chapter 3 chapter 3 basics of health insurance elsevier items and derived items © 2010, 2008 by...

Chapter 3Chapter 3

Basics of Health InsuranceBasics of Health Insurance

Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.

Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc.Elsevier items and derived items © 2010, 2008 by Saunders, an imprint of Elsevier Inc. 22

Learning ObjectivesLearning Objectives

Describe the history of insurance in the United States. Describe the history of insurance in the United States. State four concepts of a valid insurance contract. State four concepts of a valid insurance contract. Explain the difference between an implied and an Explain the difference between an implied and an

expressed physician-patient contract. expressed physician-patient contract. State the types of health insurance coverage.State the types of health insurance coverage. Describe in general terms the important federal, state, Describe in general terms the important federal, state,

and private health insurance plans. and private health insurance plans. Define common insurance terms.Define common insurance terms. Explain the administrative life cycle of a physician-based Explain the administrative life cycle of a physician-based

insurance claim from completion to third-party payer insurance claim from completion to third-party payer processing and payment.processing and payment.


Learning Objectives (cont’d.)Learning Objectives (cont’d.) Determine the appropriate questions to ask a patient for a Determine the appropriate questions to ask a patient for a

complete patient registration form.complete patient registration form. List four actions to prevent problems when using a signature List four actions to prevent problems when using a signature

stamp for insurance claims. stamp for insurance claims. Demonstrate how to track submitted insurance claims.Demonstrate how to track submitted insurance claims. List the functions of an aging accounts receivable report in a List the functions of an aging accounts receivable report in a

computerized practice management system or a “tickler” file in computerized practice management system or a “tickler” file in a paper environment.a paper environment.

Explain how insurance billing and coding information can be Explain how insurance billing and coding information can be kept up-to-date.kept up-to-date.

Describe the proper information to post to the patient’s financial Describe the proper information to post to the patient’s financial account after claims submission and payment received.account after claims submission and payment received.


Chapter 3Chapter 3

Lesson 3.1Lesson 3.1


HistoryHistory

Insurance is one of the world’s largest Insurance is one of the world’s largest businessesbusinesses

Health insurance offsets the costs of illness Health insurance offsets the costs of illness and/or injuryand/or injury

Escalating medical costs have limited Escalating medical costs have limited insurance coverage optionsinsurance coverage options

Patients may have more than one insurance Patients may have more than one insurance policy to defray healthcare costspolicy to defray healthcare costs


Insurance ContractsInsurance Contracts

Four considerations in valid insurance Four considerations in valid insurance contracts:contracts: The person must be a mentally competent adult The person must be a mentally competent adult

and not under the influence of drugs or alcohol.and not under the influence of drugs or alcohol. The insurance company must make an offer (the The insurance company must make an offer (the

signed application) and the person must accept signed application) and the person must accept the offer (issuance of the policy), without the offer (issuance of the policy), without concealment or misrepresentation of facts on the concealment or misrepresentation of facts on the application.application.


Insurance Contracts (cont’d.)Insurance Contracts (cont’d.)

Four considerations in valid insurance Four considerations in valid insurance contracts (cont’d.):contracts (cont’d.): An exchange of value (the first premium payment) An exchange of value (the first premium payment)

submitted with the application, known as a submitted with the application, known as a consideration, must be present.consideration, must be present.

A legal purpose must exist, which is an insurable A legal purpose must exist, which is an insurable interest in the case of a health insurance policy. interest in the case of a health insurance policy.


Implied/Expressed ContractsImplied/Expressed Contracts

Implied contract:Implied contract: not manifested by direct not manifested by direct words, but implied or deduced from the words, but implied or deduced from the circumstance, the general language, or the circumstance, the general language, or the conduct of the patientconduct of the patient Most physician contracts are impliedMost physician contracts are implied

Expressed contract:Expressed contract: can be a verbal or can be a verbal or written contractwritten contract


The Insurance PolicyThe Insurance Policy

Major medical:Major medical: extended benefits contract to extended benefits contract to offset large medical expenses caused by offset large medical expenses caused by prolonged illness or serious injuryprolonged illness or serious injury

Insured:Insured: individual or organization protected in individual or organization protected in case of loss under terms of the insurance case of loss under terms of the insurance policypolicy Also known as:Also known as:

• subscribersubscriber

• membermember

• policyholderpolicyholder

• recipientrecipient


Policy Renewal ProvisionsPolicy Renewal Provisions

Five classifications:Five classifications: CancelableCancelable Optionally renewableOptionally renewable Conditionally renewableConditionally renewable Guaranteed renewableGuaranteed renewable Noncancelable policyNoncancelable policy


Policy TermsPolicy Terms

Premium:Premium: monthly, quarterly, or annual fee to monthly, quarterly, or annual fee to keep insurance activekeep insurance active

Deductible:Deductible: specific amount of money paid specific amount of money paid each year before policy benefits begineach year before policy benefits begin

Coinsurance/copayment:Coinsurance/copayment: cost-sharing cost-sharing requirement in which insured assumes a requirement in which insured assumes a percentage of the fee or pays a specific percentage of the fee or pays a specific amount for covered servicesamount for covered services


Policy Terms (cont’d.)Policy Terms (cont’d.)

Insurance billing specialist abstracts Insurance billing specialist abstracts information from the patient record to:information from the patient record to: code diagnoses and services rendered.code diagnoses and services rendered. complete insurance claim form.complete insurance claim form. post entries to patient’s financial accounting record post entries to patient’s financial accounting record

(ledger).(ledger). follow up on unpaid claims.follow up on unpaid claims.


Coordination of BenefitsCoordination of Benefits

When patient has more than one insurance When patient has more than one insurance policy, this statement requires insurance policy, this statement requires insurance companies to coordinate the reimbursement companies to coordinate the reimbursement of benefits to determine the primary and of benefits to determine the primary and secondary carriers.secondary carriers. Prevents duplication or overlapping of payment for Prevents duplication or overlapping of payment for

the same expense the same expense


General Policy LimitationsGeneral Policy Limitations

Exclusion:Exclusion: injury or illness that is not injury or illness that is not covered by the insurance policycovered by the insurance policy Examples:Examples:

• Attempted suicideAttempted suicide

• Military serviceMilitary service

• On-the-job injuriesOn-the-job injuries

• Fertility coverageFertility coverage

• PregnancyPregnancy

• Preexisting conditionsPreexisting conditions


PreapprovalPreapproval

Requirements for preapproval:Requirements for preapproval: EligibilityEligibility PrecertificationPrecertification PreauthorizationPreauthorization PredeterminationPredetermination


Chapter 3Chapter 3

Lesson 3.2


Classes of Health InsuranceClasses of Health Insurance

Group ContractGroup Contract Conversion PrivilegeConversion Privilege Income Continuation BenefitsIncome Continuation Benefits Medical Savings AccountsMedical Savings Accounts Health Savings AccountsHealth Savings Accounts Health Reimbursement AccountHealth Reimbursement Account Healthcare Flexible Spending AccountHealthcare Flexible Spending Account

High-Deductible Health PlansHigh-Deductible Health Plans Individual ContractIndividual Contract Prepaid Health PlanPrepaid Health Plan


Types of Health Insurance Types of Health Insurance CoverageCoverage

The Civilian Health and Medical Program of the The Civilian Health and Medical Program of the Department of Veteran Affairs (CHAMPVA)Department of Veteran Affairs (CHAMPVA)

Competitive Medical Plan (CMP)Competitive Medical Plan (CMP) Disability Income InsuranceDisability Income Insurance Exclusive Provider Organization (EPO)Exclusive Provider Organization (EPO) Foundation of Medical Care (FMC)Foundation of Medical Care (FMC) Health Maintenance Organization (HMO)Health Maintenance Organization (HMO) Independent or Individual Practice Association (IPA)Independent or Individual Practice Association (IPA) Maternal and Child Health Program (MCHP)Maternal and Child Health Program (MCHP)


Types of Health Insurance Types of Health Insurance Coverage (cont’d.)Coverage (cont’d.)

Medicaid (MCD)Medicaid (MCD) Medicare (M)Medicare (M) Medicare/MedicaidMedicare/Medicaid Point-of-Service Plan (POS)Point-of-Service Plan (POS) Preferred Provider Organization (PPO)Preferred Provider Organization (PPO) TRICARETRICARE Unemployment Compensation Disability (UCD)Unemployment Compensation Disability (UCD) Veterans Affairs Outpatient Clinic (VA)Veterans Affairs Outpatient Clinic (VA) Workers’ Compensation Insurance (WC)Workers’ Compensation Insurance (WC)


Chapter 3Chapter 3

Lesson 3.3Lesson 3.3


Basic Methods of Processing Basic Methods of Processing Insurance ClaimsInsurance Claims

Manually preparing claims for submissionManually preparing claims for submission In-office electronic filing by fax or computerIn-office electronic filing by fax or computer Contracting with an outside service bureauContracting with an outside service bureau Use of a telecommunications networking Use of a telecommunications networking

systemsystem


Basic Steps in Handling an Basic Steps in Handling an Insurance ClaimInsurance Claim


Basic Steps in Processing an Insurance Claim


Patient Registration FormPatient Registration Form

Patient’s name (first, middle initial, last)Patient’s name (first, middle initial, last) Street address and telephone numberStreet address and telephone number Business address, telephone number, occupationBusiness address, telephone number, occupation Date of birthDate of birth Person responsible for account or insured’s namePerson responsible for account or insured’s name Social Security numberSocial Security number Spouse’s name and occupationSpouse’s name and occupation Referral source (i.e., physician’s name)Referral source (i.e., physician’s name) Driver’s license numberDriver’s license number Emergency contact informationEmergency contact information Insurance billing informationInsurance billing information


Insurance CardInsurance Card


Patient Signature ReleasePatient Signature Release


Encounter Form (Superbill)Encounter Form (Superbill)

Attached to the patient’s medical record Attached to the patient’s medical record during an office visitduring an office visit

Combines a bill, insurance form, and routing Combines a bill, insurance form, and routing documentdocument

Can also be a computerized multipurpose Can also be a computerized multipurpose billing form to input charges and diagnoses billing form to input charges and diagnoses into a patient’s accountinto a patient’s account


Financial StatementFinancial Statement(Ledger Card)(Ledger Card)


Minimum Information Required Minimum Information Required on CMS-1500 Claim Formon CMS-1500 Claim Form

What was done? (services and procedures What was done? (services and procedures using procedure codes)using procedure codes)

Why was it done? (diagnoses using diagnosis Why was it done? (diagnoses using diagnosis codes)codes)

When was it performed? (date of service)When was it performed? (date of service) Where was it received? (place of service)Where was it received? (place of service) Who did it? (provider name and ID number)Who did it? (provider name and ID number)


Provider’s SignatureProvider’s Signature

Acceptable formats:Acceptable formats: HandwrittenHandwritten Signature stamp/FacsimileSignature stamp/Facsimile ComputerizedComputerized

• Electronic signatureElectronic signature

• Digital signatureDigital signature


Insurance Claim Follow-upInsurance Claim Follow-up


Insurance Claim Follow-up Insurance Claim Follow-up (cont’d.)(cont’d.)

Electronic systems should generate a log of claimsElectronic systems should generate a log of claims Put the necessary information in the patient’s financial Put the necessary information in the patient’s financial

recordrecord

chapter 3 chapter 3 basics of health insurance elsevier items and derived items © 2010, 2008 by...

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