CHAPTER

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3Patient Encounters

and Billing Information

Learning Outcomes

When you finish this chapter, you will be able to:3.1 Explain the method used to classify patients as

new or established.

3.2 Discuss the five categories of information required of new patients.

3.3 Explain how information for established patients is updated.

3.4 Verify patients’ eligibility for insurance benefits.

3.5 Discuss the importance of requesting referral or preauthorization approval.

3-2

Learning Outcomes (continued)

When you finish this chapter, you will be able to:3.6 Determine primary insurance for patients who

have more than one health plan.

3.7 Summarize the use of encounter forms.

3.8 Identify the eight types of charges that may be collected from patients at the time of service.

3.9 Explain the use of real-time claims adjudication tools in calculating time-of-service payments.

3-3

Key Terms

• accept assignment• Acknowledgment of

Receipt of Notice of Privacy Practices

• assignment of benefits• birthday rule• cash flow• certification number• charge capture• chart number

3-4

• coordination of benefits (COB)

• direct provider

• encounter form

• established patient (EP)

• financial policy

• gender rule

• guarantor

• HIPAA Coordination of Benefits

• HIPAA Eligibility for a Health Plan

Key Terms (continued)

• HIPAA Referral Certification and Authorization

• indirect provider• insured• new patient (NP)• nonparticipating provider

(nonPAR)• participating provider

(PAR)• partial payment• patient information form

3-5

• primary insurance

• prior authorization number

• real-time claims adjudication (RTCA)

• referral number• referral waiver• referring physician• secondary insurance

Key Terms (continued)

• self-pay patient• subscriber• supplemental insurance

• tertiary insurance

• trace number

3-6

Patient Encounters and Billing Information

• Healthcare is business – Big business!• Financial health of a practice depends on billing and

collection of fees• Regular cash flow – monies moving in and out – must

be maintained• Standardized billing procedures assist in success of

practice

3-7

3.1 New Versus Established Patients 3-8

• New patient (NP)—patient who has not seen a provider within the past three years

• Established patient (EP)—patient who has seen a provider within the past three years

3.2 Information for New Patients 3-9

• When a patient is new to the practice, five categories of information are important:1. Preregistration and scheduling information

2. Medical history

3. Patient/guarantor and insurance data

4. Assignment of benefits

5. Acknowledgment of Receipt of Notice of Privacy Practices

3.2 Information for New Patients (continued)

3-10

• Referring physician—physician who refers a patient to another physician

• Participating provider (PAR)—provider who agrees to provide medical services to a payer’s policyholders according to a contract

• Nonparticipating provider (nonPAR)—provider who does not join a particular health plan

• Patient information form—form that includes a patient’s personal, employment, and insurance company data

3.2 Information for New Patients (continued)

3-11

• Other terms for the policyholder of a health plan include:– Insured– Subscriber– Guarantor

• Assignment of benefits—authorization allowing benefits to be paid directly to a provider

3.2 Information for New Patients (continued)

3-12

• Acknowledgment of Receipt of Notice of Privacy Practices—form accompanying a covered entity’s Notice of Privacy Practices

• Direct provider—clinician who treats a patient face-to-face

• Indirect provider—clinician who does not interact face-to-face with the patient

3.3 Information for Established Patients 3-13

• When EPs arrive for appointments, they are asked if any pertinent personal or insurance information has changed

• EPs should review their information forms for accuracy at least once per year

• Any changes to an EP’s information should be entered in the practice management program (PMP)

• Chart number—unique number that identifies a patient

3.4 Verifying Patient Eligibility forInsurance Benefits

3-14

• First step is to verify patients’ eligibility for benefits

• Next contact the payer to verify three points:1. Patient’s general eligibility for benefits

2. Amount of the copayment or coinsurance required at the time of service

3. Determine that the planned encounter is for a covered service considered medically necessary under the payer’s rules

3.4 Verifying Patient Eligibility forInsurance Benefits (continued)

3-15

• Check out-of-network benefits if the practice does not participate with the insurance plan presented by the patient

• Verify amounts for copayment and coinsurance because these could have changed over time

• Contact the payer for verification of coverage on unusual or unfamiliar services

3.4 Verifying Patient Eligibility forInsurance Benefits (continued)

3-16

• HIPAA Eligibility for a Health Plan—transaction in which a provider asks for and receives an answer about a patient’s eligibility for benefits (X12 270/271)

• Trace number—number assigned to a HIPAA 270 electronic transaction

3.5 Determining Preauthorization and Referral Requirements

3-17

• Preauthorization is requested before a patient is given certain types of medical care– Prior authorization number—identifying code

assigned when preauthorization is required (also called a certification number)

– HIPAA Referral Certification and Authorization— transaction in which a provider asks a health plan for approval of a service and gets a response (X12 278)

– Referral number—authorization number given to the referred physician

• Providers must handle these situations correctly to ensure that services are covered if possible

3.5 Determining Preauthorization and Referral Requirements (continued)

3-18

• Referral waiver—document a patient signs to guarantee payment when a referral authorization is pending– Used if a patient does not have the required referral

document– Patient may have chosen to “self-refer” and signing

the waiver provides documentation of that situation

3.6 Determining the Primary Insurance 3-19

• Primary insurance—health plan that pays benefits first

• Secondary insurance—second payer on a claim

• Tertiary insurance—third payer on a claim• Supplemental insurance—health plan that

covers services not normally covered by a primary plan

3.6 Determining the Primary Insurance (continued)

3-20

• To determine a patient’s primary insurance, medical insurance specialists:– Examine the patient information form and insurance

card– Follow coordination of benefits guidelines– Follow any rules that may apply– Communicate with the patient as needed

3.6 Determining the Primary Insurance (continued)

3-21

• Coordination of benefits (COB)—explains how an insurance policy will pay if more than one policy applies– HIPAA Coordination of Benefits—transaction sent

to a secondary or tertiary payer (X12 837)

• Birthday rule—guideline to determine which parent has the primary insurance for a child

• Gender rule—coordination of benefits rule for a child insured under both parents’ plans

3.6 Determining the Primary Insurance (continued)

3-22

• Entering Insurance Information in the Practice Management Program– Database of payers is maintained to reflect changes

in participation agreements or contact information– Database is kept up-to-date to assist with information

on secondary payers, policy numbers, effective dates and referral numbers

3.6 Determining the Primary Insurance (continued)

3-23

• Communications with payers– Checking on eligibility– Receiving referral certification– Resolving billing disputes– Documenting all communication with payer into

patient’s financial record

3.7 Working with Encounter Forms 3-24

• An encounter form (electronic or paper) is completed by a provider to summarize billing information for a patient’s visit– Lists medical practice’s most frequently performed

procedures with associated procedure codes– Blank spaces for diagnosis codes, and often includes

other various information– Paper forms may be preprinted or computer-

generated

• Charge capture—procedures that ensure billable services are recorded and reported for payment

3.8 Understanding Time-of-Service (TOS) Payments

3-25

• Practices routinely collect these charges at the time of service:1. Previous balances

2. Copayments

3. Coinsurance

4. Noncovered or overlimit fees

5. Charges of nonPAR providers

6. Charges for self-pay patients

7. Deductibles for patients with CDHPs

8. Charges for supplies and copies of medical records

3.8 Understanding Time-of-Service (TOS) Payments (continued)

3-26

• Accept assignment—participating physician’s agreement to accept allowed charge as full payment

• Self-pay patient—patient with no insurance• Partial payment—payment made during

checkout based on an estimate

3.9 Calculating TOS Payments 3-27

• Real-time claims adjudication—process used to generate the amount owed by a patient at the time of service

• Financial policy—practice’s rules governing payment from patients

• Credit and debit cards usually accepted

Summary

Summary

Summary