The Business of Medicine

REIMBURSEMENT, HIPAA and COMPLIANCE

Reimbursement:
• Compensation or repayment for healthcare services
• Depends on the assignment of codes to describe diagnosis, services and procedure provided.
• Usually comes from third-party payers

Coder’s Role:
• Code accurately & completely to optimize reimbursement for services provided
• Upcoming (maximizing) is NEVER appropriate

TYPES OF PAYERS:
1. Self Pay:
2. Private Insurance:
o Commercial carriers-offers both group and individual plans
o Private Insurances:
i. BCBS (Blue Cross Blue Sheild)
ii. Aetna
iii. Cigna
iv. Etc.

3. Government Insurance:
o Medicare, Medicaid, Tricare

❖ MEDICARE:
o Federal health insurance program established in 1965
o Dramatically increased the involvement of the government in health care
o Largest third party payer in the US

Eligible for Medicare:

o Designed for people 65 and above (65 y/o included)
o Disabled or blind
o People with permanent Kidney Failure and end-stage renal disease (federally controlled)
Medicare Officiating Office
o Department of Health and Human Services (DHHS)
-administration of the Federal Medicare Program
o Centers for Medicare and Medicaid Services (CMS)
-handles Medicare & Medicaid operations through the use of Medicare Administrative
Contractors (MAC)
-MACs usually insurance companies
Medicare Funds
o Social Security taxes
o CMS sends money to MACS
o MACs then handles paperwork and pay claims

MEDICARE PART A (Inpatient)

o Hospital insurance
o Diagnosis codes basis for payment
o MS-DRG (Medicare Severity Diagnosis Related Groups)
➢ Hospital Care
➢ Skilled Nursing Facility Care
➢ Nursing Home Care
➢ Hospice
➢ Home Health Services
➢ Free, no need premiums
MEDICARE PART B (Outpatient care and other medical services not covered by Part A
o Helps to cover
➢ medically-necessary doctor’s services
➢ Preventive services,
➢ Outpatient care
➢ Other medical services & supplies not covered by Part A
o Premium is paid by the individual

MEDICARE PART C (Also called Medicare Advantage)

o Combines the benefits of Medicare Parts A, B, and sometimes D.
o The plans are managed by private insurers approved by Medicare.
o Beneficiaries can choose their healthcare providers
o CMS-Hierarchical Condition Category (CMS-HCC) provides adjusted payments based on a
patient’s disease and demographic factors.
MEDICARE PART D
o Prescription Drugs Plan/ Coverage
❖ MEDICAID:
o Aide means to help (last one to pay if client has both Medicare and Medicaid, only if eligible)
o a program created by the federal government, but administered by the state, to provide
payment for medical services for low-income citizens. People qualify for Medicaid by
meeting federal income and asset standards and by fitting into a specified eligibility

❖ TRICARE:
o A healthcare program for uniformed service members, includes active duty and retired
members of the US Army, US Air Force, US Navy, US Marine Corps, US Coast Guard, the
Commissioned Corps of the US Public Health Service and the Commissioned Corps of the
National Oceanic and Atmospheric Association and their families around the world.

CLAIM FORMS (OUTPATIENT VS INPATIENT)

1. CMS-1500 (outpatient)
2. UB-04 (inpatient) Universal Billing – 2004

MEDICAL NECESSITY
Services or Supplies that:
• Are proper and needed for the diagnosis or treatment of your medical condition
• Are provided for the diagnosis direct care and treatment of your medical condition
• Meet the standards of good medical practice in the local area.
• Not mainly for the convenience of you or your doctor.

ADVANCE BENEFICIARY NOTICE (ABN)

• This is a form that is signed by the patient that client will pay if Medicare does not pay.
• Provider is responsible for obtaining ABN prior or before to provide the service or item to a
beneficiary. (estimated cost should be specified).
• The form must be filled out in its entirety as well as the cost to the patient and the reason why
Medicare may deny the service.
• Providers should use an ABN when a Medicare beneficiary requests or agrees to receive a
procedure or service that Medicare may not cover.
o Must include an explanation why the service may potentially not be covered.
o Must Include a cost estimate for the service.
o Estimate must be within $100 or 25% of the actual cost, whichever is greater.
o ABN should not be used to bill for additional fees beyond what Medicare reimburses.
o Should not be used to charge patient for services that are bundled with a bigger service.
o Never required in emergency/urgent care
▪ ABN is prohibited in such cases.
OFFICE OF THE INSPECTOR GENERAL (OIG)
• Office in charge with identifying, auditing, and investigating fraud, waste, abuse, and
mismanagement
• Develops Work Plan annually.
• Outlines monitoring Medicare program
• MACs monitor those areas identified in plan

7 ELEMENTS of OIG:
1. Conduct internal monitoring and auditing.
2. Implement compliance and practice standards.
3. Designate a compliance officer or contact.
4. Conduct appropriate training and education
5. Respond appropriately to detected offenses and develop corrective action.
6. Develop open lines of communication with employees.
7. Enforce disciplinary standards through well-publicized guidelines.

LAWS AFFECTING REIMBURSEMENT:

• Lincoln Law (False Claim Act)

-an American federal law that imposes liability on persons and companies (typically
federal contractors) who defraud governmental programs,
- It is the federal Government's primary litigation tool in combating fraud against the Government

• 1972 Anti-Kickback Law

-a criminal statute that prohibits the exchange (or offer to exchange), of anything of value, in an
effort to induce (or reward) the referral of federal health care program business

• 1986 EMTALA (Emergency Medical Treatment and Active Labor Act)

-attend to patient first before securing payment method.
- a federal law that requires anyone coming to an emergency department to be stabilized
and treated, regardless of their insurance status or ability to pay, but since its enactment in 1986 has
remained an unfunded mandate.

• 1988 CLIA (Clinical Laboratory Improvement Amendment)

-United States federal regulatory standards that apply to all clinical laboratory testing
performed on humans in the United States, except clinical trials and basic research
- 30 days validity for lab test results
• 1989 Stark Law
-is a set of United States federal laws that prohibit physician self-referral, specifically a
referral by a physician of a Medicare or Medicaid patient to an entity providing designated health
services ("DHS") if the physician (or an immediate family member) has a financial relationship with that
entity.

• 1995 ORT (Operation Restored Trust Fund)

-is a 2-year partnership of Federal and State agencies working together to protect the
health care trust funds more effectively through shared intelligence and coordinated
enforcement, and to enhance the quality of care for the programs

• 1995 PATH
-Physicians At Teaching Hospitals
-No need to bill for student doctors
-Teaching physician should be present during the procedure.

HEALTH INSURANCE PORTABILITY AND ACCOUNTABILITY ACT (HIPAA)

• Kennedy-Kassebaum Law
• Established 1996
Mandate of HIPAA
• National Standard code sets
• National Unique Identifier
• Privacy and Security

Applies to "Covered Entities":

1. Health care providers
2. Health plans
3. Government programs that pay for healthcare
4. Healthcare clearinghouses

Clearinghouse
-Entity that processes nonstandard health information received from another entity into a standard
format or vice versa
IMPORTANT: The definition of “health plan" in the HIPAA regulations exclude any policy,
plan, or program that provides or pays for the cost of excepted benefits. Excepted benefits
include:
i. Coverage only for accident, or disability income insurance, or any combination thereof,
ii. Coverage issued as a supplement to liability insurance;
iii. Liability insurance, including general liability insurance and automobile liability insurance;
iv. Workers' compensation or similar insurance;
v. Automobile medical payment insurance;
vi. Credit-only insurance:
vil. Coverage for on-site medical clinics;
viii. Other similar insurance coverage, specified in regulations, under which benefits
for medical care are secondary or incidental to other insurance benefits.

Code Sets:
HCPCS - Healthcare Common Procedure Coding System
CPT. Current Procedural Terminology
CDT - Dental Procedures and Nomenclature
ICD-10 CM- only managed by HIPAA
NDC - National Drug Codes -

Although HIPAA mandates the use of the specified code sets, it does not mandate the use of its conventions
or guidelines, except the ICD-10 CM.

National Unique Identifier (NPI)

1) a unique 10-digit identification number issued to health care providers in the United
States by the Centers for Medicare and Medicaid Services (CMS).
2) Providers must use their NPI to identify themselves in all HIPAA transactions.

Privacy & Security

• Protection from covered entities
1) Healthcare Providers
2) Health Plan
3) Healthcare Clearinghouse -

Only the minimum necessary protected health information (PHI)s should be shared to satisfy a particular
purpose

HIPAA Privacy Rule is enforced by the Office for Civil Right (OCR).
• 2003 RAC
• program was created through the Medicare Modernization Act of 2003 (MMA) to identify and recover
improper Medicare payments paid to healthcare providers under fee for service (FFS) Medicare plans.

• 2009 HITECH
-The Health Information Technology for Economic and Clinical Health Act
1) Promote the adoption and meaningful use of health information technology
2) Strengthened HIPAA
3) Patient audit trail

• 2010 ACA O(Affordable Care Act also known as Obama Care)

-is a United States federal statute enacted by President Barack Obama on March 23, 2010
-Together with the Health Care and Education Reconciliation Act amendment, it represents the most
significant regulatory overhaul of the U.S. healthcare system since the passage of Medicare and
Medicaid in 1965.
-Under the act, hospitals and primary physicians would transform their practices financially,
technologically, and clinically to drive better health outcomes, lower costs, and improve their
methods of distribution and accessibility.

FRAUD (Intentional)
➢ Knowingly submitting or causing to be submitted, false claims or making misrepresentations of
fact to obtain a Federal health care payment for which no entitlement would otherwise exist
➢ Knowingly soliciting, receiving, offering and/or paying renumeration to induce or reward
referrals for items or services reimbursed by Federal health care programs

Example of Fraud:
o Billing Medicare for appointments the patient failed to keep
o Knowingly billing for services at a level of complexity higher than services actually
provided or documented in the file
Knowingly billing for services not furnished, supplies not provided or both including
falsifying records to show delivery of such items
o Paying for referrals of Federal health program beneficiaries

➢ Making prohibited referrals for certain designated health services

➢ Intentional deception to benefit
➢ Deliberate intention to deceive and an expectation of an unauthorized benefit
Example:
Submitting for services not provided
➢ Anyone who submits for Medicare services can be violator
Physicians
Hospitals
Laboratories
Billing Services

COMPLAINTS OF FRAUD OR ABUSE

• Submitted orally or in writing to MACs or OIG
• Allegations made by anyone against anyone
• Allegations followed up by MACs and/or OIG

ABUSE (Intent: Unnecessary Cost)

➢ Describes practices that either directly or indirectly result in unnecessary costs) to the Medicare
program
➢ Includes any practice not consistent with providing patients with services that are medically
necessary, meet professionally recognized standards and are priced fairly
➢ Happens when doctors or suppliers don't follow good medical practices, which leads to unnecessary
costs to Medicare, improper payment, or services that aren't medically necessity
Example of Abuse:
- Billing for unnecessary medical services
- Charging excessively for services or supplies
- Misusing codes on a claim such as upcoding or unbundling services
➢ Generally involves
Impropriety
Lack of medical necessity for services reported
➢ Review takes place after claim submitted
May go back and do historic review of claims
➢ Excessive charges for services or supplies
➢ Routinely submitting duplicate claims
➢ Improper billing practices such as:
Exceeding the limiting charge
Billing Medicare at a higher fee schedule rate than for non-Medicare patients
Routinely submitting bills to Medicare when Medicare is not the beneficiary's primary insurer
Collecting more than 20 percent coinsurance or the deductible on claims filed with Medicare
➢ Breach of the Medicare participation or assignment agreements
➢ Claims for services that are not medically necessary
Some Acronyms:
PHI- Protected Health Information
EHR- Electronic Health Record