Hospital Billing and Reimbursement
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School
Central Georgia Technical College *
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Course
2370
Subject
Medicine
Date
Nov 24, 2024
Type
docx
Pages
5
Uploaded by GrandMorningSquid15
Healthcare Facilities: Inpatient Versus Outpatient
• Outpatient services are also provided in patients’
home settings:
• Home healthcare—care given to patients in their homes
• Home health agency (HHA)—organization that provides
home care services
• At-home recovery care—assistance with activities of daily
living provided in the home
• Hospice care—care for terminally ill people provided by a
public or private organization
• Integrated delivery systems—multiple facilities and
specialties join together to provide a continuum of
care.
Hospital Billing Cycle:
• The three major steps in a patient’s hospital stay (from
the insurance perspective):
• Admission
• creating or updating the patient’s medical record
• verifying patient insurance coverage
• securing consent for release of information to payers
• collecting advance payments as appropriate
• Treatment
• services are provided and charges are generated
• Discharge
• patient’s record is compiled
• claims and/or bills are created
• payment is followed up
• Admission: The first major step in the hospital claims
processing sequence
• Patient is admitted and registered
• Registration—process of gathering information about a
patient during admission to a hospital
• Personal and financial information is entered in the
hospital’s health record system
• Insurance coverage is verified
• Consent forms are signed by the patient (Figure 17.1)
• A notice of the hospital’s privacy policy is presented to the
patient
• Some pretreatment payments are collected
• Treatment: The second major step in the hospital
claims processing sequence
• The patient’s treatments (and transfers among the various
departments in the hospital) are tracked and recorded
• Discharge: The third major step in the hospital claims
processing sequence
• Discharge and billing using the charge master--hospital’s list
of codes and charges for its services
• Follows the discharge of the patient from the facility and the
completion of the patient’s record
• Coordination of benefits
• Hospitals generally have large departments that
are responsible for major business functions
• Hospitals are also structured into departments for
patient care
• Health information management (HIM)—hospital
department that organizes and maintains patient medical
records
• Master patient index (MPI)—hospital’s main patient
Database
• Attending physician—clinician primarily responsible
for a patient’s care from the beginning of a
hospitalization
• Hospital-issued notice of noncoverage (HINN)—form
used to describe benefit guidelines for inpatient
hospital services
• Observation service—assistance provided in a
hospital room but billed as an outpatient service.
Hospital Diagnosis Coding:
• Diagnosis coding for inpatient services follows the
rules of the Uniform Hospital Discharge Data Set
(UHDDS)—classification system for inpatient health
data—and is also based on ICD-10-CM as of October
1, 2015.
• Inpatient coding differs from physician and outpatient
diagnostic coding in two ways:
1. The main diagnosis, called the principal rather than the
primary diagnosis, is established after study in the
hospital setting
2. Coding an unconfirmed condition (rule-out) as the
admitting diagnosis is permitted
• Principal diagnosis (PDX)—condition established after
study to be chiefly responsible for admission
• Admitting diagnosis (ADX)—patient’s condition
determined at admission to an inpatient facility
• Sequencing—listing the correct order of a principal
diagnosis according to guidelines
• Comorbidity—admitted patient’s coexisting condition
that affects the length of hospital stay or course of
treatment
• Complication—condition a patient develops after
surgery or treatment that affects length of hospital
stay or course of treatment
Hospital Procedure Coding:
• Volume 3 of the ICD-9-CM, Procedures, was replaced
on October 1, 2015, by ICD-10-PCS to report
procedures for inpatient services
• Table format used to build codes
• Sixteen sections with seven character codes
• ICD-10-PCS—mandated code set for inpatient
procedural reporting for hospitals and payers as of
October 1, 2015
• Principal procedure—process most closely related to
treatment of the principal diagnosis (usually a surgical
procedure)
• Code set structure
• All codes in ICD-10-PCS are seven characters long
• Each character in the seven-character code represents an aspect
of the procedure
• The first character of the procedure code always specifies one of
the sixteen available sections
• ICD-10-PCS has a multiaxial code structure:
• A table format is used to present options for building a
code
• An axis is a column or row in a table
• Columns are vertical, while rows are horizontal
• The coder picks the correct values from one of the rows in
a table to build a seven-character code for each procedure
• Medicare pays for inpatient services under its
Inpatient Prospective Payment System (IPPS)—
Medicare payment system for hospital services
• Uses diagnosis-related groups (DRGs) to classify patients into
similar treatment and length-of-hospital-stay units and sets
prices for each classification group
• Diagnosis-related group (DRG)—system of analyzing
conditions and treatments for similar groups of patients
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• Grouper—Software used to calculate the DRG to be paid
based on the codes assigned for the patient’s stay
• Each hospital’s case mix index is an average of the
DRG weights handled for a specific period of time
• Case mix index--measure of the clinical severity or resource
requirements
• Other factors affect the pay rate a hospital negotiates
with CMS: geographic location, labor and supply costs,
and teaching costs
• Medicare-Severity DRG (MS-DRG)—type of DRG
designed to better reflect the different severity of
illness among patients who have the same basic
diagnosis
• Major diagnostic category (MDC)—classification used
to group MS-DRGs
• Present on admission (POA)—code used when a
condition existed at the time the order for inpatient
admission occurred
• Hospital-acquired condition (HAC)—condition a
hospital causes or allows to develop
• Inpatient-only list – itemized description of
procedures that can be billed from the facility
inpatient setting only
• Never event—preventable medical error resulting in
serious consequences for the
patient
• Outpatient Prospective Payment System (OPPS)—
payment system for Medicare Part B services that
facilities provide on an outpatient basis
• Ambulatory patient classification (APC)—Medicare
payment classification for outpatient services
• Three-day payment window – rule requiring Medicare
to bundle all outpatient services provided by a hospital
to a patient within three days before admission into
the DRG payment for that patient
• HIPAA X12 837 Health Care Claim: Institutional
(837I)—format for claims for institutional services
• UB-04—uniform billing 2004, also known as the CMS-
1450 paper claim for hospital billing
• See Figure 17.4
• CMS-1450—another name for the UB-04 paper claim form
• UB-92—former paper hospital claim
• The UB-04 reports: (see Table 17.1)
• Patient data
• Information on the insured
• Facility and patient type
• The source of the admission
• Various conditions that affect payment
• Whether Medicare is the primary payer (for Medicare claims)
• The principal and other diagnosis codes
• The admitting diagnosis
• The principal procedure code
• The attending physician
• Other key physicians
• Charges