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.

Running Your Own Medical Billing and Coding Service

Explore a Day in the Life of a Medical Biller and Coder

Any time a medical service is provided, whether it’s a routine checkup or a major surgery, information about that service is recorded and given to the medical billing and coding specialist. A doctor gives the medical biller and coder procedure documentation of the services provided, which the biller and coder must then translate into the proper code. Medical billing and coding specialists are responsible for correctly coding the diagnoses and procedures performed by the healthcare provider. This requires a thorough knowledge of both ICD-9-CM codes and ICD-10-CM codes for diagnostics, and CPT codes for procedures.

A procedure document includes relevant information like the date of the procedure, the patient’s name, and his or her date of birth. More importantly, a procedure document includes the doctor’s diagnosis and the procedure performed. For example, a doctor may provide documentation of a mole removed from the torso of a patient via cryoablation (essentially, freezing the mole). The medical biller and coder would look at the procedure documentation and decide which codes correspond to the diagnosis and procedure listed. In the case of this example, a coder would select the CPT code 11710 (destruction of benign lesions or skin tags or cutaneous vascular proliferative lesions; up to 14 lesions) for the procedure, and the ICD-9-CM code 216.5 (benign neoplasm of skin of trunk, except scrotum) for the diagnosis.

The bulk of the medical coding portion of the billing process involves turning procedure reports into correct medical code, then entering it into the system for the claims process. Medical coders spend their day taking procedure documentation, looking up the proper codes, and entering that information into their claims software. Most medical coding is relatively straightforward (for example, the CPT code 99213 corresponds to a routine visit to the doctor’s office), but even with common codes there are discrepancies or gray areas. Coders must consult their manual, professional associations, and periodicals to stay up-to-date on current professional best practices.

Learn about lag days

Like medical billing, medical coding is a time-sensitive operation. Any hiccup in the coding process can cause a ripple effect, which delays billing, the claims process, and ultimately the reimbursement of the healthcare provider from the insurance company. For this reason, most coders are asked to keep their operations within a number of “lag days.” Lag days refer to time between when a procedure note is given to the coder and when the claim for that procedure is filed. Most offices keep the number of lag days between two and five, so coders must stay on top of their work in order to ensure efficiency in the operation of the health-care provider.

Review crosswalking

In certain cases, a medical billing and coding professional has to perform a code “crosswalk” between these sets of codes. Crosswalking is covered in depth in courses 11 and 12. To briefly review, a crosswalk refers to an equivalency or translation between two code sets. A medical coder may have to use a crosswalk in order to track data between two different sets of code (as in the case of ICD-10-CM and ICD-9-CM) or translate between two sets to comply with certain form requirements (as with translating CPT codes into ICD-9-CM codes).

Avoid clerical errors to shorten reimbursement time

Coders should also make sure the procedural and diagnostic codes that they are entering on a claim make sense with one another. For example, you would not want to pair the procedure code for a tonsillectomy with the diagnosis code for a broken hand. Inaccurate, contradictory, or improperly crosswalked codes are just a few of the many reasons a claim may be denied, and it is up to the coding specialist to prevent as many of these clerical errors as possible.

Understand the role of medical billers

As stated earlier, the job of the medical biller aligns closely with that of the medical coder, but there are other integral tasks that are unique to the medical biller. As you read in Course 2, the initial part of the medical billing process is the collection of data from the patient. Medical billing specialists must ensure they have all the relevant information from the patient and that this information is correct in order to proceed with a claim to the insurance company.

Once medical billers have the correct information regarding a patient’s history, contact information, and insurance policy (or policies), they then input that information into their medical claims software and begin the claims process. Upon translating the procedure notes into diagnostic and procedural codes (or upon receiving these codes from a third-party coder), the medical biller creates an insurance claim and sends this to an insurance company. Medical billers should be familiar with claim formats for each of the major payers, including Blue Cross/Blue Shield (and other private payers), Medicare, Medicaid, TRICARE, CHAMPVA, and various worker’s compensation and disability organizations.

When the claim is returned and the healthcare provider is properly reimbursed for services, medical billers must then bill the patient. This process involves following up with patients about late payments or arranging for a collections service in the case of notably delinquent bills. Medical billers are also responsible for interpreting the Explanation of Benefits (EOB) and explaining the general billing process to patients. Medical billers must be familiar with co-pays, coinsurance, and deductibles in order to bill patients correctly.

If a claim is returned to the healthcare provider as denied or rejected, the medical billing expert must determine why and correct errors if possible. If the claim was denied because of inaccurate or inappropriate coding, the medical biller must input the correct codes and resubmit the claim (or pass it back to the third-party coder who initially coded the procedure).

Medical billers must also prepare appeals to denied claims on behalf of patients or the healthcare provider. A denied claim may be due to a clerical error (as with a missed code), or it may come down to a discrepancy in the provider’s contract with a payer. Medical billers also have to help patients prove the necessity of their medical procedure. They must be prepared to research all of the elements of the appeals process. As with coding, the appeals process is time-sensitive, so medical billers handling claim appeals must work quickly and efficiently to ensure their appeal is filed in a timely manner.

See What Tools You Will Use as a Biller and Coder

Many professionals in the field rely heavily on billing and coding software. This software is especially important if you are planning on working from home. Software like Medisoft or MediTouch allow coders to look up specific codes for accuracy and create claims quickly. There are dozens of billing and coding software programs at various price points, and you will have to assess what your individual needs and preferences are when it comes to the coding software you use.

While medical billing and coding software is becoming an industry standard, some smaller practices still use paper hard copies for their coding and billing services. Paper is less efficient than electronic records, and can create problems such as duplicate data (in the case of there accidentally being two separate files for one patient), not to mention the massive amount of physical space needed for storage of paper claims. Coding and billing via hard copy also makes it difficult for different parties (like other insurance companies or healthcare providers) to access important health records. Still, despite the clear advantages of electronic health records for the purposes of billing and coding, professional billers and coders should familiarize themselves with hard copy billing and coding forms. Medical billers also have to refer to hard copies of a patient’s medical records and EOBs throughout the day when creating a claim.

Find Out What Regulations You Have to Follow

While there are no laws that apply exclusively to medical billing and coding, billers and coders must operate within the laws and regulations that govern the whole of the healthcare industry. Because the information they handle includes confidential patient medical histories, they must follow guidelines laid out in the Health Insurance Portability and Accountability Act (HIPAA), and the Correct Coding Initiative, which is a project of the Centers for Medicare and Medicaid (CMS).

Title II of HIPAA, also known as the Administrative Simplification Statute, ensures that the confidentiality of patients will be secure when their information is transmitted electronically. This applies to all entities that handle health information electronically, including health plans, healthcare providers, and healthcare clearinghouses. These rules also apply to any off-site or third-party entity (such as a freelance biller or coder) that handles sensitive healthcare information. The HIPAA Administrative Simplification Statute states, effectively, that all parties capable of accessing or transmitting sensitive health information have a set of rules in place that a) protect patient health and b) identify which employees or persons will have access to a particular level of private information. Privacy rules may vary from one practice to another, and HIPAA mandates internal audits as a primary method of ensuring adherence to the law. Audits may mean a routine review of protocol and procedure for the medical coder and biller.

Note that this part of HIPAA applies only to electronic transactions, including claims and encounter information (such as ICD-10-CM codes) and inquiries into claim status. Healthcare providers, coders and billers, clearinghouses, and insurance companies are not required to submit this information electronically, but if they do, they must follow HIPAA guidelines.

The Correct Coding Initiative provides detailed guidelines for professional coders and billers. Updated annually by CMS, the initiative ensures that the codes used for various medical transactions are uniform around the country. You are already familiar with certain initiative regulations: The initiative mandates that Current Procedural Terminology (CPT) be used to code medical procedures, and that ICD-10 be adopted by October 1, 2014 for all diagnostic reports. The Correct Coding Initiative also regulates which codes will be used in pharmacy and dental transactions. The medical biller and coder should be aware of these regulations and be able to research them whenever the need arises.

Start Your Own Business

The medical billing and coding field is expected to grow steadily in the next few decades. As health informatics change and the healthcare industry continues to expand, coders and billers will be in demand to cope with the increased burden of processing information that changes hands during a medical procedure. Third parties sometimes perform billing and coding operations, and there are opportunities for entrepreneurs to build their own billing and coding business.

One of the interesting benefits of starting a billing and coding profession is the ability to work from home. Because the job requires mostly clerical work that can be done on a computer, a medical biller and/or coder does not need to work from a medical office or even interact with patients directly. However, starting your own coding and billing business will not be easy. Even if you are working from home, you’ll have to stay in frequent contact with your clients, health insurance companies, and clearinghouses. Explore the following tips to running your own successful billing and coding business:

1) Get certified

Certification is not formally required for medical billers and coders, but if you’re starting your own business, you’ll want to have a certification from a school or training program that’s recognized by either the American Health Information Management Association (AHIMA) or the American Association of Professional Coders (AAPC). This certification will assures prospective clients that you have achieved a certain level of expertise and dependability.

2) Get experience

Before you start your own billing and coding service, you’ll want to get some experience working at a healthcare provider’s office. While it might not make sense to start your own at-home business working for someone else, you’ll have a very hard time finding any clients willing to entrust the sensitive health information of their patients to an unknown third party. Working for an established provider grants you a reference, proof of your legitimacy, and possibly even future clients.

3) Know the law

As you pursue certification, you’ll undoubtedly learn the regulations and laws that govern the day-to-day tasks of a medical biller and coder. However, don’t forget about local, state, and federal laws, as well. If you’re going to run your own billing and coding service, you’ll need to apply for a business license. You may also need to apply for special licenses within your state. Some medical billing agencies, for example, must be registered as collections agencies. You may also need to get a federal tax ID number for your small business. It’s worth the time and money to consult a professional accountant or financial adviser when it comes to setting up these licenses.

4) Get the tools

Like any start-up business, a medical billing and coding business will require some initial investment. Fortunately, unlike the capital needed for a lot of other small business, this investment is relatively low. You’ll have to invest in coding, billing, and accounting software, such as Quickbooks. You should invest in high-quality software (which may cost as much as $1,500), and avoid any program that seems too good to be true. You’ll also have to budget for expenses such as a computer and monitor, a fax machine/copier/scanner, separate phone line, reference books, clearinghouse fees, and more. To save money, explore all your options when searching for reference books. For instance, reference books can cost around $450, but there are online reference services that are available for around $30 per month. Also, set aside a space in your home for an office, and furnish it accordingly. Lastly, add the cost of training and certification into your start-up budget. All in all, be prepared to spend between $4,000 and $6,000 to start your coding and billing business.

5) Actively pursue networking opportunities

Once you’ve got your certification and business license and your home office is set up, it’s time to reach out to clients. If you worked with a provider before starting your own business, that provider may have work for you, or may be able to suggest other offices in need of coding and billing services. Note that smaller practices may have less on-site administrative help and could be interested in outsourcing coding and billing tasks. You may also want to choose a medical specialty, like cardiology or radiology. If you become proficient in a certain area of coding and billing, it’s easy to reach out to different practices that focus on the same thing. Set up a website for your business and keep it updated regularly.

You should also network the old-fashioned way, by attending conferences and joining professional associations. Professional associations like the AAPC provide valuable resources and opportunities to learn from other individuals in your field.

6) Get paid

When you’re about to begin work with a client, you’ll have to work out how you’ll be paid. Third-party coders can be paid by the hour, by the claim, or by a percentage of that client’s monthly revenue. The payment arrangement will depend on a number of things, such as the size of the practice and the frequency of patient visits. A general practitioner, for example, can have more than 40 office visits a day and charge a small amount, while a radiologist may have only a few visits but charge a significantly higher amount. Whichever payment rate you decide on, be sure to get that rate in a written contract.

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 Errors

As a medical billing specialist, it’s critically important that you minimize any coding and processing errors as you file claims. Healthcare providers receive the majority of their revenue through the processing of successful claims, so any mistake you make could cost your employer. This course is designed to help you avoid the most common errors and keep denied and rejected claims at a minimum.

Understanding the Difference Between a Denied and a Rejected Claim

First, you need to know the difference between a denied claim and a rejected claim. A denied claim is one that has been determined by an insurance company to be unpayable. Typically, insurance companies explain the reasons in the Explanation of Benefits (EOBs) attached to the claim. Claims are often denied because of common billing errors or missing information, but can also be denied based on patient coverage. Denied claims can be appealed and reprocessed in some cases.

A rejected claim has been rejected because of errors. An insurance company might reject a claim because a medical billing specialist incorrectly input patient or insurance information. Once a medical billing specialist amends the errors on a rejected claim they can resubmit it for processing with an insurance company.

Common Errors Made When Filing a Claim

It is easy to overlook parts of a claim when you’re processing many in a given day. But if you can identify some of the more common mistakes medical billing specialists make, you can try to avoid them. Here are some of the most common mistakes made when filing a claim:

• Entering incorrect information for the provider (name, address, contact information, etc.)
• Entering incorrect information for the patient (name, sex, date of birth, insurance ID information, etc.)
• Entering incorrect information for the insurance provider (policy numbers, address, contact information, etc.)
• Inputting the wrong codes or confusing codes such as CPT codes, point of service codes, or ICD-9-CM codes
• Entering too few or too many digits for ICD-9-CM codes
• Inputting mismatched treatment and diagnostic codes
• Forgetting to input codes at all for services performed by a physician or another healthcare official

Again, every piece of information on a claim has to be accurate in order for it to be processed correctly. It is particularly important to make sure the correct codes are used. Be sure to familiarize yourself with all the relevant codes as well as patient, provider, and insurance information prior to filing a claim.

Other common billing errors include the following:

• Not having access to EOBs on denied claims: Sometimes an insurance company may forget to attach the EOB to a denied claim. In these cases, you won’t know the reason the claim was denied because the insurance company didn’t provide it at all or it was mistakenly sent to another provider. You can minimize problems with the EOB by keeping track of denied claims as soon as you receive them from insurance companies.
• Not verifying a patient’s insurance coverage: A patient’s health insurance can change at any time, sometimes without the patient knowing it. As a medical billing specialist, part of your job is to verify insurance coverage.
• Duplicate billing: Duplicate billing is an issue that occurs when you bill for the same service more than once. This might happen if more than one person at a provider’s office reports that a patient received services without checking whether or not those services had been paid for. The best way to avoid duplicate billing is for you to be extra vigilant about suspicious entries on a patient’s superbill and to communicate your concerns to a physician about them.

Some billing errors are simply beyond your control including the following:

• Upcoding: Upcoding occurs when physicians or medical coders enter codes into a patient’s superbill for services not received. Typically this is done to inflate the total amount a patient owes for receiving care at a healthcare provider. Upcoding is illegal and can lead to fines and criminal prosecution.
• Undercoding: Undercoding occurs when a physician or a medical coder leaves out codes from a patient’s superbill or codes them for less treatment than they actually received. Healthcare providers might undercode for healthcare services in an attempt to avoid audits or to minimize a patient’s cost. Undercoding is also illegal and can have legal repercussions.
• Sloppy documentation: Medical billing errors can also arise when physicians or other healthcare providers turn in sloppy documentation to medical billing specialists. A physician might have illegible handwriting, for example, making it hard to assign codes and bill for a patient’s healthcare. A physician’s documentation may also cause you to inadvertently undercode a patient’s bill.

How to Catch and Correct Errors Early

To avoid common medical billing: stay vigilant about simple mistakes on your end, be thorough when reviewing a patient’s superbill, and consult with your physician whenever you have questions about what should or shouldn’t be billed for. Most medical billing errors can be avoided well before claims are sent for processing with an insurance company, and it’s up to you to keep the claims moving through the system quickly and accurately. Here are a few tips to help you stay on track:

• Coordinate with everyone at the provider’s office: You aren’t the only person responsible for the information you in a claim. The physician who administered the actual healthcare and the personnel who collected a patient’s co-pay and insurance information also contributed to the superbill. So if you have any concerns about a claim, you can check with them to work out any issues before submitting the claim.
• Double-check patient and insurance information before filing a claim: Entering patient and insurance information incorrectly is one of the easier mistakes to avoid, but they still happen. The strategy for avoiding this mistake is simple: double-check your work.
• Study billing and coding trends: You can guard against coding mistakes by staying up to date on the latest medical billing codes. Medical billing codes change over time to accommodate modifications in healthcare regulations, newfound illnesses, and new treatments for illnesses and conditions. Be sure to study new codes and billing procedures as they become available.
• Follow up on claims: You can avoid and anticipate errors by following up on claims filed with insurance companies. A representative working on the claim for the insurance company might be able to tell you of any errors they find on their end, and thereby provide you with an opportunity to resubmit a claim before it gets denied.

Health Insurance Providers

Government Insurance Providers

The federal and state governments fund and operate several government insurance providers. Many of the government-operated insurance programs are specifically designed to cover a certain part of the population, such as veterans, the elderly, or low-income persons. Below are some of the government insurance providers that you will encounter when filing claims:

• Civilian Health and Medical Program of the Department of Veterans Affairs (CHAMPVA): This government program covers certain healthcare costs for dependents of veterans who are permanently disabled due to injuries or conditions suffered during service, as well as dependents of veterans who died during service.
• Consolidated Omnibus Recollection Act (COBRA): COBRA was a law passed by the federal government to serve as a safety net for individuals recently terminated by a company that provided health insurance. Under COBRA, terminated employees and their dependents can still receive health insurance from their previous company’s healthcare plan for up 18 months, and up to 36 months if they are disabled.
• Medicare: Medicare is a program started by the federal government to provide healthcare coverage options for persons over 65 years old, as well as younger people with disabilities. The Medicare program itself is broken up into several parts, each of which provides insurance that covers certain aspects of healthcare (such as prescription drug coverage) to eligible individuals.
• Medicaid: Medicaid is a program started by the federal government to offer healthcare coverage to low-income individuals. The costs of the Medicaid program are divided between the state and federal governments, a complication you will need to be aware of as you file claims. Note that all states have their own version of a Medicaid program, though they all must meet minimum requirements of care as established by the federal government.
• Children’s Health Insurance Program (CHIP): This program provides health insurance to children of families who can’t afford private coverage and whose incomes are too high to receive Medicaid coverage. CHIP is jointly funded by state and federal governments just like Medicaid, and each state has a different interpretation of its program.
• TRICARE: This healthcare program provides insurance to active-service members and their families, retired military personnel and their families, and the survivors of deceased service members. TRICARE (formerly known as Civilian Health and Medical Program of the Uniformed Services, or CHAMPUS) is funded and run by the federal government.
• Worker’s Compensation Insurance: This type of health insurance is available for employees who suffer injuries or illnesses while performing their regular work duties. Worker’s compensation insurance is required by law in most states.

There are other federal and state insurance programs available to those who are eligible, but those mentioned above make up the majority that you will encounter as a medical billing specialist. Check out the federal government’s resource for more information about government insurance providers.

Commercial Insurance Providers

Commercial insurance providers are private insurance companies that contract with businesses or individuals to help cover healthcare costs according to criteria set forth in a formal health plan. Private health insurance plans typically require that the company or the individual receiving coverage pay a predetermined deductible or a monthly premium before benefits take effect.

Commercial health insurance providers offer plans that can be sold individually or collectively as a group plan. Plans offered by commercial insurance providers range in price and in the scope of services covered. Coverage from commercial providers depends on a number of factors, including a patient’s personal medical history, family medical history, and the amount of money the patient (or the sponsoring employer) is willing to spend on premiums, co-pays, and deductibles.

Most Americans who have health insurance have plans with private insurers. According to a recent survey by the Center for Disease Control, nearly 64.2% of insured Americans have private health insurance. Commercial insurance providers include companies like Aetna, United Health Care, and Prudential.

Key Differences Between Government and Commercial Insurance Providers

It is important to keep in mind that commercial insurance providers are for-profit institutions whose success depends on the premiums that they receive from insured businesses and individuals. As such, commercial insurance providers are likely to provide coverage for people who have an uneventful medical history rather than someone with a long history of medical problems. Commercial insurance providers make money by avoiding as much risk as possible in their health plans. If a private insurance company mostly covers people who need constant medical attention for chronic illnesses or conditions, that company would be in danger of offsetting the revenue generated by its premiums.

Government insurance providers are a reliable alternative for certain people denied coverage by commercial insurance providers. Because government insurance providers aren’t interested in generating a profit from premiums, they can afford to cover “riskier” people.

About Blue Cross Blue Shield

Blue Cross Blue Shield is an exception to typical health insurance providers because it is neither a for-profit privately owned company nor a program run by the federal government. Blue Cross Blue Shield is a federation of 38 independent health insurance companies across the U.S. that covers over 100 million Americans. Blue Cross Blue Shield has partnered with a number of government insurance providers like Medicare to help process claims associated with Parts A and B of Medicare coverage. Blue Cross Blue Shield companies also enroll in the Federal Employee Program (FEP), providing private health insurance to over 5 million federal employees. As a medical billing specialist, you should become more familiar with Blue Cross Blue Shield’s role in the American healthcare system.

Types of Health Insurance Coverage

There are a number of ways in which health insurance carriers provide coverage. Health insurance coverage can be quite complex, as it involves the coordination between a healthcare provider, the health insurance provider, and the actual person receiving care. As a medical billing specialist, you will need to be especially aware of the role that each party plays in these coverage plans as you process claims. Some of the methods of coverage include managed care, indemnity policies, and high-deductible plans.

Managed care

Managed care is the most common form of health insurance coverage. Managed care coverage is administered by organizations that contract with healthcare providers to create an active network of participating providers. The three main components of managed care are preferred provider organizations, health maintenance organizations, and point of service plans.

• Preferred provider organizations (PPOs): PPOs operate off a list of preferred healthcare providers that patients can choose from for their coverage. Patients save the most money on their healthcare plans by selecting the preferred providers affiliated with a PPO. Providers on the preferred list are considered “in-network,” while those not on the preferred list are “out-of-network” providers. Sometimes an insurance carrier will not cover a person who receives treatment from an out-of-network provider, though PPOs tend to have more coverage options for out-of-network providers than HMOs.
• Health maintenance organizations (HMOs): HMOs are groups of physicians, medical facilities, and healthcare services that work to keep patients under the care of providers within their network. Healthcare providers in HMOs coordinate a patient’s healthcare decisions and suggest a suitable hospital for urgent care. Because of the close-knit healthcare community in HMOs, members enrolled with these organizations tend to have limited provider options. The upside to HMO membership is that patients tend to pay less in deductibles and receive higher quality medical care coverage at facilities within the HMO network.
• 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, you have the option of coverage for care received from out-of-network providers. Note that patients in point-of-service plans have to get a referral before being covered by out-of-network providers, and they likely have to pay a deductible. Some HMOs offer point-of-service plans to people who want more options with their healthcare coverage.

Indemnity policies

Indemnity policies, or fee-for-service insurance, allows people the freedom to choose whatever healthcare provider they want and receive some form of coverage for these services. Patients covered by an indemnity policy can go to any healthcare provider and receive care, even when traveling across state lines.

The caveat to indemnity policies is that patients are typically required to pay a deductible or out-of-pocket fee before they start to receive coverage. This means patients with an indemnity policy can able to receive emergency room care at a hospital of their choosing, but they might have to pay a sizable deductible (ranging from a few hundred to several thousand dollars) before insurance carriers will pay for their care. Many indemnity policies allow patients to choose how much they pay for their deductible, and that amount is commensurate with the level of coverage they receive from insurance carriers.

High-deductible plans

High-deductible plans have low premiums and high deductibles, which make them enticing to those who don’t want to pay for health insurance up front. High-deductible plans may be a preferable coverage option for people with a clean bill of health who don’t anticipate requiring any medical services in the near future. Of course, when those with a high-deductible plan do require care, they are responsible for covering the cost of their care until they reach the predetermined deductible. However, people with high-deductible plans don’t have to pay the deductible before receiving coverage for preventive care services. Some people opt to enroll in health savings accounts or health reimbursement arrangements to help mitigate the potential costs of high-deductible plans:

• Health savings account (HSA): HSAs allow people to pay for certain medical expenses (including expenses incurred before meeting a deductible) using nontaxed funds. Patients build their savings in an HSA by contributing a portion of their paycheck or other earnings on a regular basis. Funds that remain at the end of the year can often be rolled over to the next year. Furthermore, people with an HSA keep their funds once they leave a job and can continue contributing to their HSA with their next employer. However, there is a limit to the amount of earnings that can be contributed to an HSA.
• Health reimbursement arrangement (HRA): HRAs are different from HSAs in that employers, not the employees, contribute funds to the account that is used to offset healthcare costs. Employees lose their HRA funds if they leave or are terminated from a company, and any funds unused by the end of the year are no longer accessible in the following year.

Medical Billing for Medicaid/Medicare

The Difference Between Medicaid and Medicare

Medicaid and Medicare are often mentioned in the same breath, but the two programs perform completely separate functions in the American healthcare system.

Medicare

Medicare is a federal healthcare program created in 1965 with the passage of the Social Security Amendments to ensure that citizens 65 and older as well as younger persons with certain disabilities have access to quality healthcare. Medicare is administered by the Centers for Medicare and Medicaid Services (CMS). CMS manages Medicare programs by selecting official Medicare administrative contractors (MACs) to process the Medicare claims associated with various parts of Medicare. Medicare as a healthcare plan is divided into different parts, each of which cover a specific healthcare service:

• Part A (Medically necessary services): Part A of Medicare covers basic healthcare necessary to treat a pressing medical condition. Covered services may include hospital care, skilled nursing care, nursing home care, hospice care, and other support deemed essential to treating an illness or a condition.
• Part B (Preventive Care): Services covered in Part B include services or supplies needed to treat or prevent a medical condition. Part B of Medicare also covers some preventive care services such as inpatient/outpatient mental health, clinical research, and ambulance services.
• Part C (Medicare Advantage Plan): Part C of Medicare covers all healthcare services through a provider organization such as a hospital or a private practice. Patients must be enrolled in Medicare Parts A and B to qualify for Part C.
• Part D (Prescription Drugs): Part D was created in 2003 with the passage of the Medicare Prescription Drug, Improvement, and Modernization Act. It covers many prescription drug costs and is paid for by monthly premiums of Medicare enrollees.

For more information regarding Medicare, check out the federal government’s official page for Medicare.

Medicaid

Medicaid is a program that provides healthcare coverage for low-income families and individuals, for persons with disabilities, and in some cases the elderly. For medical billing purposes, the most important difference between Medicare and Medicaid is the organization of each program. Medicare is a program provided by the federal government through CMS and has universal applications across state boundaries. Medicaid is a program funded by both state governments and the federal government. States provide Medicaid benefits in cooperation with CMS and federal guidelines. Medicaid programs differ from state to state, though they must all meet certain standards established by the federal government.

Medicaid coverage plans can change from state to state. Some states have extended their Medicaid programs to cover comprehensive healthcare issues for recipients, while other states only meet the minimum program requirements as mandated by the federal government. The following are some of the minimum Medicaid services covered:

• Inpatient/outpatient hospital services
• Family planning care
• Pediatric services
• Prescription drug costs
• Dental healthcare and services
• Mental health services
• Occupational, physical, and speech therapy

Rules of Medicaid eligibility also vary by state. Some states have stricter rules for eligibility, while others are more relaxed. As a medical billing specialist you should understand Medicaid eligibility in your state. You can visit the official Medicaid site in addition to the Medicaid page for your state to learn more.

Medical Billing for Medicaid

Medical billing for Medicaid is more complicated than medical billing for Medicare simply because Medicaid programs differ from state to state. Some citizens eligible for care in one state may not be eligible for care in another state, or they may receive a more or less benefits depending on the state in which they receive care. Billing codes, claim submission protocols, reimbursement rates, and other billing information will vary by state.

You will start the medical billing process for Medicaid by filling out a state claim form for the services and procedures covered. Most state Medicaid claim forms will be divided into main two parts: information regarding the patient and/or the insured person and information regarding the healthcare provider. As you complete the Medicaid form you will input codes from the following code sets:

• International Classification of Diseases, Ninth Revision, Clinical Modification (ICD-9-CM) Codes: ICD-9-CM is the system by which official codes are assigned to medical diagnoses and procedures relating to hospital use in the U.S. The ICD-9-CM lists the official disease codes for relevant medical conditions and procedures. ICD-9-CM codes are a series of alphanumeric digits followed by a decimal point followed by one or two numeric digits.
• Place of Service Codes: Place of service codes specify where the patient received their medical care or supplies. Place of service codes are ascribed to medical facilities such as inpatient hospitals, nursing facilities, and hospices. Place of service codes are typically two digits long.
• Healthcare Common Procedure Coding System (HCPCS) Level II Codes: HCPCS Level II codes are used to identify and categorize supplies, services, and products not included in CPT codes. HCPCS Level II codes may include ambulance services and prosthetics. HCPCS Level II codes have a single letter followed by four numeric digits.
• Current Procedural Terminology (CPT) Codes: CPT codes (also known as Level I HCPCS codes) are a subset of the HCPCS and they are used for identifying and categorizing medical procedures and services. CPT codes are created and revised as necessary by an official editorial board in conjunction with the American Medical Association. CPT does are five numeric digits long.

You can check the format of the Medicaid claim form in the state where you live in addition to state Medicaid policies on the official Medicaid webpage.

Medical Billing for Medicare

Medicare functions as a single-payer healthcare system that pays insurance companies on behalf of people enrolled in its various programs. It’s up to medical billing officials to submit claims to appropriate MACs for processing after a person has received care covered by their Medicare plan.

Your duties as a medical billing specialist include inputting information from a provider’s superbill into compatible medical billing software. This includes provider information, patient information, information regarding treatment the patient received, and any relevant medical codes. Once you’ve input the necessary information into the medical billing software, you will either print out a CMS-1500 claim form for submission via mail or you will submit another claim form electronically to MAC for processing. As you file claims associated with Medicare, you will need to input medical codes similar to those you would use for Medicaid claim forms including CPT, ICD-9-CM, and place of service codes.

In order to properly understand how to file claims associated with Medicare coverage, consider the separate parts of the Medicare healthcare program.

Part A: medically necessary services

You will process claims associated with Part A of Medicare (medically necessary services) if you’re a medical billing specialist working with hospitals, clinics, and other facilities that offer inpatient care. You file Part A claims on behalf of your provider using the UB-04 medical claim form (also known as the CMS-1450 form). The UB-04 is the uniform institutional provider hardcopy claim form accepted for billing third-party providers. It is also the only hardcopy claim form that CMS accepts from institutional providers such as hospitals or skilled nursing facilities. When filing the UB-04 form, you should note that not all payers are required to complete the same data fields. Do your research to determine what fields are appropriate for each claim.

Part B: preventative care

As a medical billing specialist working for an outpatient healthcare provider, you will usually process claims associated with Part B of Medicare (preventative care). You file Part B claims using the CMS-1500 form, which is the standard claim form used by healthcare providers to billing Medicare carriers.

These forms must be purchased from legitimate sources other than the CMS, like the National Uniform Claim Committee (NUCC), which is responsible for updating and maintaining the CMS-1500. Be sure to check the guidelines for printing and preparing CMS-1500 forms before you process any claims. Note that the CMS-1500 form can also be used to bill some state Medicaid programs.

Parts C and D: to be filed separately

Claims related to Parts C and D of Medicare are relayed through a private insurer and should never be filed through Medicare. You won’t file Medicare claims with Parts C and D because private health plan carriers have agreements with Medicare to receive a certain amount per member every month. Part D of Medicare coverage may change depending on the person receiving care because coverage depends on the drugs involved. Some drugs aren’t covered by Part D at all. Thus claims filed through Parts C and D of Medicare should be treated like any other claim handled through a private health plan carrier.

Check out the Centers for Medicare and Medicaid Services for detailed information about medical billing and coding procedures related to Medicare.

Processing Claims for Medicare and Medicaid

Know how to handle claims through these government healthcare programs.

Medicare claims

As a medical billing specialist, Medicare claims you file on behalf of the provider are sent directly to nearby MACs for processing. MACs typically take around 30 days to process each claim they receive.

Part A claims: Medicare pays the provider directly. Any deductibles, co-pays, or other fees that apply after Medicare pays the provider must be satisfied by the patient.

Part B claims: Medicare pays either the provider or the patient for care covered by the plan, which depends on who accepts assignment of the claim. If the provider accepts assignment of the claim, Medicare will pay them for 80% of the approved amount. The remaining 20% will be paid to the provider by the patient. If the provider does not accept assignment of the claim Medicare will pay the patient the approved amount for care received, and they will then pay the provider.

Medicaid claims

Processing billing for Medicaid claims can be trickier than those filed under Medicare because Medicaid claims must adhere to both federal and state guidelines. Providers who participate in Medicaid must meet these guidelines, and as a medical billing specialist you should be aware of any discrepancies between federal and state guidelines as you process claims. For example, a provider must adjust the remaining balance once meeting any applicable charges for a co-payment or deductible and after Medicaid has paid what they are allowed to pay under the Medicaid fee schedule.

Note also that Medicaid is officially the payer of last resource for a claim, meaning that if a person has any other health coverage for services rendered, those institutions should be billed before Medicaid.