26 Jun The purpose of the Claims s ection of this course
Question
The purpose of the Claims s ection of this course is to cl ose the gap of information about
wha t happens after a cl aim is s ubmitted. In this s ection, you will l earn a bout the 3 possible
outcomes a fter cl aim s ubmission, a s well a s some follow-up methods. It will provide you
general knowledge but i t is i mportant for you to remember that most topics covered in this
cours e a re payer specific.
Pa yer s pecific means that the policies a nd procedures that will have to be followed will be
va ri ed depending on which third party payer you a re submitting to. These processes won’t
rea lly be refined until you a re on the job. The physician’s office that you work for will most
l i kely have their own policies and procedures in place, however know that every a nswer is
a s i mple phone call away. Don’t hesitate to pick up the phone and call the payer to get
cl a ri fication about a nything you may be unsure of.
You s hould begin your s tudies in this section of the course by giving yourself a refresher on
the two pri mary types of claims that you will be submitting. Refer to your Insurance
Ha ndbook for the Medical Office textbook a nd reference chapter 7 – The cl aims process.
Then utilize the Chapter 10 – Cl a i m Forms chapter i n your understanding Hospital Billing
text book.
The CMS-1500 i s the cl aim that is used i n the outpatient office setting. You will report a ll
s ervi ces and diagnostics done in the physician’s office on this claim as well as the
professional s ervices performed in the hospital s etting.
The UB-04 i s the cl aim form that hospitals use to submit their charges to third party payers.
Thes e contain all charges regardless of the patient’s status, (inpatient or outpatient).
There a re two ways to submit a claim, electronically or by ma iling or faxing in a paper
cl a im.
• A paper claim i s one that is submitted on paper i ncluding optically s canned claims that
a re converted to electronic form by i nsurance companies. Pa per cl aims may be typed or
generated vi a computer.
• An electronic claim i s one that is s ubmitted to the i nsurance ca rrier via dial-up modem
(tel ephone l ine or computer modem), direct data entry, or over the Internet by way of
di gital subscriber line (DSL) or file tra nsfer protocol (FTP). El ectronic cl aims are digital files
tha t a re not printed on paper cl aim forms when submitted to the payer.
Once a cl aim is submitted to the third party payer there a re three possible outcomes. The
cl a im will be paid, the cl aim will be pended, or the claim will be denied. You will s ome form
of a remi ttance a dvice from the third party payer explaining which outcome was rendered.
Ea ch remit will be payer s pecific, meaning a remit from Insurance company “A” ma y l ook
di fferent from a remit from Insurance Company “B.” Al l of the i nformation that is contained
i n a remit will be pretty s imilar but you will have to learn to read each payer’s differences
once you get on the job.
Let’s break down a s ample of a remittance a dvice. The next few slides will define the
di fferent pieces of i nformation that a re contained. You will see portions of the above remit
bl own up for ease of reading a long with descriptors of what you are s eeing.
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Thi s is zoomed in to highlight the top portion of the RA (remittance a dvice.) The middle
a reas s hows which s pecific payer this remit if from. Notice that it is dated on the top. The
l eft s hows the practice/hospital that the payer is s ending payment to. And the ri ght hand
s i de lists the payee ID number, the NPI i d number, the EFT number, a nd the i ssue date. The
pa yee ID is a unique number assigned to the practice that submitted the claim forms. The
NPI i s the National Provi der Identification number that is a unique number assigned to the
phys ician. No two physicians will s hare an NPI number. EFT s tands for El ectronic Funds
Tra ns fer, this number will change on every remit.
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Thi s is the Mi d-Left s ection that we zoomed in on. The ICN is the Item Control Number. The
s ervi ce dates will s how the date the patient was admitted and discharged or the dates of
s ervi ce that this payment is for. Below is the patient name and the identification number.
Thi s RA is reading that this patient was admitted on Ja n 20, 2009 a nd discharged January
24, 2009.
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Thi s is the upper ri ght hand side that i s zoomed i n on. This is the financial portion of this
RA. It s hows the Deductible a mount, the co-insurance amount, the billed a mount, the TPL
or Thi rd Pa rty Li ability Amount, and the Paid Amount.
Jus t a s a refresher…
• The deductible is an annual a mount that must be paid to the provider before
rei mbursement from the payer will take effect. It is a one ti me a nnual fee.
• The Co-Insurance is a percentage based fee that is a lso patient responsibility. The most
common example of this is the 80% that the payer reimburses and the 20% that the
pa ti ent is responsible for.
• Thi rd Pa rty Liability is generally noted when there is a n injury i nvolved (based on
di a gnosis codes 800-999). Any ti me a patient gets i njured there i s a ri sk that there will be
s ome sort of legal involvement. Third party payers will need to know if the case is being
purs ued from a l egal standpoint before they wi ll a gree to pay the cl aim.
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Thi s is the charge a rea of the RA enlarged. It l ists the REV codes, HCPCS, Service Dates,
Modi fiers, Units Billed, Billed Amount, and Allowed amount.
Jus t a refresher…
• The revenue codes or “rev” codes a re categories of services that are grouped together to
combi ne a like charges. You originally l earned this i n Chapter 10 of your Understanding
Hos pital Billing text book.
• The HCPCS a re the CPT codes or Medicare National Codes that were s ubmitted on the
cl a im form.
• The Uni ts a re the amount of ti mes each listed HCPCS code was billed.
• There is generally a big difference between the billed a mount a nd the a llowed a mount.
The bi lled amount is the fee that the physician s ubmitted on his/her cl aim form. The
a l lowed a mount is the a mount the i nsurance has agreed to pay for. This will va ry
s i gnificantly based on the physician’s contract wi th the third party pa yer.
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Thi s section of the RA s hows samples of denial codes. Denial codes explain the reason that
ea ch line item on the RA was paid, pended or denied. Take a moment to read the s ample in
front of you. The next s lides will go over the most common reasons for denial.
When a claim gets paid you will need to verify that the a ppropriate payment was made
ba s ed on the contractual a greement between the physician a nd the i nsurance company.
You wi ll also need to see i f the payer “dropped” any pa rt of the balance to patient
res ponsibility. “Dropping” would mean that the i nsurance company has designated a
porti on of the payment should be made directly from the patient to the physician.
Exa mples would include Co-insurance, deductibles, a nd non-covered s ervices.
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When a remittance advice indicates that the cl aim is pending, that means that the
i ns urance company mostly l ikely is depending on your follow-up to proceed with
processing. This usually means that more documentation and or the entire medical record
i s needed for the medical review portion of processing to be completed. When this
ha ppened you will make copies of the entire record, or portions requested and submit
them to the review department along with a copy of the claim form. When documentation
i s requested, processing is usually delayed depending on the payer.
When a claim i s denied it means that the i nsurance has s ent back $0.00 for pa yment. A
denial isn’t the end of the world, nor does it mean that the physician will never get paid for
the s ervices rendered. It just means that a s a biller or a medical collector you get to play
detective to find out why it was denied a nd what it will take to get paid.
Let’s s tart by l ooking a t some of the more common denial reasons, and then we will discuss
pos sible ways to have the cl aim reprocessed.
We a re now going to review the top 10 most popular reasons that a health insurance claim
i s denied.
(1) Incorrect patient’s information (insurance ID# , date of birth): If you a re s ubmitting
el ectronic cl aims, AVOID entering patient’s i nsurance number wi th characters like a n
a s terisk (*) a nd dash (-) in between the alphanumeric numbers because these
cha ra cters ca n be recognize by electronic as unrecognizable. Just check on this issue
wi th the clearinghouse or your s ervice provider. Always ma ke a copy of your patient’s
pri ma ry & s econdary i nsurance ca rd on file (copy front and back!). Ma ke s ure to get a
copy of their new ca rd (if there is a change).
(2) Patient’s non-coverage or terminated coverage at the time of service: Tha t i s why it is
,
very i mportant that you check on your patient’s benefits and eligibility before see the
pa ti ent. When you don’t verify i n advance, you run the risk not receivi ng payment for
the s ervice rendered to the patient.
(3) CPT/ICD9 Coding Issues (requires 5th digit, outdated codes)— be careful also with
your secondary code! Claims may be denied even if the problem was just because of
the secondary CPT/ICD9 code: Di s cuss solvi ng the coding error rather than how much
you wa nt to get reimbursed. Most of the i nsurance companies will help you with codes
(i n fairness!!) and they a lso i nform you on outdated codes, or codes that requires a 5th
di git. Be nice with the claims department! Also, under no circumstances ca n you
a uthorize a code change UNLESS you a re the coder. Stay confined within the
pa ra meters of your job description even though you may be a ware of the necessary
s ol ution.
(4) Incorrect use of modifiers! (be ca reful with bilateral procedures!, modifiers for
professional a nd technical component, modifiers for multiple procedures, postoperative
peri od, etc.).
(5) No precertification or preauthorization obtained (if required): It i s s o hard to file a n
a ppeal when the claim or s ervice was non-pre-certified. Avoid i t from happening!
(6) No referral on file (if required) Note: HMOs a lways requires a referral! (remember
tha t!)
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(7) The patient has other primary insurance or the patient’s claim is for workman’s comp
or auto accident claim! It i s the responsibility of your front desk staff to get all the
necessary i nformation before the patient can be s een. Remember that i f this is a
workma n’s comp or an auto accident cl aim, you need a claim number a nd the adjustor’s
na me. Services a re always preauthorized!
(8) Claim requires documentation & notes to support medical necessity A wel l
documented medical records is a good practice!
(9) Claim requires referring physician’s info to include a NPI or national provider
identifier.
(10) Untimely filing: Thi s means that the cl aim was received by the i nsurance company
pa s t their a llotted time limit for s ubmission. Unfortunately most of the i nsurances does not
a ccept your billing records on your office computer that s hows that date(s) you billed the
i ns urance! If you are s ubmitting cl aims by electronic, make s ure you generate transmission
reports/receipts. Your reports must read "accepted" a nd not "rejected". File all these
tra ns mittal reports/ a nd receipts and a very s afe place! If you are s ending claims by paper
or pos tal mail, i t is a good i dea to send your cl aims as certified mail with tra cking number,
keep your receipts!
Now tha t we know s ome reasons that claims get denied, what ca n we do a bout it? You will
need to research each individual third party payers requirements when it comes to
a ppealing a decision made on a cl aim. However, i t is required that all appeals come in the
form of a l etter with s upporting documentation. It is i mperative that this l etters a re
composed in the utmost professional manner. Spelling errors a nd grammatical errors will
not be received well a nd will reflect poorly on the physician who employs you. Pay s pecial
a ttention to details as all correspondence i s considered part of the medical record and
therefore a l egal document.
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