Review Figure 10.1 on p. 239 and the section “Billing Workflow” on pp. 238 to 239 of your textbook Health Information and Technology Management.

Write a 225  word response to the following:

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  • Discuss at least two components described in the “Billing Workflow” section in Ch. 10 of Health Information and Technology Management.
  • How do these components affect health care reimbursement?

HIPAA Transactions

Secondary Health Records and Business Processes

Chapter 5 described secondary health records as those that are created by abstracting relevant details from the primary records. The business or billing office is one of the main departments creating and using secondary health records. A principal example of secondary records is the health insurance claim.

This chapter will examine health insurance claims, billing, and other healthcare transactions. To put some of the terms from Chapter 9 into the context of business office processes, we begin with an overview of a general billing workflow. We then examine separately the business processes of medical professionals and of hospitals. Follow the workflow in Figure 10-1 as you read the following section.

Billing Workflow

  • 1. Providers of all types verify patient insurance eligibility with the health plan, either prior to or during the admission or visit. Medical offices collect and post copays at the visit.
  • 2. The patient is treated and discharged or checked out.
  • 3. As you learned in Chapter 9, the provider usually needs to bill a third party, the insurance plan, in order to receive payment. The insurance bill is called a claim. The first step in preparing the claim is to assign procedure codes for the services rendered and the supplies used and diagnosis codes representing the disease or medical condition.
  • 4. Using these codes and the patient registration information, a computer program generates a paper or electronic claim to be sent to the insurance plan. Before the claim is sent to the insurance plan, an insurance or claim specialist reviews the claim to make sure there are no errors. Because of the volume of claims, a computer program is used to examine the claim data and identify problems. Once the claim is correct, it is sent to the insurance plan (usually electronically).
  • 5. When the claim is received by the insurance plan, it is adjudicated. If the claim is correct, a payment is sent to the provider; this is called the remittance. A paper or electronic document is generated that explains the amounts that were paid. This is called the remittance advice or explanation of benefits (EOB).
  • 6. When the remittance is received by the provider, the payment amount is recorded in the patient accounts system. Frequently, the amount billed does not equal the amount paid. This may be the result of a contractual agreement that stipulates that the provider will accept a discounted payment and/or that a portion of the charges is the patient’s obligation. An accounting entry called a write-down adjustment is posted to adjust the charge.
  • 7. If the patient has a secondary insurance plan, a claim is next sent to the second plan. In certain cases the first plan will automatically forward the claim to the second plan. This is called a “piggyback” claim or coordination of benefit (COB) claim. For example, when a Medicare patient has a supplemental insurance policy with the fiscal intermediary who processes the Medicare claims, the company will sometimes process the secondary claim automatically. This eliminates the need for the provider to file a second claim. These are also known as crossover claims.
  • 8. Most health plans require the patient to pay a portion of the medical bill. These payments are referred to as the copay, coinsurance, and deductible amounts. The copay amount is usually stated on the patient’s insurance card and collected during the patient visit. The coinsurance amount is usually a percentage of the allowed amount and is not known until the claim has been adjudicated. The EOB tells the provider what amount is the patient’s responsibility. When all the patient’s insurance plans have responded with remittance advice, a bill or statement is sent to the patient for any amounts due that are the patient’s responsibility. The patient statement should clearly show the amounts paid or denied by the insurance plans, any adjustments to the charges required by the plan contract, and the amount due from the patient.
  • 9. When patient payments are received by the medical office or hospital, they are posted to the patient’s account. When the account balance is zero, no further statements will be sent.

FIGURE 10-1 Billing workflow.

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