This is a comprehensive chapter on reimbursement methodologies. The instructor may use all of the content or select portions that apply to specific healthcare settings.
Depending upon the philosophy of the instructional program, the first part of the chapter on reimbursement history and reimbursement system types can be presented as either a global overview or a more in depth lesson. For most HIT programs the purpose and use of this section is to give students a general understanding of the evolution of reimbursement and how we have gotten to the complex place we are today.
The section on healthcare reimbursement methodologies is an important one for all HIT students. Students should develop a clear understanding of and be able to distinguish among the various methodologies.
The section on claims processing and knowledge of various government forms for reimbursement is an essential one, particularly for those programs preparing individuals for coding positions.
The section on reimbursement support processes is an essential one, particularly in relation to managing fee and chargemasters and addressing issues of documentation and quality coding.
Chapter Outline
Learning Objectives
Key Terms
Introduction
Theory into Practice
History of Healthcare Reimbursement in the United States
Pre-Medicare/Medicaid Campaigns for National Health Insurance
Medicare/Medicaid Programs
Cost Management
Development of Prepaid Health
Blue Cross/Blue Shield
Group Health Insurance
Major Medical Insurance
Health Insurance Coverage
Healthcare Reimbursement Systems
Commercial Insurance
Private Health Insurance Plans
Employer-Based Self-Insurance Plans
Not-for-Profit and For-Profit Healthcare Plans
Blue Cross and Blue Shield Plans
Government-Sponsored Healthcare Programs
Medicare
Medicare Part A
Medicare Part B
Services Not Covered by Part A or Part B
Part C Medicare Advantage (MA Plans)
Part D Medicare Prescription Drug Plan, Improvement and Modernization Act
Out-of-Pocket Expenses and Medigap Insurance
Medicaid
Medicaid Eligibility Criteria
Medicaid Services
Medicaid–Medicare Relationship
State Children’s Health Insurance Program
TRICARE
Veterans Health Administration
CHAMPVA
Indian Health Service
Workers’ Compensation
Federal Workers’ Compensation Funds
State Workers’ Compensation Funds
Managed Care
Definition
Managed Care Quality Initiatives
Health Maintenance Organizations
Group Model HMOs
Independent Practice Associations
Network Models HMOs
Staff Model HMOs
Preferred Provider Organizations
Point-of-Service Plans
Exclusive Provider Organizations
Integrated Delivery Systems
Group Practices without Walls
Integrated Provider Organizations
Management Service Organizations
Medical Foundations
Physician-Hospital Organizations
Healthcare Reimbursement Methodologies
Fee-for-Service Reimbursement Methodologies
Traditional Fee-for-Service Reimbursement
Managed Fee-for-Service Reimbursement
Episode-of-Care Reimbursement Methodologies
Capitation
Global Payment
Global Surgery Payments
Prospective Payment
Medicare Prospective Payment Systems
Medicare Acute Inpatient Prospective Payment System (IPPS)
Diagnosis-Related Groups (DRGs)
MS-DRG Assignment
Case-Mix Index All Patient DRG
Hospital-Acquired Conditions and Present on Admission Indicator Reporting
Resource-Based Relative Value Scale (RBRVS) System
Skilled Nursing Facility Prospective Payment System
Resource Utilization Groups
Resident Assessment Validation and Entry
Consolidated Billing Provision
Outpatient Prospective Payment System
Ambulatory Payment Classification Groups (APCs)
Payment Status Indicators
Ambulatory Surgery Center Prospective Payment Systems (ASC PPS)
Home Health Prospective Payment System (HH PPS)
OASIS-C and Home Assessment Validation and Entry (HAVEN)
Home Health Resource Groups
Low Utilization and Outlier Payments
Ambulance Fee Schedule
Inpatient Rehabilitation Facility (IRF) Prospective Payment System
Patient Assessment Instrument
CMG Relative Weight
Long-Term Care Hospitals (LTCH) Prospective Payment System
MS-LTC-DRGs
Adjustments
Inpatient Psychiatric Facilities (IPFs) Prospective Payment System
Adjustments
Processing of Reimbursement Claims
Coordination of Benefits
Submission of Claims
Explanation of Benefits and Medicare Summary Notice Remittance Advice
Medicare Administrative Contractors
National Correct Coding Initiative (NCCI)
Physician Query Process
Electronic Data Interchange
Reimbursement Support Processes
Management of Fee Schedules
Management of the Chargemaster
Maintenance of the Chargemaster
Management of the Revenue Cycle
Revenue Cycle Management Committee
Management of Documentation and Coding Quality
Coding and Corporate Compliance
History of Fraud and Abuse and Corporate Compliance in Healthcare
Elements of Corporate Compliance
Relationship between Coding Practice and Corporate Compliance
OIG Workplan
The HIM Compliance Program
Code of Conduct
Policies and Procedures
Education and Training
Communication
Internal Audits
Corrective Action
Reporting
Recovery Audit Contractor Program
Real-World Case
Summary
References
Learning Objectives
- Understand the historical development of healthcare reimbursement in the United States
- Describe current reimbursement processes, forms, and support practices for healthcare reimbursement
- Differentiate between commercial health insurance and employer-based self-insurance
- Describe the purpose and basic benefits of the following government-sponsored health programs: Medicare Part A, Medicare Part B, Medicare Advantage, Medicaid, CHAMPVA, TRICARE, HIS, TANF, PACE, SCHIP, workers’ compensation, and FECA
- Understand the concept of managed care and to provide examples of different types of managed care organizations
- Identify and differentiate between the different types of fee-for-service reimbursement methods
- Describe the various Medicare prospective payment systems
- Understand the purpose of the fee schedules, chargemasters, and auditing procedures that support the reimbursement process
- Support accurate billing through chargemaster, claims management, and bill reconciliation processes
- Outline the revenue cycle processes
- Describe the elements of a compliance program
- Explain the relationship between coding practice and corporate compliance
Key Terms
Accept assignment
Accounts receivable
Administrative services only (ASO)
contracts
Advance Beneficiary Notice of
Noncoverage (ABN)
All patient DRGs
(AP-DRGs)
All patient refined DRGs (APR-DRGs)
Ambulatory payment classification (APC) system
Ambulatory surgery center (ASC)
Auditing
Balance billing
Balanced Budget Refinement Act of 1999
(BBRA)
Blue Cross and Blue Shield (BC/BS)
BC/BS Federal Employee Program (FEP)
Bundled payments
Capitation
Case-mix group
Case-mix group (CMG) relative weights
Case-mix index
Categorically needy eligibility groups
(Medicaid)
Centers for Medicare and Medicaid
Services (CMS)
Chargemaster
Civilian Health and Medical Program of
the Uniformed Services (CHAMPUS)
Civilian Health and Medical Program-
Veterans Affairs (CHAMPVA)
Claim
CMS-1500
Coinsurance
Comorbidity
Compliance
Compliance program guidance
Complication
Coordination of benefits (COB) transaction
Cost outlier
Cost outlier adjustment
Current Procedural Terminology (CPT)
Department of Health and Human Services (HHS)
Diagnosis-related groups (DRGs)
Discharge planning
Discounting
DRG grouper
Employer-based self-insurance
Episode-of-care (EOC) reimbursement
Exclusive provider organization (EPO)
Explanation of Benefits (EOB)
External reviews (audits)
Federal Employees’ Compensation Act
(FECA)
Fee schedule
Fee-for-service basis
Fraud and abuse
Geographic practice cost index (GPCI)
Global payment
Global surgery payment
Group health insurance
Group model HMO
Group practice without walls (GPWW)
Hard-coding
Health maintenance organization (HMO)
Health Plan Effectiveness Data and
Information Set (HEDIS)
Healthcare Common Procedure Coding
System (HCPCS)
Healthcare provider
Home Assessment Validation and Entry (HAVEN)
Home health agency (HHA)
Home health prospective payment system
(HH PPS)
Home health resource group (HHRG)
Hospice
Hospital-acquired conditions (HAC)
Hospitalization insurance (HI) (Medicare Part A)
Indemnity plans
Independent practice association (IPA)
Indian Health Service (IHS)
Inpatient psychiatric facility (IPF)
Inpatient rehabilitation facility (IRF)
Inpatient Rehabilitation Validation and
Entry (IRVEN)
Insured
Insurer
Integrated delivery system (IDS)
Integrated provider organization (IPO)
Long-term care hospital (LTCH)
Low-utilization payment adjustment (LUPA)
Major diagnostic category (MDC)
Major medical insurance
Managed care
Management service organization (MSO)
Medicaid
Medical foundation
Medically needy option (Medicaid)
Medicare
Medicare administrative contractor (MAC)
Medicare Advantage
Medicare carrier
Medicare fee schedule (MFS)
Medicare severity diagnosis-related groups
(MS-DRGs)
Medicare Summary Notice (MSN)
Medigap
Minimum Data Set 3.0 (MDS)
National Committee for Quality Assurance (NCQA)
National conversion factor (CF)
National Correct Coding Initiative (NCCI)
National Uniform Billing Committee (NUBC)
Network model HMO
Network provider
Nonparticipating providers
Omnibus Budget Reconciliation Act (OBRA)
Outcomes and Assessment Information Set (OASIS)
Out-of-pocket expenses
Outpatient code editor (OCE)
Outpatient prospective payment system (OPPS)
Packaging
Partial hospitalization
Patient Protection and Affordable Care Act
Payer of last resort (Medicaid)
Payment status indicator (PSI)
Per member per month (PMPM)
Per patient per month (PPPM)
Physician-hospital organization (PHO)
Point-of-service (POS) plan
Policyholder
Precertification
Preferred provider organization (PPO)
Premium
Present on admission (POA)
Primary care physician (PCP)
Principal diagnosis
Principal procedure
Professional component (PC)
Programs of All-Inclusive Care for the Elderly (PACE)
Prospective payment system (PPS)
Public assistance
Relative value unit (RVU)
Remittance advice (RA)
Resident assessment instrument (RAI)
Resident Assessment Validation and Entry (RAVEN)
Resource Utilization Groups, Version IV
(RUG-IV)
Resource-based relative value scale (RBRVS)
Respite care
Retrospective payment system
Recovery audit contractor (RAC)
Revenue codes
Skilled nursing facility prospective
payment system
(SNF PPS)
Social Security Act
Staff model HMO
State Children’s Health Insurance Program (SCHIP)
State workers’ compensation insurance funds
Supplemental medical insurance (SMI)
(Medicare Part B)
Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA)
Technical component (TC)
Temporary Assistance for Needy Families (TANF)
Third-party payer
Traditional fee-for-service reimbursement
TRICARE
TRICARE Extra
TRICARE Prime
TRICARE Standard
UB-04 (CMS-1450)
Unbundling
Upcoding
Usual, customary, and reasonable (UCR)
charges
Veterans Health Administration
Voluntary Disclosure Program
Workers’ compensation
Activities
Learning Simulation
One of the best types of learning activities is one where the student participates in a learning simulation. Simulations that can be developed include having the student function as a supervisor of reimbursement and perform the following tasks:
- Following set procedures (developed by the instructor), perform an internal coding audit for coding compliance
- Following set procedures (developed by the instructor) perform an audit on a snapshot of a chargemaster or fee schedules for various types of healthcare delivery sites
Exercise and Discussion
Given appropriate health records and other documentation have students complete various reimbursement forms for government and private pay. Compare completed forms of all students afterwards in a discussion session. Have a discussion of the complexity of completing such forms and what types of policies, procedures, and audit mechanisms must be in place to ensure quality documentation.
Theory into Practice and Real-World Case
Use the Theory into Practice section and/or the Real-World Case to initiate student discussion of the material in the chapter. The questions in the Check Your Understanding sections located throughout the chapter also can be used to stimulate class discussion.
Guest Speakers
- Invite a coding supervisor to speak to the class about managing coding functions in a healthcare facility.
- Invite a director of health information to speak to the class and to share information about reimbursement and about accounts receivable management and other techniques used to monitor coding processes to ensure facility reimbursement.
Lecture
Use the enclosed PowerPoint slides as a lecture guide.
Class Discussion
- Have individual students present information from their facility coding interviews (see Projects) to the class. Their varied experiences can stimulate a discussion of similarities and differences in various types of hospitals or other care settings.
- Alternatively, divide the class into groups made up of students who visited different facilities for the interview. Select a topic for each group such as the process of coding, ensuring coding quality and coding compliance programs, staffing a coding service and setting productivity standards, use of encoders, or reimbursement systems. Have each group prepare a presentation addressing the similarities and differences its members observed relative to their topic. Ask each group to research published information on their topic and to incorporate this information into their presentation.
- Give students sample billing forms for government and private payers (including CMS-1450 and CMS-1500) and, using sample patient records, have them enter billing data on the forms. Discuss the difficulty in finding data elements and discuss the types of policies, procedures, and audit mechanisms that must be in place to ensure quality documentation.
Literature Review/Additional Readings
- There are many articles pertaining to issues of coding and reimbursement. Students can access readings via the university/college library or by using the FORE HIM Body of Knowledge available at library.ahima.org.
- Have the students read and be prepared to discuss the following (available at library.ahima.org):
- Youmans, K. 2004. An HIM spin on the revenue cycle. Journal of AHIMA 75(3):32–36.
- Campbell, T. 2003. Opportunities for HIM in revenue cycle management. Journal of AHIMA 74(10):62–63.
- Practice Briefs:
- Rhodes, H. 1999. Practice brief: The care and management of charge masters. Journal of AHIMA 70(7):supplement 2.
- Prophet, S. 2001. Practice brief: Developing a physician query process. Journal of AHIMA 72(9):88I–M.
- Students may also consult the following books as extra resources.
- Schraffenberger, L. 2011. Effective Management of Coding Services, 4th ed. Chapter 7: The Charge Description Master. Chicago: AHIMA Press.
- Bowman, S. 2008.Health Information Management Compliance: Guidelines for Preventing Fraud and Abuse, 4th ed. Chicago: AHIMA Press.
Project
The facility coding interview project detailed as follows may be done individually, in pairs, or in small groups.
Have the students visit a healthcare facility and interview a coding supervisor or director of health information services about the process of coding, productivity standards, quality assurance of coding, reimbursement systems, and management issues. The interview guide below provides sample questions to ask in the interview. Students should choose one of the following types of facilities. Make sure that each type of facility is visited by a group.
(a) Hospitals (inpatient and outpatient functions)
(b) Physician’s office
(c) Ambulatory surgery center
(d) Skilled nursing facility
(e) Long-term care hospital
(f) Inpatient rehabilitation hospital
(g) Inpatient psychiatric hospital
(h) Home health agency
Make an appointment to interview the director of the department or a coding supervisor. The interview should take approximately one hour. Be sure to send a thank-you letter to the person you interview.
The information from your interview should be compiled into a three- to four-page report that can be presented in both verbal and written format. Summarize all the information you learned during the interview, and answer the following questions:
- What are your reactions to the interview?
- Was the interview educational? Was anything surprising or particularly interesting?
- Did this experience help you to integrate classroom information?
Use the data from the interviews as you continue the discussion of coding issues, especially as they relate to the quality of data.
Following are suggested items of information students should try to obtain. This list is intended for guidance only; it is by no means an exhaustive list of questions.
Facility Data
- Name, title, and credentials of the person interviewed
- Name and type of facility
- Number of beds
- Number of outpatient visits per year (if applicable)
- Director of the HIM department
- Coding supervisor
Data Regarding the Coding Function
- How many coders does the facility employ? How many are full-time and how many part-time?
- What are the credentials of the coders? RHIAs? RHITs? CCSs? CCAs? CCS-Ps? Other? None?
- If some of the coders are noncredentialed, how did they obtain coding training?
- On-the-job training
- Formal in-service program at the hospital
- AHIMA Coding In-Service Training Program
- Other (specify)
- Do coders regularly attend continuing education workshops on coding issues? If so, what types of workshops do they attend?
- State HIM association workshops
- AHIMA workshops
- AHA teleconferences (Is the hospital a teleconference site?)
- Local HIM association workshops
- Other (specify)
- Does the facility use outside coding services/contractors for coding? If so, what is the name of the company? Does the facility use this service to perform all coding, only backlog coding, or only overload?
- Has the facility used coding/reimbursement consultants to help optimize coding and MS-DRG assignment? If so, which company? Was the facility satisfied with the service?
- Does the department have an automated encoder? If so, what type of encoder do they use?
- Is a MS-DRG grouper part of the encoding system?
- Is the department satisfied with the encoder? What advantages and disadvantages does this system have? How does the department feel about the system’s accuracy, consistency, ease of use, and ease in training? Does the department get adequate support from the vendor?
- If possible, get samples of input and output screens from the encoding product.
The Coding Process
- What is the average time lapse between discharge and coding?
- Are Medicare records handled differently from non-Medicare discharges?
- If there are two or more coders, how are records divided among coders?
- Do coders have other responsibilities in the department, such as abstracting, quantitative analysis, or MS-DRG assignment?
- Are there current backlogs in coding?
Monitoring the Coding Function
- Is coding productivity monitored? Does the department have coding-related standards? If so, what standards do they set for quantity, quality, and timeliness?
- Are coders rewarded for meeting or exceeding the standards? Are they disciplined if they consistently do not meet the standards?
- Does the facility have a compliance plan in place to address issues of fraud and abuse? Does it address coding guidelines?
- Is coding done using only the face sheet, or are other reports used?
- Is the record coded if the face sheet and/or summary are not completed?
- Do coders contact physicians for information and clarification, or is contact made only by the supervisor?
- Is the medical staff generally cooperative in providing adequate documentation for coding?
- Are incentives used to persuade the physicians to complete their records?
- Is concurrent coding done in the facility? If so, is it effective in getting the record coded in a timely way? Are there quality or accuracy problems?
Staffing the Coding Area
- Has coder turnover been a problem in this department?
- How many positions opened up in the coding area last year?
- Is it difficult to fill coding positions?
- Are there current shortages?
- How does the department recruit coders? Is there an adequate supply in the area?
- What is the average salary for a coder? (Ask the interviewee if he or she is willing to share this information with you. Salaries are sensitive information, and the interviewee may not be willing to give exact figures.)
- Are candidates for coding positions tested during their interview? Are coders selected on the basis of a coding test?
Producing the Disease/Diagnosis and Operative Index
- What system is used to capture coded data to produce monthly/annual diagnosis and operative indexes? Are data entered directly into a computer system or abstracted on a paper abstract?
- Is the abstract system or database a commercial system or an in-house system? Is it linked to the grouper?
- Are monthly and/or annual indexes produced, or is information retrieved as needed?
- What types of routine reports are produced? Who reviews them?
- What types of special reports are produced?
- If possible, obtain samples of the input document(s) and routine reports.
Keys
Real-World Case Discussion Questions
- Why is revenue cycle management important?
Delays in the revenue cycle management will delay payment to the healthcare facility. This delay can result in cash flow problems that can jeopardize the financial stability of the healthcare facility.
- What is the role of the HIM professional in revenue cycle management?
The HIM professional can be involved at a number of points throughout the revenue cycle. The points include, but not limited to admission, coding, billing, and chargemaster maintenance.
- Why would the hospital spend the time creating the flowchart of the claim process?
Using a flowchart to diagram the revenue cycle is a very useful tool as it can identify problems and delays in the process. Once problems are identified, then steps can be taken to solve the problems and therefore improve the efficiency of the revenue cycle.
Application Exercises
Exercise 1
Jane Doe is an 83-year-old patient who only has Medicare Part A insurance. After reviewing the following information, answer the questions regarding her listed hospitalizations.
| DATE ADMITTED | DATE DISCHARGED | PATIENT’S FINANCIAL
RESPONSIBILITY |
| 01/01 | 01/13 | $912.00 |
| 03/20 | 03/30 | $912.00 |
| 07/04 | 11/02 | $21,888 ($912 + 6,840 + 14, 136) |
| 12/01 | 12/05 | $2,280 |
- How many benefit periods were used during this calendar year?
_____3_____
- Were any lifetime reserve days used during this period of time? If so, how many? ____36_____
- If lifetime reserve days were used, how many does the patient have left to be used at a later date?
____24_____
- How many times was the patient required to pay a hospital deductible during this time period?
_____3_____
- Following this last hospital admission, Jane was transferred to a skilled nursing facility (SNF) and remained there for continued treatment for 22 days.
- How much was Jane required to pay for her SNF care for days 1–20?
_____$0____
- How much was she required to pay for the remainder of her SNF stay?
____$228___
- After Jane’s discharge from the skilled facility, she received home health care as prescribed by her physician for 14 days. During this time period, she met all Medicare’s medical necessity criteria for her care. How much did the patient have to pay for her home health care?
_____$0____
Exercise 2
Under the new outpatient prospective payment system, Medicare decides how much a hospital or a community mental health center will be reimbursed for each service rendered. Depending on the service, the patient pays either a coinsurance amount (20 percent) or a fixed copayment amount, whichever is less. For each case that follows, determine whether the patient will pay the coinsurance or copayment amount.
- Mr. Smith was charged $85 for a minor procedure performed in the hospital outpatient department. The fixed copayment amount for this type of procedure, adjusted for wages in the geographic area, is $15. Mr. Smith has already paid his annual Medicare Part B deductible of $100.
Mr. Smith would pay the copayment amount because it is less than the coinsurance amount.
- Mr. Jones and Mrs. Day live in the same area of the country. They are having the same outpatient procedure done, but at different hospitals. Mr. Jones’s hospital charges $250 for the procedure, but Mrs. Day’s hospital charges $150. The national median charge for this procedure is $225 (adjusted for wages in their area) with a fixed copayment of $54. Both patients have already paid their $100 yearly Medicare Part B deductible.
In both cases, the 20 percent coinsurance amount is the lesser of the charges, so Mr. Jones and Mrs. Day would pay the coinsurance amount.
Exercise 3
Alfred State Medical Center’s charges, payments, and adjustments from third-party payers for the month of July are represented in the table below.
- Calculate the percentage of charges, payments, and adjustments for each third-party payer and enter the percentages in the percentages columns of the table.
| Payer | Charges | Payments | Adjustment | Charges | Payments | Adjustments |
| BC/BS | $450,000 | $360,000 | $90,000 | 23% | 31% | 12% |
| Commercial | $250,000 | $200,000 | $50,000 | 13% | 17% | 6% |
| Medicaid* | $350,000 | $75,000 | $275,000 | 18% | 6% | 36% |
| Medicare | $750,000 | $495,000 | $255,000 | 39% | 42% | 33% |
| TRICARE* | $150,000 | $50,000 | $100,000 | 7% | 4% | 13% |
| Totals | $1,950,000 | $1,180,000 | $770,000 | 100% | 100% | 100% |
* Managed care capitated payment for period
- Based on the percentages calculated in the charges column, identify the payer the facility does the most business with and the payer it does the least business with.
Medicare; Tricare
- Based on the percentages calculated in the payment column, identify the payers that reimburse the facility the most and the least.
Medicare; Tricare
- Based on the percentages calculated in the adjustments column, identify the payers that proportionately reimburse the facility the most and the least.
Commercial; Medicaid
Exercise 4
Use the tables below to answer the following questions.
The national conversion factor for 2011 is $33.9764.
- How much can a physician in St. Louis bill Medicare for an office visit for a new patient with a detailed history and physical and low-complexity medical decision making (assuming the patient has met any deductible for the year)?
Conversion Factor: $33.9764
Billing 99203 in St. Louis
1.42 × 0.99163 = 1.408115
0.72 × 0.939923 = 0.676745
0.10 × 1.793 = 0.1793
Total = 2.264159 × $33.9764 = $76.93
- In which city would a physician receive the highest reimbursement for a TURP? Conversion factor: $33.9764
TURP (52601)
St. Louis
15.26 × .99163 = 15.13227
8.09 × .939923 = 7.603977
1.49 × 1.0594 = 1.578506
Total = 24.31476 × $33.9764= $826.13
Dallas
15.26 × 1.0113 = 15.43244
8.09 × 0.99943 = 8.085389
1.49 × 0.82543311 =1.229895
Total = 24.74772 × $339764 = $840.84
Spokane
15.26. × .98989 = 15.10572
8.09 × 0.932469= 7.543674
1.49 × 1.670886 = 1.229895
Total = 23.87929 × $3 = $811.33
The physician in Dallas has the highest reimbursement.
- In which city would a physician receive the lowest reimbursement for a colonoscopy with biopsy? Conversion Factor: $33.9764
Colonoscopy with biopsy (45380)
St. Louis
4.43 × 0.99163 = 4.385213
2.73 × 0.939923 = 2.54564
0.67 × 1.05944 = 1.119494
Total = 7.668735 × $33.9764 = $260.56
Dallas
4.43 × 1.0113 = 4.480059
2.73 × 0.99943 = 2.728444
0.67 × 0.82543311 = 0.55304
Total = 7.761543 × $33.9764 = $263.71
Spokane
4.43 × 0.98989 = 4.385213
2.73 × 0.932469 = 2.54564
0.67 × 1.670886 = 1.119494
Total = 8.050347 × $33.9764 = $273.5218
The city where physicians receive the lowest reimbursement is St. Louis.
- Calculate the expected payment for an incision and drainage of a pilonidal cyst in each of the cities listed. Conversion factor: $33.9764
Incision and Drainage (10080)
St. Louis
4.19 × 0.99163 = 4.15493
3.49 × 0.939923 = 3.280331
0.76 × 1.05944 = 0.805174
Total = 8.240435 × $33.9764 = $279.98
Dallas
4.19 × 1.0113 = 4.237347
3.49 × 0.99943 = 3.488011
0.76 × 0.82543311 = 0.627329
Total = 8.352687 × $33.9764 = $283.79
Spokane
4.19 × 0.98989 = 4.147639
3.49 × 0.932469 = 3.254317
0.76 × 1.269873 = 1.269873
Total = 8.671829 × $33.9764 = $294.64
Review Quiz
Instructions: Choose the most appropriate answer for the following questions.
- Which of the following plans reimburses patients up to a specified amount?
- Health insurance
- Coinsurance
- Indemnity
- Major medical plan
- Catastrophic coverage is categorized as part of which of the following?
- Major medical insurance
- Managed care insurance
c Special risk insurance
- Coinsurance
- The number of days Medicare will cover SNF inpatient care is limited to which of the following?
- 21
- 60
- 30
- 100
- Which of the following types of care is not covered by Medicare?
- Long-term nursing care
- Skilled nursing care
- Hospice care
- Home health care
- Which of the following covers prescribed preventive benefits and is subject to a deductible?
- Medicare Part A
- Medicare Part B
- Medicare Part D
- Medicare Prescription Drug, Improvement and Modernization Act
- Which of the following terms is used for the amount charged for a medical insurance policy?
- Fee schedule
- Premium
- Claim
- Deductible
- Upon which criterion is Medicaid eligibility-based?
- Income
- Whether a person is Medicare eligible
- Age
- Health status
- How many benefit periods are covered by hospital insurance during a Medicare beneficiary’s lifetime?
- One per year
- Based on a 90-day stay
- None
- Unlimited
- What term is used for retrospective reimbursement charges submitted by a provider for each service rendered?
- Fee-for-service
- Deductible
- Actuarial
- Prospective
- What is the name of the federally funded program that pays the medical bills of the spouses and dependents of persons on active duty in the uniformed services?
- DHHS-CMS
- TRICARE
- CHAMPVA
- Medigap
- What is the name of the program funded by the federal government to provide medical care to people on public assistance?
- CHAMPUS
- Medicare
- Medicaid
- Medigap
- Some services are covered and paid by Medicare before Medicaid makes payments because Medicaid is considered which of the following?
- Qualified beneficiary
- Premium payer
- Payer of last resort
- Alternative payer
- Which of the following groups of healthcare providers contracts with an employer to provide healthcare services?
- Preferred provider organization
- Health maintenance organization
- Point-of-service provider
- Independent practice association
- Which of the following is a nonprofit organization that contracts with physicians, acquires assets, and manages the business side of medical practices?
- Management service
- Managed care organization
- Medical foundation
- Group practice
- Which of the following reimbursement methods pays providers according to charges that are calculated before healthcare services are rendered?
- Fee-for-service reimbursement method
- Prospective payment method
- Retrospective payment method
- Resource-based payment method
- Which of the following payment methods reimburses healthcare providers in the form of lump sums for all healthcare services delivered to a patient for a specific illness?
- Managed fee-for-service
- Capitation
- Episode of care
- Point of service
- Which of the following apply to radiological and other procedures that include professional and technical components and are paid as a lump sum to be divided between physician and healthcare facility?
- Global payments
- Professional payment
- Bundled payment
- Fee-for-service
- Which of the following is a state-licensed, Medicare-certified supplier of healthcare services to Medicare beneficiaries?
- Global surgery center
- Ambulatory surgery center
- Professional surgery center
- Technical surgery center
- Critique this statement: Medicare severity-diagnosis-related groups represent a prospective payment system implemented by CMS to reimburse hospitals a predetermined amount for inpatient stays.
- This is a true statement.
- This is not a true statement as MS-DRGs apply to ambulatory care.
- This is a false statement as MS-DRGs utilize bundled payments not
predetermined payments. - MS-DRGs are controlled by the CDC not CMS.
- Dr. Smith has received a single payment for preoperative care, performing surgery, and postoperative care for Ms. Jones’s cholecystectomy. This model of reimburse is called:
- Global surgery payment
- Bundled payment
- Fee-for-service
- Capitation
Instructions for questions 21–24. Match the terms with their definitions.
- Condition established after study to be the reason for hospitalization
- Categories of patients treated
- Coexisting condition
- Condition arising during hospitalization
- _b_ Case mix
- _a_ Principal diagnosis
- _d_ Complication
- _c_ Comorbidity
Test Bank
with Key
Instructions: Choose the most appropriate answer for the following questions.
- Critique this statement: Skilled nursing facilities are no longer paid under a system based on reasonable cost but, rather, through per-diem prospective case-mix-adjusted payment rates.
- This is a true statement.
- This is a false statement as skilled nursing facilities are paid on a per visit rate.
- This is a false statement as skilled nursing facilities are paid based on a schedule.
- This is a false statement as skilled nursing facilities are paid based on charges.
2 Which of the following classification systems uses resident assessment data to assign residents to one of 44 groups, with each assessment applying to specific days within a resident’s stay?
- MS-DRG
- APC
- RUG
- HH PPS
- The ambulatory payment classification system is based on the categorization of which services?
- Inpatient care
- Home care
- Outpatient care
- Skilled care
- Which of the following terms can be defined as the combination of certain items (such as anesthesia, supplies, and drugs) for the purposes of reimbursement?
- Packaging
- Discounting
- Prospective payment
- Global surgery payment
- Which classification system is established for the prospective reimbursement of covered home care services to Medicare beneficiaries during a 60-day episode of care?
- OASIS
- HAVEN
- HHRGs
- HH PPS
Instructions for questions 6–10: In the following questions, answer “a” if the provider should submit a CMS-1500 to a third-party payer or “b” if the provider should submit a UB-92/UB-04 to a third-party payer.
- _a_ Physician who sees a patient in the office
- _b_ Hospital that treats a patient as a hospital
inpatient
- _b_ Ambulance company that responds to a motor vehicle accident and transports the patient to the closest trauma center
- _a_ DMERC supplier that provides services to the patient
- _b_ Ambulatory surgery center that performs same-day
surgery on the patient
Instructions: Choose the most appropriate answer for the following questions.
- Which organizations enter into contracts with the CMS to process claims for Parts A & B professional physician services?
- Medicare administrative contractors
- Medicare fiscal intermediaries
- Quality improvement organizations
- Integrated provider organization
- Which term is used in reference to the transfer of health claims using electronic media?
- ANSI
- ASC X12
- EDI
- Optical scanning
- Which term is used in reference to the electronic transmission of information from a provider to a health plan to determine a patient’s eligibility for services?
- Claims transaction
- Coordination of benefits transaction
- Electronic data interchange
- Remittance advise
- Which of the following explains Medicare payments and denials?
- ERA
- HCC
- HIPAA
- Payment transaction
- Which of the following statements best describes the situation for a provider that agrees to accept assignment for Medicare services?
- Reimbursed at 15 percent above the allowed charge
- Paid according to the MFS plus 10 percent
- Prohibited from balance billing patients
- Referred to as a nonparticipating provider
- When did CMS implement the Correct Coding Initiative for physician claims?
- 1983
- 1990
- 1996
- 2000
- Our hospital wants to partner with local physicians so that we can be viewed as a single entity in negotiating managed care contracts. Which of the following model should we develop?
- MSO
- PHO
- Medical foundation
- ASO
Health Information Management Technology
An Applied Approach
Fourth Edition
Instructor’s Manual
Chapter 7
Health Information Functions
Lesson Plan
Background and Instructional Delivery
This chapter focuses on the functions required by the processing of paper records, hybrid records, and the electronic health record, including storage and retrieval, chart processing, monitoring of chart completion, transcription, release of information, and clinical coding.
Storage and maintenance of the health record is the most fundamental HIM function and affects all other functions. If records and information are not stored and maintained appropriately, then it is almost impossible to perform other tasks. This chapter discusses filing systems, storage systems, microfilming, remote storage, chart tracking, and quality monitoring of paper-based record systems. The HIM functions of hybrid and electronic health records systems are also discussed.
In addition to the typical HIM functions, other related functions that are sometimes performed by the HIM department are also discussed, including research and statistics, cancer and trauma registries, and birth certificates.
Figure 7.1 of the chapter provides a description of a fictional HIM department. This fictional department will help students to visualize how all the various services and functions of the HIM department are integrated.
Review the department organization with students and discuss the HIM functions. Students may have been exposed to other HIM departments through work, site visits or rotations. This is a good opportunity to discuss differences and similarities among organizational structures and functions of HIM departments.
Secondary uses of health data are also discussed in this chapter. Indexes and registers support functions for areas such as coding and research and statistics. This section covers the customary indexes and registers.
Patient registration is discussed as the starting point of the health record with the collection of demographic information, admitting diagnosis, and payment information. Points of registration are described for a large healthcare facility. Discussion of the need for coordination and consistency of registration activities should be emphasized with regard to data integrity, completeness, and accuracy. If possible, obtain registration forms from various points of patient registration and compare these for consistency. The interdepartmental relationships in regards to data integrity and health record content should be discussed.
The next section of the chapter covers the management of the health record content and processes. Joint Commission accreditation is discussed, with examples of the HIM monitoring activities that assist in determining compliance with Joint Commission standards. The instructor should discuss other examples of the HIM department’s involvement in the accreditation process.
Forms design and development are also covered. In most acute care facilities, the medical records committee serves as the forms committee.
Chapter Outline
Learning Objectives
Key Terms
Introduction
Theory into Practice
HIM Functions and Services
Master Patient Index
Maintenance of Master Patient Index
Patient Identity in a Health Information Exchange Environment
Identification Systems
Identification Systems for Paper-Based Health Records
Serial Numbering System
Unit Numbering System
Serial-Unit Numbering System
Alphabetic Identification and Filing System
Identification Systems for Electronic Health Records
HIM Functions in a Paper-based Environment
Record Storage and Retrieval Functions
Filing Systems for Paper-based Health Records
Alphabetic Filing Systems
Numeric Filing Systems
Alphanumeric Filing Systems
Centralized Unit Filing Systems
Storage Systems for Paper-based Records
Filing Cabinets or Shelving Units
File Folders
Microfilm-Based Storage Systems
Off-Site Storage Systems
Imaged-Based Storage Systems
Retrieval and Tracking Systems for Paper-based Records
Retention and Destruction of Paper-based Records
Retention
Destruction
Record Processing of Paper-based Records
Admission and Discharge Record Reconciliation for Paper-based Records
Record Assembly Function for Paper-based Records
Deficiency Analysis for Paper-based Records
Monitoring Completion of Paper-based Records
Authorization and Access Control for Paper-based Records
Forms Design, Development and Control for Paper-based Records
Forms Design and Development
Clinical forms Committee
Forms Control, Tracking, and Management
Quality Control Functions in Paper-based Systems
Storage and Retrieval
Record Processing
HIM Functions in a Hybrid Environment
Record Storage, Retrieval, and Retention of Hybrid Records
Use of Electronic Document Management Systems
Workflow Using an EDMS
Record Retention
Handling Corrections
Search, Retrieval and Manipulation
Authorization and Access Control for Hybrid Records
Quality Control Functions for Hybrid Records
Quality in Record Processing
Reconciliation in the Hybrid Records
Issues and Challenges with Hybrid Records
HIM Functions in an Electronic Environment
Transition Functions to an EHR
Record Filing and Tracking of EHRs
Record Processing of EHRs
Version Control of EHRs
Management of Free Text in EHRs
Management and Integration of Digital Dictation, Transcription and Voice Recognition
Reconciliation Processes for EHRs
Managing Other Electronic Documentation
E-mail
Voice Mail
Handling Materials from Other Facilities
Search, Retrieval and Manipulation Functions of EHRs
Access Control for EHRs
Identification
Authentication
Authorization
Nonrepudiation
Handling Amendments and Corrections in EHRs
Purge and Destruction of EHRs
Quality Control Functions for EHRs
Medical Transcription
Management of Medical Transcription
Quality Control
Release of Information (ROI)
ROI Quality Control
Legal Health Record
Tracking and Report of Disclosures
Clinical Coding
Quality Control in Clinical Coding
Revenue Cycle Management
Other HIM Functions
Data Reporting and Interpretation
Maintenance of Indexes and Registries
Disease and Operation Indexes
Physician Index
Registries
Birth Certificates
HIM Interdepartmental Relationships
Patient Registration
Billing Department
Patient Care Departments
Information Systems
Participation on Medical Staff and Organizational Committee
Managing Documentation Requirements
Virtual HIM
Accreditation and Licensing Documentation Requirements
Monitoring of Accreditation, Licensure, and Standards Requirements
Management and Supervisory Processes
Policy and Procedure Development
Future Direction in Health Information Management Technology
Real-World Case
Summary
References
Learning Objectives
- Identify typical health information management functions
- Explain the purpose and techniques used for the maintenance of the master patient index in paper-based and electronic environments
- Identify operational techniques for managing traditional HIM functions in paper-based, hybrid, and electronic record environments
- Discuss techniques used in the processing, storage, retrieval, and maintenance of health records in paper-based, hybrid and electronic environments
- Explain the use of quality control techniques used for paper-based, hybrid, and electronic health records and for supporting services such as medical transcription, release of information, and coding functions
- Discuss the concept of the legal health record and how it is applied
- Describe practices for authorization and access control of health records in paper-based, hybrid, and electronic formats
- Recognize the interrelationship between the HIM department and other key departments within the healthcare organization
- Describe the purpose, development, and maintenance of registries and indexes such as the master patient index, disease index, and operation indexes
- Discuss the functions and responsibilities of common HIM support services, including cancer and trauma registries, birth certificate completion, and statistical and research services
- Explain the relationship of accreditation, licensing, and standards requirements to HIM functions and how compliance with these is monitored
- Describe techniques used in the management of the HIM department, such as policy and procedure development and the budgeting process
Key Terms
Abstracting
Access control
Alphabetic filing system
Alphanumeric filing system
APC grouper
Authentication
Authorization
Back-end speech recognition
Certificate of destruction
Clinical coding
Computer-assisted coding (CAC)
Concurrent review
Corrections
Deemed status
Deficiency slip
Delinquent record
Destruction
Digital dictation
Duplicate medical record number
Encoder
Enterprise master person/patient index
(EMPI)
Free-text data
Front-end speech recognition
Health information exchange (HIE)
Health record number
Hybrid record
Index
Joint Commission
Legal health record
Master patient index (MPI)
Medical transcription
Middle-digit filing system
MS-DRG grouper
Natural language processing (NLP)
Nonrepudiation
Numeric filing system
Operation index
Outguide
Overlap
Overlay
Patient account number
Policies
Procedures
Purged records
Quantitative analysis
Reassignment
Record completion
Record processing
Record reconciliation
Registry
Release of information (ROI)
Requisition
Resequencing
Retention
Retraction
Retrospective review
Serial numbering system
Serial-unit numbering system
Standard
Storage and retrieval
Straight numeric filing system
Terminal-digit filing system
Transcription
Unit numbering system
Version control
Virtual HIM
Voice recognition technology
Activities
Site Visit
- Have students perform tasks in clinical coding, medical transcription, storage and retrieval, chart completion, or release of information, or shadow an employee performing one of these tasks. Students may then write a procedure for the task they performed or observed. The students can use the format for the procedure as shown in the sample procedure in figure 8.22 of the textbook.
- During clinical rotations or a site visit to an acute care facility, have students gather information using the question inventories below. These question inventories cover the release of information function, chart completion process, and storage and retrieval functions. Questions can be modified as necessary to accommodate information at non-acute facilities. After the questions are answered, have the students compare and contrast their site observations/experiences with classroom and textbook discussions.
Question Inventory: Storage and Retrieval
Note: Some questions for this activity may be covered in other chapters of the textbook.
Numbering System
- What type of numbering system(s) is used by this facility? Describe.
Storage (Filing) System
- What type of health record storage system is used (for both paper-based, hybrid, and electronic systems)? Briefly describe the system(s). What are the advantages and disadvantages of the system(s)?
- How does the facility define an active chart? What is considered the legal health record?
- Is a centralized unit filing system used? Explain.
- How long are records retained?
- Is microfilm or off-site storage used? If so, describe the process.
Record Control
- Describe methods of record control (for example, outguides, policies for record requests, audit trails, passwords, and access monitors).
- Describe the chart tracking system used.
Filing Facilitators
- Describe methods used to facilitate the storage and retrieval process (for example, color-coded labels, terminal digit, purging, year label, bar coding, or header sheets).
- Is there adequate space for expansion? Consider the physical space for paper-based records and computer space for the EHR.
- For paper-based systems, estimate the current linear filing inches of the permanent record storage area. Describe how you determined this number.
- For the EHR, describe the level of computer storage needed to maintain the electronic health records.
Forms
- Name at least one aspect of forms design/control you would suggest changing, if you were responsible for forms control in this facility. For electronic or hybrid health records, name at least one aspect of screen design or navigation, you would suggest changing. Why?
Loose Report Filing
- Who is responsible for ensuring that loose reports are filed in the patient health record?
- Is there a backlog of loose filing? If so, estimate the amount of loose sheets needing to be filed. Describe how you determined this number.
- How long would you estimate it would take to file this backlog? How did you determine this time period?
Regulatory Requirements
- Which policies and procedures pertaining to the storage and retrieval function are based on standards established by regulatory agencies? What are the regulatory standards? What agency established these standards? Be specific.
Question Inventory: Chart Completion Process
- Is there an established chart order for the facility?
- What type of chart format (source-oriented, problem-oriented, or integrated) is used by this facility? Describe.
- What type of deficiencies are analyzed for chart completion? Is this type of analysis considered qualitative or quantitative and why?
- Describe how chart deficiencies are marked (for example, colored clips or tags, paper clips, or electronic tags).
- Is the assembly/analysis or the prepping/imaging process concurrent? If so, explain how this works.
- If there is an incomplete filing area, what type of filing system is used for this area? Is this type of filing system effective and efficient? Why or why not? Describe the filing system.
- Describe the chart deficiency database.
- Create a flow chart of the flow of the health record from discharge to permanent filing. (If you are in an outpatient setting, create a flow chart relevant to your setting.)
Policy
- At what point is the chart considered delinquent? Why was this timeframe selected? If this question is not applicable to your setting, explain why it is not.
- How are the physicians notified that they have records to complete?
- What are the consequences if a physician does not complete his/her incomplete or delinquent records? Explain.
- Are there quantity and/or quality standards established for the tasks related to assembly/analysis, prepping/scanning and quality review?
Regulatory Requirements
- Which policies and procedures pertaining to chart completion are based on standards established by regulatory agencies? What is the name of the agency and what are the regulatory standards? Be specific.
Question Inventory: Release of Information
General Release of Information
- What types of requests for information are received by the department or facility (for example, patient, attorneys, Bureau of Disability, or other healthcare providers)?
- How many written requests are received monthly?
- Is a copying service used? How many days a week is the copying service available?
- What is the average turnaround time for completing requests?
- What is the cost to the requester for record copies and/or form completion? Explain.
- Create a flow chart to show the process and logic of the release of information function for this facility.
- Describe the database or manual system used to track release of information.
Authorization Requirements
- What does the facility require in order for an authorization to be valid?
- When an authorization is found to be invalid, what steps are taken?
- What information is considered non-privileged by the facility?
Subpoenas
- How are subpoenas handled at this facility? Be specific.
- Who accompanies the record to court? Describe a typical day at court when appearing with a medical record.
Regulatory Issues
- What legal principles, policies, regulations, and standards control the release of information and the request for information? Be specific. State how the facility meets these requirements.
Projects
- Numeric Filing Exercise: For this project students will use index cards labele
