HEALTHCARE DOMAIN

HEALTHCARE

Health Insurance- It is an insurance against the risk of incurring medical expenses.

Need-

1. To plan & control the cost of medical care and treatment.

2. Proper timely medical care in case of emergencies.

3. Stay healthy by regular check-ups

Providers- are health care providers like Individual Doctor or Hospital. Providers provide
care services to patients, charge payers for that care, and buy products from vendors. E.g.,
Mayo Clinic, Cleveland Clinic, your concierge doctor.

Payers- are insurance providers. Payers sell insurance to patients and pay for patient care to
providers

NPI- Stands for National Provider identifier (NPI) is a unique 10-digit identification
number issued to Healthcare providers by CMS in the United States. NPI is created to
improve the efficiency and effectiveness of electronic transmission of health information. It is
a Unique number that will be accepted and recognized by all health plans, it eliminates the
need of report, maintain and track multiple provider identification numbers. To identify
whether the Health Care provider is fake or real, a Unique Identification Number is assigned
to Health Care Provider issued by National Provider system (NPS).

All Health care providers- Physicians, Nurses, dentists, physical therapists or pharmacists are
eligible for applying NPI. Even healthcare can apply for NPI by visiting the NPPES (
National Plan & Provider Enumeration System) website, read instructions carefully and
submit application.

Claims are generally broken down into two main categories:

• Claims from Physicians, called Medical Claims or Professional Claims/ (Type-1) providers

• Claims from Organizational, called as Institutional or Hospital Claims/ (Type-2) providers

1. Individual Provider/ Professionals- Physicians, Nurses, dentists, physical therapists or

pharmacists.

2. Institutional/ Hospital Providers- Hospitals, clinics, nursing home, laboratories, health

agencies and ambulance companies etc.
HEALTHCARE DOMAIN

HIPPA- Stands for Health Insurance Portability & Accountability Act 1996- Is a federal
regulation with main purposes of protecting patient’s Health information and security of
electronic records. It requires Health care clearing houses, providers and Health plans to use
set code of standards and rules to standardize the electronic exchange of patient identity,
health-related information implemented by HIPPA. If providers electronically submit EDI
standard transactions, they must comply with the current HIPAA 5010 standards.( As 5010
standards has replaced 4010 version of HIPPA transactions)

HIPPA transactions are the set code standards & rules to exchange patients/ providers
information from one system to other. They are based on (EDI) Electronic data interchange
standards, which allow the electronic exchange of information from computer to computer
without human involvement

EDI Transactions 1. It is a secured way to transmit data between computer systems using
established message formats and standards without human interaction.

2. It is a process which allows one company to send information to another company

electronically rather than with paper. It improves productivity, high level accuracy, efficiency
and speed.

Systems in Health care:

• Member system – To maintain policy holder data, various plans with their list of benefits
and generate premium bills for the policy holder based on their Plans.
• Provider system – To maintain provider data.
• Broker system – To maintain BROKER data and calculate commissions.
• Claims system – For claim entry and validation Like FACETS system.
• Finance system – To do the necessary payment to provider/member/broker.
• Member portal – To display the policy holder information, make premium payments and
raise request for change information for policy holders.
• Provider portal – To display provider information and raise request for change information
for providers.
• Broker portal – To display broker information and raise request for change information for
BROKERS

HIPAATransactions:

• EDI 837/835 – Claims submission standard files for the electronic submission of
Healthcare claim and payment information.
837 File- Information such as Patient’s condition for which the treatment is been
given and service provided, cost of the treatment is provided.
835 File- Claim payment information is provided. It is used by the healthcare
insurance company to make payments to the providers.
HEALTHCARE DOMAIN

• 834 – Enrolment of members with a payer (Benefit Enrolment and Maintenance)

• 820 – Making premium payments for insurance claims (Payroll Deducted and Another
Group
Payments)

• 270/271 – Eligibility and Benefits (Health Care Eligibility Inquiry and Response)
270 file- Transmission of healthcare benefits and subscriber’s eligibility.
276 file- Requesting the status of healthcare claims and to inquire about the current status
of the claims.

• 278 – Authorization (Health Care Services Request for Review and Response) 271

837and 835 Files are the standard files used for the electronic submission of healthcare claim
and payment information.

837 files consist of multiple claims with information such as- the patient’s condition for
which the treatment and services provided and the cost of the treatment.

835 File is the electronic transaction that provides Claims payment information. It is used by
healthcare insurance plans to make payments to providers

Personas:

1) Entities:

Insurer: An entity which creates plan, sell policy and reimburses policy holder or provider for
the submitted valid claims.

2) Policy Holder:

Healthcare policy holder: A person or an entity, who buys the policy from the insurer or
BROKER, pays premium to the insurer and sometimes submit claim

3) Provider:

A person or an entity, which provides the health care service to the policy holder and their
dependents, either receives payment for the service from the policy holder or from the insurer
by submitting a claim.

4) TPA:
A person or an entity that manages the claims of policy holder or provider and receives
payment for the management from the respective contributor.

5.) Broker : Healthcare insurance broker as you have guessed, he is an agent who sells policy
to the customers on behalf of insurer and receives commission in return from the insurer.

6) Subscriber: Person who pays the premium and under whom the family is covered.
HEALTHCARE DOMAIN

7) Member: Who receives medical coverage under a subscriber. Dependents of the family.

8) Purchaser: The person who purchases the health insurance.

9) Claims: An invoice from the provider to the doctor for the services rendered.

10.) Coinsurance: A form of medical cost sharing in a health insurance plan that requires
an insured person to pay a stated percentage of medical expenses after the deductible amount,
if any, was paid.

11.) Copayment – A form of medical cost sharing in a health insurance plan that requires
an insured person to pay a fixed dollar amount when a medical service is received. The
insurer is responsible for the rest of the reimbursement

12.) Deductible – A fixed dollar amount during the benefit period – usually a year – that
an insured person pays before the insurer starts to make payments for covered medical
services.

13.) FSA (Flexible spending accounts or arrangements) – Accounts offered and

administered by employers that provide a way for employees to set aside, out of their
paycheck, pre-tax dollars. Can pay only medical expenses. Money lost if unused. FSA can
cover childcare expenses, if setup separately.

13) MSA (Medical Savings Account) / HSA (Health Spending Account) – Savings
accounts designated for out-of-pocket medical expenses. Employers and employees can
contribute to this and are pre-taxed. Can carry unused funds into future year. Are normally
combined with high-deductible or catastrophic health insurance plans.

14.) Fully Insured Plan – A plan where the employer contracts with another organization
to assume financial responsibility for the enrollees’ medical claims and for all incurred
administrative costs.

15.) Exclusions- Not all services are covered the insured are generally expected to pay the
full cost of non-covered services out of own pockets.

16.) Coverage limits- Some Health insurance company pay up to certain dollar amount.
The insured person has to pay the access amount. Once the limit gets over. So, some health
insurance companies provide annual or lifetime coverage benefits. So, insured must check
when the healthcare will stop making payment when they reach benefit maximum and policy
holder will pay the remaining costs.

17.) COBRA Act- The (Consolidated Ominous Budget Reconciliation Act). gives workers
& their families a health insurance. It’s a federal law if you lose your job, COBRA lets you
keep your existing employer based on coverage for at least next 18 months. But it would cost
you more. Under COBRA, you have to pay whole premium including the share from
previous employer or used to pay.
 HEALTHCARE DOMAIN

18.) EOP- Explanation of Payment shows reimbursements and denials based on claims
processed by health plan. Member is responsible for paying the provider listed in EOP if not
paid so as stated in EOP.

19) COB- Coordination of Benefits shows provision in the contract that applies when a
person is covered under more than one health insurance plan. For example, when a husband
and wife both work and choose to have family coverage through both employers. When a
member is covered with more than one health plan, insurance company will follow a
procedure called
‘Coordination of benefits’ to determine how much each should pay when you have a claim.

Commercial Health Care Plans:

•
Preferred provider organization (PPO)
•
Exclusive provider organization (EPO)
•
Health maintenance organization (HMO)
•
Preferred provider organizations (PPOs)
•
High Deductible Health Plan (HDHP)- Link
A high-deductible health plan (HDHP) is any health plan that typically has a lower monthly
premium and a higher deductible than other plans.
• Medigap

HMO PPO EPO POS

No PCP X Direct No PCP X Direct
PCP- Gatekeepers specialists specialists HMO+ PPO
Dermatologists/
Specialists appointment
once approved from It has large no. of Easier access to In network+ Out of
PCP. providers specialists Network
Limited doctors- In PPO is a less managed Larger no. of provider
network HP network
Out of networks Out of network- not
providers not covered Out of network covers covered
more managed types of
HP

Types of Health Insurance Coverage:

- Physician Visits
- Hospitalizations
- Surgeries
- Physical Therapy, Occupational therapy, Speech therapy
- Prescription Drugs
- Preventative Health Care
- Laboratory Tests
- Mental Health
HEALTHCARE DOMAIN

- Certain Medical Equipment

- Rehabilitation Costs
- Dental Care
- Vision Care

- Elements of Claim

- Member information
- Provider Information
- Explanation of Benefits
- Co-ordination of benefits
- Procedure Codes
- Diagnosis Codes
- Taxonomy codes
- Location codes

1. Processing Claims – The healthcare claims process starts when a patient visits a
healthcare provider for a consultation, service, or treatment. Once the treatment is
complete, a claim is filed.
2. Submission of Claims – Claims processing begins when a healthcare provider has
submitted a claim request to the insurance company. There are three ways by which
providers can submit a healthcare claim:

1. Paper Claims
Institutional (i)
UB- O4 Claim form- Professionals (p)
CMS-1500 Claim form- Dental claims
ADA-2012 Claim form- form(d)
2. Electronic Claims
EDI files 837(i)- Institutional
EDI files 837(p)- Professionals
EDI files 837(d)- dental
3. Through Web portal called
IHCP (Provider Healthcare
Portal)

EMR( Electronic Medical Records):

Electronic medical Records are the records of the Patient’s medical history, history of visits,
diagnoses and prescribed treatments.
These are important because it helps practitioners and office staff to keep a track and record
of patient’s progress or changes over time. Major benefits of medical records turning into
electronic is that it makes easier to identify which patient are due for screening and urgent
check-ups.

EHR( Electronic Health Records):

HEALTHCARE DOMAIN

It collects medical information from a variety of sources, including multiple physicians,

hospitals, medical care facilities and from patients. It is more of a snapshot that enables
multiple providers to quickly assess the patient’s overall health. It can be shared to different
healthcare providers to provide best patient care.
EHR make it easy to keep a patient’s record updated with information.

What is Claims Processing? Definition and how it works?

Claims processing is the fulfilment by an insurer of its obligation to receive, investigate and
act on a claim filed by an insured. It involves multiple administrative and customer service
works which includes “review, investigation, adjustment( if necessary), remittance or denials
of the claim.”
It begins when a healthcare provider has submitted a claim request to the insurance company.
Sometimes, claims requests are directly submitted by medical billers in the healthcare facility
and sometimes it is done through a clearing house/ Trading partner.
Claims processing refers to the insurance company’s procedure to check the claim requests
for sufficient information, validation, justification and authenticity. At the end of this process,
the Insurance company might reimburse the money to the healthcare provider in parts or
whole amount.
The Insurance company might reject the claim request, if they found invalid, fake or not
meeting the policy terms.
HEALTHCARE DOMAIN

Elements/ Components of a Claim:

Member Information: Information about the members to whom the provider rendered
services. Member’s name, address, DOB, ID number
Provider information: Information about the provider submitting charges is also included.
Co-ordination of benefits/ Other health insurance
If a member has OHI on the claim, the co-ordination of benefits is also required. For
example: If the treatment was provided in relation to a motor vehicle accident or as part of
workers compensation claim, then OHI is filled in. Co-ordination of benefits is a way to co-
ordinate all of your benefits when you have a dual coverage.
Procedure Code: It defines what services have been performed. On medical claims they are
called as Current Procedural Terminology( CPT) codes. It gives a small description of what
type of services performed. Hospital Claims procedure codes are referred to as HCPCs
Insurance Codes to Avoid Billing Errors:

Insurance codes are used by your health plan to make decisions about how much to pay to the
doctor and other healthcare providers. The codes are basically mentioned on the Explanation f
benefits( EOB) and medical bills.
Levels of CPT Codes:

Level-I contains CPT codes, this is a 5-digit system describes procedures and services
providers may render to their patients.
Example: CPT code 99213 indicates an Office visit
CPT code 56300 indicates a laparoscopy.
Level-II contains HCPCS( Healthcare Common Procedure Coding System) that has 5 digits
codes which begin with an alphabetical character between A & V. These codes/ numbers are
assigned to task and service a medical practitioner may provide to a Medicare patient
including medical, surgical and diagnostic services.

Example: HCPCS code A4253 indicates glucose test strips

HEALTHCARE DOMAIN

HCPCS code E0570 indicates nebulizer

Diagnosis Codes: It describes the patient’s condition or the reason the services were
performed. ICD9 codes( International Classification of Disease) they indicate medical
necessity of a particular service.

Example:
Diagnosis code V20.2: Routine infant or child health check.
Diagnosis code 650: Delivery in a normal complete case.

Taxonomy codes: are the specialty codes, are the 9-digit numbers assigned under the HIPAA
provisions to health care providers, in order to digitally encode their specialty in order to
facilitate electronic billing.

Home Health Agency: 251E0000X

Adult Day Health: 261QA060X
Hospital General: 282N0000X

Location codes: It shows where the services were provided. Some commonly used location

codes are: 11-Office 12-Home

20-Urgent care center

21-Outpatient Hospital
22-Inpatient Hospital
23-Hospital Emergency room
Modifiers: It indicates that due to some specific circumstances which has changed a service
or procedure performance but has not changed the definition or code.
A modifier may also indicate that a procedure deserves payment at the full fee schedule
amount or that there was less work than is included in the CPT code description.
51- Multiple procedure
76-Repeat procedure by the same physician
77- Repeat procedure by another physician
82- Assistant surgeon

Importance of Insurance Codes:

EOB, insurance claims forms and medical bills from the doctors or hospitals are difficult to
understand because of use of several codes to explain the services performed and the
diagnosis given.
Healthcare providers, medical billing companies and Health plans use three different coding
systems. These codes are developed to make sure that there is consistency and valid
transactions for health insurance companies to process claims.
Coding Systems-

1. CPT( Current Procedural Terminology)

2. HCPCS( Healthcare Common Procedure Coding System)
3. ICD( International Classification of Diseases)

Let’s start with CPT,

HEALTHCARE DOMAIN

1. CPT codes are used by physicians to describe the services they provide. The doctor
would not be paid by health plan unless a CPT code is listed on the claim form.
Some examples of CPT codes are:
99201: Office or other outpatient visit for the evaluation and management of a new
patient 93000: Electrocardiogram
36415: Collection of venous blood by venipuncture (drawing blood)

2. HCPCS is the coding system used by Medicare.

Level I HCPCS codes are the same as the CPT codes from the American Medical
Association (AMA).
Medicare also maintains a set of codes known as HCPCS Level II. These codes are
used to identify products, supplies and services not included in the CPT codes, such as
ambulance services and durable medical equipment( Wheelchairs and hospital beds),
prosthetics, orthotics, and supplies that are used outside your doctor’s office.

Some examples of Level II HCPCS codes are:

• L4386: Walking splint

• E0605: Vaporizer
• E0455: Oxygen tent

3. International Classification of Diseases: The ICD provides a method of classifying

diseases, injuries and causes of death.

Claim Submission

Steps in the Claims Process

• Processing Claims – The healthcare claims process starts when a patient visits a
healthcare provider for a consultation, service, or treatment. Once the treatment is
complete, a claim is filed.
• Submission of Claims – There are two ways to submit a healthcare claim, the Manual
Method and Electronic Method. Some healthcare providers are still using the slower
manual or paper method of submitting claims, but more and more providers are
converting to electronic filing since it allows physicians to not only save around $3
per claim, it also makes the process a lot easier to tackle.
• Role of Clearing houses – Once a claim is ready, it is sent to a clearinghouse, a third-
party process that acts as middleman between healthcare providers and insurance
companies. Claims from the healthcare provider can go to several insurance
companies that have completely different processes. The clearinghouses ensure that
claims are filed according to the process observed by each insurance company.

Following are some of the reasons why the claims get denied:
HEALTHCARE DOMAIN

• Claim has a missing information or was submitted earlier with incorrect information.
• Provider did not bill according to their contract
• Member has OHI the provider was not aware of
• Treatment started without prior authorization
• Improper claim filing
• Claims not filed within the time limits.
• Treatment not covered by policy
• Procedure deemed medically unnecessary.

Claims Processing life cycle:

Well, claims processing involves three steps:

1. Claims Adjudication
2. Explanation of Benefits(EOBs)
3. Claims settlement

1. Claims Adjudication: The healthcare claim process starts when a patient visits a
healthcare provider/ hospital for services or treatment. Once the treatment is
completed provider files a claim by sending 837 File to the insurance company.
Before file goes to Insurance company claims system, clearing house/ trading partners
they check the data and process the file to Insurance company’s claim adjudication
system.

Insurance company will start the process of adjudicating the claim filed by provider by
checking the following:

Has pre-authorization been approved?

Does the claim match the details given in the pre-authorization request?
Is the patient eligible for a claim?
Has there been any duplication in the claim?
Is the hospital in the approved network list?
Is the diagnosis valid?
Was the treatment medically necessary?
Has the treatment been coded correctly?
Is the claim request amount validated?

Insurance companies use a combination of automated and manual verification for the
adjudication of claims. When this is done, payment determination is done, wherein the
insurance company decides how much it is willing to pay for the claim.

Explanation of Benefits:

When the adjudication process is complete, the insurance company sends a notification to
the hospital, along with details of their findings and justification for settling (fully or
partially) or rejecting the claim. This is known as an explanation of benefits or remittance
advice. Based on the EOB, the healthcare provider may provide more information or
request to represent the claim.
HEALTHCARE DOMAIN

Usually, the explanation of benefits includes details such as: Amount paid, amount
approved, allowed amount, patient responsibility amount (in cases of copay or
coinsurance), covered amount, discount amount and so on.
It is a document that is sent by Insurance company several weeks or months after you had
a healthcare service that was paid by the Insurance company. EOB is a window into your
medical billing history and to check the amount your doctor received, and your share is
correct, and your diagnosis and Procedure are correctly listed.
• A member/ Patient must receive an EOB for every service they have received. //**If
your health insurance plan is an HMO, you might not receive an EOB, because many
HMOs pay a monthly fee for patient care rather than paying for each service
separately.**//
• An EOB is not a bill, EOB is just for a reference only that how much doctor charged
for. Patient will receive medical bill for that service separately and it will be sent by
the patient’s provider not by the insurance company.
What is included in your EOB?
The EOB contains the following information:
• Your name, or the name of your dependent (whoever received the service)
• Your (or your dependent’s) health insurance ID or policy number, and the claim
number
• The name of the health care provider who administered care – doctor, dentist,
specialist, laboratory, hospital, or clinic
• The type of service or equipment you received and the date on which you received it;
for service that lasted more than one day, the date range will be given
• The cost of the service (what your provider billed the insurance company)
• How much of the billed amount your insurance company paid?
• The remaining amount to be paid, which is usually your responsibility

Claims Settlement:

This is final step, where the insurance company sends 835 File in which they provide
claim payment information to make payments to the providers.

Difference between Medicare and Medicaid:

Medicare and Medicaid are two separate, government-run programs. They are operated
and funded by different parts of the government and primarily serve different groups.

• Medicare is a federal program that provides health coverage if you are 65+ or under
65 and have a disability, no matter your income.

There are four parts of Medicare: Part A, Part B, Part C, and Part D.

Part A provides inpatient/hospital coverage.

Part B provides outpatient/medical coverage.
HEALTHCARE DOMAIN

Part C offers an alternate way to receive your Medicare benefits (see below for
more information).
Part D provides prescription drug coverage.

• Medicaid is a State and federal program that provides health coverage if you have a
very low income.
If you are eligible for both Medicare and Medicaid (dually eligible), you can have both.
They will work together to provide you with health coverage and lower your costs.

HEALTHCARE INTERVIEW QUESTIONS

1. Difference between Medicare and Medicaid insurance.

2. Describe the Claims processing Life cycle.
3. Difference between EOB, EOP and COB.
4. What are the Different Types of Healthcare?

Answer: Healthcare is primarily divided into two types:

1) Primary Care: Primary care refers to the care provided by a generalist doctor. It
focuses on the diagnosis and treating small ailments.
2) Secondary Care: Secondary care refers to the care provided by a specialist doctor. It
focuses on treating advanced ailments.
3) Tertiary Health Care: Tertiary health care includes treatment that is advanced and
complex. Tertiary health care includes services provided for major surgeries such as
plastic surgery, cardiac surgery, and other complex surgeries. It also includes services
provided for cancer management, treating severe burns, etc.

5. Explain HIPPA Transactions EDI 835 and 837.