Overview
In this module, we introduce the student to the revenue cycle and the different reimbursement methodologies for different healthcare settings.
MODULE INTRODUCTIONPayment for healthcare services is complex and can be difficult to grasp for HIM students. This chapter discusses healthcare insurance, revenue cycle management, reimbursement systems (including private and government plans), managed care, healthcare reimbursement methodologies, and utilization and case management.
Assignment Checklist: (ALL SHOULD BE COMPLETED)
Discussion 13.1: Healthcare Reimbursement Methodologies
[4a, 4b, 4c, 4d, 4e, 4g]
Lab Assignment 15.1: Charge Description Master (CDM) [4a, 4b, 4c, 4d, 4e, 4g]
SPC Real World Case 15.1: Community Health Clinic [4a, 4b, 4c, 4d, 4e, 4g]
SPC Real World Case 15.2: Sitlan Community Hospital [4a, 4b, 4c, 4d, 4e, 4g]
Discussion 13.1: Healthcare Reimbursement MethodologiesDiscussion TopicHealthcare Reimbursement Methodologies15 POINTSIn this discussion, briefly describe the following items in your initial Discussion Post:
The reimbursement process.
Common forms used in the billing process.
For this discussion, read Chapter 15 and research the internet to gather information. GuidelinesPlease make sure your discussion posts include all of the items below: The reimbursement process.Common forms used in the billing process.The support practices utilized for healthcare reimbursement.
Note: your initial summary post should be one or two paragraphs in length (a paragraph is at least 3 sentences in length).
Reply to at least one classmates’ posts with a substantial thought.
View the
Discussion Rubric
for grading criteria.
Charge Description Master (CDM)The core of the healthcare revenue cycle is the chargemaster. The chargemaster is a comprehensible list of all billable items that can be billed to either a patient or a patient’s medical insurance company. When a patient receives services, a coder audits the health record for supporting documentation, assigns the appropriate code and the claim is submitted to the patient or the patient’s insurance company for payment.For this assignment, you will review chapter 15 in your textbook and then answer the following questions in the Quiz Tool, using complete sentences and focusing on relevant details.
Name the 3 codes utilized in the charge capture process.
What is a fee-schedule?
How do all of the above components support the reimbursement process?
Guidelines
Before you submit yourwritten responses:
Ensure all of the Lab Assignment 15.1 questions are answered thoroughly.
View the Lab Assignment Rubric (15 points) for the grading criteria.
Then, finally, complete and submit your answers in the Quiz Tool.
Please Note:Each question is worth 3 points for a total of 15 points. Lab Assignment 15.115 POINTSCharge Description Master (CDM)The core of the healthcare revenue cycle is the chargemaster. The chargemaster is a comprehensible list of all billable items that can be billed to either a patient or a patient’s medical insurance company. When a patient receives services, a coder audits the health record for supporting documentation, assigns the appropriate code and the claim is submitted to the patient or the patient’s insurance company for payment.For this assignment, you will review chapter 15 in your textbook and then answer the following questions in the Quiz Tool, using complete sentences and focusing on relevant details.What is a chargemaster?What codes are utilized in the charge capture process?Name the 3 codes utilized in the charge capture process.What is a fee-schedule?How do all of the above components support the reimbursement process?GuidelinesBefore you submit yourwritten responses:Ensure all of the Lab Assignment 15.1 questions are answered thoroughly.View the
Lab Assignment Rubric (15 points)
for the grading criteria.Then, finally, complete and submit your answers in the Quiz Tool.Please Note:Each question is worth 3 points for a total of 15 points.
For this activity, you will review the Real World Case 15.1. You will conduct an analysis of the situation and summarize how you would have addressed the issues.A student on an outside clinical rotation from a local HIM program has been tasked with mapping the revenue cycle for an outpatient visit at the Community Health Clinic. She started with the Registration Department, next was Coding, and ending with the Billing Department.
Analyze Real World Case 15.1:
A student from an accredited HIM program was given the project of mapping the revenue cycle for a simple outpatient visit to the Community Health Clinic where she was doing her internship. She started with the registration department and determined the clerks were not obtaining copies of insurance cards but were taking the information orally from patients. She then determined that the coding department was using CPT (current procedural terminology) codes that were from the prior year. Finally, in reviewing the remittance advice notice from the insurance carriers she noticed that the patients were never balance billed for the claim amount for which they were responsible.
For this assignment, you will identify the deficiencies the student found within each of the 3 departments she was asked to review, offer suggestions on how to improve the current processes, and outline the changes each department involved must make in order to increase the clinics billing revenue.
You will then answer the following questions in the Quiz Tool, using complete sentences and focusing on relevant details.
What are some of the problems with the revenue cycle for Community Health Clinic?
Which departments are responsible for the revenue cycle problems at Community Health Clinic?
Guidelines
Before you submit your Real World Case Study written responses:
Ensure all of the Real World Case Study 15.1 questions are answered thoroughly.
View the Critical Thinking Assignment Rubric (20 points) for the grading criteria.
Then, finally, complete and submit your answers in the Quiz Tool.Please Note:Each question is worth 6.66 points for a total of 20 points. Real World Case 15.120 POINTSFor this activity, you will review the Real World Case 15.1 on page 443 of your textbook. You will conduct an analysis of the situation and summarize how you would have addressed the issues.A student on an outside clinical rotation from a local HIM program has been tasked with mapping the revenue cycle for an outpatient visit at the Community Health Clinic. She started with the Registration Department, next was Coding, and ending with the Billing Department.
Analyze Real World Case 15.1. For this assignment, you will identify the deficiencies the student found within each of the 3 departments she was asked to review, offer suggestions on how to improve the current processes, and outline the changes each department involved must make in order to increase the clinics billing revenue.
You will then answer the following questions in the Quiz Tool, using complete sentences and focusing on relevant details.What are some of the problems with the revenue cycle for Community Health Clinic?Outline suggestions for changes to the process for this clinic to improve the efficiency of the revenue cycle management.Which departments are responsible for the revenue cycle problems at Community Health Clinic?GuidelinesBefore you submit your Real World Case Study written responses:Ensure all of the Real World Case Study 15.1 questions are answered thoroughly.View the
Critical Thinking Assignment Rubric (20 points)
for the grading criteria.Then, finally, complete and submit your answers in the Quiz Tool.
Please Note:Each question is worth 6.66 points for a total of 20 points.
For this activity, you will review the Real World Case 15.2. You will conduct an analysis of the situation and summarize how you would have addressed the issues.Hospital-acquired infections can be caused by viral, bacterial, and fungal pathogens. Risk factors for healthcare-associated infections can be from injections, catheters, central lines, surgeries, and passing from healthcare workers to patients or patients to healthcare workers due to poor hygiene.
You will then answer the following questions in the Quiz Tool, using complete sentences and focusing on relevant details.
Why would the reimbursement rate decrease for this hospital?
What should the hospital do to determine why the infection rates are high?
What can patients do if they have choices of where to go for their care?
GuidelinesBefore you submit your Real World Case Study written responses:
Ensure all of the Real World Case Study 15.2 questions are answered thoroughly.
View the Critical Thinking Assignment Rubric (20 points) for the grading criteria.Then, finally, complete and submit your answers in the Quiz Tool.Please Note: Each question is worth 6.66 points for a total of 20 points. Real World Case 15.220 POINTSFor this activity, you will review the Real World Case 15.2 on page 444 of your textbook. You will conduct an analysis of the situation and summarize how you would have addressed the issues.Hospital-acquired infections can be caused by viral, bacterial, and fungal pathogens. Risk factors for healthcare-associated infections can be from injections, catheters, central lines, surgeries, and passing from healthcare workers to patients or patients to healthcare workers due to poor hygiene.
Analyze Real World Case 15.2. For this assignment, you will conduct an analysis of Emily Kelly, an appendectomy surgical patient who developed a post-op infection in her surgical site. The billing department noticed the reimbursement rate for Emily’s surgery was lower than expected. Your analysis should include the reason for the reimbursement, why the infection rates for Sitlan Community Hospital are so high, and what can patients do in regards to seeking care in other healthcare facilities.
You will then answer the following questions in the Quiz Tool, using complete sentences and focusing on relevant details.Why would the reimbursement rate decrease for this hospital?What should the hospital do to determine why the infection rates are high?What can patients do if they have choices of where to go for their care? Health Information Management Technology:
An Applied Approach
Sixth Edition
Chapter 15: Revenue Management and Reimbursement
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Introduction
• Payment for healthcare services is called reimbursement
• Adjudication includes paying, denying, and adjusting claims
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Healthcare Insurance
• Out of pocket is paying for healthcare with own funds
• Healthcare insurance protects a person from paying the full cost of
healthcare
• Coverage for all Americans was the topic of campaigning in 1912
• Affordable Care Act was signed into law in 2010
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Revenue Cycle Management
• Revenue cycle is the process of patient financial and health
information moving into, through, and out of the healthcare facility,
culminating with the facility receiving payment
• Management of the revenue cycle is the process of supervision
the entire claims process
• HIM provides vital expertise in coding, documentations
management, and accounts receivable management
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Patient Registration
• Preregistration
• Registration
• Insurance verification
• Prior approval (authorization)
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Patient Access Department
• Responsible for capturing demographic information on each
patient
• Third-party payer is the insurance company that pays the claim for
a patient
• Coordination of Benefits (C O B) is determining which insurance
coverage is the primary, secondary and tertiary payer
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Documentation, Coding, and Charge Capture
• All services documented and captured into a financial account
• Charge description master is a list that contains every service and
supply the facility provides and the charge for that service
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Figure 15.1: Paper-Based Charge Capture Process for a
Physician Practice
©Preferred Healthcare Solutions. LLC Reprinted with Permission
Source: Fahrenholz 2010.
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Access the text alternative for slide images.
Healthcare Claims Processing
• After all charges are captured, a claim is created
• Third party payer determines eligibility or verification the patient is
covered
• Medical necessity is the determination that the services will benefit
the patient and are needed
• Deductible is the amount the policy holder must incur
• Coinsurance is preestablish percentage of expenses
• Copayment is a cost sharing measure to pay a fixed dollar amount
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Example of Claim Processing
Table 15.1: Example of Claim Processing
Service
Cost (fee Deductible ($500
schedule) per year)
Coinsurance 20%
Copayment
($15 per
visit)
Total
insurance
pays
Patient
responsibility
Physician
visit
$100.00
$50.00
$10.00
$15.00
$25.00
$75.00
Comment —
Patient has already
paid $450 this
year, he has now
met his deductible
20% of cost of visit
after the deductible
is paid. $100 minus
$50 = $50 and
20% of $50 = $10
Patient pays
$15 out of
pocket for
each visit
—
—
X-ray
$250.00
$0.00
$50.00
$0.00
$200.00
$50.00
Antibiotic
$50.00
$0.00
$10.00
$0.00
$40.00
$10.00
Total
$400.00
$50.00
$70.00
$15.00
$265.00
$135.00
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Claim Processing
• Accept assignment payment is based on a fee schedule and the
provider will accept the amount paid as payment in full
• Explanation of benefits details how the payer paid the claim
• Remittance advice explains the process to the healthcare provider
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Working the Accounts Receivable (AR)
• AR is a record of payment owed to the organization as a
mechanism for payments to be posted
• Billers are responsible for maintain and working the AR
• Billers will monitor charges, payments, adjustments and write-offs
and resubmit claims with denials if an error is found
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Healthcare Insurers
• Commercial
• Managed care
• Government plans
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Commercial Insurance
• Private healthcare insurance—individuals, self-employed, and
groups of people
• Employer-based coverage—employees and employers share the
cost of premium payment
• Employer-based self-insurance plans—employers set aside the
cost for coverage of its employees
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Managed Care
A healthcare delivery system or network organized to manage cost,
utilization, and quality
• Health Maintenance Organizations (HMO)
• Preferred Provider Organizations (PPO)
• Point of Service (P O S)
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Health Maintenance Organization
An entity that combines the provision of healthcare insurance and
the delivery of healthcare services
• Network model—HMO contracts with network providers
• Staff model—HMO employs the physicians
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Preferred Provider Organizations
Managed care contract-coordinated care plan with the following
elements
• Network providers agree to specified reimbursement
• Reimbursement for all covered benefits
• Offered by an organization that is not an HMO
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Point-of-Service Plans
• Enrollees choose between an HMO or PPO each time they need
care
• Payment outside the network is covered by the plan with the
patient paying a percentage of the bill
• Primary care provider refers patient outside the network of
providers
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Government Sponsored Healthcare Plans
• Medicare
• Medicaid
• Children’s Health Insurance Program
• Health Insurance Marketplace
• TRICARE
• Veterans Administration
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1
Government Sponsored Healthcare Plans
• CHAMPVA
• Indian Health Services
• Workers’ Compensation
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2
Medicare
Healthcare coverage for Americans age 65 or older or those
receiving retirement benefits from Social Security or Railroad
Retirement Board
• Medicare Part A Hospital Insurance
• Medicare Part B Medical Insurance
• Medicare Advantage (Part C) Managed care offered by MCOs
• Medicare Part D—Prescription Drug Coverage
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Medicaid
Helps with the medical costs for American with low incomes and
limited resources including mandatory eligibility groups:
• Children
• Pregnant women
• Elderly adults
• People with disabilities
• Low income adults
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Medicare-Medicaid Relationship
Federal Coordinated Healthcare Office serves people who are
enrolled in both Medicare and Medicaid and are known as dual
eligible, meaning they are covered under both Medicare and
Medicaid
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State Children’s Health Insurance Plan
• S C H I P provides healthcare coverage to eligible children through
both Medicaid and individual state C H I P programs
• Eligibility is based on a percentage of the family annual income
• Cost sharing is prohibited for some services
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TRICARE
• Healthcare program for uniformed service members
• Managed by the Defense Health Agency
• Several plan options are available for members
• Emergency care, urgent care, preventative services,
hospitalization, dental, and pharmacy
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Veterans Health Administration
• V A offers healthcare services to veterans
• The number who can be enrolled is determined by the amount of
money congress give the V A each year
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Civilian Health and Medical Program of the Department of
Veterans Affairs
• CHAMPVA comprehensive healthcare program in which the V A
shares the cost of covered services
• Covers most healthcare services medical and psychologically
necessary
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Indian Health Services
• Responsible for providing healthcare to American Indians and
Alaska natives in the US
• Developed out of a special government-to-government relationship
• US is divided into 12 physical areas
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Workers’ Compensation
• Insurance for employees who are injured on the job
• Workers’ compensation laws are regulated by state and federal
government and vary by state
• Federal employees are covered under the Federal Employees’
Compensation Act
• State Workers’ Compensation insurance funds cover claims
occurring because of workplace injury
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New Trends
• Health insurance marketplace or exchange
• Consumer-directed health plans
• Hospital-acquired conditions
• Present on admission indicator reporting
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Medicare Access and Chip Reauthorization Act
• Quality Payment Program
• Focuses on value over volume
• Helps streamline quality programs under Merit Based Incentive
Payments Systems (M I P S)
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Utilization Management
Evaluation of the medically necessity, appropriateness, and
efficiency of the use of healthcare services, procedures, and
facilities under the provision of the applicable health benefits plan
• Prospective review takes place prior to procedures
• Concurrent review takes place while service is being rendered
• Retrospective review takes place after patient is discharged
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Case Management
Collaboration between healthcare and service providers to aid in the
process of assessment, planning, facilitation, care coordination,
evaluation, and advocacy to meet the comprehensive health needs
of an individual or family
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Healthcare Reimbursement Methodologies
Healthcare services can be reimbursed in a number of ways
depending on the type of insurance coverage and the type of
service provided
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Fee-For-Service
• Fee-for-Service retrospective payment
• Traditional Fee-for-Service retrospective payment
• Managed Fee-for-Service utilization controls
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Payment Methodologies
• Capitation—a specified amount of money paid
• Global—both professional and technical components paid
• Prospective—payment based on predetermined amount
• Episode-of-care continuous treatment for a particular problem
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Medicare Severity Diagnosis-Related Groups
1
• Major complication/comorbidity (MCC): The patient has a medical
condition that arises during an inpatient stay, like a wound infection
(complication) or a medical condition that coexists with the primary
reason for admission and affects the patient’s treatment or length
of stay (comorbidity)
• Complication/comorbidity (CC): The patient has a medical
condition that is not considered major
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Medicare Severity Diagnosis-Related Groups
2
• Non-CC: All severity levels are based on the secondary diagnosis;
this level of severity indicates the patient does not have a CC
(CMS 2016b)
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Resource-Based Relative Value Scale
A payment methodology in which physician payments are
determined by the resource costs needed to provide care
Components include
• Physicians’ work
• Practice expenses
• Cost of professional liability insurance (A M A 2016d)
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Skilled Nursing Facility PPS
• Comprehensive per diem
• Payment includes all reasonable costs incurred by the SNF
• Case-mix adjusted payments based on resource utilization group
classifications
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Outpatient Prospective Payment System
Single payment for all outpatient services that fall within an
ambulatory payment classification (APC) or multiple APCs
APC groups consists of five types of services
• Medical visits
• Ancillary services
• Partial hospitalization
• Significant procedures
• Surgical services
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Ambulatory Surgery Center PPS
Payment for covered surgical procedures, including facility services
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Home Health PPS
• Series payment methodology
• Visits are billed in a series of 6, 14, or 20 visits at a time and are
paid as a series instead of billing each visit separately
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Ambulance Fee Schedule
• Include vehicular and air travel
• Must be medically necessary
• Payment is base rate plus mileage
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