 20% of Medicare approved amount after deductible is met
Part A- deductible for service rendered
◦ Medicare pays:
Part B – 80% of Medicare allowed amount for covered services
Part A- All covered costs except deductibles
Forms:
◦ CMS-1500 form is a standardized medical claim form used for submitting Medicare part
B charges to third party payers for physician’s and other provider’s services, procedures
and allied supplies.
◦ UB-04 or CMS-1450 is the paper claim form for inpatient billing.
Types of claims:
A) Paper claims:
They have standard formats prescribed by CMS, namely,
Physician’s claims – CMS 1500
Hospital claims- UB 04
B) Electronic claims:
NSF- National Standard Format- Limited by carrying capacity
ANSI- American National Standard Institute- Flexible format
MEDICAID
Medicaid:
It is a national health care program. It helps pay for medical services for low income
people.

Medicaid Eligibility:
◦ Below poverty line- Low income group
◦ Blind aged- People who are 65 and are older.
◦ Disabled- People who are unable to work due to a serious physical or mental condition
that has lasted, or is expected to last, 12 months or longer.
◦ Widower age 50 to 65- Includes recipients of Social Security Widower Insurance benefits
who do not receive Medicare.
◦ Aid to families with dependent children medically needy (AFDC-MN)
Aid to families with dependent
children medically needy (AFDC-MN)
◦ AFDC was a federal assistance program created by social security act and
administered by the US- DHHS that provide financial assistance to children of single
parents or whose families had low or no income.
◦ AFDC provides assistance to support children who had lose one or both parents to
death, disability etc.,
◦ AFDC was replaced by TANF.
◦ TANF- Temporary assistance for needy families
CHAMPUS
◦ Civilian Health and Medical program
of the uniformed services.
◦ Insurance linked to military services,
also known as Tricare.
◦ CHAMPUS is a health care benefits
program for active duty and retired
members of the military.
CHAMPVA
The civilian health and medical program of the department of veterans affairs
(CHAMPVA) is a health care benefits program for permanently disabled veterans an
their dependants.

Eligibility:
A) You are the spouse or child of a veteran who has a 100% rating for a service
connected disability.
B) You are the spouse or child of a veteran who died from a service connected
disability that had been VA rated.
Comparison
CHAMPUS CHAMPVA
◦ Medical insurance program through ◦ Medical Insurance Program through
department of defense. VA.
◦ Must be active or retired military ◦ Cannot be retired military.
◦ Must be enrolled in DEERS (Defense ◦ No DEERS enrolment for CHAMPVA.
Enrollment Eligibility Report System) ◦ Veteran must be 100% service
◦ No disability criteria to be eligible. disabled or died on active duty, or
◦ Spouse and dependent children are died as a result of SC disability.
eligible to participate in the program. ◦ Spouse and dependent children are
eligible to participate in the program.
DEERS
Defence Enrolment Eligibility Reporting System:

◦ Automated system of verification of a person’s eligibility to receive uniformed

service benefits and privileges.
◦ DEERS records and tracks the eligibility of military benefits, including TRICARE, for
active duty and retired service members and their eligible dependents.
◦ Service members are automatically enrolled in the system.
◦ Dependents must be manually enrolled and all changes in eligibility tracked.
Medigap Insurance:
◦ Privately purchased individual or group health insurance policies designed to
supplement Medicare coverage.
◦ Benefits may include payment of Medicare deductibles, co-insurance and balance bills,
as well as payment for services not covered by Medicare.

Workers compensation:
◦ Insurance coverage provided by employers to cover employees injured on the job
 Birthday rule
◦ Used to determine coordination of benefits (primary or secondary) for children.
Insurance’s only use the month and day to determine coverage.
◦ The listed below are few examples:
1. Parents are married, the insurance of the parent whose birthday occurs first in a
calendar year is primary, while the other parent’s coverage would be secondary.
2. If the parents have the same birthday, the parent who has had their insurance plan the
longest would be considered primary.
COBRA ACT
◦ Consolidated Omnibus Budget Reconciliation Act (COBRA) is a federal law that
allows a worker to continue to purchase employer paid health insurance for upto
18 months if he/she lose the job or the coverage is otherwise terminated.

◦ The important rule is that the employee must continue to pay the premiums that
the employer paid.
Skilled Nursing Facility (SNF):
A facility, either free- standing or part of a hospital, that accepts patients seeking
rehabilitation and medical care that is less intense than that received in hospital.

Centers for Medicare and Medicaid Services (CMS):

US federal agency which administers Medicare, Medicaid and the State Children’s
Health Insurance Program. CMS provide health insurance for over 74 million Americans
through these programs.
UPIN
◦ A Medicare UPIN (Unique Phyisician Identification Number) is a national identification
number which will remain the same no matter where the provider practices, any
healthcare provider who has enrolled with Medicare will only have one UPIN.
◦ This is issued by Medicare for each provider.

PIN
◦ A PIN (Provider Identification Number) is a number that links the provider to the
healthcare institution in which they practice. If a provider sees patient at multiple
separate institutions, they will have multiple PINS.
◦ Issued by institutions where they work.
NPI
◦ A National Provider Identifier or NPI is a unique 10 digit identification number issued
to health care providers in the United States by the CMS and NPPES (National Plan
Provider enumeration System).
◦ UPINS were discontinued in the second quarter of 2007 and are replaced by National
Provider Identifier or NPI numbers.
◦ Block 17b on CMS-1500

Social Security Number (SSN)

◦ In the United States, a SSN is a 9 digit number issued to citizens.
◦ The first three digit field is called the area number. The central, tow digit field is
called the group number. The final four digit field is called the serial number.
Code sets
◦ Code sets are the codes used to identify specific diagnosis and clinical procedures on
claims and encounter forms.

Current Procedural Terminology:

◦ CPT is published by American Medical Association and is a collection of descriptions
that depicts the various medical services available.
◦ A comprehensive review of CPT that includes history, structure, coding conventions and
coding concepts is included in this program.

Current Dental Terminology:

◦ CDT refers to the codes used by dental offices to submit and process dental claims.
ICD -10- CM:
◦ International Classification of Diseases 10th Revision Clinical Modification is an
international coding classification for diseases, anomalies, syndromes, external causes
of injury, chemical imbalances, genetic illnesses and administrative reasons for an
encounter with health care.
◦ The National Center for Health Statistics (NCHS) and the clinical modification (CM) to
ICD-10-CM for use in the United States.

Healthcare Common Procedure Coding System:

◦ HCPCS also known as Level II codes was created to describe supplies, procedures and
services that may not be found in level I CPT and to provider greater specificity of
descriptions.
Diagnostic and Statistical Manual of Mental Disorders, Fourth Edition:
◦ Published by American psychological Association.
◦ The code set classifies mental disorders and addictions ins greater clinical detail than
what is provided in ICD-10-CM.
◦ The acronym DSM-IV refers to Diagnostic and Statistical Manual of Mental Disorder,
fourth edition.

Advanced Billing Contract Codes:

◦ ABC codes are alphanumeric representations of alternative medicine, nursing and other
integrative health care inventions.
◦ The codes describe health care interventions in a detail not available in CPT.
◦ The codes address alternative medicine therapies including acupuncture, herbal
medicince, massage therapy, bodywork, naturopathy, ayurvedic medicine, chiropractic,
homeopathy, nursing and midwifery.
Diagnosis related group (DRG):
◦ It is a patient classification system adopted on the basis of diagnosis consisting of
distinct groupings.
◦ It is a scheme that provides a means for relating the type of patients a hospital treats
with the costs incurred by the hospital.
◦ DRG are based upon the patient’s principal diagnosis, ICD diagnosis, gender, age, sex,
treatment procedure, discharge status, and the presence of complications or
comorbidities.
◦ It is a system developed for Medicare as part of the prospective payment system that
utilizes a predetermined rate per case or type of discharge.
◦ DRGs have been used in the US in inpatient hospital discharge and the emergency
department encounter to determine how much medicare pays the hospital, since
patients within each category are similar clinically and some groups of patients having
common demographic, diagnostic, and therapeutic attributes use the same level of
hospital resources.
Fraud
◦ Fraud is an international representation that an individual knows to be false or does not
believe to be true despite understanding that the representation could result in some
unauthorised benefit to himself/herself or some other person.
◦ The most frequent kind of fraud arises from a false statement or misrepresentation
that allows the provider to collect reimbursement from Medicare that he or she is not
justified to collect.
◦ The other violations coming under the classification of fraud are:
-Offering or acceptance of kickbacks
-Routine waiver of copayments
-Fraudulent coding activities including unbundling, down coding and upcoding.
Abuse
◦ Abuse is the term associated with providers whose medical, business or fiscal practices
fall outside parameters that may result in the services not being considered medically
necessary.
◦ Unlike fraud which involves an intentional deception or misrepresentation, abuse occurs
when physician provides or suppliers mistakenly bill for items or services that should
not be paid.
◦ It generally involves impropriety and lack of medical necessity for services provided.
False Claims Act
◦ The False Claims Act imposes civil liability on any person or entity submitting a false or
fraudulent claim for payment to the United States government.
◦ It allows an individual (whistle blower) who knows about a person or entity who is
submitting false claims to bring a suit on behalf of the government and to share in the
damages recovered as a result of the suit. The whistle blower bringing in the case is
called a “qui tam” relater.
◦ It is also called as Lincoln Law.
Auditing Medical Records
◦ An audit is an action of comparing physician records, claims and medical records to
verify expected treatment outcomes, medical necessity of services, appropriate
documentation to support fees, and reasonable charges for services rendered.
◦ The OIG, Medicare, Medicaid or other insurance carries may contact audits.
◦ Prospective audit- auditing patient records against proposed medical information.
◦ Retrospective audit- (post payment audit) auditing paid claims
Regulatory Practices
◦ The office of Inspector General (IOG) of the HHS is mandated by public law to engage
in activities to test the efficiency and economy of government programs to include
investigation of suspected health care fraud or abuse.
◦ The OIG publishes OIG voluntary compliance programs to help physicians and other
entities adhere to health care regulations.
◦ The operation Restore Trust (ORT) program, launched in May of1995, was an effort to
restore integrity in the Medicare program.
◦ ORT was designed to demonstrate new partnerships and approaches in finding and
shipping fraud and waste in the Medicare and Medicaid Programs.
◦ Its mission was to identify and penalize those who wilfully defraud the Medicare and
Medicaid programs.
OIG Work Plan:
◦ It describes the various project areas that are perceived as critical to the mission of
the DHHS.
◦ The work plan assists the HHS in pursuing criminal convictions by recovering
maximum dollar amounts through judicial and administrative methods.
◦ OIG work plans particularly reviews Part B reimbursement methodology and reviews
the adequacy of part B payments, both in general and under the average sales price
methodology used for computing drug costs under the Part D Medicare Program.
Omnibus Budget Reconciliation Act of 1989:
◦ It replaced the reasonable charge payment mechanism with a fee schedule for
physician services.
◦ This payment approach requires the establishment of national conversion factor.
◦ It requires Secretary of Health and Human Services to recommend the CF by April 15 th
for the following calendar year.
◦ This federal law gives additional COBRA continuation to those deemed disabled when
they first qualified. This extends group health coverage from 18 months to 29 months
post their employment.
Stark Law:
◦ Stark law refers to legislation regarding financial kick backs between hospitals and
providers for referrals(vendors and providers).
◦ Kick back is financial inducement or reward for sending business to either a provider
and a hospital, or a provider and DME supplier, or a provider to provider situation.
◦ For example, if a physician sends all of his patients to one certain hospital supply store
and gets 10 percent cash back on all sales that result from his referrals, this situation is
considered as kick back.
◦ Preventive screening test, immunizations and vaccines are exempted from stark law till
they meet the relevant frequency limits mandated by CMS.
Clinical Laboratory Improvement Amendment (CLIA)

◦ CLIA regulations established in 1988 and adopted by Medicare and Medicaid.

◦
CLIA regulations determine the types of laboratory studies that can be performed by
each laboratory.

◦ All laboratories must be certified by CLIA standards.

◦ Once certified, the laboratory can bill Medicare and Medicaid with the certification
number assigned.
◦ CLIA waiver designation limits the lab services they can perform.
Health Insurance Portability
and Accountability Act (HIPAA)
◦ HIPAA was passed in 1996 to amend the Internal Revenue code of 1986

-To improve portability and continuity if health insurance coverage in the group and
individual markets.

-To combat waste, fraud and abuse in health insurance and health care delivery.
-To promote the use of medical savings account.
-To improve access to long term care services and coverage.
-To simplify the administration of health insurance.
◦ This law applies directly to three groups referred to as covered entities. They are:
Health care provider:
Any provider of medical or other health services or supplies who transmits any health
information in electronic form in connection with a transaction for which standard
requirements have been adopted.

Health plans:
Any individual or group plan that provides or pays the cost of health care.

Health care clearing houses:

A public or private entity that transforms health care transactions from one format to
another.
Reimbursment Terminology
Advance Benificiary Notice (ABN):
◦ It is a written beneficiary notification to the beneficiary indicating that the insurer may
not reimburse the cost of the procedure and therefore the patient may be liable for
the fee.
◦ The patient must sign the form prior to rendering a service to a Medicare
beneficiary, if it’s suspected that Medicare may not cover the service.
◦ HCPCS level II modifier GA must be appended to the service in question to the CMS
1500 form indicating that the patient is aware of the fact that Medicare may not cover
the service, and that the patient has signed an ABN.
Account Number:
Number the patient’s visit (account) is given by the hospital for documentation and
billing purposes.
Admitting diagnosis:
The initial medical reason that was documented for the patient’s condition.
Assignment of benefits:
An arrangement by which a patient requests that their health benefit payments be made
directly to a designated person or facility, such as physician or hospital. Patient’s assign
the rights for payment when they sign the consent for admission or treatment.
Ancillary services:
A service that is supportive of care of a patient, such as laboratory services.
Appeal:
A process by which the patient, the doctor, or the hospital can object to the health plan’s
decision not to pay for medical services.
Assignment:
An agreement the patient signs that allows your insurance to pay the doctor or hospital
directly.
Authorization Number:
A reference number stating that your treatment has been approved by insurance. Also
called a certification number or prior authorization number.
Benefit:
The amount insurance pays for medical services.
Beneficiary:
The person who benefits from insurance coverage; also known as subscriber, dependent,
enrollee, member or participant.

Beneficiary liability:
The amount that the patients must pay out of pocket for medical services, including co-
payments, co-insurance and deductibles.

Birthday rule:
When both parents have insurance coverage, the parent with the birthday earlier in the
year carries the primary coverage for a dependent.

Certified Registered Nurse Anesthetist:

CRNA, an individual with specialized training and certification in nursing and anesthesia.
Claim:
Refers to the form submitted to the insurance company for payment of benefits.

Claims Review:
A method used by insurance companies to review bills for a patient’s health care services
before payment is made. The purpose of claims review is to make sure the service
provided was medically necessary, billed according to industry standards and paid
according to the company’s fee schedule.

Clean Claim:
A properly completed CMS-1500 form submitted to a payer with all data boxes containing
current and accurate information and submitted within the timely filling period required
by the insurer.
Co- insurance:
An arrangement where patients and their insurance company share payment of a health
care service. Coinsurance takes effect after the deductible amount has been paid. The
coinsurance usually is a percentage of the cost of medical services after the deductible is
paid until the annual maximum out of pocket expense is reached.

Compliance plan:
Written strategy, developed by medical facilities to ensure appropriate, consistent
documentation within the medical record and ensure compliance with third party payer
guidelines and the Office of the Inspector General (OIG) work plan guidelines.

Concurrent care:
More than one physician providing care to patient at the same time.
Contractual Adjustment:
Part of the bill that the hospital has agreed not to charge the patient because of billing
agreements they have with the patient’s insurance company.

Copayment (Copay):
A common term for the fixed amount set by an insurance company and paid by a patient
for a specified medical service. A copayment is often connected with a physician office
visit or an emergency room visit. Copayments are collected at the time the services are
provided. Amounts of $15, $25 or $30 are common for copays.

Coordination of Benefits (COB):

The method for determining which insurance company is primarily responsible for
payment when a patient is covered under more than one insurance plan. The insured’s
total benefits do not exceed 100% of the medical expenses.
Covered Services:
Covered services are those services that are payable in accordance with the terms of the
benefit plan contract by the payer. Such services must be documented and medically
necessary for payment to be made.

Deductible:
An agreed amount that a patient must pay before the insurance company will pay
anything toward medical charges. Usually the amount must be met and paid by the
patient each year.

Denial:
A decision by insurance company not to pay for part or all of a medical bill based on a
lack of medical necessity or pre-admission approval/certification, terminated coverage,
or other reasons. Denied amounts may be charged to the patient.
Durable Medical Equipment (DME):
Medical equipment that can be used multiple times and is ordered by a doctor for use at
home. Examples include hospital beds, wheelchairs and oxygen equipment.

Electronic Data Interchange:

EDI, computerized information exchange to health care insurance.

Employer Identification Number:

EIN, an Internal Revenue Services (IRS)- issued identification number used on tax
documents.

Encounter from superbill:

Medical document that contains information regarding a patient visit for health care
services, can serve as a billing and/or coding document
Explanation of benefits:
The statement sent by the insurance company to the patient with the list of services
provided, amount billed, and any insurance payments. EOB details the information what
was billed, the payment amount approved by the insurance, the amount paid, and what
the patient have to pay.

Fee- Schedule:
List of established payment for medical services arranged by CPT and HCPCS codes.

Follow- up days:
FUD, established by third party payers and listing the number of days after a procedure
for which a provider must provide services to a patient for no fee. Also known as global
days, global package and global period.
Group provider number:
GPN, a numeric designation for a group of providers that is used instead of the individual
provider number.

Guarantor:
Someone who either accepts or is legally responsible to pay for a given patient’s
hospital bill. The guarantor may or may not be the patient.

Invalid claim:
Any claim that is missing necessary information and cannot be processed or paid.

Medical Record:
Documentation about the health care of a patient to include diagnoses, services and
procedures rendered.
Medically necessary:
Refers to services or supplies that are required to properly treat a specific medical condition.
Services or supplies that are not considered medically necessary by insurance may be
denied.

Non covered services:

Any service not included by a third party payer in the list of services for which payment is
made.

National Provider Identification:

NPI, 10 digit number to provider by CMS and National plan and Provider enumeration System
(NPPES) and used for identification purposes when submitting services to third party payers.

Premium:
Amount paid periodically to purchase health insurance benefits.
Point of Service:
POS, a plan in which either an in-network or out-of-network provider may be used with a
higher rate paid to in-network providers.

Prior authorization:
Also known as preauthorization, which is a requirement by the payer to receive written
permission prior to patient services in order to be considered for payment by the payer.

Provider Identification Number:

PIN or UPIN is a number assigned by a third party payer to providers to be used for
identification purposes when submitting claims.

Reimbursement:
Payment from a third party payer for services rendered to a patient covered by the
payer’s health care plan.
Rejection/Denial:
A claim that did not pass the edits and is returned to the provider as rejected.

Resource based Relative Value Scale:

RBRVS, a list of physician services with assigned units of monetary value.

State License Number:

Identification number issued by a state to a physician who has been granted the right to
practice in that state.

Subscriber:
A person who is enrolled for benefits with an insurance company.
Usual, Customary and Reasonable:
UCR, used by some third party payers to establish a payment rate for a service in an
area with the usual (standard fee in area), customary (standard fee by the physician),
and reasonable (as determined by payer) fee amounts.

Medical Record Number:

The number assigned by the doctor or hospital that identifies the individual patien’t
medical record.

Account Number:
Number given by the doctor or hospital for a medical visit.
Actual charge:
The amount of money a doctor or supplier charges for a certain medical service or
supply. This amount is often more than the amount an insurance plan approves.

Aging:
One of the most billing terms referring to the unpaid insurance claims or patient
balances that are due past 30 days. Most medical billing software’s have the ability to
generate a separate report for insurance aging and patient aging. These reports typically
list balances by 30, 60, 90 and 120 day increments.

Enrollee:
Individual covered by health insurance.
Electronic Claim:
Claim information is sent electronically from the billing software to the clearing house or
directly to the insurance carrier. The claim file must be in a standard electronic format as
defined by the receiver.

Scrubbing:
Process of checking an insurance claim for errors in the health insurance claim software
prior to submitting to the payer.

Self-referral:
When a patient sees a specialist without a primary physician referral.

Secondary Insurance Claim:

Claim for insurance coverage paid after the primary insurance makes payment.
Secondary insurance is typically used to cover gaps in insurance coverage.
Self pay:
Payment made at the time of service by the patient.

Workers Compensation:
Insurance claim that results from a work related injury or illness.

Utilization Limit:
The limits that Medicare sets on how many times certain services can be provided
within a year. The patients claim can be denied if the services exceed this limit.

Pre-existing Condition Exclusion:

When insurance coverage is denied for the insured when a pre-existing medical
condition existed when the health plan coverage became effective.
Adjustment:
The portion of the bill that the doctor or hospital has agree not to charge for the patient.

Admission date (admit date):

The date where the patient Is admitted for treatment.

Billed amount:
The amount charged by the provider for a health care service rendered to the patient. It can
also be called as Total charges, Total amount, submitted charges, total expenses etc.,

Allowed amount:
The maximum amount allowed by the insurance for a particular service. Allowed amount Is
also known as covered expenses, amount allowed, negotiated expense etc.,
Paid Amount:
The amount paid by the Insurance Company as per the policy. It may be the same as the
allowed amount also if the insurance pays at 100%. Paid amount is also called as Paid,
Total benefit, Net payment, Benefit, payment etc.,

Outpatient:
Medical treatments which are completed within the course of a day and do not require
the patient to stay overnight in a hospital or other treatment facility are known as
outpatient services.

Outsource Billing:
Term which refers to the process of contracting with a third party medical billing service
to provide the infrastructure, knowledge, and employee labour necessary to conduct all
of a medical practice’s claims billing needs.
Primary Insurance:
In cases where more than one insurance policy is simultaneously providing coverage for
an individual insured, the primary insurance is the insurer which must first pay out the
benefits of their policy, prior to the claim being submitted to the other insurers.

Referring Physician:
When one medical provider requests an appointment for a patient with another medical
provider, the first provider is considered the referring physician on any medical claims
generated by the second provider for services rendered to that patient.

Patient balance:
The amount of money that a patient owes on a particular medical claim.
Practice
1. Which is the best explanation of Medicare coverage ?
A. The program is exclusive to beneficiaries age 65 and older.
B. The program is administered by the states for low income individuals.
C. Coverage depends on sources of income exclusive of medical condition or other
factors.
D. The program provides coverage for people age 65 or older, some people under 65
with disabilities and people with ESRD.
Ans: D
2. Which of the following Medicare Plans refer to the prescriptive drug benefit ?
A. Medicare Part A

B. Medicare Part B

C. Medicare Part C

D. Medicare Part D

Ans: D

3. EOB and checks are scanned and returned to

A. Charge entry team

B. Cash posting team

C. A R team

D. Adjudication team

Ans: C
4. CHAMPVA is an non federal insurance
A. True
B. False
Ans: B

5. Eligibility of Medicaid
A. Low income group
B. AFDC
C. Blind aged
D. All of the above
Ans: D
6. Other name of Tricare is:
A. Champva
B. Champus
C. WC
D. Medigap
Ans: B

7. This tells you what was billed, the payment amount approved by your insurance, the amount paid,
and what you have to pay.
A. EOB
B. COB
C. DEERS
D. COBRA
Ans: A
8. PIN is a number that links the provider to the healthcare insurance institution in which they practice
A. True
B. False
Ans: A

9. Who is referred as Gate keeper

A. Physician
B. Referring provider
C. Primary care provider
D. Specialist
Ans: A

10. Fraud- Payment for items or services that are billed by mistake by providers, but should not be paid
for by the insurance plan.
A. True
B. False
Ans: B