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2 Understanding Hospital Coding and Billing: A Worktext, Second Edition Marsha S. Diamond CCS, CPC-H, CPC Vice President, Career Education and Training Solutions: Dave Garza Director of Learning Solutions: Matthew Kane Executive Acquisitions Editor: Rhonda Dearborn Managing Editor: Marah Bellegarde Senior Product Manager: Jadin Babin-Kavanaugh Editorial Assistant: Lauren Whalen Vice President, Career Education and Training Solutions: Jennifer Baker Marketing Director: Wendy Mapstone Senior Marketing Manager: Nancy Bradshaw Marketing Coordinator: Erica Ropitzky Production Director: Carolyn Miller Production Manager: Andrew Crouth Content Project Manager: Brooke Greenhouse Senior Art Director: Jack Pendleton Technology Product Manager: Mary Colleen Liburdi Technology Project Manager: Brian Davis 2012 Delmar, Cengage Learning ALL RIGHTS RESERVED. No part of this work covered by the copyright herein may be reproduced, transmitted, stored, or used in any form or by any means graphic, electronic, or mechanical, including but not limited to photocopying, recording, scanning, digitizing, taping, Web distribution, information networks, or information storage and retrieval systems, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without the prior written permission of the publisher. For product information and technology assistance, contact us at Cengage Learning Customer & Sales Support, For permission to use material from this text or product, submit all requests online at Further permissions questions can be ed to permissionrequest@cengage.com. Library of Congress Control Number: ISBN-13: ISBN-10: X Delmar 5 Maxwell Drive Clifton Park, NY, USA Cengage Learning is a leading provider of customized learning solutions with office locations around the globe, including Singapore, the United Kingdom, Australia, Mexico, Brazil, and Japan. Locate your local office at: international.cengage.com/region Cengage Learning products are represented in Canada by Nelson Education, Ltd. To learn more about Delmar, visit Purchase any of our products at your local college store or at our preferred online store Notice to the Reader Printed in the United States of America Publisher does not warrant or guarantee any of the products described herein or perform any independent analysis in connection with any of the product information contained herein. Publisher does not assume, and expressly disclaims, any obligation to obtain and include information other than that provided to it by the manufacturer. The reader is expressly warned to consider and adopt all safety precautions that might be indicated by the activities described herein and to avoid all potential hazards. By following the instructions contained herein, the reader willingly assumes all risks in connection with such instructions. The publisher makes no representations or warranties of any kind, including but not limited to, the warranties of fitness for particular purpose or merchantability, nor are any such representations implied with respect to the material set forth herein, and the publisher takes no responsibility with respect to such material. The publisher shall not be liable for any special, consequential, or exemplary damages resulting, in whole or part, from the readers use of, or reliance upon, this material.

3 CHAPTER1 The Flow of the Hospital Organization KEY TERMS Acute care Admitting diagnosis Advance Beneficiary Notice (ABN) Appeal Assignment of benefits Authorization for Release of Medical Information Case management Charge capturing Consent to treat Electronic health record Facility charge Health information management (HIM) Hospital-based physicians Inpatients Physician employees Physician s order Professional charge Technical charge Third-party contract Utilization review (UR) LEARNING OBJECTIVES Discuss the hospital revenue cycle Understand and explain the hospital billing process Recognize services performed in the facility setting Discuss career opportunities in the hospital setting 3

4 4 SECTION 1 Hospital Billing and Coding Overview INTRODUCTION The world of hospital coding and billing is indeed complex. When one considers the complexity of the hospital environment and that hundreds, sometimes thousands of individuals are employed at a hospital facility, it is a monumental challenge to ensure that the patient billing process is complete, and that successful reimbursement is obtained on a timely basis. With continued increases in the cost of quality medical care, a competitive market, an aging population that is living longer and therefore requires more years of health care, and the complexity of the reimbursement process, the demands on the hospital employee are great. The hospital facility offers a myriad of settings that involve capturing services as well as billing and coding appropriately for reimbursement. Individuals involved in the hospital revenue cycle may be capturing services for inpatient and/or outpatient care in areas such as those described next. Inpatient Facilities Hospital size is often measured by the number of inpatient admissions possible, or bed size for acute inpatient care. This acute care may take place in many inpatient settings, such as: Acute Care: An inpatient acute care facility provides medical care and treatment to patients who require care for their acute condition, illness, or injury. These patients are referred to as inpatients, and typically require a minimum of an overnight stay and continuous medical attention. Skilled Nursing Facilities: Skilled nursing facilities provide long-term daily care for patients who typically were inpatients during the acute phase of their illness, but still require continuous care, monitoring, and/or rehabilitation services for their conditions. These facilities, referred to as SNFs, may be part of the hospital facility or may be independent organizations. Intermediate Care Facilities: In some instances, patients will require long-term care; however, that care does not extend to skilled nursing care provided by licensed nurses. These patients require long-term care for medical or psychological conditions, such as trauma patients who are stabilized but neurologically impaired, individuals with developmental disabilities, or patients requiring care for drug and alcohol treatment. Outpatient Facilities In those instances when the patient stays in the hospital but does not require the type of acute care provided in an inpatient setting, usually for a period of less than 24 hours, the patient s status will be assigned as outpatient. These patients typically require minimal nursing care, usually in the form of postoperative pain management or monitoring until the patient s condition is either deemed stable for discharge or acute, wherein the patient would be admitted to the inpatient setting. Several other areas within the hospital organization are also considered outpatient, such as: Ambulatory Surgery Centers or Outpatient Surgery: Referred to as the ASC, the ambulatory surgery center provides surgical services to patients who are ambulatory; patients typically leave the facility in less than 24 hours. Following surgery, the patient is placed in a postoperative surgery recovery area, and discharged after vital signs are stable and the patient has recovered from any anesthetic agents given during the procedure.

5 CHAPTER 1 The Flow of the Hospital Organization 5 Ambulatory surgery centers may be part of the hospital facility or may be independent, free-standing facilities. Outpatient Hospital Departments/Ancillaries: There are a number of departments within the hospital facility where patients are ambulatory, and are seen and then discharged after services are provided. Examples of outpatient hospital departments include the emergency room and ancillaries such as radiology, laboratory, and other testing departments. Outpatient Clinics: Areas within the hospital that provide regular, scheduled medical care within the hospital organization are referred to as outpatient clinics. Again, these patients are ambulatory and are scheduled for regular medical care with discharge upon completion. Physical therapy, wound care centers, and infusion services are examples of outpatient clinics in the hospital facility. THE HOSPITAL REVENUE CYCLE Many individuals within the hospital network assist in the patient process, and there are few who are not involved in securing accurate information for the billing process. From scheduling at the beginning of the hospital revenue cycle to the end of the cycle when payment occurs, many individuals provide key information to the billing and coding process essential for correct reimbursement. As a result of this complex environment, knowledgeable employees in the billing and coding areas are essential to the successful operation of the hospital. The departments involved in the hospital revenue cycle are shown in Figure 1.1. Let s discuss how each of these departments within the hospital organization plays a key role in securing proper reimbursement. Physician (Physician s Order) Physicians who are employed by the hospital are known as physician employees, whereas others who provide services only in the hospital setting are called hospital-based physicians. Most of the physicians providing care in the facility are private physicians who are a part of a group of physician organizations. Before a patient may be admitted to an inpatient facility or receive any services, the physician must request specific services with a physician s order. This document is key to the entire process, as the order must contain: Status of patient services (inpatient, outpatient, observation) What services are ordered Diagnosis (medically necessary documentation) The physician s order is key to the billing and reimbursement process not only for the facility, but for the individual physician s billing as well. For instance, the status of the patient determines whether the admission is medically necessary for reimbursement purposes from the facility perspective, and the status of the patient in the facility must match the place of service and Current Procedural Terminology, 4th edition (CPT) codes utilized by the physician in order for proper reimbursement to the physician entities. Thus, as you can see, the first step in the hospital revenue cycle starts with the proper information provided in the physician s order. The original order may be written or made by phone order, then later authenticated in writing in the hospital record. Scheduling/Appointments The first contact with the patient will be made by the scheduling/appointment area. The facility s scheduling/appointment area will arrange an appropriate time and setting for requested services to be performed. Employees in this area

6 6 SECTION 1 Hospital Billing and Coding Overview End of Hospital Revenue Cycle Physician Order Written orders for requested services Scheduling Services requested are scheduled in the hospital system Payment Posting Posting of insurance/patient payments and appropriate contractuals Admit/Registration Demographics Patient Consents Collections Collection follow-up for patient balance balance not paid by patient Insurance Verification Verify coverage Obtain certification for services Patient Billing/Collection Bill patient for portion after insurance due from patient Patient Care All care provided by facility/provider(s) Appeals Reconsideration of services not paid/paid incorrectly Charge Capturing Gather all charge documents Ensure all services rendered are billed Re-Billing Additional charges Late charges Billing Generation of UB-04 for facility services Procedure Coding All services not captured by chg documents are assigned appropriate coding Discharge Appropriate discharge documentation All consents/forms signed by patient Diagnosis Coding ICD-9-CM coding assigned for all services Delmar/Cengage Learning FIGURE 1.1 The hospital revenue cycle. must be familiar with the departments where services may be performed (e.g., inpatient, outpatient, ancillary) and be able to communicate appropriate patient instructions as well as acquire key billing/coding data, such as: Patient name and demographic information Insurance information to determine whether services may be performed Contact information in the event the patient needs to be recontacted for further information or instructions In those instances when services are scheduled in advance, the appointment scheduler is an integral component of the hospital revenue cycle. The scheduler ensures that only covered services are scheduled and that the patient is informed of his or her financial responsibilities prior to the time of service, thereby ensuring appropriate payment for the facility. Of course, there will be instances when scheduling services will not be possible, such as in the event of emergency services or operating room procedures that are not planned. In these circumstances, the scheduling and appointment process will be bypassed and the next step in the hospital revenue cycle, admission/ registration will take place immediately upon receipt of the physician s orders. Admission/Registration All patients will be registered into the hospital system through the admission/ registration department, regardless of whether the service is scheduled or on an emergent basis. This department will generate a patient account number for this encounter or admission as well as gather additional information needed for insurance and patient billing and collections. As a result of this process, a patient admission/registration sheet will be generated and posted to the patient s chart

7 CHAPTER 1 The Flow of the Hospital Organization 7 (an example of this sheet is provided in Figure 3.1 in Chapter 3). As part of this process, an admitting diagnosis will be assigned based on the information provided in the physician s order. This diagnosis will be incorporated on the claim form and will be taken into consideration during the processing of the claim form. It will be crucial in the determination of conditions that are present on admission, because additional reimbursement will not be considered for those conditions under the Medicare Severity Diagnosis Related Group (MS-DRG) methodology utilized by Medicare and other third-party carriers. This information will also be utilized to ensure that the patient s presenting complaint is addressed during the course of the hospital encounter. Copies of the admission forms are often utilized by providers of service during the encounter or admission for capturing needed billing and insurance data. Care should be taken in utilizing the original information obtained during the registration/admission process, because verification and subsequent changes may be made to this information in the first 24 to 48 hours following admission. If the original admission form is utilized by other entities for billing purposes, care should be taken to verify whether this information is correct. Physician offices should also be aware that the insurance information obtained by the facility pertains only to the facility, and, in some cases, is not the same information for physician billing purposes. Appropriate Consents for Treatment, Release of Information, and Insurance Verification The information obtained during the admit/registration process usually will be verified with the insurance carrier(s) typically within two to three days, including any additional authorizations or information that may be needed at the conclusion of that admission or encounter to procure payment. The patient s registration form will be updated with corrected or additional information obtained during this process. Medical necessity must be met with the information obtained from the physician for patient status (inpatient, outpatient, observation) as well as the services provided through the assignment of appropriate diagnostic codes. These serve as the admitting diagnosis and are included on the billing form sent to the insurance carrier. When scheduling admissions, or in the case of outpatient procedures or services, the services usually have to meet minimal requirements, such as: Appropriate for patient s diagnosis Not considered experimental or elective by the patient s insurance Additional requirements to meet medical necessity may be required by specific carriers in addition to these general guidelines. In addition to the completion of the patient admission/registration form, patients give their written consent for treatment, as well as an assignment of benefits. When the patient signs the assignment of benefits form, the patient gives consent for any benefits or payments for services to be sent directly to the facility. The patient is also required to sign a consent to treat, which signifies that the patient has been made aware of the possible adverse affects of the treatment or procedure and agrees to have the services provided. The facility will also require the completion of a signed Authorization for Release of Medical Information, which allows the facility to release information to the patient s third-party carrier when required for treatment purposes or for payment of services to be made. In the case of an inpatient admission, the facility will request a copy of any advanced directives the patient may have completed, such as a living will or durable power of attorney. These are legal documents that make certain that the patient s wishes are considered in the case of life-or-death decisions. Should the facility believe that the services to be rendered may not be covered by the insurance carrier, it may request that the patient sign an Advance Beneficiary

8 8 SECTION 1 Hospital Billing and Coding Overview Notice (ABN). This form identifies those services that may not be covered by the patient s insurance, and the patient s signature indicates that the patient will be financially responsible for such services. Appropriate copies of insurance cards, verification of identification, and other documents appropriate for the insurance type of the patient are copied and filed with the patient s admission forms as part of the hospital record. ALERT! Under the Health Insurance Portability and Accountability Act (HIPAA) of 1996, patient confidentiality issues became paramount in the medical field. As part of this new legislation, each patient must be presented with a copy of the facility s privacy policies and the patient must sign a form acknowledging that he or she received such notice at the time of registration. Details regarding what patient information is governed by HIPAA is available at ALERT! Additional resources on registration forms and consent forms utilized in the hospital setting are available from the American Hospital Association Resource Center at Insurance Verification As part of the admissions process, insurance verification staff will contact the patient s insurance carriers to verify insurance coverage. In addition to verifying that coverage exists, staff members will obtain information regarding deductibles, any services that may not be covered by the plan, and whether precertification or authorization will be necessary for the encounter. This process is necessary for all hospital encounters, whether inpatient, outpatient, or ambulatory care. Patient Care While the patient is being treated, care must be taken to ensure that length of stay, services, and patient status approved during the insurance verification process have not changed. If they have, the carrier must be contacted to make certain that additional authorization or precertification is not necessary for payment to be made. Keep in mind that the facility is verifying coverage for facility resources utilized during the patient encounter and is not involved in obtaining the necessary authorizations for professional/provider services. It may be necessary for the individual provider to also request authorization for services individually provided. Medical Documentation The provider of service must document the medical care provided to the patient during the course of the admission or encounter. This documentation serves as the basis for coding and billing, as well as establishing medical necessity for the service(s) provided. It also serves as a line of defense in the case of medical malpractice. The medical record serves as a chronological record of the patient s assessment, diagnosis, treatment, and condition at discharge. The record is typically organized with the information discussed next. Admitting Forms and Information The various forms that were obtained during the admission process will be placed in the admissions section of the record. This may include consent forms as well as the admission, summary, or face sheet, which outlines the information regarding the patient s admission, such as admitting diagnosis, admitting physician, and insurance information.

9 CHAPTER 1 The Flow of the Hospital Organization 9 Physician s Orders As discussed earlier in this chapter, the specific services ordered by the physician will be outlined and made a part of the medical record. Medical Documentation Upon admission, the hospital will require that a history and physical, or H & P, is performed to document the patient s condition at the time of admission. This will serve as the beginning of the physician documentation process during the patient s admission. In the case of outpatient admission, which, as discussed earlier, usually is for a period of less than 24 hours, the H & P may be taken prior to the hospital admission and made a part of the hospital record at the time of the outpatient admission. At the time of each encounter with the patient, the physician will document findings in the physician progress note. The patient s status, results of any diagnostic tests that have been performed, and response to any treatments will be entered in the record. Nursing staff will also document their care of the patient during the hospitalization, such as vital signs, patient status, and any nursing assessments made. Requests for additional expert opinions by specialists, known as consultations, will also be documented in the medical record. Physician documentation will be the basis for billing services that have been performed by the physician as well as the facility during the course of the admission. Medication administration records (MARs) record the medications administered to the patient. Because these are services provided by the facility, they will be utilized as well for capturing services that have been provided and should be billed by the facility. The discharge summary serves as the exit summary for the inpatient encounter. It provides an overview of the patient s stay, including condition at admission, during the course of the hospitalization, and at discharge. Charge Capturing Charge collection or charge capturing is the gathering of charge documents from all departments within the facility that have provided services to patients. Making certain that all charges are coded and entered into the billing system is paramount to receiving payment for all services performed. These services may be captured by the use of a charge ticket or patient encounter form utilizing code numbers located on the form for billing purposes. Some of these services will not require code assignment by coding staff, whereas others will still require either review or some code assignment by coders in addition to the information contained on the documents. Procedure Coding The process of reviewing documentation for services provided and assigning the appropriate International Classification of Diseases, 9th edition, Clinical Modification (ICD-9-CM) and CPT codes as applicable is typically performed in the coding department of the health information management (HIM) area. Inaccurate or missed procedure or diagnosis codes can result in nonpayment, incorrect payment, or partial payment for services. In many instances, coding staff in the HIM department will be divided into outpatient, inpatient, and ancillary coding staff, as coding for each of these entities varies greatly, as we will learn in later chapters. Discharge When the patient is discharged from the facility, whether inpatient or outpatient, it is important that all information gathered has been verified, all consents

10 10 SECTION 1 Hospital Billing and Coding Overview have been signed, and all payment policies have been explained to the patient and signed by the patient. This will ensure prompt payment from the insurance carriers as well as the patient. In addition, the patient or a designated family member will usually meet with the discharge staff to make payment arrangements and arrange for follow-up care following discharge. Utilization Review During the course of the hospitalization, the utilization review (UR) department ensures that all of the health services provided to the patient during the admission are medically necessary and are provided in an appropriate setting, and thus are reimbursable by the patient s insurance carrier. Case Management Members of the case management team review patient care, treatment planning, referral, follow-up, and discharge planning. These activities are performed throughout the patient s inpatient stay by coordinating services and obtaining appropriate precertification or authorizations as required by the carrier to guarantee appropriate payment during the billing process. Diagnosis Coding All services must have medically necessary diagnoses assigned, without regard to whether the services are coded or input from an encounter form. To be considered medically necessary by the insurance carrier, the services typically have to meet the following criteria: Procedures must be appropriate for the patient s diagnosis(es) Procedure is not elective Procedure is not considered experimental Procedure is not performed at the patient s request for his or her convenience Procedure is performed at the appropriate level of care needed Inappropriate diagnosis coding, or those diagnoses not meeting the medically necessary criteria, will result in denial of payment, reduced payment, or requests for additional information that will delay payment. Billing/Accounts Receivable Management All information is gathered and input into the billing system; it will then be processed and an appropriate claim form will be generated (CMS 1450 or UB-04 for facility services, CMS-1500 for professional/physician services). Facility billing systems vary greatly; however, they typically handle accounts receivable or outstanding charges for each patient. Billing systems typically contain information such as: Demographics (patient name, address, and insurance information) Payer information (insurance company name, copayments, deductibles, and other data specific to the carrier) Generated insurance claims and patient statements Posted charges, payments, and appropriate contractuals Claims will be sent electronically or manually processed to insurance carriers with the information necessary for reimbursement. Once charges are entered in the billing system, they will begin to age in the system. The longer the charges are unpaid, the older the charges become in the system. Charges that age over 90 days are considered much more difficult to collect, so timely billing and re-billing is imperative to receiving reimbursement. Aging reports may be printed from the hospital billing system,

11 CHAPTER 1 The Flow of the Hospital Organization 11 which aids the patient account representative in identifying older charges or charges that need to be investigated or re-billed. Re-Billing/Claims Follow-up Lost or late charges or corrections to previously processed claims will generate a corrected or additional claim and will be submitted to the insurance carrier on the appropriate form. Re-billing results in delays in payment, denials, and considerable additional time in researching and reprocessing for reconsideration for payment. Billing errors may also cause suspicion for potential fraud if the errors appear to be intentional and result in incorrect or inappropriate payment for services. Appeals When payment resulting from a claim is received, a review will take place to determine whether that payment was as expected. When payment does not appear to agree with contractual guidelines with the insurance carrier, an appeal or request for additional consideration and payment will be made. Patient Billing When final payment has been made by all third-party carriers, the account will be handled by the patient account representative assigned to the account. The patient will be sent a patient statement that details the payments made by the insurance carriers, and the patient responsibility. Payment plans or other payment arrangements may be set up in order for the patient to pay his or her portion of the hospital bill in a timely manner. Should there be a dispute regarding the outstanding charges, the federal Fair Credit Billing Act protects the rights of the patient in requesting verification of charges and patient responsibility. Collections When patient payment is not received in a timely manner, collection activity on the balance of the patient account will begin. A series of collection letters may be sent in an attempt to receive patient payment. If payment is still not received, the account may be placed with an inside or outside collection agency and/or credit bureau. Payment Posting When payments are received, the appropriate payment(s) and insurance carrier contractual(s) will be posted to the patient account along with any patient payments until the balance has been satisfied. The term third party derives from the three parties who are involved in the contract for services. The first party is the facility or provider, the second is the patient, and the third is the insurance carrier. Thus, the term third-party contract refers to an agreement between the three parties mentioned. Information Technology and Its Role in the Billing Process As mentioned previously, all facilities will enter their demographic information as well as the individual charges on the patient account in the facility billing system. The billing process will often require medical documentation for substantiating medical necessity, or proof that services described on the claim form were performed as submitted. Therefore, frequent access to the patient medical records is essential as part of the billing process. The electronic health record, or EHR, stores the patient s clinical data electronically, which allows easy access for all facility staff as needed. The EHR allows access to medical documentation as well as ancillary data such as laboratory tests and other ancillary findings. The implementation of an EHR

12 12 SECTION 1 Hospital Billing and Coding Overview provides for remote access of patient medical information for satellite or adjoining areas of the hospital as well as statistical data analysis of services such as laboratory data. In addition to accessibility for medical staff, billing staff may also obtain needed reports for insurance billing purposes, thus ensuring reimbursement on a timely basis. Information systems allows for the input of data and medical documentation as well as storage, processing, access, and reporting of data through the hospital system when needed. This data may be maintained in a number of electronic formats, such as the patient account or billing system, the electronic medical record, the charge description master (CDM) where the codes and charges are stored, and the encoder/coding grouper that assists the coder in correct coding. UNDERSTANDING THE PATIENT BILLING PROCESS Just as complex as the number of employees who contribute to the functioning of the hospital revenue cycle are the many types of facilities and services rendered. The determination of what services should be coded and billed by which entities and the coding nomenclature and billing guidelines to be utilized are quite involved. Perhaps this can be best illustrated by an example of a typical hospital admission (see Table 1.1). The first column of the table represents some of the many services performed in a hospital setting. Note that in addition to the actual admission and room/board charges, ancillary services such as x-ray and laboratory are also charged, as well as surgical charges. Column 2 represents facility charges generated by the services described in Column 1, and Column 3 represents professional/provider services generated by the same services. The patient will typically receive numerous charges/bills for hospital services. At a minimum, the facility/hospital and the main provider will submit charges to the insurance carrier, and, if a balance remains after insurance, to the patient. Other providers involved in the care during the hospitalization, such as cardiologists, surgeons, anesthesiologists, radiologists, and other supportive care providers, may also present additional charges/claims for services. When the patient is admitted to the hospital, the facility will charge on a daily basis for a room/board charge. This covers the resources necessary for the patient to remain in-house, such as bed, linens, facilities such as electricity, and water as well as food. On the physician side, the admitting physician will perform an admission history and physical, which is required by the facility as well as many facility accrediting organizations within a specified period of time. Following admission, additional services will be provided, such as: Electrocardiogram: When an electrocardiogram (ECG) is performed, the resources that are necessary to provide that service are coded/billed by the facility. This would include the equipment, technician, and disposable supplies that are necessary to perform the test. This is referred to as the facility charge or technical charge. This, however, only represents a portion of the services that are provided in the performance of an electrocardiogram. Upon completion of the electrocardiogram, the physician will read the ECG, provide an interpretation, and provide a dictated, written report of the findings, which is then incorporated in the patient s record. The physician will bill/code for this portion of the electrocardiogram, referred to as the professional charge. Chest X-ray/Pathology Services: As with the electrocardiogram, technical and professional charges will be generated for additional ancillary services as well. Inpatient Hospital Care: Following the admission, subsequent inpatient days will be charged as outlined under the hospital admission. The facility charge

13 CHAPTER 1 The Flow of the Hospital Organization 13 represents resources utilized by the facility during the inpatient care day, while the professional charge represents the professional expertise expended by the physician during the care of the patient for the specific date of service. In addition to the attending physician who admitted the patient, additional physicians may be involved in the patient s care or their expert opinion may be requested by the attending physician. Professional charges will be generated by those individuals as well. Surgery Care: When an operative procedure is performed, both the facility and physician will generate charges and an insurance claim. The facility will assign a code(s) for the resources necessary for the surgical procedure to be performed, such as: Operating room charge Anesthesia supplies Equipment and monitoring devices Surgical supplies Postoperative recovery unit The surgeon will submit a claim for the professional expertise necessary to actually perform the surgical procedure. The charges for the facility charge and professional charge in no way correlate to each other. In some instances, the facility charges will exceed the professional charges, and, in other instances, the professional charges may be greater, depending upon the services provided by each entity. TABLE 1.1 Services Typically Provided during a Hospital Admission Delineates Services Billed by Facility vs. Physician Date/Service Provided Facility Services Professional Services 01/01 Admitted to Acute Care Room/Board Charge Admit History/Attending 01/01 Electrocardiogram Technical Portion Professional Cardiologist Chest X-ray Technical Portion Professional Portion Radiologist Pathology (Lab Work) Technical Portion Professional Portion Pathologist 01/02 Inpatient Hospital Care Room/Board Charge Hospital Visit Attending Consultation Cardiologist Consultation Pulmonary 01/03 Coronary Artery Bypass Graft OR (Operating Room) Room Charge OR Supplies/Drugs Recovery Room Charge Surgeon Charge Anesthesiologist Charge Hospital Visit Attending 01/04 Transferred to CCU CCU Room Charge Critical Care Cardiologist (Coronary Care Unit) CCU Supplies/Drugs Hospital Visit Attending Respiratory Therapy Respiratory Technical Respiratory Professional 01/05 Transferred to Acute Care Room/Board Charge Hospital Visit Attending Chest X-ray Technical Portion Professional Portion Radiologist Pathology (Lab) Technical Portion Professional Portion Cardiology Electrocardiogram Technical Portion Professional Pathologist 01/06 Continued Inpatient Room/Board Charge Hospital Visit Attending 01/07 Continued Inpatient Room/Board Charge Hospital Visit Attending 01/08 Patient Discharge Room/Board Charge Discharge Visit Attending

14 14 SECTION 1 Hospital Billing and Coding Overview Specialty Care Units: In addition to the regular daily care provided in an admission patient room, in some instances, the patient may be transferred to a specialty care unit, such as the coronary care unit following a myocardial infarction or cardiovascular surgery. Physician visits provided in the specialty care unit will also be charged. Specialty Care Services: Similar to the electrocardiogram process outlined earlier, the respiratory therapist, who is employed by the facility in most cases, would generate a technical charge. If the patient is also seen by a respiratory physician and evaluative and management services are performed, a professional charge may also be appropriate. Other Medical Care Services: Additional inpatient days will be charged by the facility as outlined in the admission information. Professional charges will be generated by those physicians who participate in the evaluation and management of the patient s care. SERVICES PROVIDED IN THE FACILITY SETTING Table 1.2 outlines services provided in a facility setting as well as professional services provided in conjunction with the facility. Section One of the table illustrates those type(s) of services performed in the inpatient, outpatient, and professional/provider areas. Section Two describes which services are coded/billed as a result of the services performed in those setting described in Section One by inpatient, outpatient, and professional sources. Section Three illustrates the billing forms, reimbursement methodology, and coding guidelines utilized for submitting claims for inpatient and outpatient facility services as well as professional services provided in a facility setting. In some instances, the hospital may agree to bill and code for the professional component on behalf of the physicians or providers, in which case, the facility will code and bill for both facility and provider services. This table also illustrates the differing billing forms, reimbursement methodologies, and coding nomenclatures involved in the various types of billing that evolve from the hospital admission or encounter. CAREER OPPORTUNITIES IN THE HOSPITAL SETTING Qualified, trained individuals are vital to the successful procurement of reimbursement on a timely basis. There are many types of jobs available. To some degree, all of the facility processes we have discussed require some knowledge of the billing and coding process. There are many entry-level positions available, as well as positions for experienced individuals and those who have acquired certification for their skills. ALERT! Sample job descriptions for many hospital facility positions are available from the American Hospital Association at and through the Medical Group Management Association at Scheduling/Appointments Working in scheduling/appointments requires a knowledge of scheduling as well as insurance coverage information that must be obtained at the time of the appointment. As we saw in our review of the hospital revenue cycle, the scheduling/ appointment position is integral to obtaining appropriate payment on a timely basis from third-party insurance carriers. Job descriptions typically list these positions under the title Appointment Secretary or Scheduler. This is often an entry-level position in the hospital/ facility network. In many instances, students from the billing/coding arena will gain entry into the hospital facility employment arena through this and other

15 CHAPTER 1 The Flow of the Hospital Organization 15 TABLE 1.2 Services Provided in a Facility SECTION ONE Facility Types Inpatient Outpatient Professional Acute Care Outpatient Hospital All Services Provided in an Inpatient and Outpatient Facility Acute Condition/Illness Length of Stay Less Than 24 Hours Continuous Medical/Nursing Hospital-Based Departments (e.g., Radiology, ER) Skilled Nursing Facility Care/Rehabilitation Ambulatory Surgery Center (ASC) Intermediate Care Facilities Same-Day Surgery Center Inpatients Not Requiring Acute Outpatient Clinic Facility Skilled Nursing (Disabled) Outpatient Facility Hospice Home Health Agency (HHA) Care of Terminally Ill Visiting Nurses Home-Based Programs/Care SECTION TWO Billed Services Inpatient Outpatient Professional Room/Board Room/Board Surgeon/Assistant Surgeon Operating Room Charge Operating Room Attending Physician Drugs/Supplies Drugs/Supplies Anesthesiologist Ancillary Technical (e.g., Radiology/ Pathology) SECTION THREE Billing Forms Ancillary Technical (e.g., Radiology/ Pathology) Emergency Department Observation Care Ancillary Professional (e.g., Radiology/ Pathology) Consultants Specialists Inpatient Outpatient Professional UB-04 or CMS 1450 (Uniform Billing Form 92) Reimbursement Methodology UB-04 or CMS 1450 (Uniform Billing Form 92) CMS 1500 (formerly HCFA 1500) Inpatient Outpatient Professional Prospective Payment System (e.g., Diagnosis Related Groups [DRG]) Cost-Based Reimbursement per Diem Cost-Based Reimbursement Outpatient Prospective Payment System (e.g., Ambulatory Payment Classifications) Contracted Amounts With Third Party Carriers (continues)

16 16 SECTION 1 Hospital Billing and Coding Overview TABLE 1.2 Continued Coding Methodology Inpatient Outpatient Professional ICD-9-CM (Diagnosis) ICD-9-CM (Diagnosis) ICD-9-CM (Diagnosis) ICD-9-CM (Procedures) ICD-9-CM (Procedures) CPT Procedures CPT (Procedures) entry-level positions. The knowledge gained in the scheduling/appointments position will aid the future biller/coder in the process of appointments/ scheduling and the information that is obtained during that process for billing and coding. Admission/Registration The admission/registration process is the beginning of the billing process, as these individuals secure insurance information as well as diagnostic data. A minimal knowledge of coding/billing is important, because this position will often require the admissions clerk to assign the admitting diagnosis, requiring knowledge of ICD-9-CM coding. The HIM student or employee also must possess a strong knowledge of consents, authorizations, and HIPAA, which will be discussed with the patient during the admission/registration process. This entrylevel position also often serves as a way to gain entry into the hospital employee network. The individual performing this job function should have a minimum knowledge of diagnostic coding in order to code the chief complaint or admitting diagnosis, as well as a basic knowledge of insurance coverage, requirements for authorizations, and other related billing issues. Jobs in this area are typically referred to as Admissions Representatives. Coding Unlike the physician or professional billing side, the facility side typically has a number of coding career opportunities available. In many instances, the facility will provide diagnostic coding, ICD-9-CM procedural coding, as well as CPT coding on the facility side and may also provide physician coding for any physician employees who have a contractual agreement with the facility. As a result, the facility may employ coders with various qualifications or skill requirements (discussed next). In some facilities, and in smaller facilities, the facility coder may perform all of the coding assignments necessary, including both inpatient and outpatient facility and professional coding. Inpatient DRG Coder This senior-level coder assigns ICD-9-CM diagnostic and procedural codes for inpatient charts. This individual should have prior coding knowledge preferably, inpatient coding experience as well as an understanding of inpatient reimbursement methodology. Often the facility will recruit an experienced inpatient coder or an individual with coding training with a clinical background due to the large volume of medical and clinical documentation that must be reviewed by this individual. This individual will often be certified as a Certified Coding Specialist (CCS) through the American Health Information Management Association (AHIMA). Typically, the facility will refer to these inpatient coders as Senior Coders or Inpatient Coders.

17 CHAPTER 1 The Flow of the Hospital Organization 17 Outpatient APC Coder The outpatient coder assigns ICD-9-CM diagnostic and procedural codes as well as CPT procedural codes to chart documentation. As services for the outpatient are often provided in a number of locations throughout the facility, some of these services will be captured by encounter forms or charge tickets, while others will be forwarded to the outpatient coding area for code assignment. The outpatient coder should have prior coding knowledge and an understanding of outpatient reimbursement methodology. As outpatient coding utilizes both ICD-9-CM and CPT, this individual should have knowledge of both nomenclatures. The qualified applicant may also possess a coding certification, preferably the CPC-H (Certified Professional Coder/Hospital) from the American Academy of Professional Coders (AAPC) or CCS. Facilities usually refer to these outpatient coders as APC Coders or Outpatient Coders. Diagnostic Coder Many services (especially those performed on an outpatient basis) may be captured and their codes assigned through the use of charge documents. These services may still need diagnostic codes to be assigned appropriately and reviewed to make certain that medical necessity has been met. Some larger facilities employ individuals in the coding department at an entry level as Diagnostic Coders who assign diagnostic (ICD-9-CM) codes only to these services. Physician-Facility Coder Many large facilities have physicians hired by the facility to provide health-care services; as noted earlier, such individuals are referred to as physician employees. Part of their agreement with the facility requires the facility to provide the coding and billing expertise for these services. In such instances, the facility will employ coders typically known as Physician Coders or Physician/Professional Coders. These individuals will have a physician/professional background in coding, and will be familiar with ICD-9-CM diagnostic and CPT procedural coding. Because these services are coded and billed on a separate form utilizing independent coding and billing methodologies, this coder is often a separate, independent coder from the other coders in the department. This individual may be required to be certified, often as a Certified Professional Coder (CPC) or Certified Coding Specialist-Physician (CCS-P). ALERT! Additional information regarding membership and certification through AAPC and AHIMA can be obtained from their respective websites at and Table 1.3 illustrates the four coding certifications available to the coder to demonstrate mastery of coding skills. Billing/Patient Business Several individuals are employed in the patient business area of the facility. Their titles differ from facility to facility, but these are some of the services they perform: Claims Processing: Responsible for ensuring that claims are processed and submitted to third-party carriers on a timely basis. This includes both electronic and paper claims within the guidelines of each third-party carrier contract. Electronic Claims Submission: Responsible for tracking electronic claims to carriers or clearinghouses. Claims Reviewer: Reviews claims, both electronic and paper, before submission to third-party carriers. Ensures coding and billing guidelines meet requirements for specific third-party carrier.

18 18 SECTION 1 Hospital Billing and Coding Overview TABLE 1.3 Coding Certifications Available for Coders to Demonstrate Their Mastery of Coding Skills Certification Full Name Accrediting Body Concentration Competencies CPC-H Certified Professional Coder/ Hospital AAPC Outpatient Hospital ASC Facility CPT and HCPCS Codes ICD-9-CM Volumes I, II CCS Certified Coding Specialist AHIMA Hospital ICD-9-CM Volumes I, II, III Regulatory Guidelines CPT and HCPCS CPC Certified Professional Coder AAPC Professional/ Physician CPT and HCPCS Codes ICD-9-CM Volumes I, II CCS-P Certified Coding Specialist- Physician AHIMA Professional/ Physician CPT and HCPCS Codes ICD-9-CM Volumes I, II Reimbursement Specialist: Ensures that reimbursement has been made by third-party carrier according to contractual guidelines. Also ensures that appropriate contractual write-offs have been taken and patients have been billed the appropriate amounts. Reimbursement Analyst: Determines whether coding and billing have provided the maximum reimbursement under third-party guidelines. Determines whether an appeal or additional reimbursement should be requested. Provides feedback to the appropriate departments when coding and billing issues prevent maximum reimbursement. Appeals: Responsible for handling all claim appeals to third-party carriers if appropriate reimbursement has not been made. Patient Collections: Responsible for collecting patient balances on self-pay accounts as well as patient portions after insurance. Compliance/Administration In addition to the coding and billing functions performed in specific departments within the facility, there are individuals outside of those departments who must have knowledge of the coding and billing fields. These individuals typically work in the administrative areas and are involved with compliance and ensuring that appropriate coding and billing guidelines are being followed throughout the facility. These individuals usually assume the title of Compliance Specialists or Auditors within the facility organizational structure and report directly to administration. They review claims and coding and billing processes and ensure that contractual obligations with third-party carriers and governmental agencies are being enforced. Individuals assuming these positions typically have been involved in the facility coding and billing process, have knowledge of reimbursement methodologies, and are usually certified.