The Hospital Billing Environment

1. PART ONE The Hospital Billing Environment Chapter 3 Hospital Insurance

2. LEARNING OUTCOMES After completing this chapter, you will be able to define the key terms and: Compare primary, secondary, and supplemental insurance. Describe the way in which an insurance company controls payment to a beneficiary who has more than one insurance plan. Briefly describe the coverage that the two main parts of the Medicare program provide to beneficiaries. Describe the purpose of the Medicare Secondary Payer program. Discuss the eligibility requirements and coverage of the Medicaid, TRICARE, and CHAMPVA programs. Discuss the purpose of workers’ compensation.

3. KEY TERMS • end-stage renal disease (ESRD) • excluded (noncovered) services • fiscal intermediary (FI) • Hospital-Issued Notice of Noncoverage (HINN) • lifetime reserve days (LRDs) • Medicaid • Medicare administrative contractor (MAC) • Medicare Part A • Medicare Part B • Medicare Secondary Payer (MSP) • Medicare Summary Notice (MSN) • Advance Beneficiary Notice of Noncoverage (ABN) • benefit period • carriers • cash deductible • Civilian Health and Medical Program of the Veterans Administration (CHAMPVA) • coinsurance days • coordination of benefits (COB) • covered days • covered services • durable medical equipment (DME) • employer group health plans (EGHPs)

4. KEY TERMS (cont.) • Medigap • national coverage determinations (NCDs) • primary insurance • secondary insurance • supplemental insurance • TRICARE • workers’ compensation

5. PATIENTS’ INSURANCE COVERAGE • Primary Patient Coverage • Primary insurance receives the claim first • Secondary insurance pays, according to its guidelines, after primary carrier has paid • Supplemental insurance covers costs that other plans do not • Coordination of Benefits • Coordination of benefits (COB) rules limit payment to a total of 100% of the charge

6. PATIENTS’ INSURANCE COVERAGE (cont.) • Facility Participation and Assignment of Benefits • Many payers establish networks of providers and facilities and encourage or require members to use the network • Members sign Assignment of Benefits forms to have benefits paid directly to providers

7. THE MEDICARE PROGRAM • Federal medical insurance program established in 1965 • Two parts: Medicare Part A & Medicare Part B • Managed by Centers for Medicare and Medicaid Services (CMS) • Eligibility categories: • Individuals 65 or older • Disabled adults • Spouses of deceased, disabled, or retired individuals entitled to Medicare benefits • Individuals disabled before age 18 • Retired federal employees enrolled in the Civil Service Retirement System (CSRS) and their spouses • Patients who receive dialysis or a renal transplant for end-stage renal disease (ESRD)

8. Medicare Claim Processing • Federal government contracts with insurance organizations to process claims • Fiscal intermediaries (FIs) process hospital claims • Carriers process claims for physicians, other providers, and suppliers • Local coverage determinations (LCDs) issued by contractors to clarify guidelines and regulations not governed by national policy • National coverage determinations (NCDs) issued by CMS cover guidelines and regulations governed by national policy • Medicare Administrative Contractors (MACs) • To replace numerous FIs and carriers for Part A and Part B claims • Fifteen A/B MACs to be set up by late 2009

9. Medicare Part A • Coverage • Inpatient hospital care • Skilled nursing facility care • Home health care • Psychiatric inpatient care • Hospice care • Blood

10. Medicare Part A (cont.) • Eligibility and Costs • Anyone who receives Social Security benefits is enrolled with no premium • People age 65 or older not eligible for Social Security benefits may enroll, but must pay premiums • Beneficiaries must pay: • inpatient hospital deductible • coinsurance amount for 61st through 90th days of hospital stay • coinsurance amount for lifetime reserve days (LRDs) • deductible for unreplaced blood • inpatient coinsurance for 21st through 100th days of SNF stay • charges for excluded (noncovered) services

11. Medicare Part B • Coverage • Physicians’ services other than routine physical exams • Outpatient medical and surgical services and supplies, diagnostic tests, ambulatory surgery center facility fees for approved procedures, and durable medical equipment • Second surgical opinions, outpatient mental health care, and outpatient physical and occupational therapy • Clinical laboratory services • Home health care • Outpatient hospital care • Blood

12. Medicare Part B (cont.) • Eligibility and Costs • Anyone entitled to Part A benefits automatically qualifies for Part B • U.S. citizens and permanent residents over 65 are eligible • Part B is voluntary; eligible people must enroll and pay a premium based on income • Original Medicare Plan (OMP) is fee-for-service; Medicare pays 80% of approved charges • Medicare Advantage plans, also known as Medicare Part C, are managed care plans and are offered by private insurance companies as an alternative to OMP • Medicare Part D offers prescription drug plans from private companies for Medicare eligible people; beneficiaries pay a monthly premium

13. Medicare Health Insurance Card • Every Medicare enrollee receives a health insurance card from the Social Security Administration which includes the following information: • Beneficiary’s name • Sex • Effective dates for Part A and Part B coverage • Medicare number

14. Advance Beneficiary Notices (ABN) • Medicare does not pay for some services unless certain conditions are met • When a facility judges that Medicare is unlikely to pay for a planned service, an Advance Beneficiary Notice of Noncoverage (ABN) must be given to the patient to sign • An ABN explains why Medicare payment is unlikely and includes a statement that the patient agrees to pay for the service when Medicare denies payment • A signed ABN must be obtained each time a patient receives a noncovered service

15. ABN Modifiers • If a procedure is likely to be denied, a modifier may be appended to the procedure code on the claim form to indicate if an ABN form is on file; this helps the payer determine who is responsible for the payment, the provider or the patient • These modifiers are more commonly used on physician claims; they are optional on hospital claims

16. Consent Forms • Hospitals have patients sign many types of consent forms (e.g., consent for medical treatment, assignment of benefits, advance directives, etc.); in addition there are several consent forms specifically for Medicare patients • Medicare-Specific Consent Forms • CMS’ “Important Message from Medicare About Your Rights” states the patient’s rights as a hospital inpatient, as well as his or her appeal rights regarding hospital discharge • Hospital-Issued Notice of Noncoverage (HINN) is given to a beneficiary whenever the hospital determines that care the patient is receiving or about to receive is not covered; a HINN is sometimes referred to as a hospital ABN • Different versions of HINNs are used depending on the circumstances

17. Medicare Secondary Payer Program • CMS guidelines about which insurance pays first when Medicare beneficiaries have additional health insurance coverage • Almost all other plans are primary to Medicare (for example, Medicare requires automobile insurance companies to pay for care after auto accidents no matter who is at fault)

18. Medigap Insurance • Medigap is private insurance that beneficiaries may buy to cover some of the “gaps” in Medicare coverage such as: • annual deductible • coinsurance • payment for some noncovered services • Patients with Medicare managed care plans or Medicaid do not need Medigap coverage • Medicare Summary Notice • A Medicare Summary Notice (MSN) is sent to patients to tell them what Medicare covered on claims sent on their behalf and what they are going to be billed

19. THE MEDICAID PROGRAM • Entitlement program to pay for health care needs of low income people; established in 1965 • Jointly funded by federal and state governments • Eligibility • Must meet minimum federal requirements as well as additional state requirements • Medicaid Plans and Participation • Most states offer both fee-for-service and managed care plans • Facilities participating in Medicaid program agree to accept Medicaid payment as payment in full; they may not bill patients for any additional amount • Some states require “cost share” payments from patients

20. Medicaid as the Payer of Last Resort • Medicaid is always billed last if the patient has any other kind of coverage • Medicare-Medicaid Crossover Claims • Some people are eligible for both Medicare and Medicaid (Medi-Medi) • Claims are first sent to Medicare; then to Medicaid

21. TRICARE • Department of Defense health insurance plan for military personnel and their families • TRICARE Plans and Participation • TRICARE regional contractors certify authorized providers who agree to accept TRICARE allowable charges as payment in full • Plans offered: • TRICARE Standard • TRICARE Prime • TRICARE Extra • TRICARE Reserve Select • TRICARE for Life • TRICARE and Other Insurance Plans • TRICARE is a secondary payer in almost all circumstances (Medicaid is one exception)

22. CHAMPVA • The Civilian Health and Medical Program of the Veterans Administration (CHAMPVA) is the government’s health insurance program for veterans with 100% service-related disabilities and their families • Expenses are shared between the VA and the beneficiary; veterans must enroll in program to receive benefits • CHAMPVA Participation • Providers agree to accept CHAMPVA payment and patient’s cost-share payment as payment in full • CHAMPVA and Other Insurance Plans • CHAMPVA is a secondary payer in almost all circumstances (Medicaid and supplementary insurance are exceptions) • CHAMPVA for Life extends CHAMPVA benefits to enrollees who are age 65 and over.

23. WORKERS’ COMPENSATION • Workers’ compensation is a government-supervised and employer-sponsored program for compensating employees for injury or disease in connection with employment • Federal and State Programs • Each state administers its own program and has its own statutes; however all states provide two types of benefits: • payment for medical expenses • payment for lost wages • Handling Workers’ Compensation Cases • Workers’ compensation cases have special procedures that must be followed • In most cases, workers’ compensation is primary to other health plans

24. CHAPTER REVIEW • When a facility believes that Medicare is unlikely to pay for a planned service, what document must the patient sign? • [Advance Beneficiary Notice (ABN)] • What program controls Medicare benefits when Medicare beneficiaries are also covered by other health plans? • [Medicare Secondary Payer (MSP)] • Which TRICARE plan is a fee-for-service plan? • [TRICARE Standard]

25. CHAPTER REVIEW (cont.) • What document notifies patients of what Medicare covered on a claim sent on their behalf and what they are going to be billed? • [Medicare Summary Notice (MSN)] • Who is responsible for determining if an individual is eligible for coverage by CHAMPVA? • [Veterans’ Administration (VA)] • What limits total payment for medical services to 100% regardless of how many health plans cover the patient? • [coordination of benefits (COB) rules]

26. CHAPTER REVIEW (cont.) • Who receives carrier payments if a patient signs an Assignment of Benefits form? • [facility or provider] • Who processes Medicare hospital claims? • [contracted fiscal intermediaries (FIs)] • What is Medicare Part D? • [prescription drug plans] • Is Medicaid typically a primary or secondary payer? • [secondary – “payer of last resort”]

27. TERMINOLOGY QUIZ • Type of insurance plan that pays for the costs that primary and secondary plans typically don’t pay for. • [supplemental] • What is COB the abbreviation for? • [coordination of benefits] • Name of insurance companies contracted to process Medicare physician claims. • [carriers] • Name of document hospital gives patient when it determines that the care the beneficiary is receiving or about to receive is not covered by Medicare. • [Hospital-Issued Notice of Noncoverage (HINN)]

28. TERMINOLOGY QUIZ (cont.) • What does “Medi-Medi” stand for? • [Medicare-Medicaid] • Insurance that pays for medical expenses and lost wages for employees injured at work is: • [workers’ compensation] • A payment from a payer to a provider that covers all services provided to a member of a managed care plan for a specified period of time is: • [capitated payment]