2 P concepts

The health industry wherein only the patient and provider are involved is considered to follow the 2 P concepts.
The Indian healthcare industry works on 2 P concepts.

3 P concepts
The health industry wherein the patient, provider and payer are involved is considered to follow the 3 P concepts.
The US healthcare industry works on 3 P concepts

Some types of insurance work in USA Two types of Billing are there in USA
Life insurance 1) Physician Billing
Health insurance 2) Hospital Billing
Auto insurance
When we work on physician billing then the claim form which we used that
General insurance
is called CMS 1500/HCFA
Worker compensation
Centre for Medicare and Medicaid services
Healthcare financing administration
When we work on hospital/facility then the claim form which we used that is
called UB04/UB1450
Universal Billing

RCM – Revenue cycle management

RCM is a process of generating revenue for the providers in simple words we can say it begins when the patient make
the appointment to seek medical services and ends with successful payment collection
SCHEDULING – Scheduling is the process in
AR FOLLOWS UP – Once the claim which the patient fixes an appointment with
denied by the insurance company providers for the medical services.
then AR team start to taking follow
ups on that particular claim.

FUNCTIONS OF REGISTRATION – Registration is the process

PAYMENT AND DENIALS – REVENUE of collecting and recording the patient’s
CYCLE details by the provider’s office.
Payment and denial refers the
MANAGEMENT
process where the insurance
company makes payment or
denial after adjudication. ELIGIBILITY – Eligibility is the process by
which provider’s office check effective and
ADJUDICATION – Adjudication is the process Termination date of patient’s policy and also
check whether the benefits whatever patient
of claim processing (Insurance has received
is taking that benefits would cover in that
the claim and start working on it.) After
policy or not.
adjudication is complete, the insurance
generates the EOB and payment for the
claim this process is called Check Run.
CHARGES – Charges is the process in
which convert rendering charges into
TRANSMISSION – Claim transmission is billable charges.
the process of sending the claim to the
insurance company for processing.

CODING – the process of assigning pre defined

medical codes to diagnosis and procedures is
called coding.
Difference between CMS 1500 and UB04

When we work on physician billing means clinics then the claim form which we use that is called CMS
1500/HCFA, when we work on hospital/facility then the claim form which we use that is called UB04

There are 33 boxes in CMS1500

There are 81 boxes in UB04

Registration – when patient goes to the provider for taking necessary services, then there he has to fill
the registration form in that form he has to fill the following information and these are

1) Demographic details – it includes following information which patient has

to fill.Patient’s full name Date of birth
Address Email
Phone number marital status
Gender Social security number
Emergency contact Release of information (ROI – ROI means release of
information, patient has to sign on ROI then only we can share his information with insurance
company otherwise according to PHI under HIPAA we are not able to share. We can see ROI in
box no. 12 in CMS 1500.

2) Insurance details – Patient has to fill his insurance details

Primary insurance name Secondary insurance name tertiary insurance name

Insurance phone number Insurance address Policy

number Medical history – Patient has to attach his medical history
with this as well.

2) Employment details - In this patient has to fill his employment details if he is working
with anyorganization
Employer name Employer address Employer phone number

3) Guarantor information – In this patient has to fill his guarantor information if the patient is
minor.Guarantor should be in blood relation.

After the registration patient will be given a medical record index (MRI) number. This can be used to retrieve the
patient details from the database for future visits

Transmission – With in this function claim forwards to the insurance company

Any provider can forward the claim to the insurance company only by two ways
1) Through Electronically
We need payer id to forward the claim
2) Through Paper
We need mailing address to forward the claim
3) Insurance web portal
Federal /Government Insurance Companies/ Commercial /Private Insurance Companies
Medicare United Health Care Megna Care
Medicaid BCBS Anthem
Tricare Cigna
Champ VA/US Aetna
Medicare – Medicare is a federal government program that provides health care coverage.

Eligibility of Medicare
A person should have more than 65 years of age (Here a question arise that every individual above 65 years ofage
would get this insurance?)
Answer would be no
A person will get Medicare only if that person is more than 65 years of age, he should be citizen of USA, or thatperson
should have paid the tax for 10 years

A person should have disability (Here a question arise that every disable individual would get this insurance?)Answer
would be no
A person will get Medicare only if that person is disable and recognized by Rail Road retirement board by 2years
A person should have ESRD (end stage renal disease)
Example of ESRD is permanent kidney failure

Medicaid – Medicaid is a state and federal program that provides health care coverage
Eligibility of Medicaid

Low income people and their families (Each state set poverty line if any person proves that his income is under that
poverty line then that person is eligible to take Medicaid)

Tricare – Tricare and Champ US is same both are only available for those persons who are working in military

Champ VA/US
VAmeans veterans affairs (it is for those person who has retired from defense or military)
US means uniform services (it is for those people who have existing in defense or military.)
Champ US-Civilian Health and Medical Program of the
Eligibility for champ VA Uniformed Services
Retired people from defense or military Champ VA-Civilian Health and Medical Program for the
Widow of died military person Veterns Affairs
Disable person (who got disability while in war)

New Patient – New patient means patients who visit first time or else after 36 months.

Established patient – A patient who has received the services from any physician in the same facility or hospitalin
the previous three years is called an Established patient.
AOB – AOB means assignment of benefits
Assign of benefits means it is like an agreement between patient and the insurance company in that patient
requested to the insurance company to pay all the medical benefits to the provider (Patient has to sign this
AOB)
We can see this in box no. 13 in CMS1500
Birthday rule – Birthday rule means this is a rule which is applied when patient does not have any insurance and
he/she is dependent on his/her parent insurance (Question would arise here that how do we know whether the father
insurance is primary or the mother insurance is primary)
Answer would be

Who so ever date of birth come first, his /her insurance would be primary
If suppose date of birth is same of mother and father than how we know whose insurance would be primary

Answer would be
Then if the mother policy is older than mother’s insurance would be primary if the father policy is older than father’s
insurance would be primary

If suppose policy older date is also same then

Then father would be get benefit and father insurance would be the primary insurance
Fee Schedule (Allowed Amount) – Fee schedule means it is a fixed amount of money which is given
to providers for their servicesby the insurance company
Suppose a provider send the claim to insurance company for $200 for the particular service what he offered to
patient but the fee schedule is already set by the insurance company for that particular service is $50 then
insurance company will pay only $50 not $200.
This fee schedule is set by the insurance and insurance pay anything to provider according to this fee schedule only.

Prior Authorization – Prior authorization means it is a process by which insurance company gives
approvalto providers before providers performing any high dollars services on patients. We can see this in box
no. 23 in CMS 1500

Retro Authorization – Retro authorization means it is the process by which provider ask for the
authorizationfrom the insurance company after performing the high dollars services on patient.

Offset – Offset means the adjustment of incorrect or overpayment in the next claim. (Means if the provider has
sentthe claim to the insurance company for $200 but by mistake insurance company made payment of $300 on that
particular claim then the extra $100 would be adjust by the insurance company in the next claim)

Recoupment – Recoupment means the take back of money by the insurance company at the same time is
calledrecoupment.( (Means if the provider has sent the claim to the insurance company for $200 but by mistake
insurance company made payment of $300 on that particular claim then the extra $100 would be taken back by
the insurance company at the same time not in the next claim)
Clean claim – Clean claim means when claim is paid in one go without any error is called clean claim.

CLIAA – Clinical laboratory improvement amendment act 1988

According to this act if you are running with any laboratory or testing facility then that laboratory or testing facility
should be cliaa certified in order to get payment by Medicare or Medicaid and other insurances.
In order to get certified by cliaa you have to fill CMS 116 form which is there on CMS.GOV
COBRA – Consolidated omnibus budget reconciliation act 1985
According to this act if any person laid off from the job then also that person can continue the same insurance
upto 18 months to 36 months.

Hospice – Hospice means it is supported care given to patient when he is in the last phase of terminal illness and
here focus on comfort and quality life rather than cure.
Global Period – Global period means period of 90 days after the surgery.
Clearing house – clearing house is software which reject the claim due to in sufficient information, missing
information, or overlapping information.

When we send the claim through electronically and if it is rejected by clearing house then it is dropped claim
and if it is not rejected by clearing house (means passes through the clearing house and reach the insurance)
than it is clean claim.

The report come out from clearing house is called scrubber report.
This scrubber report is used for giving proof of timely filling as well. (We will see it on sixth day)

Important point
Clearing house only come into the picture when the claim forwards to the insurance company through
electronically, when the claim forwards to the insurance through paper the clearing house would not have
any use.

CMS – CMS means centre of Medicare and Medicaid services

Earlier it was known as health care financing administration; it is a department of health and human
science which concentrate on Medicare and Medicaid program (All insurance company and providers
follow the instruction and guidelines under CMS.)

Home Plan – Home plan means when the service is rendered within the patient city is called home plan

Host plan – Host plan means when the service is rendered outside of the patient city is called host plan.

HIPAA – HIPAA means health insurance portability accountability act 1996

This act was designed to protect the privacy of provider or patient.

PHI – PHI means protected health information. (This is a guideline under HIPAA where we have to protect the
privacyof patient or provider.

ABN – ABN means Advance Beneficiary Notice

In this when patient visit to provider then provider ask patient to fill this ABN form, in case if the procedure is
not covered by insurance company which patient has taken and if claim would denied by insurance then this
would be patient liability to pay the claim value. (This is happened only in case of Medicare)

WOL – Waiver of Liability

In this when patient visit to provider then provider ask patient to fill this ABN form, in case if the
procedureis not covered by insurance company which patient has taken and if claim would denied by
insurance then this would be patient liability to pay the claim value. (This is happened only in case of
other insurance)
 Place of service – Place of service means where the service has rendered (means place where the patient has
taken the service) We can see this in box no. 24B in CMS 1500.

Important place of services are

11 – Office
12 – Home
21 – Impatient
22 - Outpatient
23 – Emergency
31 - Skilled nursing
32 – Nursing
34 – Hospice
65 - ESRD facility

Four type of Managed Care Plans of all Insurances

HMO – HMO means Health maintenance organization
PPO – PPO means preferred provider organization
EPO – EPO means exclusive provider organization
POS – POS means point of service

Detail picture of all plans

Things which are there in Referral letter
HMO – Patient name
Patient can only go in network Patient medical condition
PCP is required in HMO In the case of emergency PCP and
referral is not required Name address and contact details of specialist
Referral code is required here Name address and contact details of PCP
Out of pocket expensive is less in HMO Referral authorization number
Premium is also less in HMO

Deductable – Deductable means an amount of money which patient has to pay to the insurance
company before insurance company starts paying him.

Co Insurance – Co Insurance means an amount of money which patient has to pay against the
claim once deductable is met. Co Insurance is always in percentage.

Co Pay – Co Pay means a small amount of money which patient has to pay during the visit.

Out of pocket expenses means any expenses coming out from the patient’s pocket

Deductable, Co Insurance, Co Pay is also called out of pocket expenses. Because all three expenses come out from
the patient’s pocket.

PPO –
Patient can go out of network
PCP is not required in PPO
Referral code is not required here
Out of pocket expensive is high in PPO
Premium is high in PPO
 POS –
Points of service (POS) plans are usually cheapest type of plan, but their list of providers may be limited in
scope.
Patient can go in network and out of network both
PCP is required in POS
Referral is required in POS
Out of pocket expensive is medium in POS
Premium is also medium in POS

EPO –
Patient can visit exclusive provider only (Patient has emergency then only he can go out of network)
PCP not required
Referral is not required
Out of pocket expenses are high but lesser than PPO
Premium is also high but lesser than PPO
Important points to be remember regarding these plans

 HMO and POS is a individuals plan where as PPO and EPO group health plan

 Those plan has more advantage and benefits that plan has high premium, high deductable and high
co insurance and those plan has less advantage and less benefits that plan has low premium and low
deductable and low co insurance.

CPT – CPT means current procedural terminology ( it is also called HCPC(health care common procedure
coding system) level 1 it is five digit code and all the digit are in numbers) It is also called procedure code

Definition of CPT
It is a medical code used to report medical, surgical, diagnostic procedure and services. (In simple terms we
can say CPT is a service which is given to patient)
Diagnosis Code (Illness/Sickness)
Diagnosis code Dx code is a combination of letters and or numbers assigned to particular illness/sickness, symtoms.
We can find these diagnosis code in box number 21 in CMS 1500 and we can billed up to 12 diagnosis code in
CMS1500 when we send claim through paper and up to 8 diagnosis code when we send claim through
electronically. Diagnosis code is developed by WHO(world health organisation)

Parts of Medicare
Part A - It includes Hospital coverage, Impatient (impatient means if the patient admits in the hospital
for more than 24 hours)
Part B - It includes Medical coverage, Outpatient (outpatient means if the patient admits in the hospital
for less than 24 hours)
Part C - It includes both hospital coverage and medical coverage both (it is also called medical
advantage and HMO
Part D - Drug prescription

If the patient has Part A of Medicare and if he is admit in hospital for less than 24 hours then insurance company will
not pay anything for this patient.
In order to get payment from insurance company with in this Part A patient has to admit in the hospital more than 24
hours.

If the patient has Part B of Medicare and if he is admit in hospital for more than 24 hours then insurance company
 will not pay anything for this patient.
In order to get payment from insurance company with in this Part B patient has to admit in the hospital less than 24
hours.
If the patient has Part C of Medicare then whether he is admits in the hospital for less than 24 hours or more than 24
hours insurance company will pay for this patient.

Along with all these parts patient has to take part D in order to take medicine prescribed by provider from the
pharmacy (that means whether the patient has Part A, B, and C he has to take part D if that patient want medicine
from the pharmacy)

MSP – MSP means Medicare Secondary Payer

Medicare is only the insurance who acts as primary always if the patient has Medicare, UHC, and BCBS, then among
all insurance Medicare will act primary.

But Medicare also could be secondary but in only three scenarios

Medicare is secondary in three scenarios

If a patient has worker compensation (worker compensation means that insurance which a person gets when that
person is working in any organization or else person will face any accident while working in that organization)

If a patient has group health plan (group health plan means that insurance which a person gets when that person is
working in any organization)

If a patient has auto no fault injury insurance

All these three above mentioned insurance never leave any patient responsibility

Medigap – Medigap is a supplement plan of Medicare it only pays left out by Medicare. For example AARP
insurance.(American Association of Retired Person)

Important point
Medicare always cross over the claim in home plan.

Important things about Medicaid

Medicaid is always the last payer (means when all insurance paid the claim then Medicaid
would be the last payer who paid the claim) and in the case of Medicaid we use Medicaid id.

Medicaid is month to month plan where the subscriber has to show his income month to month if any
monthhe fails to show his income then he lost the coverage by Medicaid.

Medicaid never leaves any patient responsibility, Medicaid paid all 100% of claim value.
 EOB – EOB means explanation of benefits
Whenever insurance company paid the claim or else denied the claim, the EOB generate automatically

It simply explains how your benefits were applied to that particular claim. It includes the date you receive
the services, the amount billed, allowed amount, Fee schedule, contractual adjustment, out of pocket
expenses, theamount paid, and other any balance which patient is responsible for paying to the
providers.

Important point – It provides details about provider’s claims payment and if the claims are denied, it
would thencontain the required explanation.

ERA – ERA means electronic remittance advice

ERA is an electronic data interchange (EDI). The electronic version of EOB is called ERA. In EOB everything is
mentioned in details but in ERA the things are mentioned in short but specific.

COB – COB means Coordination of Benefits

COB tell us which insurance of patient will act primary, secondary, tertiary, if the patient has more than one insurance
then patient has to update the COB to both insurances that which one is primary and which one is secondary, the
primary insurance will pay first and the secondary insurance will pay the remaining balance, secondary insurace will
not pay anything untill and unless primary insurance will not pay.
We can find this COB in box no. 11D in CMS 1500.

Referral authorization – Referral authorization means when patient goes to PCP (Primary Care Physician)
andwhen PCP refers that patient to specialist then PCP gives him referral code or referral authorization

Medical necessity – Medical necessity justify the necessity of performing the treatment. (In simple words we
can say that the service which was performed on patient by provider that was not necessary, it was just provider
choice andinsurance company will not pay for this.)

Medicare Cross Over – once medicare completed processing the claim then medicare authomatically
forward the claim along with his EOB to secondary insurance for processing, this is called medicare cross over.
Mostly Electronic forward happens which is called automatic cross over

Difference between Par and Non Par / participating or non participating

Providers

Par providers are in network providers with insurance and non par providers are out network providers with
insurance
Par providers are contracted with insurance for their services and non par providers are not contracted for any
serviceswith the insurance.
Par providers are agreed on allowed amount set by the insurance company but non par providers consider the
billamount as the final amount

Capitation – Capitation means it is a fixed amount of money which insurance company provide to providers
when providers are under capitation contract.(in simple words we can say capitation is the money which insurance
companygives to providers for their services which they offered to patients)

HIX – HIX means health insurance exchange by this patient can choose his own PCP
 E&M – E&M means Evolution and Management
It simply means observation E&M coding process in support of medical billing. All providers use E&M coding system to
be reimbursed by Medicare, Medicaid or other private insurance.
E&M codes are based on the current procedural terminology (CPT) codes established by the American Medical
Association (AMA)
E&M range
Anesthesia - 00100 – 01999
Surgery - 10040 – 69990
Radiology - 70010 – 79999
Medicine - 99281 – 99199
Pathology - 80040 – 89399
Routine visit - 99201 – 99499
New patient - 99201 – 99205
Establishment patient - 99211 – 99215

E&M range can be changed

The time given to patient by provider
Patient criticalality

Modifiers – Modifiers are two digit codes these may be alpha/numeric/alpha numeric which specify the services,
modifier would add within two services or else more than two services (two cpt or more than two cpt) we can see
modifiers in box no. 24 D in CMS 1500.

Important modifiers are

LT: Service performed on left hand side

RT: Service performed on right hand side
50: Bilateral
24:Unrelated Evaluation and Management Service by the Same Physician during a Postoperative Period.
25:Separately Evaluation and Management Service by the Same Physician on the Same Day
26: Professional Component/Reading the report only
51: Multiple procedures
58: Related procedure or service by the same physician during postoperative period
59: Distinct procedure
76 : Same service perform by same physician on same date of service
77 : Same service perform by different physician on same date of service
78 : Return to operating room for a related procedure during postoperative period
79 : Unrelated procedure or service by the same physician during postoperative period
AS: Assistant Surgeon not required

TFL – TFL means time filing limit

Time filing limit is a time frame which is given to provider by insurance company to submit the claim.

Time filing limit for some insurances are

Medicare - One year

Medicaid - 95 days
Tricare - One year
Champ VA/US - One year
UHC - 120 days
Cigna - 90 days (earlier it was 180 days)
Aetna - 90 days
Megna care - 90 days
Anthem - 90 days
Important Denial codes
CO4 – Modifier is missing
CO11 – Diagnosis code is invalid
CO16 – Additional information required
CO18 – Duplicate claim
CO22 – Covered by another payer
CO23 – Primary paid more than secondary allowed amount
CO24 – Capitation
CO27 – Coverage terminated
CO29 – Untimely filling
CO45 – Contractual adjustment
CO50 – Non Medical necessity
CO96 – Non covered services
CO97 – Bundle and Inclusive
CO109 – Non covered by this payer
CO 197 – Authorization is missing
PR 1 Deductable
PR 2 Coinsurance
PR 3 Copay
CO 167 – Diagnosis is Not Covered
CO 5 – procedure code is inconsistent with POS

CMS – 1500 (Important Boxes)

17- Referring provider name
17b-Referring provider NPI
19 Additional claim information corrected claim
21 Nature of illness
23 Prior Authorization# Referral Authorization# Cliaa#
24 A Date of service, 24B place of service, 24D Cpt and modifiers, 24F Charges, 24J Rendering provider NPI
25 Tax id
26 Patient account number
28 Total charges
29 Amount paid
31 Signature of physician
32 Service facility location information
33 Billing provider info and phone number

Allowed amount –
Paid + Patient responsibility
Billed amount –
Allowed amount + CO (contractual adjustment, contractual obligation)

ICD – International Classification of Disease

Earlier it was ICD 9 but now it is ICD10 is going on in US healthcare industry,
ICD is redesigned by CMS (Centre for Medicare & Medicaid Services.
CPT CODE FACTS
Will all the doctors get the same payment for cpt code?
No payment will not necessarily be the same
For example Doctor A may perform a physical check up and he got payment of $100 from the insurance compnay, same
service performed by Doctor B and he got payment of $90 from the insurance company, this is happened because of
contract signed by provider with insurance company.

DOS Date of service

Date of service denotes a date on which patient has taken the service from the doctor.

Insurance rep – Thankyou for reached united healthcare my name is lisa how can I help you
Agent – Hi my name is Eric and I am calling from the doctor’s office to verify the claim status please

What is your call back number

My call back number is 800-265-6681 with extension 2541

Insurance rep – Could you please give me your facility name

Agent – Yes it is general orthopaedic associates

Insurance rep – ok can I have the NPI of your provider?

Agent – Yes please the NPI of the provider is 0987654321

Insurance rep – can I have the tax id of your provider please

Agent – yes the tax id of the provider is 987654321

Insurance rep – can I have the patient member id please

Agent – Yes the member id is AFR78542614

Insurance rep – Can I have the patient full name and date of birth
Agent – Yes the patient name is david miller and his date of birth is 01/01/1987

Insurance rep – What is the date of service and total billed amount on this claim
Agent – Date of service on this claim was 04/26/2021 with the total billed amount that was $200 even

Insurance rep – Allow me sometime let me open the claim meanwhile could you please let me know
whether you have any specifice question on this claim or just need a general status

Agent – No I don’t have any specific question only I need a general status