The entire revenue cycle at your healthcare business follows a few steps. Read in more details on this page. Essentially, it is broken down into:
– Insurance eligibility
– Prior authorizations
– Patient Copays
– Charge Entry / Charge Capture Audit (CCA)
– Payment Posting / Remittance processing
All of this is made quite clear to you and your staff during the credentialing step of revenue cycle management.
After you have seen the patient, you or your staff will need to submit a claim to the insurance payer. To be able to submit the claim, your staff is going to need the CPT and the ICD codes.
Effectively, you or your billing staff is going to say that you, the doctor, performed CPT 1234 because they diagnosed the patient with ICD A123.
Before the patient comes in, your office checks for insurance eligibility of the patient. Most EMRs give you a simple way to check patient eligibility. This just shows that the patient will have active insurance on the date of their appointment.
What could go wrong? The patient might terminate their insurance just before they visit you. Alternatively, the insurance company (payer) might terminate the insurance just before the patient’s appointment date. When that happens, the patient is no longer covered. All of this is made quite clear to you and your staff during the eligibility verification step of revenue cycle management.
The patient arrives at your front desk. At this point, your front desk knows the copay amount that the patient has to pay to see you.
If it is a self pay patient, then your office needs to charge the patient the same amount that you charge the insurance company (unless you are using a sliding fee scale).
This copay amount needs to be paid not only because you need to get paid, but also because you signed an agreement with your payer (insurance company) that you will collect that copay from your patient. When you collect that copay from your patient, the payer agrees to pay you a certain contracted (predetermined) amount.
You see the patient and diagnose the patient with certain ICD codes. To diagnose the patient, you followed some procedure. This procedure has a CPT / HCPCS code.
When the patient comes in for the first consult, you are almost 100% sure that the visit (consult) CPT is covered. However, while seeing the patient you might want to perform certain other procedures (each one of those procedures also has a CPT).
You do not always know whether the additional CPT you performed is covered by the patient’s insurance.
You may choose to perform those procedures right away. Or, You can also ask the patient to come back for the additional procedure at a later date.
Either way, before you perform that procedure you want to know whether the insurance company / payer will cover that CPT or not.
The insurance company / payer might require you to get a prior authorization for the CPT that you are proposing.
So, your office might need to submit a prior authorization request to the patient’s payer. The payer might deny your request or might approve your request. When the payer denies it, they will submit the denial reason back to you. You can choose to appeal that decision and would have to provide your reason / proof of medical necessity.
CPT is just a numerical representation that describes what was done to the patient during the consultation/visit. This will include diagnostic, laboratory, radiology, and surgical procedures.
The ICD code on the other hand, is an alphanumeric representation of why what was done to the patient was done. This identifies a diagnosis (or diagnoses). ICD describes a disease or medical condition.
DRG means “Diagnosis-related group”. This is typically used in hospital cases and is a system which classifies hospital cases. This classification is done according to certain groups, which are expected to have similar hospital resource usage (i.e. cost).
For each CPT code, there’s a specific contracted amount that the payer is going to pay you (no matter what you charge the payer).
Keep in mind that diagnosis code is also known as DX code in medical billing.
The CPT code is also called as PX code in medical billing
Your biller might need to know the modifiers as well. Modifiers are used with the CPTs when they need to differentiate the medical services rendered to the patient (there are specific guidance around that).
Your biller will need the accurate Date of Service.
You will also need to provide the units of service to your biller.
This will indicate the quantity of procedures to claim for.
If, for some reason, a prior authorization was needed to post this charge, the biller is also going to need an authorization number (pre certification number).
Then, your biller is going to enter the “Billed amount”. This is also called “charge amount”.
Much of this information should or could be available in your “SuperBill”. That is, if you are still using superbills. Paper superbills are typically easier and faster to use than entering that same information in your EMR. As you know, it’s just a form listing procedures, service and diagnosis codes for a patient’s visit.
After all this data is gathered and entered into the charge posting software, your medical biller will submit this to the insurance company / payer.
Hopefully your office is already using electronic submissions. If not, this charge will be posted via a paper claim (discussed below).
When you submit the charge electronically, it goes through a clearing house (e.g. EMDEON) and is submitted to the payer (since they both speak the same language).
The above steps of revenue cycle management is collectively called charge posting.
Medical Coding is crucial in revenue cycle management (as you might have already guessed).
If you have inefficient practice workflows, you could be slowing down your medical billing department even further.
Coding correctly AND on time can make or break your medical billing process. This will, of course, affect your collection rate and days in A/R as well.
When you or your biller has a backlog of charts to code, you are effectively running the risk of missing the timely filing deadlines set by payers. Each payer has their own timely filing limit set up and your medical billing department needs to be cognizant of those timelines.
Pretty simple and you might have guessed this just as well. Institutional claims are submitted by hospitals and skilled nursing facilities (SNFs). Professional claims are submitted by physicians, suppliers and other non-institutional providers.
This really depends on whether it’s an institutional claim or a professional claim.
Professional billing is going to use the CMS-1500 form and/or the 837-P form. The CMS-1500 is the paper version (the red ink one). The 837-P is the electronic version of this same claim form.
Meanwhile, institutional claims use the UB-04 form and/or the 837-I forms. The UB-04 form, (or CMS-1450) is the paper version and the 837-I is the electronic version. That’s it.
Do note that institutional billing is a lot more complex (and the forms as well) than the professional one.
Overall, you have 3 categories of code in medical billing
– Category I Codes – These are the 5 digit CPT codes
– Category II Codes – These are performance measurement tracking codes. They are alphanumeric and will have a letter as the last digit.
– Category III Codes – These will also have a letter in the last digit. These are temporary data collection codes that CMS uses.
The ones you are going to deal with on a regular basis are broken down here.
– (E&M) Evaluation and Management: 99201 – 99499.
– Anesthesia: 00100 – 01999. You also have 99100 – 99140 (most of you will not handle these)
– Surgery: 10021 – 69990.
– Radiology: 70010 – 79999.
– Pathology and Laboratory: 80047 – 89398.
– Medicine: 90281 – 99199. You also have 99500 – 99607
Do not confuse this with a denied claim.
An electronic claim is submitted (usually) to a clearinghouse (e.g EMDEON). If there are errors in the claim itself, the claim is rejected by the clearinghouse (trust me, it’s better than a denial).
It’s better this way because the payer would have denied your claim and that would have contributed to longer account receivable days anyway (and more work).
Your claim may get rejected by the clearing house for various reasons. Examples below
– It could be a simple clerical error.
– It could be a mismatch between the procedure code (CPT) and diagnosis (ICD) codes.
These rejected claims will be sent back to your practice and your biller will have a chance to correct and resubmit the claim. Think of this process as “claim scrubbing” (which it actually is).
There could be several reasons. E.g.
– Incorrect patient demographics – including patient gender, name (spelling or missing out middle name), date of birth, member ID, etc.
– Provider information issues – yes, it does happen 🙂 Your team might have screwed up the rendering provider information as well (NPI, name, contact info etc)
– Incorrect payer information – e.g. wrong member ID, address.
– Incorrect ICD/CPT/HCPCS codes. Yes, codes are confusing and codes are changed each year (call them enhancements). Sometimes modifiers used do not belong to the CPT being submitted. Your claim might get rejected due to these errors as well.
– Mismatched or missing codes – We have seen CPT and ICDs being reversed. This kicks the claim back immediately
– Duplicate claims – this is a bit harder to catch and it usually eats up a lot of biller time. A biller might not have noticed that a claim for a particular patient, particular date of service and CPT has already been submitted. Such claims would have been rejected by the payer anyway. This is a huge headache.
Now that the charge has been posted, you will need to wait for the outcome.
The payer can pay the claim in full if everything went correctly.
The payer can pay in part and deny some parts of your claim.
The payer can deny the claim altogether.
There’s another state that the claim might be in. That’s called “no response”. This is where the payor has not yet made a determination on your claim. Typically, payers ask for a minimum of 30 days before responding to your claim. During this time, the claim stays in a “no response” state.
Every day or on certain days a week, you will notice payments from your payers. Of course, the actual payment will go to your bank directly or will be sent to you via check which you will deposit in your bank. Meanwhile, the payment advice will come to your charge posting software or along with the check that you received. This is known as the ERA (electronic remittance advice) or a RA (remittance advice) when it comes to you via the mail.
Keep in mind that you might get multiple checks or a single check with multiple remittances for multiple claims.
Also, understand that it’s better to use electronic remittances as ERAs follow a universal format (ANSI) called 835. If your software (most charge posting software can) can handle ERA files, you are good to go.
Along with the ERA you are also going to get an explanation of the benefits (EOB) file – either electronically or via mail.
This EOB is going to explain the claim payment. This will tell you about any or all patient responsibilities as well. E.g. co-insurance, deductible, copay.
The EOB will state the “Billed Amount” – the amount you or your office billed the payer. It will contain the “Allowed Amount” – the amount that you and your payer had contracted for, while credentialing. The EOB will contain the “Not Covered” section that will tell you the amount not covered by the patient’s policy (depends from employer to employer). It will also tell you the “Deductible Amount” – if the patient’s plan has a deductible amount, this amount will be specified in the EOB.The patient is supposed to pay this amount.
The EOB will tell you “Provider Paid” – that will be the amount that the insurance company actually paid you. It will also tell you the “Adjustment Amount” – this is the amount by which the payer’s payment is reduced due to “adjustments”. The reason for the adjustment will be explained by the Claim Adjustment Reason Code (CARC).
Finally, the EOB will tell you the “Patient Responsibility” – that’s the amount that the patient still has to pay you, the provider.
With the above information, you or your medical billing staff can apply the insurance payment(s) to reconcile the same.
For this, the lump payment would need to be broken down and applied against each individual claim.
This whole step is known as payment posting in revenue cycle management.
You can start submitting secondary claims once the primary insurance payments are posted. That, of course, would be “charge posting” as explained above and even that will follow the same payment posting steps mentioned above.
Finally, once all insurance payments have been received and account adjustments made, the remaining patient responsibility can then be billed.