Chapter 15 - Revenue Management and Reimbursement

Question 1

adjudication

Answer 1

1. to make an official decision about who is right in (a dispute): to settle judicially
2. a judicial decision or sentence
3. a term used by the insurance industry that refers to the process of paying, denying, and adjusting claims based on the patient’s healthcare insurance coverage benefits

Question 2

claim

Answer 2

A request for payment for services, benefits, or costs by a hospital, physician, or other provider that is submitted for reimbursement to the healthcare insurance plan by either the insured party or by the provider

Question 3

out of pocket

Answer 3

Paying for the services provided with one’s own funds

Question 4

Affordable Care Act (ACA)

Answer 4

The Affordable Care Act (ACA), also known as Obamacare, was signed into law in March 2010.

It was designed to extend health coverage to millions of uninsured Americans.

The act expanded Medicaid eligibility, created a Health Insurance Marketplace, prevented insurance companies from denying coverage due to pre-existing conditions, and required plans to cover a list of essential health benefits.

Lower-income families qualify for subsidies for coverage purchased through the Marketplace.

Question 5

policy vs policyholder

Answer 5

When a person has healthcare insurance, they receive a policy, which is a contract between the insurer and the person, in which they pay a premium, which is a set amount per month or per year to help cover the cost of medical expenses.

The policyholder is the person covered by the policy. The purchaser of a healthcare insurance policy can be an individual, group, or employer.

Question 6

healthcare insurance

Answer 6

Protection from having to pay the full cost of healthcare by prepaying for a plan for healthcare coverage.

Question 7

premium

Answer 7

an amount of money paid at regular times (e.g. monthly, yearly) to insure (=protect against risk) your health or life, or your home or possessions

Question 8

third-party payer

Answer 8

A term used to identify an insurance company that pays for the medical care of covered individuals. The terms first party, the patient, and second party, the healthcare provider, are not used as frequently.

Question 9

coordination of benefits (COB)

Answer 9

If a patient is covered by more than one insurance, coordination of benefits (COB)—determining which insurance coverage is the primary, secondary, and tertiary payer—takes place.

For example, a patient is covered under the group plan A offered at her place of work and is also covered under the group plan B, offered at her spouse’s place of work. Her own insurance A is primary and her spouse’s insurance B is billed after her plan A has made its payment.

For children covered by both their parents’ insurance, the birthday rule is used to determine which coverage is billed first. The parent whose birthday falls first in the calendar year (not who is oldest, or who has insurance for the longest amount of time) is primary; for example, if the mother’s birthday is January 21 and the father’s birthday is March 14, the mother’s insurance plan is primary because her birthday is in January and falls first in a calendar year.

Question 10

prior approval

Answer 10

also called prior authorization
a requirement that your healthcare provider or hospital obtains approval from your health insurance company before prescribing a specific medication for you or performing a particular medical procedure

Question 11

deductible

Answer 11

The amount of cost, usually annually, the policyholder must incur before the plan will assume liability for the remaining covered expenses. For example, a person who has a $1,000 deductible must pay that amount each year before the insurance policy will start paying for services.

Question 12

coinsurance

Answer 12

The percentage of costs of a covered health care service you pay (20%, for example) after you’ve paid your deductible.

If you’ve paid your deductible: You pay 20% of $100, or $20. The insurance company pays the rest.

If you haven’t met your deductible: You pay the full allowed amount, $100.

Question 13

copayment (co-pay)

Answer 13

A cost-sharing measure in which the policyholder pays a fixed dollar amount (flat fee) per service, such as $15 per physician office visit.

Question 14

accept assignment

Answer 14

A term used to refer to a provider’s or a supplier’s acceptance of the allowed charges (from a fee schedule) as payment in full for services or materials provided

Question 15

fee schedule

Answer 15

A complete listing of fees used by health plans to pay doctors or other providers.

Question 16

balance billing

Answer 16

A reimbursement method that allows providers to bill patients for charges in excess of the amount paid by the patients’ health plan or other third-party payer (not allowed under Medicare or Medicaid).

Question 17

professional component vs technical component

Answer 17

Professional component:

1. The portion of a healthcare procedure performed by a physician or other healthcare professional
2. A term generally used in reference to the elements of radiological procedures performed by a physician

Technical component:The portion of radiological and other procedures that is facility based or non-physician based (for example, radiology films, equipment, overhead, endoscopic suites, and so on)

Question 18

endoscopy

Answer 18

a procedure in which an instrument is introduced into the body to give a view of its internal parts

Question 19

overhead

Answer 19

the ongoing business expenses not directly attributed to creating a product or service (e.g. rent of a building)

Question 20

remittance advice (RA)

Answer 20

A document that provides comprehensive information about claims that are paid, denied, adjusted or in process and are produced based on a provider’s claim activity.

Question 21

Internal Control Number (ICN)

Answer 21

When claims are entered into the Medicare system, they are issued a tracking number known as the internal control number (“ICN”). The ICN is a 13-digit number assigned to each claim received by Medicare.

Question 22

claim detail

Answer 22

The specific information (From and To Date of Service, Procedure Code, Modifiers, if applicable, Units, Facility Type Code, Charges, Allowed Amount, etc.) associated with the services billed on a claim.

Question 23

private healthcare insurance

Answer 23

Commercial insurance purchased by individuals, self-employed business people, and groups of people (such as associations and religious organizations), for themselves and for their dependents; typically these plans have high deductibles or limited covered services; a premium for coverage is paid each month to the third-party payer and those funds are used to help pay for the healthcare services.

Question 24

commercial insurance

Answer 24

Health insurance provided and administered by public and private companies rather than by the government.

Question 25

self-insured health plan

Answer 25

also called employer-based self-insurance plans or a self-funded plan

A self-insured group health plan (or a ‘self-funded’ plan as it is also called) is one in which the employer assumes the financial risk for providing health care benefits to its employees. In practical terms, self-insured employers pay for each out of pocket claim as they are incurred instead of paying a fixed premium to an insurance carrier, which is known as a fully-insured plan. Typically, a self-insured employer will set up a special trust fund to earmark money (corporate and employee contributions) to pay incurred claims.

Self-insured employers can either administer the claims in-house, or subcontract this service to a TPA.

Question 26

third party administrator (TPA)

Answer 26

An entity that processes or adjudicates claims for an employee benefit plan. A TPA may provide additional services to an employee benefit plan or employer, such as collecting premiums, contracting for PPO services, providing utilization review of claims, and similar ancillary services to the operation of the employee benefit plan.

Question 27

earmark

Answer 27

1. designate (something, typically funds or resources) for a particular purpose.
2. mark the ear of (an animal) as a sign of ownership or identity
3. a characteristic or identifying feature
4. a congressional directive that funds should be spent on a specific project

Question 28

out-of-pocket maximum

Answer 28

The most you’ll have to pay for covered services in a year, no matter how much care you need. Once you spend this amount for covered services in a year, your plan pays 100% for your care.

Question 29

employer-sponsored coverage

Answer 29

Also called employer-based coverage
The term “employer-sponsored coverage” refers to health insurance obtained through an employer—the most common way Americans get insurance. Employer-sponsored coverage includes not only insurance for current employees and their families, but can also include retired employees.

Employer-sponsored coverage is obtained when employees and employers share the cost of premium payment—the employer contributes a portion of the premium amount and the employee also contributes, usually with a direct deduction from his or her paycheck. For example, an employer might pay for 80 percent of the cost of coverage and the employee would cover the additional 20 percent of the premium. Employees are usually able to pay an additional premium amount to cover dependents.

Further, federal law gives former employees the right to stay on their employer’s health insurance, at their own expense, for a time after leaving a job. That, too, is employer-sponsored coverage.

Question 30

exclusive provider organizations (EPO)

Answer 30

A managed care plan where services are covered only if you go to doctors, specialists, or hospitals in the plan’s network (except in an emergency).

Question 31

Medigap

Answer 31

also called Medicare Supplement Insurance

Medicare does not pay 100 percent of billed medical claims by healthcare organizations and providers. Medicare beneficiaries pay out of pocket for the deductible, co-pay, and non-covered services portions of healthcare claims.

Beneficiaries may purchase supplemental insurance—known as Medigap—to help cover those expenses.

Question 32

mandatory eligibility groups

Answer 32

Federal law requires states to cover certain groups of people (called mandatory eligibility groups) based on income level, age, and pregnancy status.

Therefore: children, pregnant women, elderly adults, people with disabilities, and low-income adults automatically qualify for Medicaid.

Question 33

beneficiary

Answer 33

1. a person or thing that receives help or an advantage from something: one that benefits from something
2. law: the person designated to receive the income of an estate that is subject to a trust
3. the person named (as in an insurance policy) to receive proceeds or benefits

Question 34

group model HMOs

Answer 34

In this model the HMO contracts with more than one physician; for example, a medical group that includes physicians in multiple fields of expertise. The members of the medical group provide the care to the HMO enrollees on a fee-for-service basis.

Question 35

independent practice associations

Answer 35

also called open-panel model
This model is created when the HMO contracts with a physician who has his or her own practice and the physician agrees to see the patients who belong to the HMO in addition to their regular patients.

Question 36

network model HMOs

Answer 36

In this model the HMO contracts with a network of providers who provide multispecialty group practices. Reimbursement for healthcare is either on a fee-for-service or capitation basis.

Question 37

staff model HMOs

Answer 37

In this model the HMO employs the physicians. Physicians see only members of the HMO and are paid a salary by the HMO. The premiums paid by enrollees to the HMO are used to cover the cost of services and facilities.

Question 38

Medicare Administrative Contractors (MAC)

Answer 38

private insurance companies that serve as Medicare’s agents in the administration of the Medicare program, including processing and paying claims

Question 39

poverty thresholds vs poverty guidelines

Answer 39

The poverty thresholds are the original version of the federal poverty measure. They are updated each year by the Census Bureau. The thresholds are used mainly for statistical purpose — for instance, preparing estimates of the number of Americans in poverty each year. (In other words, all official poverty population figures are calculated using the poverty thresholds, not the guidelines.)

The poverty guidelines are the other version of the federal poverty measure. They are issued each year in the Federal Register by the Department of Health and Human Services (HHS). The guidelines are a simplification of the poverty thresholds for use for administrative purposes — for instance, determining financial eligibility for certain federal programs.

The poverty guidelines are sometimes loosely referred to as the “federal poverty level” (FPL), but that phrase is ambiguous and should be avoided, especially in situations (e.g., legislative or administrative) where precision is important.

Question 40

Federal Coordinated Healthcare Office

Answer 40

The Federal Coordinated Healthcare Office (Medicare–Medicaid Coordination Office) serves people who are enrolled in both Medicare and Medicaid. Such people are known as dual eligible, meaning they are covered under both Medicare and Medicaid.

The goal is for enrollees who are dual eligible to have full access to seamless, high-quality healthcare and to make the system as cost-effective as possible. The Medicare–Medicaid Coordination Office, established by the ACA, works across federal and state agencies to align coordination of benefits (COB) between the programs. COB determines the financial responsibility for payment of medical claims when one or more payers are involved.

Question 41

Civilian Health and Medical Program of the Department of Veterans Affairs (CHAMPVA)

Answer 41

A comprehensive healthcare program in which the VA shares the cost of covered healthcare services and supplies with eligible beneficiaries. The Chief Business Office Purchased Care (CBOPC) administers the program. CHAMPVA covers most healthcare services that are medically and psychologically necessary.

To be eligible for CHAMPVA, a person cannot be eligible for TRICARE and must be in one of the following categories:

The spouse or child of an eligible veteran
The spouse or child of a veteran who died as the result of a service injury
The spouse or child of a veteran who was totally disabled at the time of his or her death
The spouse or child of a military member who died while serving in the military

Question 42

Indian Health Service (IHS)

Answer 42

An HHS agency responsible for providing healthcare to American Indians and Alaska Natives within the United States. The provision of health services to members of federally recognized Native tribes grew out of a special government-to-government relationship between the federal government and Indian tribes.

Question 43

What are the four Federal Workers’ Compensation Funds?

Answer 43

Federal employees are covered under the Federal Employees’ Compensation Act (FECA) of 1916. The Department of Labor’s Office of Workers’ Compensation Programs (OWCP) administers four major disability compensation programs for federal employees or their dependents if the employee is injured at work. The four programs include the following:

1. Division of Federal Employees’ Compensation (DFEC)
2. Division of Energy Employees Occupational Illness Compensation (DEEOIC)
3. Division of Longshore and Harbor Workers’ Compensation (DLHWC)
4. Division of Coal Mine Workers’ Compensation (DCMWC)

The benefits include disability, wage replacement, medical treatment, and vocational rehabilitation for workers injured on the job.

Question 44

Health Insurance Marketplace

Answer 44

also called Health Insurance Exchange
A health plan that offers the purchase of federally regulated and subsidized health insurance to uninsured, eligible Americans based on their income.
It was created by the Affordable Care Act.

Question 45

hospital-acquired condition (HAC)

Answer 45

A reasonably preventable condition that a patient did not have upon admission to a hospital, but that developed during the hospital stay. Examples of HACs include foreign object retained after surgery, blood incompatibility, falls, and infections.

Question 46

present on admission (POA)

Answer 46

a condition that was present at the time the patient was admitted to the hospital

Question 47

three types of utilization reviews

Answer 47

Prospective review refers to the review that takes place prior to elective procedures and admissions. This is achieved through a precertification process for elective admissions, certain diagnostic procedures, and outpatient surgeries. Utilization management professionals, who may be clinical nurses, physicians or mid-level providers, use clinical screening processes to apply consistent standards when determining if a service is medically necessary. One tool is preauthorization, which reviews proposed surgeries and other inpatient and outpatient healthcare services before the patient is admitted.

Concurrent review involves screening for medical necessity and the appropriateness and timeliness of the delivery of medical care from the time of admission until discharge.

Retrospective review includes review and analysis of actual utilization data after the patient has been discharged. The retrospective review may be conducted by a committee of the organization or an outside quality improvement organization (QIO), which is an organization hired by CMS to perform medical peer review of coding information for completeness, adequacy, and quality of care, as well as the appropriateness of payments. An outside review may find errors in daily operations performance that the organization missed.

The UM professionals (utilization management) monitor inpatient utilization daily by reviewing a list of all patients, their diagnoses, the requested length of stay versus the actual length of stay, and other information that helps to continually manage inpatient activity to determine medical necessity as well as reimbursement for the inpatient stay.

Question 48

usual, customary, and reasonable (UCR) charges

Answer 48

A type of fee-for-service payment method in which the third-party payer remunerates fees that are usual for the provider’s practice, customary for the community, and reasonable for the situation. For example, the amount of reimbursement for a mammogram at a rural hospital may be significantly more than for a large urban hospital because the cost of doing business in the rural area is higher and justified for that geographic area.

Question 49

remunerate, remuneration

Answer 49

an amount of money paid to someone for the work that person has done

Question 50

episode-of-care (EOC) reimbursement

Answer 50

A reimbursement given for a relatively continuous medical treatment provided by the healthcare professional in relation to a particular clinical problem or situation.

For example, an obstetrician who charges a patient a flat fee for the entire episode of pregnancy and delivery or a patient receiving follow-up care for the first 60 days after a stroke. In home health services, all services and supplies provided to a patient for a 60-day period are paid by EOC reimbursement.

Question 51

global payment methodology

Answer 51

Payment that combines the professional and technical components of a procedure and disperses payments as a lump sum to be split between the physician and the healthcare organization.

The professional component of a service is considered the part of the service supplied by physicians (for example, the radiologist). The technical component (for example, supplies, equipment, and support services) is supplied by a hospital or freestanding surgical center. For example:

A patient receives a chest x-ray.
Professional component: Services of the radiologist
Technical component: Radiology department use, x-ray equipment
Global payment: The facility received a lump-sum payment for the radiologist reading the x-ray and the facility fees to take the x-ray

Question 52

prospective payment system (PPS)

Answer 52

A method of reimbursement in which Medicare payment is made based on a predetermined, fixed amount. The payment amount for a particular service is derived based on the classification system of that service.

Question 53

Medicare severity diagnosis-related group (MS-DRG)

Answer 53

a system of classifying a Medicare patient’s hospital stay into various groups in order to facilitate payment of services

Question 54

disproportionate share hospital (DSH)

Answer 54

a hospital that treats a high percentage of low-income patients

Question 55

patient assessment instrument (PAI)

Answer 55

A standardized tool used to evaluate the patient’s condition after admission to, and at discharge from, the healthcare facility. Use by Medicare.

The full title is Inpatient Rehabilitation Facility Patient Assessment Instrument (IRF-PAI).

Question 56

resource-based relative value scale (RBRVS)

Answer 56

a payment methodology in which physician payments are determined by the resource costs needed to provide care