Health Information

Technology and Management

Health
Transactions and
Billing

Health Information Technology and Management

 Figure 10-1 Billing wokflow.

Health Information Technology and Management

 Billing Workflow (continued)

• Providers verify patient insurance

eligibility; medical offices collect and post
copays
• The patient is treated and discharged or
checked out
• Procedure codes are assigned for services
rendered and supplies used; diagnosis
codes are assigned for disease or medical
condition
Health Information Technology and Management
 Billing Workflow (continued)

• Computer program generates paper or

electronic claim to be sent to insurance
plan after its reviewed by insurance or
claim specialist

Health Information Technology and Management

 Billing Workflow (continued)

• Insurance plan adjudicates claim and pays

provider (remittance); remittance advice or
EOB explaining payments generated
• Payment amount recorded in patient
accounts system; write-down adjustment,
if necessary, posted

Health Information Technology and Management

 Billing Workflow (continued)

• If applicable, claim is next sent to patient’s

secondary plan; “piggyback” or COB claim
• Statement is sent to patient for any
amounts due that are patient’s
responsibility
• Patient payments received by medical
office or hospital are posted to patient’s
account

Health Information Technology and Management

 Figure 10-2 Example of an open item patient statement.

Health Information Technology and Management

 Real-Time Posting

• Occurs while patient still present

• Allows for collection of copay
• Shortens revenue cycle (charge posting
complete at day’s end)
• Most commonly used in medical offices

Health Information Technology and Management

 Figure 10-3 Encounter form (also known as a superbill or charge ticket).

Health Information Technology and Management

 Batch Posting

• Similar to real-time posting except

superbills are gathered into a batch for the
date and posted later
• Often handled by a billing service which
posts charges, generates insurance
claims, and sends patient statements
• Common method for hospital billing

Health Information Technology and Management

 Payments

• Posted in both in batches and real time

• Patient payments, especially copays,
posted while patient is present to generate
receipt
• Insurance plan payments often posted in
batches
– May include lengthy EOB or ERA files

Health Information Technology and Management

 Hospital Batch Posting

• Do not bill until patient is discharged and

all records completed
• Many hospitals do not begin coding and
charge capture until HIM department has
analyzed record and sent it for coding

Health Information Technology and Management

 Hospital Batch Posting
(continued)
• Hospitals often use a bill-hold period to
ensure the hundreds of applicable charges
have been collected and coded
– Helps ensure use of accurate DRG and APC
codes

Health Information Technology and Management

Electronic Data Interchange (EDI)

• HIPAA standardized healthcare EDI by

requiring use of standard formats
developed and maintained by ANSI
• HIPAA requires specific transaction
standards for eight types of electronic data
interchange

Health Information Technology and Management

 Eight Mandated
HIPAA Transactions
• Claims or equivalent encounters and
coordination of benefits (ANSI 837)
• Remittance and payment advice (ANSI
835)
• Claim status inquiry (ANSI 276) and
response (ANSI 277)
• Eligibility benefit inquiry (ANSI 270) and
response (ANSI 271)
Health Information Technology and Management
 Eight Mandated
HIPAA Transactions (continued)
• Referral certification and authorization
(ANSI 278)
• Health plan premium payments (ANSI
820)
• Enrollment and de-enrollment in a health
plan (ANSI 834)
• Retail drug claims, coordination of drug
benefits and eligibility inquiry (NCPDP 5.1;
Version D.0)
Health Information Technology and Management
 Additional Transactions

• Under development, not yet mandated by

HIPAA; include:
– Patient Information in Support of a Health
Claim or Encounter (ANSI 275)
– First Report of Injury transaction

Health Information Technology and Management

 Professional Claims Billing

• Use either CMS-1500 form (paper) or

ANSI 837-P (electronic) transaction
– Medicare now requires most providers to
submit claims electronically
• CMS-1500 “fields” are numbered boxes
called form locators
• Form includes HCPCS/CPT-4 code;
associated with one or more diagnoses
that justify its medical necessity
Health Information Technology and Management
 Professional Claims Billing
(continued)
• Charges for each item are typically
providers’ usual and customary rate for the
item, not the contractually allowed amount
they expect to be paid
• Electronic claims report the same
information, but are sent a batch file
containing many claims for same provider
or multiple claims for one or more patients

Health Information Technology and Management

 Figure 10-4 Loop structure of ANSI 837-P electronic media claims.

Health Information Technology and Management

 Figure 10-5 CMS-1500 paper form for professional claims.

Health Information Technology and Management

 Institutional Claims Billing

• Hospitals use different claim form for

paper and electronic billing, necessitated
by reimbursement system based on
principal diagnosis and DRG

Health Information Technology and Management

 Institutional Claims Billing

• UB-04 form (paper) and ANSI 837-I

(electronic) format differ substantially from
professional claim forms
– Has coded fields instead of “yes/no” boxes
– Has condition, occurrence, and value codes
to communicate special information
– May be nine pages long to accommodate 450
line items

Health Information Technology and Management

 Figure 10-6 Sample electronic media claim file (ANSI 837-I).

Health Information Technology and Management

Electronic Media Claims (EMCs)

• HIPAA requires most health plans to

receive claims electronically in ANSI 837
format and permits all types of providers to
send them
• Medicare also requires nearly all providers
to submit claims electronically
• EMC files are typically batches of claims
sent in one large file

Health Information Technology and Management

 Clearinghouses

• Act as transaction intermediaries between

providers and health plans
• Receive claims from provider, send them
to plans, receive responses from plans,
and send responses to provider (functions
as a switch)

Health Information Technology and Management

 Clearinghouses (continued)

• May transmit PHI because they are one of

the three covered entities defined by
HIPAA
– Clearinghouse function is to convert data
arriving in a noncompliant format into a
HIPAA-compliant format

Health Information Technology and Management

 Claim Scrubbers

• Special software that examines claim data

before it is sent to eliminate preventable
billing errors
• May be component of billing system and
thus help prevent claims from being
created until errors corrected

Health Information Technology and Management

 Claim Scrubbers (continued)

• Or, may examine batch of claims and

report errors prior to sending
• Follow same logic as payer’s claim edits

Health Information Technology and Management

 Provider Payment Delays

• Caused by:
– Bill-hold period
– Payment floor
 14-day delay (electronic claims) and 29-day delay
(paper claims) imposed by Medicare intermediaries
and other health plans

Health Information Technology and Management

 Provider Payment Delays
(continued)
• Caused by:
– Secondary insurance plan billing
– Payment from patient
– Accounts receivable is uncollected money
owed

Health Information Technology and Management

Two Types of Patient Statements

• Balance forward
– Begins with previous month’s balance and
shows only charges or payments posted in
current period
• Open item
– Shows all unpaid items with payment,
adjustments, and balance for each item

Health Information Technology and Management

 ERA Systems

• Receive remittance information

electronically from payer in ANSI 835
transaction
– Special segments carry codified information
about how claim was adjudicated and any
adjustments made to the payment
• Save information from ANSI 835
transaction in database and report claim
electronically to secondary payer
Health Information Technology and Management
 ERA Systems (continued)

• Create report of what has been sent and

how it has been applied to patient
accounts
• Reconciles checks to totals on report or
verifies EFT
• ERA not sent to bank due to PHI

Health Information Technology and Management

 Figure 10-8 Sample paper EOB remittance advice.

Health Information Technology and Management

Determining Insurance Eligibility

• Provider sends eligibility inquiry to payer in

ANSI 270 format
• Payer responds with requested
information using ANSI 271 transaction
• Payer can also send ANSI 271
transactions to communicate information

Health Information Technology and Management

 Referrals and Authorizations

• Use ANSI 278 transaction, Health Care

Services Request for Review and
Response, to:
– Send request for authorization
– Return information about authorization,
certification, or referral to provider by plan

Health Information Technology and Management

 Claim Status

• Suspended claims may have not been

adjudicated due to:
– Need for further information, supporting
documentation, or test
– Loss of requests for missing information
• Unpaid claims must be investigated after
reasonable amount of time
– By phone
– Electronically using ANSI 276 transaction
Health Information Technology and Management
 Claim Attachments

• Supplemental documents providing

additional medical information to claims
processor
• Include information that cannot be
accommodated within claim format

Health Information Technology and Management

Claim Attachments (continued)

• Examples include:
– certificates of medical necessity (CMNs),
discharge summaries, operative reports
• Main reason claims are suspended

Health Information Technology and Management

Notice of Proposed Rule Making

• Identifies six types of electronic claims

attachments:
– Clinical reports
– Laboratory reports
– Emergency department reports
– Rehabilitative services
– Ambulance services
– Medications (during treatment, upon
discharge)
Health Information Technology and Management