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AMCA, Billing and Coding Exam Review (BCSC), 2016

American Medical Certification Association

Billing and Coding Specialist Certification (BCSC)

Exam Review


Dear Student, This exam prep study guide is intended to be used as reinforcement for what you have already learned. It is not intended to replace classroom learning or notes that you have already taken. Instead, use what you have already learned, and the notes that you have taken and the books that you used could be a great reference while you are studying. The exam consists of 100 multiple choice questions and you will have 2 hours in which to complete the exam. When taking the test, always apply these test taking strategies:

• Look for distracters in the question such as the words, not, always, exactly, first, next, etc.

• Read all the answers • Eliminate the ones that you know are incorrect • Narrow it down to 2 possible answers • Choose the BEST possible answer

ON TEST DAY

1. Please bring a picture ID with you. A valid driver’s license, county ID, and passport are all acceptable forms of ID.

2. Please bring a #2 pencil with you. 3. Fill out all registration and test answer sheets in their entirety. Your full name as you

would like it to appear on your certification card, your complete SSN and mailing address are necessary. Failure to provide this information, will delay the processing of your exam.

4. DO NOT WRITE IN THE TEST BOOKLET! All of your answers must be recorded on the answer sheet.

5. Cheating of any kind will not be tolerated. If someone is suspected of cheating, they will be removed from the classroom. They will forfeit their right to retake the exam.

6. In order to be successful on the exam, you must achieve a 70% or better on the exam. 7. Once the exam begins, you will not be allowed to access your cell phone or any other

electronic device. Please turn them to silent prior to entering the classroom. 8. Once the exam begins, you will not be allowed to use the restroom. Please use the

restroom before the exam begins


Special Accommodations

AMCA pledges to comply with the provisions of the Americans with Disabilities Act. as amended (42 USCG Section 12101, et. seq.), and with Title VII of the Civil Rights Act, as amended (42 U.S.C. 2000e, et seq.), to the best of their ability.

If you need special accommodations because of a disabling condition, you may ask for special testing services. This request must be submitted in writing and included with your registration. All requests are handled on an individual basis. If you are requesting special accommodations you must submit a letter (IEP) from an appropriate healthcare professional that is licensed to evaluate the disability. The letter must be written on the healthcare professional’s letterhead and include the professional’s title, address and telephone number and date. The letter must also include a diagnosis of the disabling condition and explain why special testing accommodations are necessary. The letter must have an original signature from the professional and be dated no more than 2 years prior to registration of the exam

Exam Challenges

If you have a question or believe any part of the exam was unfair or misleading, you can email customer service and your concerns will be forwarded to the appropriate department. When emailing, please include “Exam Challenge” in the subject line and email to: [email protected].

Good luck on your exam!

mailto:[email protected]


Introduction

The billing coding specialists’ duties have evolved in recent years. According to the U.S. Department of Labor (Bureau of Labor and Statistics) health information technicians are projected to be one of the fastest growing occupations. Employment of health information technicians is expected to grow faster than the average for all occupations through 2020, due to the increasing number of medical tests, treatments and procedures being scrutinized by third party payers, consumers, etc.

The billing coding specialists, also known as medical coders, or health information technologists, are responsible for maintaining and accurately reporting and categorizing patient information. Medical Insurance specialists are critical to the cash flow of a practice in addition to the financial success of the practice. They manage health information and ensure its’ quality through a series of checks and balances. They will also need basic knowledge of medical terminology, patient care skills and general office skills. The duties of a billing and coding specialist are decided on the basis of type of facility, size of practice and state of working. Some of the main duties of a billing and coding specialist may include but are not limited to:

• Answering phones • Processing patient information • Accurately entering patient financial information to ensure timely payments • Billing and coding for insurance purposes • Communicating with patients • General office duties

Communication As an integral part of the medical team, the type of communication sent and received sets the tone for the office. Email E-mail is a quick and easy way to communicate. Keep these handy tips in mind when using email to communicate:

• Use a personal name if your system allows it.

• Fill in the subject line to identify your message.

• Do not write a message with upper case as this may be perceived as expressing anger.

• ALWAYS CHECK WHO THE RECEIVER OF THE EMAIL IS BEFORE YOU CLICK SEND. This can be quite embarrassing if the email goes to the wrong recipient.

• Use “please” and “thank you”.


• Remember, email could be used as a legal document. Never threaten or intimidate someone; even in jest.

Phone Etiquette

When speaking on the phone always identify yourself to the caller. Convey to the person your undivided attention and willingness to help. Listen without interrupting, provide reasonable alternatives for the caller and take a clear concise message in order for the call to be returned. The following steps will ensure proper telephone etiquette:

• Answer the telephone promptly and kindly.

• Never allow an angry or aggressive caller to upset you; remain calm and composed.

• Speak clearly and concisely

• Be sure to ask the caller’s permission before placing them on hold

Understanding the way a patient feels is important. They may be anxious, nervous or even frightened. Empathy, having an understanding and compassion for what they may be experiencing, is a good characteristic to have in order to relate to your patients.

Patient Reception & Registration

The billing and coding specialists’ duties begin before the patient has entered the office. Each facility will have its own policy, however the medical assistant will usually be responsible for preparing files either the night before or the morning of the day the patients are scheduled to arrive. If a new patient is expected, all the appropriate paperwork must be included in their file. If an established patient is expected, up to date information including previous laboratory result, pathology reports, or similar documents must be included in the file.

Greeting the Patient

A successful assistant will be able to juggle the responsibilities of answering phones, completing paperwork, and greeting patients in a proper manner. If a patient arrives while the medical assistant is handling a phone call, the proper action is to look up and smile at the patient, then hold up an index finger to indicate that you will be able to assist them shortly. If the medical assistant is available, the patient must be greeted in a friendly manner, and then handled according to their status. For new patients, instructions should be given regarding the completion of paperwork, and the patient should be oriented with the facility including the location of the restroom, refreshments, and appropriate places to hang their coats, umbrellas etc.

When established patients present for appointments the front desk staff members should ask whether any pertinent personal or insurance information has changed. This update process is important because different employment, marital status, dependent status, or plans may affect


patients’ coverage. Patients must also provide confirmation of the accuracy of information including their address, telephone number, insurance carrier, or any other information that must be kept up to date. To double-check that information is current, most practices periodically ask established patients to review and sign off on their patient information forms when they come in. This review should be done at least once a year. If it is necessary to discuss confidential information regarding the patient’s finances or health information, the medical assistant should ensure that the patient is out of the hearing range of other patients.

A new patient arriving at the front desk for an appointment completes a patient registration form. This form is used to collect the following demographic information about the patient:

• First name, middle initial, and last name • Gender • Marital status • Birth date using four digits for the year • Home address • Social Security number • Work/home telephone • For a married patient, the name and employer of the spouse • A contact person for the patient in case of a medical emergency

For an insured new patient, the front and back of the insurance card are scanned or photocopied. All data from the card that the patient has written on the patient information form is double-checked for accuracy. Many practices also require the patient to present a photo I.D card, such as a driver’s license, which the medical assistant scans or copies for the chart.

In order to remain compliant within HIPAA standards, the sign-in sheet must be set up in a way which prevents a patient from seeing the signature of the previous patient.

Federal/State Regulations

The main federal government agency responsible for healthcare is the Centers for Medicare and Medicaid Services known as CMS. State regulators are also regulators of the healthcare industry. States can set/regulate price increases on premiums, other charges to patients, and they can also require that policies include a guaranteed renewal provision.

HIPAA

The Health Insurance and Accountability Act (HIPAA) of 1996 accounts for the privacy of patients’ health information. The basic premise of HIPAA is to protect people’s private health information, ensure health insurance coverage for workers and their families if the change or lose their jobs, uncover fraud and abuse and create standards for electronic transmission of healthcare transactions.

HIPAA contains five provisions called “titles” that focused on various aspects of healthcare. The


titles include:

• Title I: Healthcare Access, Portability and Renewability

• Title II: Preventing Health Care Fraud and Abuse

• Title III: Tax – Related Health Provisions

• Title IV: Application and Enforcement of Group Health Plan Requirements

• Title V: Revenue Offsets

HITECH

As part of the ARRA of 2009, the Health Information Technology for Economic and Clinical Health (HITECH) Act promotes the adoption and meaningful use of health information technology. The HITECH act also refers to the financial incentives for physicians, hospitals, and other healthcare providers. To receive these financial incentives, providers must purchase and use an electronic health record (EHR) system. Meaningful Use is the utilization of certified EHR technology to improve quality, efficiency, and patient safety in the healthcare system. The HITECH Act also imposes Medicare payment penalties on providers who do not meet the meaningful use standards by 2015.

Health Information Exchange (HIE) allows providers to share information through organized networks. Examples of this include, sharing patient records with other physicians outside of the medical group, transmitting prescriptions to pharmacies, and ordering tests from a lab. The Certification Commission for Healthcare Information Technology (CCHIT) is a private sector organization that certifies electronic health record products.

Covered Entities

A covered entity is an organization that must follow the HIPAA regulations. There are three types of covered entities

• Health plans

• Healthcare clearinghouses

• Healthcare providers

Many, not all, physician’s practices are covered under HIPAA. Since all Medicare claims need to be filed electronically, even small practices have moved to filing claims electronically due to the advantage of claim being paid quicker than a paper submission.

Electronic Medical Records

An important business document, a medical record is used to support treatment decisions, document services provided, and could also be used in a court of law for evidence purposes. Electronic Medical Records (EMR) are computerized records of one physician’s encounter with a patient over time. The EMR reflects treatment of a patient by one physician. In contrast an Electronic Health Record (EHR) reflects the data from all sources that have treated the individual. Personal Health Records (PHR) are maintained and owned by the patient. The


patient makes the decision whether to share the contents with their physician. The contents of a health record vary depending on the setting. Acute care, most often refers to a hospital, treats patients with urgent problems that cannot be handled. Ambulatory care refers to treatment without admission to hospital. Hospital records keep track of time-limited episodes where doctor charts are reflective of the ongoing health of individuals.

Advantages of Electronic Health Records

• Safety

• Quality of care

• Efficiency

• Cost Reduction

HIPAA Security Rules

HIPAA requires the usage of password protection on all electronic devices used to access patient information. If you work in a reception area that is visible to patients, it is important that your computer is positioned in a manner that does not reveal information to patients that may be standing close to your desk. Additionally, each employee is required to log off of their computers when leaving their desks, in order to prevent information from falling into the wrong hands.

Encryption is also required when computers exchange data over the Internet. Encryption is the process of encoding information in such a way that only the person (or computer) with the key can decode it. PMP’s encrypt data traveling between the office and the Internet, especially Social Security numbers.

HIPAA National Identifiers

Identifiers are a unique set of numbers, (like Social Security Numbers) that are used in electronic transactions. These identifiers are used for the following:

• Employers

• Healthcare providers

• Health plans

• Patients

Patient Encounters

When established patients present for appointments the front desk staff members should ask whether any pertinent personal or insurance information has changed. This update process is important because different employment, marital status, dependent status, or plans may affect patients’ coverage. Patients must also provide confirmation of the accuracy of information including their address, telephone number, insurance carrier, or any other information that must be kept up to date. To double-check that information is current, most practices


periodically ask established patients to review and sign off on their patient information forms when they come in. This review should be done at least once a year. If it is necessary to discuss confidential information regarding the patient’s finances or health information, the medical assistant should ensure that the patient is out of the hearing range of other patients.

A new patient arriving at the front desk for an appointment completes a patient registration form. This form is used to collect the following demographic information about the patient:

• First name, middle initial, and last name • Gender • Marital status • Birth date using four digits for the year • Home address • Social Security number • Work/home telephone • For a married patient, the name and employer of the spouse • Race/Ethnicity • A contact person for the patient in case of a medical emergency

For an insured new patient, the front and back of the insurance card are scanned or photocopied. All data from the card that the patient has written on the patient information form is double-checked for accuracy. Many practices also require the patient to present a photo I.D card, such as a driver’s license, which the medical assistance scans or copies for the chart.

In order to remain compliant within HIPAA standards, the sign-in sheet must be set up in a way which prevents a patient from seeing the signature of the previous patient.

Collecting Payments

The certified specialist is responsible for the collection of copayments which will typically occur when the patient arrives to register at the reception area. In order to save time and ensure accuracy, the amount required for co-pay should be listed in the patient’s file. Each medical facility should always call and verify each patient’s insurance information/eligibility. When verifying the patient’s eligibility, always ask what the patient’s copayment is. Each facility will have its own method of dealing with patients that are unable to provide payment at the time of their appointment; however it is the medical assistant’s responsibility to handle this situation in a pleasant, considerate manner.

Most facilities use preprinted fee slips, also known as superbills, to track fees for each patient. Either the physician or medical assistant will use the fee slip to make note of the services or procedures that were performed, in addition to any diagnoses assigned to the patient. Since


procedural and diagnosis codes change every year, fee slips should be reviewed for accuracy on an annual basis to determine if they need to be reprinted.

The Assignment of Benefits statement must be kept on file which authorizes the provider to be paid by the patient’s insurance company.

Acknowledging the Notice of Privacy Practices is also kept on file assuring that the patient has read and understands how the provider will keep the patient’s information private.

Scheduling Appointments

Many front office employees handle scheduling and appointments. Typically, an electronic scheduling system is used as this helps in sending reminders to patients, track follow-up appointments, etc.

When an established patient shows up for an appointment, the insurance information is verified. A PMP is set up with the provider’s information regarding the income and expense accounting, in addition to medical license numbers, tax ID numbers, and office hours. There are also a database of common codes/procedures built in to the PMP which helps in the billing process.

An important part of the financial success of every practice is patient eligibility or verifying insurance benefits. There are three steps to establish financial responsibility:

1. Verify the patient’s eligibility for insurance benefits

2. Determine preauthorization and referral requirements

3. Determine the primary payer if more than one insurance plan is in effect

Encounter Forms

This form is completed soon after a visit by a provider to summarize billing information regarding the visit.

Preauthorization

A managed care provider often requires preauthorization before the patient sees a specialist. If the payer approves the service, it issues a pre-authorization number that must be entered on in the practice management system so it appears later on the healthcare claim for the encounter. The pre-authorization number may also be called a certification number. Often times, patient’s need to see another doctor in addition to their primary. Referrals, a written request for medical services, describe the services the patient is to receive. With each insurance plan, referrals operate differently, so it is always best to check with the patient’s insurance provider before scheduling the appointment.

Insurance Plans

The primary insurance is the one who pays first. The secondary insurance can provide benefits once the primary insurance has already paid. Tertiary insurance is a third payer. Supplemental insurance can cover services not normally covered by a primary plan. All insurance plans have a COB – a coordination of benefits – which indicates how a policy will pay when more than one


insurance plan is in effect. HIPAA COB number is X12837. The COB information is exchanged between health plan and provider or between a health plan and another provider such as home owners insurance.

How to determine who has the primary coverage.

Patient has one policy Primary

Patient is covered under two group plans Plan that has been effect for the longest period of time is the primary, unless that employee has been laid –off or retired, the original plan in existence is then the primary.

Patient is covered under a group plan and an individual plan

Group plan is the primary

Patient is covered as a dependent under another insurance policy

Patient’s plan is the primary

Patient is covered under an employer plan and a government sponsored plan

Employer plan is the primary

Patient is retired and covered by a spouse’s plan that is still working, even though the retired patient has Medicare.

Spouse’s plan is the primary

Patient is a dependent covered by both parents; the birthday rule is in effect.

The Birthday Rule determines the primary insurance by whose birthday comes first.

If two or more plans cover dependent children of separated or divorced parents

1 The primary is typically the custodial parent

2 The plan of the spouse of the custodial parent if remarried

3 The plan of the parent without custody

(IN THIS ORDER)


ICD-9 vs. ICD 10

3-5 characters 3-7 characters

First character is numeric or alpha (E or V) First character is alpha (all letters except U are used)

Characters 2-5 are numeric 2nd character is numeric

Characters 3-7 are alpha or numeric

Always at least 3 characters Alpha characters are not case sensitive

Use of decimal after 3 characters Use of decimal after 3 characters

** http://www.cms.gov/

Similarities to ICD -9

ICD-10 will have a tabular list including

• Chronological list of codes divided into chapters based on body system or condition

• Same hierarchical structure

• Chapters in Tabular structured similarly to ICD-9-CM with minor exceptions

o A few chapters have been restructured

o Sense organs (eye and ear) separated from Nervous System chapter and moved to their own chapters

Benefits of ICD – 10 **

The benefits of the ICD-10 include:

• More clinically relevant data than ICD-9 • Better reflection of clinical severity and complexity • More accurate representation of provider performance • Less ambiguous code choices • Support for medical necessity • Validation for reported evaluation and management codes • More accurate and fair reimbursement • Less misinterpretation by auditors, etc. • Improved efficiencies • Fewer coding errors

** http://www.cms.gov/

Organization of ICD-10

The process of assigning ICD-10 CM’s codes begins with the physician’s diagnostic statement. This contains the medical term describing the condition for which a patient is receiving care. In

http://www.cms.gov/

http://www.cms.gov/


each part of ICD-10-CM there are conventions that are typographic techniques that provide visual guidance for understanding information and help the coder select the right code. The primary rule is that both the Alphabetic Index and the Tabular List are used sequentially to pick a code. This process must be followed when assigning all codes. A code followed by a hyphen in the Alphabetic Index is a clear reminder of this rule.

ICD-10 uses a placeholder character sometimes designated as an “x” when a fifth, sixth or seventh character is required but the digit space to the left of that character is empty.

ICD-10 has 3 Volumes

• Volume 1 – tabular list

• Volume 2 – instruction module

• Volume 3 – alphabetical list

Main Terms, Sub terms, and Nonessential Modifiers

Each main term appears in boldface and is followed by the default code. Below the main term are any subterms associated with the main term. Subterms are important as they may show the etiology of the disease. Nonessential modifiers are shown in parentheses on the same line.

Common Necessary Terms to Coding

Eponym – Condition named for a person – such as Hodgkin’s disease

NEC – Not Elsewhere Classifiable – no code is specific for that condition

NOS – Not Otherwise Specified – used when a condition is not completely described in the medical record.

Category – Three character alphanumeric code that covers a single disease or related condition

Sub category – Four or five character alphanumeric subdivision of a category.

Inclusion notes – Headed by the word “includes” and refine the content of the category appearing above them.

Exclusion notes – Headed by the word “excludes” and indicates conditions that are not classifiable to the preceding code.

o Excludes 1 is used when two conditions could not exist together

o Excludes 2 means “not included here” but a patient could have both conditions at the same time.

Punctuation

o { } Brackets (square) enclose synonyms, alternative wording or explanatory phrases. Brackets identify manifestation codes.

o ( ) Parentheses are used in both the index and tabular list to enclose supplementary words – non-essential modifiers


o : Colons are used in the Tabular List after an incomplete term which needs one or more of the modifiers

Sequelae – Are conditions that remain after a patient’s acute illness or injury has ended – could

be called residual effects or late effects. Providers – physicians, hospitals and other suppliers that furnish care or supplies to Medicare

patients are called providers.

Beneficiary Pays: deductible, premiums, co-insurance (20%) non-covered services

Medicare Pays: covered services (80%)

Coding The more characters a code has, the more specific it becomes and errors are minimal. Using the most specific code possible is referred to as coding to the highest level of specificity. The correct procedure for assigning accurate diagnosis codes has six steps:

Review complete medical documentation.

Locate the main term in the alphabetic index.

Identify the main term for each condition.

Abstract the medical conditions from the visit documentation.

Verify the code in the tabular list.

Check compliance with any applicable Official Guidelines and list codes in appropriate order.


ICD – 10 Chapters

A00-B99 – Certain Infectious and Parasitic Diseases (Chapter 1)

C00-D49 – Neoplasms (Chapter 2)

D50-D89 – Diseases of the Blood and Blood Forming Organs and Certain Disorders Involving the Immune Mechanisms (Chapter 3)

E00-E89 – Endocrine, Nutritional and Metabolic Diseases (Chapter 4)

F01-F99 – Mental and Behavioral Disorders (Chapter 5)

G00-G99 – Diseases of the Nervous System (Chapter 6)

H00- H59 – Diseases of the Eye and Adnexa (Chapter 7)

H60-H95 – Diseases of the Ear and the Mastoid Process (Chapter 8)

I00- I99 – Diseases of the Circulatory System (Chapter 9)

J00-J99 – Diseases of the Respiratory System (Chapter 10)

K00-K94 – Diseases of the Digestive System (Chapter 11)

L00-L99 – Diseases of the Skin and Subcutaneous Tissue (Chapter 12)

M00-M99 – Diseases of the Musculoskeletal System and Connective Tissues (Chapter 13)

N00-N99 – Diseases of the Genitourinary System (Chapter 14)

O00-O9A – Pregnancy, childbirth and the puerperium (Chapter 15)

P00-P96 – Certain Conditions originating the perinatal period (Chapter 16)

Q00-Q99 – Congenital Malformations, Deformations, and Chromosomal Abnormalities (Chapter 17)

R00-R99 – Symptoms, signs, and abnormal clinical and laboratory findings, not elsewhere classified (Chapter 18)

S00-T88 – Injury, poisoning and certain other consequences of external causes (Chapter 19)

V00-Y99 – External causes of morbidity (Chapter 20)

Z00-Z99 – Factors influencing Health Status and Contact with Health Services (Chapter 21)


Current Procedural Terminology (CPT)

The Current Procedural Terminology (CPT) used by physicians and other healthcare providers. The CPT is made up of the main text – sections of codes – followed by appendixes and an index.

There are three categories of CPT codes:

o Category I codes – have 5 digits. Each code has a descriptor, which is a brief explanation of the procedure

o Category II codes – used to track performance measures for a medical goal such as weight loss

o Category III codes – temporary codes for emerging technology, services, and procedures.

CPT codes are updated annually on October 1 and remain in effect for products and services provided after January 1 of the following year.

o Evaluation and Management Codes 99201-99499 o Anesthesia Codes 00100-01999 o Surgery Codes 10021-69990 o Radiology Codes 70010-79999 o Pathology and Laboratory Codes 80047-89398 o Medicine Codes 90281-99607

A code range is shown when more than one code applies to an entry. Two codes are separated by a comma. A modifier is a two digit number that may be attached to most five-digit procedure codes.

Symbols used in Coding

• A bullet (solid circle) indicates a new procedure code. The symbol appears next to the code only in the year that it is added

A triangle indicates that the code’s descriptor has changed. The symbol appears next to the code only in the year that it is added.

Facing triangles (two triangles that face each other) enclose new or revised text other than the code’s descriptor

+ A plus sign next to a code indicates an add-on code.

A bullet inside a circle indicates that moderate sedation is part of the procedure.


The lightning bolt symbol is used with vaccine codes that have been submitted to the FDA for approval and are awaiting approval.

Patient Examination and Documentation

History is documented in the patient’s medical file. History is typically taken by the assistant or the doctor and could be used as a reference for certain diseases or symptoms. There are 4 different types of histories that could be taken:

History of Present Illness – description of its development from the first sign or symptom that the patient experienced to the present time.

Past Medical History – The past history explains the patient’s experiences with illnesses, injuries, and treatments in addition to operations, injuries and hospitalizations. It also covers current medications, allergies, immunization status and diet.

Family History – reviews the medical history of the patient’s family.

Social History – Patient’s age, marital status, employment, etc.

History: Four elements of a history

1. Chief complaint • History of present illness • Review of symptom • Past, Family and or Social History

2. History Levels • Problem Focused • Expanded problem focused • Detailed • Comprehensive

3. Examination Levels • Problem focused • Expanded problem focused • Detailed • Comprehensive


4. Medical Decision Making Complexity Levels • Straightfoward • Low • Moderate • High

A. Straightforward • Minimal diagnosis • Minimal risk • Minimal complexity of data

B. Low • Limited diagnosis • Limited/low risk to patient • Limited data

C. Moderate • Multiple diagnoses • Moderate risk to the patient • Moderate amount and complexity of data

D. High • Extensive diagnoses • High risk to patient • Extensive amount and complexity of data

Coding Compliance Claims can be denied for careless errors or for incorrect diagnosis and procedure codes.

Rejected claims result in delays in the payment process or even fines to the provider. Errors relating to the Coding Process include:

• Truncated coding – using diagnosis codes that are not as specific as possible • Assumption coding – reporting items or services that are not actually documented • Altering documentation after services are reported • Coding without documentation • Reporting services provided by unlicensed or unqualified clinical personnel • Coding a unilateral service twice instead of choosing the bilateral code • Not satisfying the conditions of coverage for a particular service

There can also be errors related to the billing process which also will delay a claim. The most common ones are:


• Billing non-covered services • Billing over limit services • Upcoding – using a procedure code that provides a higher reimbursement rate than the

correct code • Billing without signatures • Using outdated codes

A good way to avoid any of the above errors is to use modifiers appropriately, be clear on discounts to uninsured or low income patients, and maintain good documentation templates on your EHR.

Type of Audits

External Audits – Private payers or government agencies review selected records of a practice for compliance. Internal Audits – conducted by the medical office staff or a hired consultant Retropsective audits – conducted after the claim has been send the remittance advice has been received.

Insurance Billing and Authorization Currently, about half of the insured Americans have health insurance through a private or commercial insurance company. Usually this is through a group policy sponsored by one employer. Practice management software has simplified the insurance billing process. Once a patient has received services and fees are applied to the account, the software will use the information entered to prepare the claim. Once the claim is sent to the insurance company and a payment returns, it will be applied to the patient’s account. This is accomplished with posting payments system. Adjustments (amounts added to or taken away from the balance of an account) still may be necessary once payment has been received. Adjustments are often used to reflect contract amounts, credits, refunds, discounts, bad debt, and corrections to erroneous entries. When amounts are removed from a balance, the adjustment is sometimes referred to as a write-off. There are two methods to determine rates to be paid to providers. The first method is charge – based and the second method is resource – base. Charge – based fees are established using the fees of providers providing similar services. Resource – based takes into account three relative factors – 1) how difficult is it for the provider to do the procedure, 2) how much office overhead is involved, and 3) the relative risk the procedure presents to the patient and the provider. Allowed charges is the amount the most the payer will pay any provider for the CPT code. Claims and Claims Terminology


HIPAA X12 837 Health Care Claim: Professional – may be called the 37P claim or the HIPAA claim – it is based on the CMS – 1500. The CMS 1500, the electronic HIPAA claim, is a paper form. Block 1 is the type of insurance coverage and the rest of the top blocks are personal identification for the patient. Up to 12 diagnoses can be reported on the CMS-1500. Clearing Houses – Edits and transmits batches of claims to insurance carriers Fee schedule – patient pays doc for professional services performed from an established schedule of fees- Physicians establish a list of their usual fees for procedures and services they frequently perform. • Usual, Customary, and Reasonable (UCR)

– Method based on individual docs charge profiles and customary charge screens for similar groupings of physicians within a geographic area with similar expertise

– Usual – fee normally charged for a given service – Customary – fee in the range of usual fees charged by physicians of similar training

and experience for same service within the same specific and limited socioeconomic area

– Reasonable – fee that meets both of above or is considered justifiable by responsible medical opinion considering special circumstances of the particular case in question

• Relative Value Studies (RVS) – a list of 5 digit procedure codes for services with unit values that indicate the value for each procedure

• Capitation • Managed care plans that are prepaid per person per month regardless of

how many times the patient is seen. • Precertification

– Is the service covered under pts insurance plan? • Predetermination

– How much will insurance pay or maximum dollar amount for this service? • Preauthorization

– Is the service medically necessary? • Referrals

• Formal • Authorization request is required to determine medical necessity can be

obtained via telephone, but usually mailed or faxed • Direct

• Simplified authorization form is completed and signed by doc and handed to pt. at time of referral certain services may require direct.

• Verbal • Primary care doc telephones specialist and indicates approval

• Self

• Pt. refers himself


MEDICAID: A federal program administrated by state government to provide medical assistance for low income people or people that cannot afford to pay their medical bills. Each state sets its own guidelines for eligibility and services, there benefits and coverage may vary widely from state to state.

Effective for dates of service on our after January 1, 2013 through December 31, 2014, states are required by law to reimburse qualified providers at the rate that would be paid for the service if the service were covered under Medicare. Most states will have to submit a Medicaid state plan amendment (SPA) to increase Medicaid rates up to this level. CMS (Centers for Medicare and Medicaid) has issued a state plan amendment for the purpose of review and approval of the primary care payment increase. Some states may not have not have had the higher fee schedule rates in place on January 1, 2013. In that event providers will likely continue to be reimbursed the 2012 rates for a limited period of time. Once these procedures are in place and providers are identified as eligible for higher payment, the state will make one or more supplemental payments to ensure that providers receive payment for the difference between the amount paid and the Medicare rate. Qualified providers should receive the total due to them under the provision in a timely manner.

Medicaid continued: • Eligibility

• Low income, blind, disabled • People with low income and few resources receive financial

assistance under Temporary Assistance for Needy Families (TANF) they are eligible for this assistance for a 5 year period.

• If a Medicaid recipient is classified as a “restricted status” they can only see a specific provider for treatment.

– Claim Submission • Photocopy front and back sides of the card. Check expiration date and

eligibility for the month of service each time the pt. comes in • Check to see if service needs prior authorization • Use of CMS-1500 form • Claims must be signed by physician and sent to a fiscal intermediary who

contracts to pay claims or to local department of social services. – Time Limit

• Varies by state • If it is submitted after time limit, claim can be reduced or rejected unless

there is valid justification by state laws


MEDICARE: Is a 100 percent federally funded health plan that covers people who are sixty-five and over and those who are disabled or have permanent kidney failure (end-stage renal disease, or ESRD).

MEDICARE PART A: also called the Hospital Insurance for the Aged and Disabled. It covers institutional providers for inpatient, hospice, home health services and services within the hospital.

MEDICARE PART B: Referred to as the Supplementary Medical Insurance (SMI). Coverage is a supplement of Part A, which covers outpatient, services by physicians, durable medical equipment, clinical lab services and ambulatory surgical services. Medicare Part B is voluntary or optional.

MEDICARE PART C: Medicare Managed Care Plans (formally Medicare Plus (+) was created to offer a # of healthcare services in addition to those available under Part A & Part B. The CMS contracts with managed care plans or PPO’s to provide Medicare Benefits.

MEDICARE PART D: Prescription Drugs enacted by the Medicare Prescription Drug Improvement and Modernization Act in Dec 2003 and began implementation in Jan 2006 where Medicare beneficiaries have the choice of among several plans that offer drug coverage for which they pay a monthly premium.

Medicare (overview)

– Funded by federal government and administered by CMS – At the time of enrollment, a choice must be made about how the health care

coverage is developed – Original medical plan is a fee for service – You can get a senior advantage plan from another carrier – Eligibility

• Application made through Social Security administration • Age 65 • Blind or disabled • Chronic or end-stage kidney disease • Kidney donors

– Part A – Hospital Insurance Benefits • Benefit period begins when pt. enters hospital and ends when pt. has not

been a bed pt. in any hospital for 60 consecutive days. • Pays for medications related to hospital stays, skilled nursing stays (unless

you live there), and hospice care – Part B – Supplementary (Outpatient)


• Premiums are paid by monthly deductions from Social security checks, from railroad retirement benefits

• Pts. Not on Social Security pay premiums to Social Security • Claims must be made by physician’s office • Pt. can be billed for noncovered services • Covers medications that are administered by or under the supervision of

physician in the physician’s office that cannot be self-administered; oral anti-cancer drugs, drugs by hemodialysis facilities, outpt. Facilities, etc.

– Part C – Managed Care • Instead of Part A and Part B • Senior Advantage Plans • Premiums similar to Medicare part B • Have to go to doctors, hospitals and other facilities on approved list • Small copays • Another plan is Medical Savings Account (MSA)

• High annual deductible for a catastrophic insurance policy approved by Medicare

• Premiums are paid by pt. and deposits are made into the pts. MSA • Pays medical expenses until deductible is reached • Unused funds roll over to next calendar year

– Part D – Prescription Drugs • Premium paid • Annual deductible not to exceed $250 and pay a cost sharing • Plan has a list of generic and brand name drugs that are allowed • Enrollment isn’t automatic unless pt. is Medi-Medi

If pt. is eligible and doesn’t enroll, late enrollment penalty will be applied that equals 1% per month

– Participating Physician • Accept assignment • Payment sent to physician

– Nonparticipating Physician • Does not accept assignment • Payment sent to patient • Patient pays physician

TRICARE – Dependents of military personnel – TRICARE Standard see claim form

• Eligibility • Beneficiaries are spouse and unmarried children up to age 21 or 23 if

full-time students of active duty • Eligible children over 21 with disabilities • Uniformed service retirees and eligible family members


• Unremarried spouses and unmarried children of deceased, active, or retired service members

• Defense Enrollment Eligibility Reporting System • Sponsor has to enroll family members • Providers call Voice response unit system

• Benefits • Portion of civilian health care services cost pd by federal government • Pts. Usually seek care from military hospital near their home • Pt. pays deductible for outpt. Care and cost sharing percentages • If provider accepts assignment, he or she accepts allowable fee as full

amount for services rendered • Nonparticipating providers must file claims and may not charge more

than 15% above maximum allowable charge for his services – Active duty military get treatment from a military treatment facility or hospital

unless it is unavailable and then the service member must get a non-availability statement (NAS)

– In an emergency, a soldier can get medical treatment and the military will pay TRICARE FOR LIFE

TRICARE for Life is a Medicare supplement entitlement program for Medicare-eligible Tricare beneficiaries.

• People must be enrolled in Medicare Part A and Part B to remain Tricare for life eligible. • This program has no enrollment fees or premiums (other than the Medicare Part B

premium). • It includes creditable drug coverage for Medicare Part D

For more information regarding TRICARE for Life, see Military Health System’s TRICARE Web site.

• CHAMPVA- Civilian Health and Medical Program for the Veterans Administration – Eligibility

• Veterans and dependents (veteran must have total, permanent, or service-related disability)

• This is not an insurance program but a service benefit program • No contracts and no premiums • Beneficiaries can choose civilian health providers or military treatment

providers. – Claims submission and time limit

• 60 day time limit Workers’ Compensation • Illness or injury at work


– Covers medical bills and lost wages • Workers’ Compensation Laws

– Mandatory in all states • Types of disability

– Non-disability • Pt. can still work

– Temporary disability (TD) • Pt. cannot perform all functions of his or her job for a limited period of time • Weekly benefits are based on employees earnings

– Permanent disability (PD) • Injured worker is left with a residual disability • Sometimes pt. can be rehabilitated in another line of work • When a pts. Case becomes Permanent and stationary and no further

improvement is expected, the case is rated to the percentage of permanent disability and adjudicated so a monetary settlement can be made.

• Reports – Initial report must be filed – Report from each subsequent visit must be filed

• Highlights – Workers comp has no deductible and no copayments. – Employer pays all premiums – All providers treating worker’s comp patients must accept assignment and has to

accept payment as payment in full. – The patient must not be billed for services for any work related illness or injury.

Workers ‘Compensation

Workers’ compensation is a form of insurance providing wage replacement and medical benefits to employees injured in the course of employment in exchange for mandatory relinquishment of the employee’s right to sue his or her employer for the tort of negligence.

The tradeoff between assured, limited coverage and lack of recourse outside the workers compensation system is known as “the compensation bargain”.

Workers Compensation is a contract between an employee and employer.

While plans differ among jurisdictions, provision can be made for weekly payments in place of wages (functioning in this case as a form of disability insurance), reimbursement or payment for medical health Insurance, and benefits payable to the dependents of workers killed during employment.


Health Insurance Nearly half of the patients the medical administrative assistant encounters will have insurance through a private or commercial insurance company. Group health insurance is usually sponsored and partially paid by an employer. Certain employers will self-insure, a method in which the employer pays directly for the employee's medical bills. Patients that are not covered by employers have the option to purchase an individual health insurance policy. In order to provide insurance for patients who do not have the opportunity to receive insurance through their employers, the state or government provides health insurance benefits through various programs based on eligibility. Medicare is a federal program for patients that are either over the age of 65, disabled, or considered end-stage renal disease patients. Individuals and/or families that have very low income may qualify to receive medical benefits under a federal program known as Medicaid. Members of the armed forces, as well as retired service personnel and their families are eligible to receive benefits under a program known as TRICARE, and veterans with service-related disabilities are eligible for care under CHAMPVA. Patients who suffer from job-related injuries are eligible for coverage under Worker's Compensation. Preferred provider organizations (PPO) are the most popular type of private plan followed by Health Maintenance Organizations (HMO)

The worker’s compensation system is administered on a state-by state basis with a state governing board overseeing public/private combinations of worker’s compensation systems.


Health Insurance Terminology Self insure – employers pay directly for employees’ medical bills Medicare – a government program that provides insurance for persons over 65.

o Medicare Part A – pays for inpatient hospital care o Medicare Part B – Supplementary Medical Insurance helps pay for physician

services - voluntary o Medicare Part C – offers Medicare beneficiaries Medicare Advantage plans that

compete with the Original Medicare Plan o Medicare Part D – provides voluntary Medicare prescription drug plans to those

on Medicare Medicaid – insurance for low income people TRICARE – insurance for active duty and retired service personnel and their families CHAMPVA – insurance for veteran’s with service related disabilities Worker’s Compensation – provides coverage for employees for job-related illnesses or injuries Sliding Fee Scale – when offices charge fees based on a patient’s financial ability to pay Member/Subscriber/Insured/ Policyholder – the person who owns the insurance policy Beneficiary – individuals who qualify for the program Dependents – family members covered by the insurance plan Premium – the policyholder contributes to his/her policy by paying a set amount of money Fee Schedule – physicians lists their charge for each service they provide. Preferred Provider Organization – (PPO) patient pays an annual premium and often a deductible. Could have a low premium with a high deductible or vice versa. May see an out-of-network doctor without a referral or preauthorization, but the deductible may be higher.


Health Maintenance Organization – (HMO) is licensed by the state. Stringent guidelines and a narrow choice of providers. Members are assigned primary care physicians and must use network providers to be covered, except in emergencies. Point of Service (POS) Plan – is a combination of an HMO and a PPO. Consumer-Driven Health Plan – (CDHP) – combines a high deductible health plan with one or more tax-preferred savings accounts that the patient directs. Health Reimbursement Account – (HRA) – Medical reimbursement plan set up and funded by an employer. Health Savings Account - (HSA) – designed to pay for qualified medical expenses of individuals who have high deductible health plans and are under the age of 65. Flexible Savings Accounts – (FSA) – employees can put pre-tax dollars from their salaries in the FSA; then they can use the funds to pay for certain medical expenses. COBRA The Consolidated Omnibus Reconciliation Act (COBRA) gives an employee who is leaving a job the right to continue health benefits under the employer’s plan for a limited time.

Additional Terminology for your Use

Assignment of Benefits: Reimbursement is sent directly from the payer to the provider.

Blue Cross/Blue Shield Plans: Group of independently licensed local companies, usually nonprofit that contracts w/dr and other health entities to provide services to their insured companies and individuals. Most BC/BS plans offer HMO’s PPO’s and POS plans.

Co-Payment: cost- sharing requirement for the insured to pay at time of service. This amount is usually a specific dollar amount.

Deductible: A cumulative out –of –pocket amount that must be paid annually by the policyholder before benefits will be paid by the insurance company.

Eligibility: The qualify factor or factors that must be met before a patient receives benefits.

E.I.N: Employer Identification also known as federal tax identification number.

Remittance Advice: an electronic or paper-based report of payment sent by the payer to the provider.


O.I.G: Office of Inspector General.

Encounter Form: also called the superbill: it is a listing of the diagnosis, procedures and charges for a patient’s visit.

Fiscal Intermediary: An insurance company that bids for a contract with Centers for Medicare and Medicaid Services (CMS) to handle the Medicare program in a specific area.

Review Questions

1. Which of the following entities is responsible for implementing the various provisions of HIPAA in Health Care? A. Occupational Safety and Health Administration (OSHA) B. Centers for Disease Control and Prevention (CDC) C. Food and Drug Administration (FDA) D. Centers for Medicare and Medicaid Services (CMS)

2. Which of the following is not a key component in selecting a level of Evaluation

and Management (E/M) services? A. History B. Date C. Examination D. Medical decision

3. When an non-member physician treats an HMO patient, the service rendered is

termed: A. Provisional B. Within network C. Improper D. Out of Plan or out of Network

4. New Codes in the CPT Manual are represented by:

A. A plus sign B. A triangle C. A solid circle D. Right and left triangle


5. The Medical Program for dependents of active military personnel is called: A. CHAMPVA B. TRICARE C. Medicaid D. Blue Cross/Shield

6. When a code has less than 6 characters and a 7th character applies, it is

appropriate to leave a space in the code? A. True B. False

7. A sequela of an injury is reported with the code that describes the sequela

followed by the code for the injury with 7th character ‘S’. A. True B. False

8. Karen has been in a car accident and broke her arm. Which volume will you refer to first to find a code representing her problem? A. Volume 1 – The Tabular List B. Volume 2 – The Instruction Manual C. Volume 3 – The Alphabetical Index.

9. Janice has breast cancer and is coming into the office today for Chemotherapy. In which chapter would you find the code for chemotherapy? A. Chapter XIX - Injury, poisoning and certain other consequences of external

causes (S00-T98) B. Chapter XX - External causes of morbidity and mortality

(V01-Y98) C. Chapter XXI - Factors influencing health status and contact with health services

(Z00-Z99)

10. In which chapter would you find a malignant cancer of the esophagus? A. Chapter II Neoplasms B. Chapter XI Diseases of the digestive system C. Chapter X Diseases of the respiratory system


11. A veteran’s wife needs to go to the doctor. Her husband’s leg was cut off due to a explosion in Afghanistan. Which insurance is she likely to have? A. TRICARE B. CHAMPVA C. Blue Cross and Blue Shield D. Workers’ Compensation

12. In the diagnostic statement “eye dryness from insufficient tear production” the

primary diagnosis is: A. Eye dryness B. Eye irritation C. Insufficient tear production D. Conjunctivitis

13. Health policies concerning the patient's constitutional right to privacy, confidentiality, and informed consent are a part of:

A. Disclosure Laws B. Patient's Bill of Rights C. Statutes of Limitations D. Technical guidelines

14. Services that are not covered by an insurance plan are referred to as: A. Procedures billed with incorrect CPT codes B. Adjustments C. Bad Debt D. Exclusions

15. C codes describe some services, such as drugs, biologicals, devices and supplies that are provided in the ________________ setting?

A. Inpatient B. Office C. Outpatient hospital D. Nursing home


16. What do the letters NEC indicate? A. Indicates terms that are to be coded elsewhere B. Appears under a code to further define or explain the content C. Encloses synonyms, alternative words, or explanatory phrases D. Indicates the use of code assignment for “other” when a more specific code does

not exist 17. The term malignant refers to:

A. Malignancy that is located within the original site of development B. Site to which a malignant tumor has spread C. Site of origin or where the tumor originated D. Used to describe a cancerous tumor that grows worse over time

18. An inconclusive diagnosis is indicated by terms such as:

A. Rule out, suspected, probable B. Finding, result, report C. Malignant, benign, in situ D. Adverse effect, poisoning, unspecified 19. Codes that identify the procedures performed for a patient are called: A. CPT B. ICD C. DOS D. POS

20. Giving the patient adequate information concerning the method, risk and consequences prior to a procedure is called:

A. Tort B. Confidentiality C. Informed consent D. The right to know


Answers to Review Questions

1. D 2. B 3. D 4. C 5. B 6. False 7. True 8. C 9. C 10. A 11. B 12. C 13. B 14. D 15. C 16. D 17. D 18. A 19. A 20. C

american medical certification association billing and coding exam review (bcsc), 2016. american...

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