Ashworth College Medical Coding Paper

Course Name:Medical Coding 1Lesson 2: Introduction to Health Insurance
The purpose of this lesson is to introduce and explain health
insurance and managed health care programs. The history of
health care in America is discussed as well as the importance of
having health insurance for health services rendered.
 Objective 1 Outline the major developments in
health insurance
 Objective 2 Explain the organization of managed
care and how it affects the provider, employee,
and policyholder
 Objective 3 Identify various types of insurance
 Objective 4 Explain the financial responsibility of
the patient and how health insurance influences
this amount
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Course Name:Medical Coding 1
Text Readings
Comprehensive Health Insurance: Billing, Coding, and Reimbursement, Chapter
2 (
Additional Readings
Required Readings
An Introduction to Health Insurance: What Should a Consumer Know?
More about Insurance and the Insurance Claims Process (
Supplemental Readings
A Brief History of Managed Care (
Introduction to the U.S. Health Care System (
Private Health Insurance (
Supplemental Videos
External Reference (
External Reference (
Lecture Notes
Understanding managed care insurance plans is an extremely important process in your role as a medical office
specialist or billing and claims specialist. As a healthcare professional, you’ll work with or be affected by
managed care every day at work.
To understand the specifics of insurance plans, you first have to understand the evolution of health care and how
managed care came about. In this lesson, we’ll discuss how managed care came into play and its role in
controlling the costs of health care for members enrolled in different programs. The goals of managed care were
to create a healthcare system where patients were provided the highest levels of care at the most cost-effective
prices. The costs of a managed care insurance plan will depend upon the type of program that a member, or
patient, enrolls in. You may even be familiar with some of the programs—HMOs, PPOs, and POS plans.
In addition to understanding managed care insurance plans, we’ll also discuss the importance of your role in
collecting information on patients visiting your healthcare facility. You can have a direct role in correct patient
information and whether the facility is adequately and accurately reimbursed. If it sounds like a big responsibility,
that’s because it is! Don’t worry, though, we’ll walk you through understanding more about your role in this lesson
and throughout the course.
History of U.S. Health Care
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The history of health care is complicated, and it has taken a great deal of time to get where we are today. Over
many years, the United States has worked to find an adequate healthcare payment system and appropriate
reimbursement for providers. As you can imagine, it’s difficult to find something that provides exactly what
everyone needs.
In 1977, the U.S. government gave power to an agency called the Health Care Financing Administration (HCFA,
pronounced “HIC-fuh”), created under the U.S. Department of Health and Human Services. On July 1, 2001, the
name HCFA was changed to the Centers for Medicare and Medicaid Services (CMS) to reinforce the agency’s
mission to serve Medicare and Medicaid beneficiaries.
This agency has come to be very powerful in healthcare operations in the United States due to the growing
number of Americans, especially children, who are uninsured. Subsequently, the government passed numerous
laws and policies that have affected healthcare billing and reimbursement. Many of the new requirements and
guidelines have made the profession of medical billing quite challenging.
Another recent requirement within the healthcare industry concerns the Health Insurance Portability and
Accountability Act (HIPAA) Privacy Rule. This part of HIPAA deals with patient authorization, consent, and the
release of a patient’s protected (confidential) health information. As a medical billing specialist, you must
familiarize yourself with this regulation.
The HIPAA Security Rule became effective in April 2005. It mandates the security of protected health information
being stored in electronic format. To verify compliance, medical providers and facilities handling protected health
information are subject to inspection by the U.S. government.
(Don’t worry if HIPAA seems confusing at this point. We’re going to cover it in greater detail later in this course.
The information presented on HIPAA in this section is meant as an introduction.)
Medical Reform with Managed Care
As your textbook discusses, healthcare reform has been taking place for a very long time. Some of the changes
that have taken place have required healthcare providers and facilities to take a closer look at how they do
business and provide services to receive appropriate reimbursement for services. The goal of a system that
delivers quality, cost-effective health care through monitoring and recommending utilization and cost of services
is called managed care. This means that resources and services are closely monitored to ensure that the costs
of the services are being held within the amount that the insurance company will reimburse. This is a big change
for healthcare providers, because in the past hospitals and physicians used whatever resources they wanted and
then charged the insurance company or patient the costs related to use of these resources. Because there were
no checks and balances in place, resources were often overutilized and costs were higher than needed. One of
the main goals of managed care is to provide the highest quality of care in the most cost-effective way.
Be sure to review Table 2.1 in your textbook to see how different aspects of managed care have come into play
throughout history.
Examples of managed care plans that you may be familiar with are HMOs and PPOs. In the past, the term
managed care was synonymous with health maintenance organization (HMO). However, today managed care is
a much more generic term referring to a wider range of services, and HMOs represent just one type of managed
care program.
The Patient Protection and Affordable Care Act
The Patient Protection and Affordable Care Act was signed into law by President Barack Obama on March 10,
2010. The law is often referred to as the Affordable Care Act, Healthcare Reform, and also as Obamacare. Here
we’ll refer to it as the Affordable Care Act.
The Affordable Care Act seeks to reform the current American healthcare system by
Allowing all Americans access to affordable health care
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Improving the quality of health care
Regulating the health insurance industry
Reducing spending in health care
One of the provisions of the act was the development of a “healthcare insurance marketplace” where Americans
can choose and purchase insurance that’s subsidized and federally regulated. A subsidized plan is a plan in
which another entity, such as an employer, pays for a portion of the insurance costs.
Before the Affordable Care Act, approximately 44 million Americans didn’t have access to health insurance.
As of October 1, 2013, Americans whose income is less than 400% of the federal poverty level can use the
health insurance marketplace, also referred to as an exchange, to obtain insurance coverage that’s subsidized
by the federal government. Americans who don’t have insurance and make above the income cutoff can also
purchase insurance on the exchange, but their premiums aren’t subsidized. Like any new system, the exchange
was met with some challenges when people couldn’t access the website for the program due to the
overwhelming number of people trying to access the site. The government has committed publicly to correcting
these issues as quickly as possible.
As you’re probably aware, the Affordable Care Act has generated great controversy. Some people are seeing
large increases in the cost of their health insurance, whereas others are able to get health insurance coverage
when they couldn’t before. When President Donald Trump entered office, he focused on dismantling the
Affordable Care Act. However, the Affordable Care Act hasn’t been repealed. Instead, there has currently been a
push to enact changes within the ACA. No matter what side of the issue you may be on, this is definitely a
monumental change for our country, and it will be interesting to watch as these changes continue to unfold.
About Managed Care Organizations
Managed care organizations (MCOs) are responsible for the health of a group of enrollees. Health plans,
hospitals, physician groups, and health systems can all be MCOs. MCOs have the following characteristics and
Primary care providers. Primary care providers are responsible for supervising and coordinating healthcare
services for enrollees and preauthorizing referrals to specialists, diagnostic testing facilities, inpatient hospital
admissions (except emergencies), and access to outpatient/ ambulatory services.
Quality assurance. This means that the MCO is “federally qualified” and must comply with state-mandated
quality assurance programs. Medicare established the Quality Improvement System for Managed Care to
ensure the accountability of managed care plans in terms of objective, measurable standards.
Utilization management. Utilization management is a method of controlling healthcare costs and quality of
care by reviewing appropriateness and necessity of care provided to patients prior to care.
Case management. Case management is the development of patient care plans for complicated cases.
Second surgical opinions. A second surgical opinion is required for all surgeries.
Prohibition of gag clauses. Providers must be able to discuss all options with patients.
Physician incentives. These include payments made directly or indirectly to healthcare providers to serve as
encouragement to reduce or limit services.
Types of MCOs
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The three major types of MCOs are health maintenance organizations, preferred provider organizations, and
point-of-service plans. Each type meets different needs.
Health Maintenance Organizations
A health maintenance organization (HMO) is a prepaid medical service plan that provides services to plan
members. HMOs are generally the most restrictive type of managed care plan because they operate according to
a “gatekeeper” concept, whereby a primary care physician (PCP) or other healthcare worker acts as the case
manager for the patient. All health care for each patient is directed through that case manager. An HMO has the
following characteristics:
All care is directed through the primary care physician (PCP) or other single healthcare worker.
Reimbursement is made by a fixed payment per patient per month, called capitation.
The emphasis is on keeping patients healthy to reduce healthcare costs, which is known as preventive care.
Patient must use specialty physicians within the HMO network.
Patients who go outside of the HMO network must pay the costs out of their own pockets.
Like any other healthcare plan, HMOs have both advantages and disadvantages. The advantages include
predictable costs, broader and more routine coverage, and no claim forms for reimbursement. Disadvantages
include choosing one primary care physician for all healthcare services and getting approval before
hospitalization or specialty care.
Preferred Provider Organizations
Preferred provider organizations (PPOs) represent an organization of “preferred” hospitals and physicians who
provide services to insurance company clients for a set fee. In a PPO, the covered individuals select the
hospitals and physicians they wish to use within the preferred provider network. With PPOs, coverage in-network
is 80 to 100 percent, with a small copayment for each office visit or hospital stay.
PPOs offer freedom of choice for the patient and fixed costs. The biggest disadvantage of PPOs is that the
success of a plan depends on its ability to offer a wide range of providers. If a large selection of providers can’t
be recruited, then it makes the plan less appealing to enrollees because the choices are limited.
Point-of-Service Plans
Point-of-service (POS) plans, often called “open-ended HMOs,” are one of the more flexible options because
they combine the best offerings from HMOs and PPOs. Individuals in a POS plan must choose a primary care
physician (just as in HMO plans), but there’s an option available for receiving care from hospitals or physicians
that aren’t in the plan without the need for referrals. If the insured chooses a physician or hospital outside the
plan, the insured must pay a portion of the cost.
You may be wondering how POS plans differ from HMO and PPO plans. In an HMO plan, the insured must
choose a primary care physician and then obtain a referral to seek care from a specialty physician. In a POS
plan, the insured chooses a primary care physician, but still has the option of receiving care from another
physician without the need for a referral. In a PPO plan, the enrollee’s incentive for receiving care through the
plan’s primary care physician is that the cost is lower than going to a physician outside the plan. The POS plan
combines HMO features with those of the PPO.
Review Table 2.2 on pages 38–39 of your textbook to understand the advantages and disadvantages of MCOs.
Review Table 2.3 on page 41 of your textbook for an overview of the different types of MCOs and their
Alternative Healthcare Plans
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Of course, the MCOs discussed here aren’t the only offerings for patients. Alternative healthcare plans are also
available, giving patients even more choices of coverage. Alternative healthcare plans include
Exclusive provider organizations (EPOs)
Independent physician associations (IPAs)
Physician–hospital organizations (PHOs)
Don’t confuse PPOs and PHOs. A physician–hospital organization (PHO) is a network of physicians and
hospitals that join together and, as a combined entity, will negotiate with insurance companies, employers, or
other organizations to provide health care to subscribers for discounted, negotiated fees. As you can see from
your textbook reading, the abbreviations for PPO and PHO are very similar, but their definitions are quite
Your Role with Managed Care Insurance Plans
We touched on it at the beginning of this lesson, but it bears repeating here: you’ll have an important role as a
medical office specialist in the managed care insurance plan process. It may be your job to collect the
information from the patient and ensure that it’s all complete and accurate. The collection and verification
process may include the following tasks:
Viewing the patient’s health insurance ID card
Verifying the patient’s information
Photocopying the card for the patient’s record
Understanding deductibles and copays for the patient
Understanding the Assignment of Benefits
Collecting insurance payments
In this lesson, we discussed how managed care was developed to control the cost of healthcare services for
members enrolled in healthcare plans. The focus wasn’t quick and easy medical care, but instead to control the
costs while also maintaining a high level of healthcare quality. This means that all medical care provided to the
patient was medically necessary and appropriate. To do this, managed care uses a network of different providers
in plans such as HMOs, PPOs, and POS plans. Each of these are MCOs that have different physician offerings
and services based on the plan.
In healthcare organizations, it’s important for medical office specialists to gain a complete understanding of
MCOs and how they work. Depending on your job, you may need to verify insurance and explain benefits and
reimbursement to the patients. In some cases, you may even need to negotiate with the insurance carrier when
reimbursements for services are denied or not completely reimbursed.
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Course Name:Medical Coding 1
Lesson 3: Medical Contracts, Ethics, and HIPAA
This lesson provides an overview of medical contracts, ethics, and HIPAA.
It’s important to have a clear understanding of these three concepts
because health care professionals are impacted by these concepts on a
daily basis. We’ll discuss medical contracts and standards of ethics for
medical office specialists of all kinds. In this lesson, we’ll also talk about
HITECH, or the Health Information Technology for Economic and Clinical
Health Act. HITECH was created to promote the adoption and meaningful
use of health information technology.
 Objective 1 Identify the key elements of a managed  Objective 3 Define terms that are used in a
care contract that dictates the provider’s
compensation for services rendered
 Objective 2 Explain the obligation of a medical
managed care contract to understand the contract
and discuss claim issues with the patient and carrier
 Objective 4 Explain the purpose of HIPAA and the
office specialist to uphold a standard of ethics
impact on health care services
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Course Name:Medical Coding 1
Text Readings
Comprehensive Health Insurance: Billing, Coding, and Reimbursement,
3 (
ou=18383&type=lti&rcode=ashworth-350454&srcou=18383) and
4 (
Additional Readings
Required Readings
Managed Care Contracts—Key Provisions for
Providers (
Summary of the HIPAA Security Rule (
Supplemental Readings
Accreditation Programs (
HIPAA for Professionals (
Health IT Legislation (
HIPAA 101 (
HIPAA and Billing (
Summary of the HIPAA Privacy Rule (
Supplemental Videos
External Reference (
Lecture Notes
Contracts. It can seem like such a difficult topic, right? The pages and pages
of legal and business speak. It’s true that it can be confusing, but
understanding how managed care contracts work is important not only for
your job in health care, but also for the patients.
Contracts are important in health care because they outline exactly how a
relationship will work and both parties’ expectations. As a medical office billing
specialist, it’s important for you to understand how these contracts work so
that you know what and how you can bill for services to receive the
reimbursement due to the provider.
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MCO contracts are legal agreements between the provider, such as the
doctor or hospital, and the insurance company or network. These managed
care contracts are creating great competition within the healthcare industry,
and companies are always changing the contracts to attract more members.
Ethics is extremely important in health care. One of the ways that the
healthcare industry stays ethical is by providing a Patient’s Bill of Rights. This
ensures that patients are aware of what care to expect and that they know
they have the right to access their healthcare information.
The healthcare industry also has a system of checks and balances in place to
ensure ethical practices. The National Committee for Quality Assurance
(NCQA) puts MCOs through a voluntary credentialing process that helps
evaluate providers.
Understanding Contracts
When a physician’s office contracts with an MCO, the provider becomes part
of the MCO’s network. The MCO is then able to create a larger network of
providers for the policyholders (also called members or enrollees). For
example, if a physician is going to get paid for providing treatment, he or she
must sign a contract with the managed care plan. In some cases, if the
contract isn’t beneficial or financially rewarding for the physician, he or she
won’t take part in that MCO contract. Depending on where you work and your
role, it may be your responsibility to review those contracts to see if they’ll
meet the needs of your physician’s office. Be sure to give consideration to the
different contract definitions in your textbook.
MCO Contracts and Reimbursement
As with most things in a business, most things boil down to money. Health
care is no different. The biggest element of a managed care contract is
reimbursement for services. The financial element of the MCO contract
explains requirements for reimbursement and claims submission.
Common types of reimbursement payments in MCO contracts include
Fee-for-service. A physician or provider bills for each service or visit
instead of on a prepaid basis.
Per diem. Reimbursement is based on service for that day and paid daily.
Per case. A predetermined reimbursement rate is provided for each
episode of care.
Capitation. Reimbursement is made based on preestablished payments of
services provided to the enrollees for a specific period of time. The
managed care plan pays the provider a fixed amount on a per capita, or per
person, basis. This is often called PMPM, or per member per month.
Ethics in Managed Care
Merriam-Webster’s Online Dictionary defines ethics as, “rules of behavior
based on ideas about what is morally good and bad.” Ethics is particularly
important in health care because we’re dealing with people’s lives. Thus, we
want to ensure that every step in the care process is performed correctly. One
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of the ways to ensure that MCOs are behaving in an ethical manner is to
create a system of checks and balances whereby the MCO can evaluate
providers through a credentialing process that evaluates the following:
Medical credentials
Service fees
Workplace environment
Although not all MCOs are accredited, those that are become voluntarily
accredited through a strict process from the National Committee for Quality
Assurance (NCQA). The NCQA is a nonprofit organization that was founded in
1990 “to improve the quality of health care.” The organization is often referred
to as the managed care “watchdog” because it assesses and reports on the
quality of managed care plans.
The NCQA works to
Improve health care
Provide accountability in health care
Empower customers by providing information
Provide excellence in customer service
In response to the need for standardized and objective information on the
quality of MCOs, the NCQA began accrediting—evaluating and examining
policies, procedures, and performance of organizations—in 1991. The
accreditation process for managed care plans is voluntary.
Voluntary accreditation means that organizations aren’t required to receive an
accreditation from the NCQA. However, an accreditation from the NCQA has
become a gold standard for managed care plans, and often employers won’t
do business with managed care plans that haven’t received the NCQA
Medical Office Specialists and Ethics
As you can imagine, being an ethical medical office specialist is one of the
most important characteristics that you can have in the industry. Because
you’re working with highly confidential information, providers and patients
want to know that you’re striving to be honest, lawful, and discreet in handling
their information and making decisions.
You can ensure ethical behavior by making sure that patients understand their
rights. The Patient’s Bill of Rights was created to make patients aware of their
rights with regards to health care. As a medical office specialist, you may be
required to review the Bill of Rights with patients and answer any questions
they may have. Some patients’ rights are covered under federal law. For
example, patients have a right to get copies of their medical records. Other
patients’ rights are more specific for each state. Be sure to review the different
parts of the Patient’s Bill of Rights in your textbook.
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On June 22, 2010, President Obama announced new final regulations for the
Patient’s Bill of Rights to help put Americans in charge of their own health
care. According to the Centers for Medicare and Medicaid Services (CMS),
“The Departments of Health and Human Services, Labor and Treasury
collaborated on the Patient’s Bill of Rights—which will help children (and
eventually all Americans) with preexisting conditions gain coverage and keep
it, protect all Americans’ choice of doctors, and end lifetime limits on the care
consumers may receive.”
In conclusion, contracts are legal agreements that are an important part of
managed health care. Not only do they help providers and insurance plans
agree and understand services and reimbursement, but they also protect the
patient. These contracts are changing the way that providers do business and
offer services because they need to work smarter to make more money.
To be successful in this industry, you must understand that managed care is
used to control costs and improve services without sacrificing healthcare
quality or ethics. To achieve this, the industry has developed national
“watchdog” organizations such as the NCQA in order to develop requirements
for quality for providers and also provide voluntary accreditation to those
meeting the requirements.
As you’ll discover, there are many regulations and laws to consider in the
healthcare industry. One of the most talked-about pieces of legislation that will
affect you directly is the Health Information Portability and Accountability Act,
commonly referred to as HIPAA (pronounced “HIP-uh”). HIPAA became law
on August 21, 1996. HIPAA amended the Employee Retirement Income
Security Act to provide new rights to participants and beneficiaries of group
health insurance plans.
At first glance, the law seems very complex, and in fact the entire text of the
HIPAA legislation is well over 500 pages. However, when broken down into
parts that directly affect you, it’s much easier to understand. For the purpose
of this course, we’ll be focusing on a few sections of HIPAA.
One of HIPAA’s main goals is to ensure the continuation of health insurance
for individuals changing employment. The act provides protection for
individuals and beneficiaries in both group health plans and individual
insurance policies. Specifically, HIPAA provides the following:
Protection against plans that limit coverage for preexisting conditions
Protection from discrimination against employees and dependents based on
health status
Opportunities to enroll in a new plan under certain circumstances
The right to purchase individual coverage if no group health plan coverage
is available
HIPAA also covers the privacy and security of patient information. Under
HIPAA, authorization isn’t necessary for the release of protected health
information for the purposes of treatment, payment, or healthcare operations
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The HIPAA Privacy Rule has essentially replaced the need for a specific and
separate authorization for release of medical information to the payer to be
executed by the patient. This authorization is now covered under the TPO
guidelines of the HIPAA Privacy Rule. Patients should execute an
Acknowledgement of Privacy Practices at their initial visit with the provider as
part of their registration paperwork; this Acknowledgement serves as their
general TPO release document. If they wish the insurance carrier to issue
payment directly to the provider, then patients still need to execute an
Assignment of Benefits to the Physician.
Figure 4.1 in your textbook is fairly standard and is most often included in the
patient’s registration paperwork as part of the demographics/insurance
registration form or as part of the financial policy documents. But if the portion
of this sample document dealing with the Authorization for Release of Medical
Information to the Payer were removed from the form, the provider/facility
would still be authorized to release patient information to the payer under
HIPAA TPO guidelines.
The HIPAA Privacy Rule
The HIPAA Privacy Rule was initially a great source of frustration and
misinformation for healthcare organizations, also known as covered entities.
At the most basic level, this portion of the law is intended to protect the privacy
of a person’s protected health information, or PHI, while improving the
portability of the information. Many practices feared they could no longer use
sign-in sheets or call out patients’ names in the waiting room. They also
thought they would have to install soundproofing in exam rooms. As HIPAA
training spread through the industry, however, healthcare providers realized
that changes were necessary and weren’t as extreme as they had first
The Privacy Rule involves mostly administrative changes. Organizations must
designate a privacy officer who understands the Privacy Rule, create
organizational polices to ensure compliance, train the staff, and handle any
patient privacy complaints. Every organization must now have patients sign a
form designating that they’ve been informed of the privacy practices and have
been offered a copy of the policy.
Under the HIPAA Privacy Rule, a covered entity must also detail within the
employees’ job descriptions what PHI they can access. For example, some
organizations may deem it necessary for billing personnel to have access to
the patient superbill, but not the patient chart. This will vary from organization
to organization.
For release of PHI, a specific authorization is required that details what
information will be released, to whom it will be released, and for how long the
authorization is effective. However, a covered entity may release whatever
information is necessary for the continued treatment of a patient, to seek
payment for a claim or service, and for the continued operation of the entity.
No further authorization is necessary from the patient for these TPO releases
other than the notification of privacy practices that should have already taken
place prior to the visit.
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PHI may also be released without patient authorization when complying with
state reporting laws, with federal laws, with governmental investigations, with
law enforcement, or with court orders, subpoenas, or other sanctioned
Patients also have several new rights under the Privacy Rule. They may
request that the use of PHI for treatment, payment, and operations be limited.
A covered entity doesn’t have to agree to such a limitation, though. Patients
may also designate that confidential communications be performed by
alternate means. For example, a patient may request that you communicate
with him or her at a specific phone number only or by mail only. Patients also
have the right to inspect or receive copies of their medical records and may
also submit an amendment to their medical records. Finally, patients have the
right to an accounting of disclosures of their PHI. This accounting doesn’t
include any releases made for treatment, payment, operations, or any
disclosure made under authorization.
Transaction and Code Sets
HIPAA states that all healthcare organizations must use uniform code sets
when submitting electronic healthcare claims. Transaction and code sets
cover most of what’s called “administrative simplification” in HIPAA. This part
of the law provides a single set of data that must be used for all claims to all
health plans. It requires the use of standardized systems such as ICD-10,
CPT, HCPCS, CDT-2, and national drug codes (NDC). We’ll discuss these
standardized coding systems at length later in the course.
The standards also provide a format or structure to send the data
electronically. The most common form you’ll hear about is the 837. Basically,
this is an electronic format of the CMS/HCFA-1500 that allows for a greater
amount of data per claim, including more line items. Most insurance
companies now require this format, and most clearinghouses can now
transmit in this format. The capability of billing software to create claims in this
format may still be limited, and often the data must be converted by an add-on
program or at the clearinghouse.
The second form you will hear about is the 835, the claim payment and
remittance advice. The 835 is essentially an explanation of benefits form
(EOB), with additional information about adjustments. In the future, as
adoption becomes more prevalent, it will be possible for this 835 to link with
the 837 (CMS-1500), automatically posting payments and reducing errors.
Additional forms created by this part of the law are the 270/271 Eligibility
Inquiry, 276/277 Claim Status, and 278 Referral and Authorization Request.
Adoption of these forms has been slow, but it will reduce confusion between
entities and insurance companies.
None of these transaction standards apply to paper claims, because each
health plan is still allowed to decide how to use paper claims and what
additional information to require. However, many providers are working toward
eliminating paper claims entirely.
The HIPAA Security Rule
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The Security Rule requires covered entities to provide reasonable
administrative, physical, and electronic safeguards to protect the
confidentiality, integrity, and availability of protected health information in an
electronic format. The standards require covered entities to implement basic
safeguards to protect electronic protected health information from
unauthorized access, alteration, deletion, and transmission.
Although the Security Rule specifies that the information must be protected,
it’s often vague on actual implementation suggestions. This is by design,
because lawmakers wished to allow for the use of evolving technology and
ideas and to allow covered entities to decide which technologies to use to
satisfy the requirements.
The Security Rule requires three security safeguards for compliance:
Administrative safeguards
Physical safeguards
Technical safeguards
Be sure to spend some time reviewing the different safeguards on pages 86–
87 of your textbook.
Working with HIPAA
Of course, this is only a brief introduction to HIPAA. As you can see, it could
easily be a course in itself! We recommend that you look at the law yourself.
In addition, every healthcare organization will have both a privacy officer and a
security officer who should be willing to answer any compliance or procedural
questions you may have. It may seem like a lot of information (it is!), but as
billing personnel you’ll deal with protected health information every day, so
you’ll become accustomed to the rules and regulations. Because patient
healthcare information is confidential, it’s important that you know how to
handle it securely.
Verification of Information
Medical practices and healthcare facilities place a high priority on the daily
process of verifying that they have correct patient information, demographic
information, and insurance information on the patients that they serve. This
information is vital to the process of submitting accurate claims to health
insurance providers and securing proper payment for the care and services
rendered. In your job, you may play an important role in this process.
Demographic/registration information (full legal name, address, Social
Security number, date of birth, employer, etc.) must be verified with patients at
regular intervals to ensure accuracy. The patient’s current health insurance
coverage should also be confirmed on an ongoing basis, because many
employers offer their employees a variety of insurance plans and coverage
options during their annual open enrollment periods. Keep in mind that in
today’s highly transient society, patients frequently change addresses and
employers. These changes result in outdated or incorrect registration and
insurance information being maintained in the patient’s paper or computerized
medical record.
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A patient’s health insurance coverage can easily be verified via telephone, fax,
or the insurance company’s website. It’s important to obtain complete
information on the patient’s type of plan (HMO, POS, PPO, EPO, etc.), the
network of participating providers, the scope of benefits provided, the annual
deductible, required copayments, and the type of services that require
preauthorization. It’s also crucial to verify if a patient requires a referral (written
or verbal) from his or her primary care provider for the appointment with your
facility/office. For new patients to your facility, basic demographic and
insurance information should be obtained during the scheduling process and
then be routed to the billing specialist for the verification process. As stated
above, the information on existing patients should be verified and updated by
the billing specialist at regular intervals (quarterly, semiannually, etc.). Doing a
little extra work upfront to obtain this information will streamline the claims
submission and payment process by reducing errors resulting from inaccurate
patient data.
The Health Information Technology for Economic and Clinical Health
(HITECH) Act promotes the adoption and meaningful use of health information
technology, or a set of requirements to move the healthcare industry toward
electronic health records (EHRs).
The HITECH Act was enacted as part of the American Recovery and
Reinvestment Act of 2009 and signed into law the same year. Healthcare
organizations were required to be compliant with the HITECH Act by 2015 or
they risked penalties for not demonstrating meaningful use of EHRs.
Healthcare changes over the past few years have created new demand for
health information professionals in a variety of settings—especially in coding,
billing, privacy, and security. However, to be professionally marketable, it’s
important to extend your knowledge and experience beyond schooling and get
involved in professional organizations and also possibly receive a certification
to demonstrate dedication and competency.
To be successful in this industry, you must also demonstrate a complete
understanding that managed care is used to control costs and improve
services. To achieve this, national “watchdog” organizations such as the
NCQA have developed requirements for providers and also provide voluntary
accreditation to those meeting the requirements.
HIPAA plays an important role in many medical careers because professionals
deal with PHI on a daily basis. You may be asked to play an important part in
ensuring that the organization’s privacy and security standards and
requirements are met.
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