Place Of Service (POS)

Listed below are place of service codes and descriptions. These codes should be used on professional claims to specify the entity where service(s) were rendered. Check with individual payers (e.g., Medicare, Medicaid, other private insurance) for reimbursement policies regarding these codes.

Place of Service Code(s)	Place of Service Name	Place of Service Description
00-10	Unassigned	N/A
11	Office	Location, other than a hospital, skilled nursing facility (SNF), military treatment facility, community health center, State or local public health clinic, or intermediate care facility (ICF), where the health professional routinely provides health examinations, diagnosis, and treatment of illness or injury on an ambulatory basis.
12	Home	Location, other than a hospital or other facility, where the patient receives care in a private residence.
13-20	Unassigned	N/A
21	Inpatient Hospital	A facility, other than psychiatric, which primarily provides diagnostic, therapeutic (both surgical and nonsurgical)and rehabilitation services by, or under, the supervision of physicians to patients admitted for a variety of medical conditions.
22	Outpatient Hospital	A portion of a hospital which provides diagnostic, therapeutic (both surgical and nonsurgical), and rehabilitation services to sick or injured persons who do not require hospitalization or institutionalization.
23	Emergency Room - Hospital	A portion of a hospital where emergency diagnosis and treatment of illness or injury is provided.
24	Ambulatory Surgical Center	A free-standing facility, other than a physician's office, where surgical and diagnostic services are provided on an ambulatory basis.
25	Birthing Center	A facility, other than a hospital's maternity facilities or a physician's office, which provides a setting for labor, delivery, and immediate post-partum care as well as immediate care of new born infants.
26	Military Treatment Facility	A medical facility operated by one or more of the Uniformed Services. Military Treatment Facility (MTF) also refers to certain former U.S. Public Health Service (USPHS) facilities now designated as Uniformed Service Treatment Facilities (USTF).
27-30	Unassigned	N/A
31	Skilled Nursing Facility	A facility which primarily provides inpatient skilled nursing care and related services to patients who require medical, nursing, or rehabilitative services but does not provide the level of care or treatment available in a hospital.
32	Nursing Facility	A facility which primarily provides to residents skilled nursing care and related services for the rehabilitation of injured, disabled, or sick persons, or, on a regular basis, health-related care services above the level of custodial care to other than mentally retarded individuals.
33	Custodial Care Facility	A facility which provides room, board and other personal assistance services, generally on a long-term basis, and which does not include a medical component.
34	Hospice	A facility, other than a patient's home, in which palliative and supportive care for terminally ill patients and their families are provided.
35-40	Unassigned	N/A
41	Ambulance - Land	A land vehicle specifically designed, equipped and staffed for lifesaving and transporting the sick or injured.
42	Ambulance - Air or Water	An air or water vehicle specifically designed, equipped and staffed for lifesaving and transporting the sick or injured.
43-49	Unassigned	N/A
50	Federally Qualified Health Center	A facility located in a medically underserved area that provides Medicare beneficiaries preventive primary medical care under the general direction of a physician.
51	Inpatient Psychiatric Facility	A facility that provides inpatient psychiatric services for the diagnosis and treatment of mental illness on a 24-hour basis, by or under the supervision of a physician.
52	Psychiatric Facility Partial Hospitalization	A facility for the diagnosis and treatment of mental illness that provides a planned therapeutic program for patients who do not require full time hospitalization, but who need broader programs than are possible from outpatient visits to a hospital-based or hospital-affiliated facility.
53	Community Mental Health Center	A facility that provides the following services: outpatient services, including specialized outpatient services for children, the elderly, individuals who are chronically ill, and residents of the CMHC's mental health services area who have been discharged from inpatient treatment at a mental health facility; 24 hour a day emergency care services; day treatment, other partial hospitalization services, or psychosocial rehabilitation services; screening for patients being considered for admission to State mental health facilities to determine the appropriateness of such admission; and consultation and education services.
54	Intermediate Care Facility/Mentally Retarded	A facility which primarily provides health-related care and services above the level of custodial care to mentally retarded individuals but does not provide the level of care or treatment available in a hospital or SNF.
55	Residential Substance Abuse Treatment Facility	A facility which provides treatment for substance (alcohol and drug) abuse to live-in residents who do not require acute medical care. Services include individual and group therapy and counseling, family counseling, laboratory tests, drugs and supplies, psychological testing, and room and board.
56	Psychiatric Residential Treatment Center	A facility or distinct part of a facility for psychiatric care which provides a total 24-hour therapeutically planned and professionally staffed group living and learning environment.
57-59	Unassigned	N/A
60	Mass Immunization Center	A location where providers administer pneumococcal pneumonia and influenza virus vaccinations and submit these services as electronic media claims, paper claims, or using the roster billing method. This generally takes place in a mass immunization setting, such as, a public health center, pharmacy, or mall but may include a physician office setting.
61	Comprehensive Inpatient Rehabilitation Facility	A facility that provides comprehensive rehabilitation services under the supervision of a physician to inpatients with physical disabilities. Services include physical therapy, occupational therapy, speech pathology, social or psychological services, and orthotics and prosthetics services.
62	Comprehensive Outpatient Rehabilitation Facility	A facility that provides comprehensive rehabilitation services under the supervision of a physician to outpatients with physical disabilities. Services include physical therapy, occupational therapy, and speech pathology services.
63-64	Unassigned	N/A
65	End-Stage Renal Disease Treatment Facility	A facility other than a hospital, which provides dialysis treatment, maintenance, and/or training to patients or care givers on an ambulatory or home-care basis.
66-70	Unassigned	N/A
71	State or Local Public Health Clinic	A facility maintained by either State or local health departments that provides ambulatory primary medical care under the general direction of a physician.
72	Rural Health Clinic	A certified facility which is located in a rural medically underserved area that provides ambulatory primary medical care under the general direction of a physician.
73-80	Unassigned	N/A
81	Independent Laboratory	A laboratory certified to perform diagnostic and/or clinical tests independent of an institution or a physician's office.
82-98	Unassigned	N/A
99	Other Unlisted Facility	Other service facilities not identified above.

A Guide to the Use of CPT MODIFIERS

In order to describe the myriad number of different medical services, procedures, and factors accurately, CPT codes are divided into three Categories. Category I CPT codes describe medical, surgical, and diagnostic procedures (for instance, a routine checkup of low complexity is CPT code 99213). Category II CPT codes provide supplemental information to Category I CPT codes. The example used in Course 12 is the code for low-density lipoprotein cholesterol (CPT I code 80061) with a result of less than 100 mg of cholesterol per deciliter (CPT II code 3048F). This test and its result would be coded as 80061-3048F.

Category II CPT codes supply information that streamlines administrative work and tracks the performance of certain tests or procedures. These Category II codes, however, do not always provide important information about the specifics of a procedure, like on which side of the body a surgery took place, or whether a surgery was discontinued due to concern for patient safety.

See Examples of CPT Modifiers

In order to communicate this extremely detailed information in an efficient, standardized way, the AMA created CPT modifiers. CPT modifiers are two-character suffixes that healthcare providers or coders attach to a CPT code to give additional information about the procedure documented. CPT modifiers are always two characters in length. They may consist of two numbers from 21 to 99, two letters, or a mix (alphanumeric). These modifiers are appended to the initial CPT code by a hyphen.

Some examples of common CPT modifiers include:

• -53 (discontinued procedure)
• -59 (distinct procedural service)
• -79 (unrelated procedure or service performed by the same physician during the postoperative procedure).

Some common letter-based modifiers include:

• -LT (denotes a procedure on the left side of the body)
• -RT (denotes the right side of the body),
• -GC (identifies that a service has been performed by residents or students under the guidance of a teaching physician).

If you had to code a partial mastectomy of the left breast, you would use the CPT code 19302 for the procedure, with the modifier –LT to describe on which side of the body the procedure took place. Our code would read 19302-LT. If, however, the procedure had to be stopped because of a concern for the well-being of the patient, you would add another modifier: -53. The new code would read 19302-LT-53. Note that this is a simplified example, and that a procedure as complex as a mastectomy often has numerous additional codes).

Certain CPT modifiers are only used with a particular type of procedure or service. For instance, the modifier –LT used above is only valid when describing a procedure on an appendage or organ paired in the body, such as the lung, kidney, leg, or breast. The modifiers, -21, -24, -25, and -27 are only used for evaluation and management. Also, note that unlike CPT codes and ICD codes, CPT modifiers are not necessarily grouped into related procedures.

Functional vs. informational modifiers

There are a number of additional rules that govern the use of CPT modifiers. Coders must constantly look out for certain restrictions, formats, and guidelines, as a miscoded CPT modifier can result in a denied claim. Medical coders typically only use two CPT modifiers. While there is room for up to four modifiers on the CMS 1500 and UB-04 claim forms, the Center for Medicare and Medicaid Services (CMS) or other payers may not recognize modifiers after the first two. For this reason, coders should list first the modifiers that will affect reimbursement. These are often called functional or pricing modifiers, while modifiers that provide information about the procedure are known as informational. There are certain CPT modifiers, such as -22 (for unusual procedural services) and -52 (for reduced services), that affect reimbursement if documentation supports the use of this modifier.

Take, for example, the partial mastectomy of the left breast (code 19302-LT-53). If you were to swap out the -53 (discontinued procedure) with the functional modifier -52 (for reduced services), you would then code the whole procedure 19302-52-LT. Note that the functional modifier (-52) now comes before the informational modifier (-LT). If the informational modifier is listed first in a claim, an insurance company will deny that claim and return it to the healthcare provider.

Certain modifiers also have guidelines specific to them. The modifier -51, for multiple procedures, is one of the more commonly used CPT modifiers. In the instance of multiple procedures provided by the same specialist or healthcare provider, a coder would list the initial procedure’s CPT code, then append the modifier -51 to the end of the code for the additional procedure or procedures. Certain procedures, however, are listed in the CPT book as “-51 exempt,” and coders must be aware of this distinction.

Note that some modifiers can be used in conjunction with each other (like -23, unusual anesthesia, and -47, for anesthesia by surgeon). Others contradict one another and cannot be included in the same code For example, the modifier –LT (procedure on the left of two paired appendages or organs) cannot be coded with the modifier -50, which describes a bilateral procedure.

Medical Billing Guidelines

HIPAA Compliance

HIPAA was passed by Congress and signed into law by President Clinton in 1996. Chief among the goals set forth by HIPAA was increased security and accountability when it comes to patient medical information. Specifically, HIPAA established guidelines that healthcare providers and health insurance companies must follow in order to keep a patient’s information secure.

These HIPAA guidelines apply to the gathering, cataloging, and transferring of any and all patient information. For the purposes of medical billing and coding, HIPAA serves to curb fraudulent activity before, during, and after the claims process as well as establishing standards for transferring patient information electronically.

HIPAA is divided into five Titles. The main points of HIPAA that apply most to the duties of a medical billing and coding specialist can be found in Titles I and II of the act, which are outlined below.

Title I: Healthcare Access, Portability, and Renewability

Title I of HIPAA addresses health insurance policies within the confines of a person’s employment. Under Title I, HIPAA sets guidelines for what an employer can and cannot do with an employee’s healthcare plan as provided by the employer. Specifically, Title I protects health insurance coverage for employees and their dependents by making healthcare plans available to those who have either lost their job or those who are in the process of switching employers.

Title I protects employees by modifying and improving the Consolidated Omnibus Reconciliation Act of 1985 (COBRA). Title I of HIPAA extended healthcare benefits already offered by COBRA, including extending the duration of benefits of disabled persons eligible for COBRA from 18 to 36 months. Title I also allowed dependents of a person covered under COBRA to continue to receive the same healthcare coverage as they did when that person was employed with health benefits.

Title I also addresses how health insurance companies treat patients with pre-existing conditions. Before HIPAA, a person with a pre-existing condition might have trouble finding a healthcare plan that covers their medical expenses because commercial insurance companies would consider them too risky to cover. Under Title I, insurance companies are limited in how many restrictions they can put into place in their healthcare plans for people with pre-existing conditions.

For medical billing and coding professionals, Title I is important because it ensures that more people are eligible for health insurance. Because of the laws set forth in Title I, you will process claims that involve patients covered by COBRA or those with pre-existing conditions that still receive coverage thanks to this act.

Title II: Preventing Medical Healthcare Fraud and Abuse, Administrative Simplification, and Medical Liability Reform

Title II addresses many more concerns relevant to the medical billing and coding field, namely, security and privacy requirements for handling a patient’s medical records and methods to simplify the billing and processing of claims. In addition, it establishes guidelines for electronic recordkeeping and electronic transactions between parties in the healthcare system.

Title II also stipulates how healthcare providers and insurance companies should avoid fraudulent activity. The law puts the Officer of the Inspector General (OIG) of the Department of Health and Human Services (DHHS) in charge of investigating and if necessary prosecuting those who commit fraud. Your responsibilities as a medical billing specialist will be discussed in the next section of this lesson.

The Privacy Rule

Title II expands security and privacy measures within the healthcare system with the creation of the Privacy Rule and the Security Rule. The Privacy Rule addresses how insurance companies and providers can handle patient information by regulating how they disclose the information to each other and to other entities that may require medical data. Under the Privacy Rule, medical billing and coding specialists must be careful not to share a patient’s Protected Health Information (PHI) with parties that aren’t covered entities (providers, insurance companies, etc.) as stipulated by Title II. A patient’s PHI includes the following data:

• The patient’s medical record, including present and past medical conditions or illnesses and treatments received for them
• The location and type of healthcare provider wherein the patient received care
• Any and all fees paid by the patient or a patient’s insurance company to cover healthcare expenses rendered by a provider

The Security Rule

The Security Rule, on the other hand, establishes the rules for protecting a person’s information and also explains how those rules can be enforced if necessary. The security rule explains how covered entities must collaborate to protect patient medical information. Part of this collaboration involves the creation of computerized physician order entry (CPOE) systems and electronic healthcare records (EHRs) that medical billing and coding specialists use everyday to file and process claims. The Security Rule also requires that any technologies developed by covered entities to facilitate their administrative work must be secure and up to standards established by HIPAA.

Title II also creates unique identifiers for providers, employers, and patients in an attempt to optimize communication between entities in the healthcare system and universalize the billing process. This is done in accordance with the Electronic Data Interchange (EDI) Rule set forth in Title II. The unique identifiers created for the EDI are either individual numbers or code sets assigned to covered entities for the use of electronic transactions and should have equal value and meaning for any medical billing specialist. Some of the unique identifiers include the following sets:

• The National Standard Employer Identifier Number (EIN) for tracking employers
• The National Provider Identifier Number (NPI) for tracking providers such as private clinics, hospitals, and nursing facilities
• The National Health Plan Identifier Number (HPID) for tracking participating health insurance companies

For medical billing and coding purposes, the standards set forth under Title II are important because they optimize the claims process. The format and transaction of electronic claims in particular is simpler and more secure now than ever before thanks to Title II of HIPAA.

OIG Compliance

The OIG operating through the DHHS works to ensure that covered entities act within the confines of privacy and security laws established in HIPAA and related federal healthcare legislation. One of the OIG’s main duties relative to the medical billing and coding industry is the prevention of fraudulent activity among covered entities. As a medical billing and coding specialist you must be vigilant about potential activity that may be viewed as fraudulent by the OIG.

Some of the most common fraudulent practices that the OIG deals with include:

• Unbundling codes: Unbundling is a fraudulent practice of submitting separate claims to an insurance provider for services that could fit on a single bill. Providers send separate claims so that the various CPT/ICD-9 codes on each claim are “unbundled” from one another thereby maximizing their payment from insurance companies.
• Upcoding: Upcoding occurs when providers assign higher CPT/ICD-9 codes than necessary to explain a patient’s condition or services they received. For instance, a provider might upcode for extra tests that weren’t performed on a patient just to get more money from an insurance company.
• Undercoding: Undercoding is the opposite of upcoding, when a provider intentionally leaves out codes for healthcare services rendered. Providers may undercode in an attempt to avoid investigation by the OIG.
• Falsifying medical records: Falsifying medical records is perhaps the most egregious fraudulent activity committed by a healthcare provider. In this case, providers falsify a patient’s medical records, including histories of their conditions, descriptions of treatment, and payment histories for self gain. Providers and any staff guilty of falsifying medical records will be subject to prosecution by the OIG and other parties that may want to press charges.

If the OIG suspects that a provider or an insurance company is committing fraud on their claims, they may conduct an audit. The OIG has the authority as an acting party of the DHHS to enforce laws found to be broken by any covered entity. As a medical billing specialist it is in your utmost interest to adhere to the federal healthcare laws and regulations to avoid getting in trouble with the OIG. Check out the DHHS for more information about OIG compliance.

Understanding the Healthcare Reform Act of 2010

The most important aspect of the Healthcare Reform Act of 2010 for medical billing and coding purposes is its overall expansion of the healthcare system and its attempt to cover more Americans. These efforts to extend coverage will require many more people to become skilled medical billing and coding professionals simply to keep up with healthcare demands. Specifically, the law is estimated to enroll an additional 30 million Americans in various healthcare programs. As healthcare eligibility increases among the American populace, so too will the number of healthcare claims needed to be filed and processed. The most relevant effects of the bill are listed below.

Increased Protections for People Enrolled in Medicare

The Healthcare Reform Act is designed to increase healthcare access, including to those people who should already have access to care under current federal healthcare laws. The new law makes many preventive care services covered under Medicare at little to no cost to enrollees. Preventative services such as annual wellness visits and preventive screenings for conditions like cancer, diabetes, and HIV will now be covered for Medicare enrollees.

These increased protections and available services will help millions of Americans to receive necessary healthcare, but it will also result in many more claims per year to be filed with Medicare administrative contractors (MACs) across the country.

Mandatory Electronic Medical Records and Transactions

The most important component of the Healthcare Reform Act for medical billing specialists is the requirement that all providers use EHR systems by the end of 2015. This means that providers who deal with mostly paper claim forms will need to reorganize their billing department to handle electronic transactions. Those electronic transactions will need to meet the security and privacy standards required by HIPAA (like those established with the privacy and security rules) and other healthcare legislation.

The push towards EHR is also designed to minimize administrative burdens for medical billing coding specialists and other provider staff who deal with medical information. The Healthcare Reform Act of 2010 includes a number of suggestions for reducing this administrative burden aside from mandatory EHR, including the implementation of new recordkeeping software. These practices will ultimately make your job as a medical billing and coding specialist much easier and optimize the healthcare experience for all parties involved.

Healthcare administrative technologies change all the time, and providers can no longer delay learning how to work with them. The Healthcare Act of 2010 merely expedited the process of bringing all providers, insurance companies, and other covered entities into the healthcare digital age. There will be a huge demand for trained medical billing and coding specialists who can assist in this transition from paper claims filing to claims filed exclusively over digital networks.

The Medical Billing Process

The medical billing process is not undertaken by a single individual. Medical coding involves front office administrators, such as receptionists, as well as back office staff, including the medical biller and coder. It is important to understand every step of this process if you intend to pursue a career in medical billing and coding. For the purposes of this lesson, we will cover the end-to-end process of medical billing as a whole, and not just the responsibilities of the biller and coder.

The primary job of medical billing specialists is to:

1. Understand each individual’s responsibility for payment, as they may differ from patient to patient
2. Evaluate and analyze insurance coverage and medical charges, and prepare accurate billing forms
3. Collect accurate payments from insurance plans and/or individual patients

These three primary tasks require many specific responsibilities within the medical billing process. In this course we will break down these responsibilities into a series of steps that begins when a patient schedules an appointment and ends when reimbursement is collected from the insurance company and/or patient.

Patient Check-in

For the purposes of this course, we will break down the medical billing process within a personal physician’s office. The first step in this process usually occurs when a patient schedules an appointment with his or her physician. The office’s front office staff, usually a receptionist, handles preregistration.

When a patient calls to make an appointment, a time slot must be scheduled. If it is the patient’s first visit, information must be collected by the front office to prepare for the patient visit. This includes basic information on the patient, such as name, address, birth date, and reason for visit. The front office must also collect insurance information from the patient, including the name of the insurance provider, and the patient’s policy number. All of this information is used to set up a file on the patient, which can be referred to during the medical billing process.

Setting up and updating medical files for the patient expedites the billing process and makes patient check-in easier and more efficient. It also eliminates potential errors and registration hiccups, such as the patient forgetting to bring insurance information upon arrival for their appointment. Anything the physician’s office can do to stay up-to-date on their patient’s file is extremely beneficial to the whole process.

Confirming Financial Responsibility

Once patient information has been recorded or updated, the physician’s office establishes who will be paying for the medical services that will be provided during the appointment.

Insurance coverage differs, often dramatically, between insurance providers and individual plans, so the first step is to familiarize yourself with the patient’s insurance coverage. Using the insurance information provided by the patient, including their insurance policy number, the office must confirm which services are covered under the patient’s current insurance policy and what medical conditions (diagnoses) the insurance provider requires in order to justify payment for those services.

For instance, a policy may cover certain types of blood work, but only if a specific diagnosis (such as hypercholesterolemia) is given by the physician. It is also important to confirm which services are explicitly not covered under the patient’s insurance policy. Knowing this information is crucial to ensuring reimbursement. For instance, if a patient is scheduled for an appointment that may require services not covered by their insurance policy, the patient should be informed that they will have to pay out of pocket before these services are rendered.

Insurance providers may also require various billing procedures, so the physician’s office must also check with the insurance provider to establish their specific billing requirements, and be prepared to meet those requirements. For instance, certain insurance providers may ask for preauthorization of all services before these services are billed. If a service is pre-authorized before the visit, the appointment can proceed smoothly, both for the patient, insurance provider, and physician’s office.

After the insurance provider has been contacted and all requirements have been met, the billing process should be explained to the patient. The patient should be informed of services not covered by their insurance plan and the out-of-pocket costs of those services. Having all parties understand and agree to their financial responsibility ensures the medical billing process will proceed smoothly. Likewise, if the patient’s insurance policy includes a copayment, or a small fee collected at the time of the appointment, the patient should be informed of the amount they will have to pay. Some offices collect copayments before the patient receives medical services.

Patient Check-Out

When a patient receives medical services from their physician, these services are recorded and placed in the patient’s medical record. It is important for the physician to record all medical services so the office can create an accurate medical bill to send to insurance providers or patients.

In order to bill for the visit, medical coders translate all diagnoses and medical procedures performed during the patient’s visit into a series of medical code sets that act as a universal language within the healthcare industry. These codes streamline the recording of medical services and ensure that these services are accurately represented between medical facilities and insurance providers. Medical codes were summarized in the previous course, and will be covered more comprehensively in later courses, but to recap, different medical code sets are used to communicate diagnosis and treatment.

After the medical coder has determined the patient’s diagnosis and treatment(s) administered, and coded these using the ICD and CPT, the medical bill can be assembled. This transaction for the visit, including all charges and payments made by the patient, is called the patient ledger. In the ledger, the medical biller calculates the patient’s balance by adding any previous balances and new charges, subtracting payments made (either by the insurance company or the patient). This amounts to the patient’s current balance.  This information is given to the patient as a receipt. The patient can then check out.

Coding and Billing Compliance

Before a bill can be officially recorded and sent off to the payer, it must first satisfy certain official requirements. These requirements differ between coding and billing procedures, as well as insurance providers and types of medical services provided. For example, the billing process must be compliant with requirements set by the Health Insurance Portability and Accountability Act (HIPAA), and the Office of Inspector General (OIG). These requirements will be discussed in greater detail in later courses.

Generally speaking, part of achieving necessary compliance in medical billing is ensuring that fees are charged accurately. The medical biller must confirm that each charge is related to a specific procedure code. Different medical facilities have different charges and fees for their service, so charges must match the standard set by the specific medical practice (in this case, a physician’s office). Different practices usually have their usual fees listed in a standard fee schedule.

The medical biller must also confirm that every code is, in fact, billable. Whether or not a code is billable depends on the payer, generally the insurance provider. In the case of insurance providers, each payer has a set of rules that determine what they can and cannot be billed for under their policyholder’s plan. It is important for the medical biller to be compliant with the payer’s rules. If a bill is sent out to a payer that includes charges outside of these rules, the bill may be denied and returned to the physician’s office to be corrected. Denied claims are time consuming, resource wasting, and complicate the billing process for all parties involved.

Transmitting the Claim

Once all diagnoses and medical procedures have been recorded, coded, and checked for compliance, the bill is ready to be sent out to the insurance company, or payer. This is a very important step in the medical billing process. This insurance claim provides the payer with important information about the diagnosis, procedures, and the charges garnered by the patient. An accurate, expedite insurance claim ensures the healthcare provider will be reimbursed in a timely fashion, and that the patient will not be left on the hook for lingering medical payments.

The majority of practices file and submit claims electronically. This is the most efficient and accurate way to process claims, and it saves the industry a significant amount of money compared to paper submissions. In fact, one of the reasons for the switchover from ICD-9-CM to ICD-10 is that the newer code is more flexible and optimized for electronic usage. Submitting claims electronically reduces the amount of manual data the medical biller must perform. With minimal analog interaction, electronic submissions reduce the amount of errors made, and subsequently increase the amount of “clean claims” submitted to health insurers.

Different healthcare providers and insurance companies use various kinds of software to send and receive insurance claims. It is important for the medical biller to become familiar with the kind of software used in their facility. Just because using technology is a faster, easier, and more accurate way to send and receive insurance claims does not mean it is error proof. Even as certain kinds of insurance claim software automatically flag for errors, proficiency with the software saves time and money for all parties involved.

Both paper and electronic claims can be submitted in a number of ways. Typically, a medical practice will send an insurance claim to the insurance provider using a clearinghouse. A clearinghouse is a private, third-party company that acts as a liaison between healthcare providers and insurers. Used primarily with electronic claims, clearinghouses will receive insurance claims from the healthcare provider, format the claim in accordance with insurer requirements, and submit the claim to the insurer.

In the case of high volume insurers, such as Medicaid, claims may be submitted directly to the insurance provider. Again, insurance providers such as private payers, Medicare, or TRICARE all institute various requirements in the processing of claims. Because a clearinghouse is not always used to format claims correctly, it is important to understand the various requirements of each insurance provider and be able to submit accurate, compliant claims directly.

The process of submitting insurance claims, including submitting through clearinghouses, insurance requirements, and the different kinds of software, will be covered more comprehensively in later courses.

Receiving Payment from Insurance Companies

When a payer (usually the insurance provider) receives an insurance claim from a clearinghouse or the healthcare provider directly, the claim is reviewed through a process called adjudication. During adjudication, the insurance provider puts the claim through a number of different steps, considering various factors, in order to evaluate the bill. Here, the insurance provider determines whether they will pay the entire bill, a portion of the bill, or if they will deny the bill outright. The amount the insurance provider pays is based on the policy held by the patient and its contract with the medical practice.

After the claim goes through adjudication, the decision to pay all, some, or none of the bill is sent back to the healthcare provider in the form of a report. If the insurance provider decided not to cover the entire bill, the first step of the medical biller is to determine whether or not more than one insurance provider covers the patient. If the patient is covered by additional insurance plans, the medical biller sends a claim for the remaining bill is sent to this second payer.

Another major step for the medical biller is to confirm that the charges and fees match up between medical practice and insurance company. It is rare that fees for both parties match up perfectly. Again, the amount reimbursed to the healthcare provider is based on the agreement they have with the individual insurance company. Medical billers evaluate each payment made by the insurance provider to confirm a number of factors.

First, the medical biller should check to see if all procedures listed on insurance claim sent out by the healthcare provider also appear on the statement received from the insurance company. Similarly, all codes included in the claim must also appear identical in the insurer’s payment transaction. If all procedures match, and the codes for these procedures are identical, the medical biller reviews the payments for each procedure. Each payment should be in accordance with the contract between healthcare provider and payer. If the insurance provider opted not to pay for certain procedures, these unpaid charges should be explained in full on the report.

If any discrepancies are found in the transaction, the healthcare provider must enter into an appeal process. This process includes different rules and regulations depending on the state and the insurance contract. In the end, it is crucial that the provider receives the maximum appropriate reimbursement as agreed upon between the practice and the payer.

Billing Patients

If the procedures and codes listed in the insurance provider’s transaction report match those sent by the healthcare provider, all charges are compliant with the financial agreement between the both parties, and the healthcare provider has received appropriate reimbursements for their medical services, these payments are then applied to the patient’s account.

In cases where the insurance provider did not cover some (or any) service rendered, leaving portions of the bill unpaid, these leftover charges are passed on to the patient. The medical biller must confirm that the amount reimbursed by the insurance provider, in addition to the total billed to the patient, equals the expected cost for all of the medical services rendered.

When billing the patient directly, it is important that the bill contains any and all information pertaining to entire transaction. Again, the medical biller must confirm that the patient bill contains a list of services provided by the medical practice, as well as the dates these services were rendered, the payments already made by the insurance provider deducted from the overall bill, and the leftover balance the patient will be responsible for paying. Making sure this information is accurate and clear is done in order to ensure the patient understands his or her financial responsibility, and will help avoid any potential complication in receiving reimbursement from the patient.

Collecting Payment

When a patient is sent a bill with the remaining balance for the medical services provided, a payment date is set and listed on the bill itself. Once the patient’s payment is received, and the healthcare provider has been reimbursed for all services provided, the information is filed in the patient’s record and the transaction is effectively closed.

If the patient fails to pay a bill on time, the healthcare provider is responsible for following up with the patient and handling any additional billing issues. If the balance remains unpaid for a certain amount of time, a collections process is initiated in order to receive reimbursement for the overdue bill. The amount of time allotted before the collections process is instated, and how to go about the collecting reimbursement, depends on the healthcare provider’s financial policy.

The Medical Claims Process

The United States healthcare system is trillion-dollar industry, which includes pharmacies, pharmaceutical companies, medical equipment manufacturers, and medical care facilities. The complex infrastructure that keeps this industry, which is responsible for the well-being of millions of Americans, running on a day-to-day basis relies on specialized professionals tasked with overseeing these operations. One such system is the medical claims process. The claims process can be summarized as a dual interaction between two of the largest and most important pieces of the healthcare system: healthcare providers and medical insurance companies.

Understanding the Key Players in the Medical Claims Process

The relationship between policyholders, healthcare providers, and insurance companies is essential to understand before tackling the details of the medical billing and coding process.

Healthcare providers

A healthcare provider is any facility or practice where you receive and are billed for a product or service related to your personal health. Healthcare providers include hospitals, private clinics, and pharmacies as well as specialized care providers like nursing homes, in-home caretakers, and chiropractors.

Insurance companies

Health insurance companies subsidize medical care for qualifying patients, called policyholders. Health insurance is not mandatory in the U.S., but many Americans have insurance coverage, whether they purchased it privately or obtained it from their employer or the government. Insurance policies vary, but they all operate under the same business model: policyholders pay a certain amount of money each month or year to the insurance company, which is called a premium. If policyholders need procedures for which they qualify, the insurance company pays for that procedure, either in full or in part.

Policyholders

A policyholder is any individual who has purchased health insurance. For example, a young adult looking for a basic insurance plan may purchase a policy where the insurance provider will pay for all medical bills that cost more than the deductible, which is a pre-arranged amount that the policyholder must pay out-of-pocket before insurance coverage kicks in.

How Medical Claims Work

The medical claims process is initiated when a policyholder goes to a healthcare provider for a medical service, which can be anything from obtaining a monthly prescription to major surgery. After the policyholder receives the service, they are usually financially responsible for a deductible, which is the amount of money that the policyholder agrees to pay before their insurance starts. The policyholder gives their insurance information to their healthcare provider, and the transaction between the policyholder and healthcare provider is complete.

Behind the scenes, the transaction between healthcare provider and insurance company begins. The healthcare provider records all the medical services and their costs offered to the policyholder. This record is known the medical claim, or bill. While working for healthcare providers, medical billers and coders are responsible for creating this record and sending the claims out to the policyholder’s insurance company, which has three options. It can:

• Accept all expenditures and pay the bill in full
• Deny the claim on account of a billing error (like incorrect patient information). The bill is then returned to the healthcare provider to be corrected.
• Reject the claim outright, usually on account of the services not being covered within the health plan. The policyholder then pays for the service out of pocket.

Working with Insurance Providers

The two major types of insurance providers are managed care plans and public insurance. Learn how to handle both types of coverage below.

Managed care

A large portion of insured Americans receive coverage through their employer, usually through managed care plans. These insurance plans work with a specific group of doctors, hospitals, pharmacies, labs, equipment vendors, and other care providers. Individuals insured under managed care plans seek medical services within this managed care network. The three main components of managed care are preferred provider organizations, health maintenance organizations, and point of service plans.

• HMOs require their policyholders to receive most or all of their medical care under the insurance provider’s managed care network. They also require policyholders to select a primary care physician. If HMO policyholders see a specialist without a referral from their primary care physician, or seek treatment outside of the managed care network, they will most likely have to pay medical bills out of pocket.
• PPOs also have a network of preferred healthcare providers they request their policyholders to seek treatment from. However, unlike HMOs, individuals do not need to select a primary care provider. Also unlike HMOs, if an individual seeks treatment outside of the managed care network, they can pay the out-of-network healthcare provider directly and possibly get reimbursed for their medical expenses.
• Point-of-service Plans: Point-of-service plans form a hybrid between PPOs and HMOs. As with HMOs, point-of-service plans allow you to select physicians and services from within a dedicated network of providers. Unlike HMOs, patients can receive care from out-of-network providers, but they will likely have to pay a deductible.

HMOs and PPOs differ in the insurance claim process. All healthcare providers within a managed care network must file a claim with the HMO. So long as services are rendered in-network, policyholders are not required to file anything themselves, and healthcare providers may not bill the policyholder directly. In the case of PPOs, policyholders may have to file a claim to their insurance provider if seeking treatment outside of the managed care network. Filing claims to insurance providers isn’t necessary for POS plans.

Public insurance coverage

The government is also a major provider of insurance coverage in America, through public programs called Medicaid and Medicare.

• Medicaid is a health service program designed for low-income individuals and families. Medicaid recipients receive health coverage decided by the state in which they reside, though some coverage is federally mandated, such as inpatient and outpatient hospital care. Within this system, states make payments on a fee-for-service system or through arrangements with HMOs.
• Medicare is another government-funded insurance program for the elderly. Like Medicaid, certain medical services must be covered for Medicare recipients, such as hospital stays and nursing care. This basic coverage is called Medicare Part A. Recipients may also receive coverage in Medicare Part B, also called Supplementary Medicare, for services such as medical equipment, x-rays and labs, and outpatient hospital visits. Recipients of Medicare Part B must pay a monthly premium and pay an annual deductible. There are also Medicare Advantage plans where users can create custom plans that meet their specific needs.

Medical Billing Terminology

This course will help you become familiar with the everyday vocabulary used by medical billing specialists and their peers. Medical billing and coding is a complex vocation that requires extensive knowledge of the healthcare system, medical terminology, and accounting, not to mention a vast suite of medical code sets. Understanding these subjects and the role that a medical billing specialist plays in them will bring you one step closer to starting a career in the field.

Because of the complexity of the medical billing field, it can be easy to feel overwhelmed by the subject matter at first glance. Let this extensive glossary of key medical billing terms serve as a reference to help you get a better grasp on the language of this field.

Check out the medical billing terminology definitions and explanations in the alphabetized list below:

A

Allowed Amount: The sum an insurance company will reimburse to cover a healthcare service or procedure. The patient typically pays the remaining balance if there is any amount left over after the allowed amount has been paid. This amount should not to be confused with co-pay or deductibles owed by a patient.

American Medical Association (AMA): The AMA is the largest organization of physicians in the U.S. dedicated to improving the quality of healthcare administered by providers across the country. The current procedural technology (CPT) code set is maintained and revised by the AMA in accordance with federal guidelines.

Aging: A formal medical billing term that refers to insurance claims that haven’t been paid or balances owed by patients overdue by more than 30 days. Aging claims may become denied if they aren’t filed in time with a health insurance company.

Ancillary Services: Any service administered in a hospital or other healthcare facility other than room and board, including biometrics tests, physical therapy, and physician consultations among other services.

Appeal: Appeal occurs when a patient or a provider tries to convince an insurance company to pay for healthcare after it has decided not to cover costs for someone on a claim. Medical billing specialists deal with appeals after a claim has been denied or rejected by an insurance company.

Applied to Deductible (ATD): This term refers to the amount of money a patient owes a provider that goes to paying their yearly deductible. A patient’s deductible is determined by their insurance plan and can range in price.

Assignment of Benefits (AOB): This term refers to insurance payments made directly to a healthcare provider for medical services received by the patient. Assignment of benefits occurs after a claim has been successfully processed with an insurance company.

Application Service Provider (ASP): ASP is a digital network that allows healthcare providers to access quality medical billing software and technologies without needing to purchase and maintain it themselves. Providers who use ASP typically pay a monthly fee to the company that maintains the billing software.

Authorization: This term refers to when a patient’s health insurance plan requires them to get permission from their insurance providers before receiving certain healthcare services. A patient may be denied coverage if they see a provider for a service that needed authorization without first consulting the insurance company.

B

Beneficiary: The beneficiary is the person who receives benefits and/or coverage under a healthcare plan. The beneficiary of an insurance plan may not be the person paying for the plan, as is the case for young children covered under their parents’ plans.

Blue Cross Blue Shield: Blue Cross Blue Shield is a federation of 38 health insurance companies in the U.S. (some of which are non-profit companies) that offer health insurance options to eligible persons in their area. Blue Cross Blue Shield offers healthcare plans to over 100 million people in the U.S.

C

Capitation: A fixed payment that a patient makes to a health insurance company or provider to recoup costs incurred from various healthcare services. A capitation is different from a deductible or co-pay.

Civilian Health and Medical Program of Uniform Services (CHAMPUS): CHAMPUS (now known as TRICARE) is the federal health insurance program for active and retired service members, their families, and the survivors of service members.

Charity Care: This type of care is administered at reduced or zero cost to patients who cannot afford healthcare. Providers may offer charity care at their discretion.

Clean Claim: This refers to a medical claim filed with a health insurance company that is free of errors and processed in a timely manner. Some providers may send claims to organizations that specialize in producing clean claims, like clearinghouses.

Clearinghouse: Clearinghouses are facilities that review and correct medical claims as necessary before sending them to insurance companies for final processing. This meticulous editing process for claims is known in the medical billing industry as “scrubbing.”

Centers for Medicare and Medicaid Services (CMS): The CMS is the federal entity that manages and administers healthcare coverage through Medicare and Medicaid. CMS coordinates with providers and enrollees to provide healthcare to over 100 million Americans.

CMS 1500: The CMS 1500 is a paper medical claim form used for transmitting claims based on coverage by Medicare and Medicaid plans. Commercial insurance providers often require that providers use CMS 1500 forms to process their own paper claims.

Coding: Coding is the process of translating a physician’s documentation about a patient’s medical condition and health services rendered into medical codes that are then plugged into a claim for processing with an insurance company. Medical billing specialists must be familiar with many code sets in order to perform their job duties.

COBRA Insurance: A federal program that allows a person terminated from their employer to retain health insurance they had with that employer for up to 18 months, or 36 months if the former employee is disabled.

Co-Insurance: The percentage of coverage that a patient is responsible for paying after an insurance company pays the portion agreed upon in a health plan. Co-insurance percentages vary depending on the health plan.

Collection Ratio: This refers to the ratio of payments received relative to the total amount owed to providers.

Contractual Adjustment: This refers to a binding agree between a provider, patient, and insurance company wherein the provider agrees to charges that it will write off on behalf of the patient. Contractual adjustments may occur when there is a discrepancy between what a provider charges for healthcare services and what an insurance company has decided to pay for that service.

Coordination of Benefits (COB): COB occurs when a patient is covered by more than one insurance plan. In this situation one insurance company will become the primary carrier and all other companies will be considered secondary and tertiary carriers that may cover costs left after the primary carrier has paid.

Co-Pay: A patient’s co-pay is the amount that must be paid to a provider before they receive any treatment or services. Co-pays are separate from a deductible, and will vary depending on a person’s insurance plan.

Current Procedural Technology (CPT) Code: CPT codes represent treatments and procedures performed by a physician in a 5-digit format. CPT codes are entered together with ICD-9 codes that explain a patient’s diagnosis. Medical billing specialists will enter CPT codes into claims so insurance companies understand the nature of healthcare a patient received with a provider.

Credentialing: The application process for a provider to coordinate with an insurance company. Once providers have become credentialed with an insurance company, they have the opportunity to work with that company in providing affordable healthcare to patients.

Credit Balance: Refers to the sum shown in the “balance” column of a billing statement that reflects the amount due for services rendered.

Crossover Claim: When claim information is sent from a primary insurance carrier to a secondary insurance carrier, or vice versa.

D

Date of Service (DOS): The date when a provider performed healthcare services and procedures.

Day Sheet: A document that summarizes the services, treatments, payments, and charges that a patient received on a given day.

Deductible: The amount a patient must pay before an insurance carrier starts their healthcare coverage. Deductibles range in price according to terms set in a person’s health plan.

Demographics: The patient’s information required for filing a claim, such as age, sex, address, and family information. An insurance company may deny a claim if it contains inaccurate demographics.

Durable Medical Equipment (DME): This refers to medical implements that can be reused such as stretchers, wheelchairs, canes, crutches, and bedpans.

Date of Birth (DOB): The exact date a patient was born.

Downcoding: Downcoding occurs when an insurance company finds there is insufficient evidence on a claim to prove that a provider performed coded medical services and so they reduce or remove those codes. Downcoding usually reduces the cost of a claim.

Duplicate Coverage Inquiry (DCI): A formal request typically submitted by an insurance carrier to determine if other health coverage exists for a patient.

Dx: The abbreviation for diagnosis codes, also known as ICD-9 codes.

E

Electronic Claim: A claim sent electronically to an insurance carrier from a provider’s billing software. The format of electronic claims must adhere to medical billing regulations set forth by the federal government.

Electronic Funds Transfer: A method of transferring money electronically from a patient’s bank account to a provider or an insurance carrier.

Evaluation and Management (E/M): E/M refers to the section of CPT codes most used by healthcare personnel to describe a patient’s medical needs.

Electronic Medical Records (EMR): EMR is a digitized medical record for a patient managed by a provider onsite. EMRs may also be referred to as electronic health records (EHRs).

Enrollee: A person covered by a health insurance plan.

Explanation of Benefits (EOB): A document attached to a processed medical claim wherein the insurance company explains the services they will cover for a patient’s healthcare treatments. EOBs may also explain what is wrong with a claim if it’s denied.

Electronic Remittance Advice (ERA): The digital version of EOB, which specifies the details of payments made on a claim either by an insurance company or required by the patient.

ERISA: Stands for the Employee Retirement Income Security Act of 1974. This act established guidelines and requirements for health and life insurance policies including appeals and disclosure of grievances.

F

Fee for Service: This refers to a type of health insurance wherein the provider is paid for every service they perform. People with fee-for-service plans typically can choose whatever hospitals and physicians they want to receive care in exchange for higher deductibles and co-pays.

Fee Schedule: A document that outlines the costs associated for each medical service designated by a CPT code.

Financial Responsibility: Whoever owes the healthcare provider money has financial responsibility for the services rendered. Insurance companies or patients themselves may be financially responsible for the costs associated with care, and these responsibilities are typically outlined in a healthcare plan contract.

Fiscal Intermediary (FI): The name for Medicare representatives who process Medicare claims.

Formulary: A table or list provided by an insurance carrier that explains what prescription drugs are covered under their health plans.

Fraud: Providers, patients, or insurance companies may be found fraudulent if they are deliberately achieving their ends through misrepresentation, dishonesty, and general illegal activity. Medical billing specialists who deliberately enter incorrect or misleading information on claims may be charged with fraud.

G

Group Health Plan (GPH): A plan provided by an employer to provide healthcare options to a large group of employees.

Group Name: The name of the group, insurance carrier, or insurance plan that covers a patient.

Group Number: A number given to a patient by their insurance carrier that identifies the group or plan under which they are covered.

Guarantor: The party paying for an insurance plan who is not the patient. Parents, for example, would be the guarantors for their children’s health insurance.

H

Healthcare Financing Administration: The former name for what is now the CMS.

Healthcare Financing Administration Common Procedure Coding System (HCPCS):HCPCS is a three-tier coding system used to explain services, devices, and diagnoses administered in the healthcare system. Medical billing specialists utilize codes in the HCPCS on a daily basis to file claims.

Healthcare Insurance: This is insurance offered to a group or an individual to cover costs associated with medical care and treatment. Those covered by healthcare insurance typically must pay a premium for their plans in addition to various co-pays and/or deductibles.

Healthcare Provider: These are the entities that offer healthcare services to patients, including hospitals, physicians, and private clinics, hospices, nursing homes, and other healthcare facilities.

Healthcare Reform Act: The major healthcare legislation passed in 2010 designed to make healthcare accessible and less expensive for more Americans.

Health Insurance Claim: The unique number ascribed to an individual to identify them as a beneficiary of Medicare.

Health Insurance Portability and Accountability Act (HIPAA): HIPAA was a law passed in 1996 with an aim to improve the scope of healthcare services and establish regulations for securing healthcare records from unwanted parties.

Health Maintenance Organization (HMO): HMOs are networks of healthcare providers that offer healthcare plans to people for medical services exclusively in their network.

Hospice: This refers to medical care and treatment for persons who are terminally ill.

I

ICD-9 Codes: ICD-9 codes are an international set of codes that represent diagnoses of patients’ medical conditions as determined by physicians. Medical billing specialists may translate a physician’s diagnoses into ICD-9 codes and then input those codes into a claim for processing.

ICD-10 Codes: ICD-10 codes are the updated international set of codes based on the preceding ICD-9 codes. ICD-10 codes are estimated to be mandatory in the American healthcare system by October 2014.

Incremental Nursing Charge: A fee for nursing services a patient is charged during the course of receiving healthcare.

Indemnity: A type of health insurance plan whereby a patient can receive care with any provider in exchange for higher deductibles and co-pays. Indemnity is also known as fee-for-service insurance.

In-Network: This term refers to a provider’s relationship with a health insurance company. A group of providers may contract with an insurance company to form a network of healthcare professionals that a person can choose from when enrolled in that insurance company’s health plan.

Inpatient: Inpatient care occurs when a person has a stay at a healthcare facility for more than 24 hours.

Independent Practice Association (IPA): The IPA is a professional organization of physicians who have a contract with an HMO.

Intensive Care: Intensive care is the unit of a hospital reserved for patients that need immediate treatment and close monitoring by healthcare professionals for serious illnesses, conditions, and injuries.

M

Medicare Administrative Contractor (MAC): MACs are contract with the federal government to process Medicare claims.

Managed Care Plan: A health insurance plan whereby patients can only receive coverage if they see providers who operate in the insurance company’s network.

Maximum Out of Pocket: The amount a patient is required to pay. After a patient reaches their maximum out of pocket, their healthcare costs should be covered by their plan.

Medical Assistant: An employee in the healthcare system such as a physian’s assistant or a nurse practitioner who perform duties in administration, nursing, and other ancillary care.

Medical Coder: A medical coder is responsible for assigning various medical codes to services and healthcare plans described by a physician on a patient’s superbill.

Medical Billing Specialist: A medical billing specialist is responsible for using information regarding services and treatments performed by a healthcare provider to complete a claim for filing with an insurance company so the provider can be paid.

Medical Necessity: This term refers to healthcare services or treatments that a patient requires to treat a serious medical condition or illness. This does not include cosmetic or investigative services.

Medical Record Number: A unique number ascribed to a person’s medical record so it can be differentiated from other medical records.

Medicare Secondary Payer: The insurance company that covers any remaining expenses after Medicare has paid for a patient’s coverage.

Medical Savings Account (MSA): An MSA is an optional health insurance payments plan whereby a person apportions part of their untaxed earnings to an account reserved for healthcare expenses. A person with an MSA can only contribute a certain amount of their earnings per year. Any unused funds in an MSA at the end of the year will roll over to the next.

Medical Transcription: The process of converting dictated or handwritten instructions, observations, and documentation into digital text formats.

Medicare: Medicare is a government insurance program started in 1965 to provide healthcare coverage for persons over 65 and eligible people with disabilities.

Medicare Coinsurance Days: Referring to 61st through 90th days of inpatient treatment, the law requires that patients pay for a portion of their healthcare during Medicare coinsurance days.

Medicare Donut Hole: This term refers to the discrepancy between the limits of healthcare insurance coverage and the Medicare Part D coverage limits for prescription drugs.  

Medicaid: Medicaid is a joint federal and state assistance program started in 1965 to provide health insurance to lower-income persons. Both state and federal governments fund Medicaid programs, but each state is responsible for running its own version of Medicaid within the minimum requirements established by federal law.

Medigap: Medigap is supplemental health insurance under Medicaid for eligible persons who need help covering co-pays, deductibles, and other large fees.

Modifier: Modifiers are additions to CPT codes that explain alterations and modifications to an otherwise routine treatment, exam, or service.

N

Non-Covered Charge (N/C): N/Cs are procedures and services not covered by a person’s health insurance plan.

Not Elsewhere Classifiable (NEC): A term used to describe a procedure or service that can’t be described within the available code set.

Network Provider: A provider within a health insurance company’s network that has contracted with the company to provide discounted services to a patient covered under the company’s plan.

Non-participation: This is when a provider refuses to accept Medicare payments as a sufficient amount for the services rendered to a patient.

Not Otherwise Specified (NOS): This term is used in ICD-9 codes to describe conditions with unspecified diagnoses.

National Provider Identifier (NPI) Number: A unique 10-digit number ascribed to every healthcare provider in the U.S. as mandated by HIPAA.

O

Office of Inspector General (OIG): The organization responsible for establishing guidelines and investigating fraud and misinformation within the healthcare industry. The OIG is part of the Department of Health and Human Services.

Out-of-Network: Out-of-network refers to providers outside of an established network of providers who contract with an insurance company to offer patients healthcare at a discounted rate. People who go to out-of-network providers typically have to pay more money to receive care.

Outpatient: This term refers to healthcare treatment that doesn’t require an overnight hospital stay, including a routine visit to a primary care doctor or a non-invasive surgery.

P

Palmetto GBA: A MAC based in Columbia, South Carolina that is also a subsidiary of Blue Cross Blue Shield.

Patient Responsibility: This refers to the amount a patient owes a provider after an insurance company pays for their portion of the medical expenses.

Primary Care Physician (PCP): The physician who provides the basic healthcare services for a patient and recommends additional care for more serious treatments as necessary.

Point of Service Plans: A plan whereby patients with HMO membership may receive care at non-HMO providers in exchange for a referral and paying a higher deductible.

Place of Service Code: A two-digit code used on claims to explain what type of provider performed healthcare services on a patient.

Preferred Provider Organization (PPO): A plan similar to an HMO whereby a patient can receive healthcare from providers within an established network set up by an insurance company.

Practice Management Software: Software used for scheduling, billing, and recordkeeping at a provider’s office.

Preauthorization: Some insurance plans require that a patient receive preauthorization from the insurance company prior to receiving certain medical services to make sure the company will cover expenses associated with those services.

Pre-Certification: A process similar to preauthorization whereby patients must check with insurance companies to see if a desired healthcare treatment or service is deemed medically necessary (and thus covered) by the company.

Pre-determination: A maximum sum as explained in a healthcare plan an insurance company will pay for certain services or treatments.

Pre-existing Condition (PEC): PEC is a medical condition a patient had before receiving coverage from an insurance company. A person might become ineligible for certain healthcare plans depending on the severity and length of their PEC.

Pre-exisiting Condition Exclusion: The existence of a PEC denies a person certain coverage in some health insurance plans.

Premium: The sum a person pays to an insurance company on a regular (usually monthly or yearly) basis to receive health insurance.

Privacy Rule: Standards for privacy regarding a patient’s medical history and all related events, treatments, and data as outlined by HIPAA.

Provider: A provider is the healthcare facility that administered healthcare to an individual. Physicians, clinics, and hospitals are all considered providers.

Provider Transaction Access Number (PTAN): This refers to a provider’s current legacy provider number with Medicare.

R

Referral: This is when a provider recommends another provider to a patient to receive specialized treatment.

Remittance Advice (R/A): The R/A is also known as the EOB, which is the document attached to a processed claim that explains the information regarding coverage and payments on a claim.

Responsible Party: The person who pays for a patient’s medical expenses, also known as the guarantor.

Revenue Code: A three-digit code used on medical bills that explains the kind of facility in which a patient received treatment.

Relative Value Amount (RVA): The median amount Medicare will repay a provider for certain services and treatments.

S

Scrubbing: A process by which insurance claims are checked for errors before being sent to an insurance company for final processing. Providers scrub claims in an attempt to reduce the number of denied or rejected claims.

Self-Referral: When a patient does their own research to find a provider and acts outside of their primary care physician’s referral.

Self-Pay: Payment made by the patient for healthcare at the time they receive it at a provider’s facilities.

Secondary Insurance Claim: The claim filed with the secondary insurance company after the primary insurance company pays for their portion of healthcare costs.

Secondary Procedure: This is when provider performs another procedure on a patient covered by a CPT code after first performing a different CPT procedure on them.

Security Standard: The security standard serves as the guidelines for policies and practices necessary to reduce security risks within the healthcare system. The security standard policies work in concert with the security guidelines set in place with the passage of HIPAA.

Skilled Nursing Facility: These are facilities for the severely ill or elderly that provide specialized long-term care for recovering patients. Skilled nursing facilities are alternative healthcare establishments to extended hospital stays and may be covered by eligible patients’ insurance policies.

Signature on File (SOF): A patient’s official signature on file for the purpose of billing and claims processing.

Software as a Service (SAAS): Medical billing software hosted off site by another company and only accessible with Internet access. SAAS is useful for providers who don’t want to maintain and update in-house medical billing software.

Specialist: A physician or medical assistant with expertise in a specific area of medicine. Oncologists, pediatricians, and neurologists are among the many specialists in the medical field.

Subscriber: The subscriber is the individual covered under a group policy. For instance, an employee of a company with a group health policy would be one of many subscribers on that policy.

Superbill: A document used by healthcare staff and physicians to write down information about a patient receiving care. The superbill can contain demographic information, insurance information, and especially any diagnoses or healthcare plans written by the physician. A medical billing specialist inputs the information on a patient’s superbill into a claim.

Supplemental Insurance: Supplemental insurance can be a secondary policy or another insurance company that covers a patient’s healthcare costs after receiving coverage from their primary insurance. Supplemental insurance policies typically help patients cover expensive deductibles and copays.

T

Treatment Authorization Request (TAR): A unique number the insurance company gives the provider for billing purposes. A provider must receive the insurance company’s TAR number before administering healthcare to a patient covered by the company.

Taxonomy Code: Medical billing specialists utilize this unique codeset for identifying a healthcare provider’s specialty field.

Term Date: The end date for an insurance policy contract, or the date after which a person no longer receives or is no longer eligible for health insurance with company. Term dates are typically determined on a case-by-case basis.

Tertiary Insurance Claim: A claim filed by a provider after they have filed claims for primary and secondary health insurance coverage on behalf of a patient. Tertiary insurance claims often cover the remaining healthcare costs such as deductibles and co-pays left over after the primary and secondary claims have been processed.

Third Party Administrator (TPA): The name for the organization or individual that manages healthcare group benefits, claims, and administrative duties on behalf of a group plan or a company with a group plan.

Tax Identification Number (TIN): A unique number a patient or a company may have to produce for billing purposes in order to receive healthcare from a provider. The TIN is also known as the employment identification number (EIN).

Triple Option Plan (TOP): Also referred to as the cafeteria plan, this plan gives an enrolled individual the options to choose between an HMO, a PPO, or a traditional point of service plan for their health insurance. Some companies offer triple option plans to their employees to accommodate the needs of a diverse staff.

Type of Service (TOS): A field on a claim for describing what kind of healthcare services or procedures a provider administered.

TRICARE: TRICARE is the federal health insurance plan for active service members, retired service members, and their families, in addition to survivors of service members. TRICARE was previously known as CHAMPUS.

U

UB04: A form used by providers for filing claims with insurance companies. The UB04 form has a format similar to that of the CMS 1500 form.

Unbundling: This term refers to the fraudulent practice of ascribing more than one code to a service or procedure on a superbill or claim form when only one is necessary.

Untimely Submission: Claims have a specific timeframe in which they can be sent off to an insurance company for processing. If a provider fails to file a claim with an insurance company in that timeframe, it is marked for untimely submission and will be denied by the company.

Upcoding: Upcoding is the fraudulent practice of ascribing a higher ICD-9 code to a healthcare procedure in an attempt to get more money than necessary from the insurance company or patient.

Unique Physician Identification Number (UPIN): A unique six-digit identification number given to physicians and other healthcare personnel, which has subsequently been replaced by a national provider identifier (NPI) number.

Usual Customary and Reasonable (UCR): The UCR is the amount of money stipulated in a contract that an insurance company agrees to pay for healthcare costs. After passing the UCR a patient is typically responsible for covering their healthcare costs.

Utilization Limit: The limit per year for coverage under certain available healthcare services for Medicare enrollees. Once a patient passes the utilization limit for a service, Medicare may no longer cover them.

Utilization Review (UR): An investigation or audit performed to optimize the number of inpatient and outpatient services a provider performs.

V

V-Codes: A code set under ICD-9-CM used to organize healthcare services rendered for reasons other than illness or injury.

W

Worker’s Compensation: Worker’s compensation is paid by an employer when an employee becomes ill or injured while performing routine job duties. Most states have laws requiring that companies provide worker’s compensation.

Write-Off: This term refers to the discrepancy between a provider’s fee for healthcare services and the amount that an insurance company is willing to pay for those services that a patient is not responsible for. The write-off amount may be categorized as “not covered” amounts for billing purposes.