RCM

Module 1
 Three main entities in US Healthcare Industry

Payer

Payer

Patient
Patient Provider

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 Introduction to US Healthcare
The Payer provides coverage the Insurance will process the claim and
coverage to the patient for a particular make payment to the Provider based
period, particular amount, particular type on the Patient’s coverage.
of medical conditions and treatments. Payer

Patient pays the premium to For patients who have insurance

the Payer to get a policy coverage, providers will submit
coverage from the the claim to the Patient’s
payer. insurance.

Treatment
Patient Insurance details
Provider

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 Outsourcing

Delegation of tasks from one entity to another entity

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 Outsourcing

Outsourcing is a process, where a company contracts with another

company to provide services that might otherwise be performed by in-
house employees .

Types of Outsourcing: Advantages:

• On-shore • Cost effective.

• Off-shore • Time zone advantage.
• Near-shore

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 Client & Sub-client
Provider Vertical Payer Vertical

Dell BPO Dell BPO

Dell’s Client US Billing Office US Insurance Co.

Physicians Groups
Dell’s Sub-
client
Hospitals

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 Healthcare – Key Terms
Term Explanation
Patient A person who receives health care service.
Provider A person or entity which provides medical service.
Payer Insurance or anyone who pays for the medical service.
Physician Doctor
Insured A person who is covered by insurance
Insurer Insurance company
Subscriber/Policy holder Owner of the policy
Dependent Family member covered under the subscribers policy
Participating Provider A Provider who has a contract with an insurance
Non-participating Provider A Provider who does not have contract with insurance
Client Customer
Sub-Client Our Client’s Client

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US Healthcare Billing
Process

Dell - Restricted - Confidential

 US Healthcare Billing Process

Hospitals, Independent Physicians, Radiologists,

Pharmacists, etc., bill the insurance for the healthcare
services provided to the insurance policy holders.

US
Healthcare In-house billing office or outsourced billing
companies help providers to handle their
Revenue cycle efficiently.

Standardized forms in which medical conditions

and procedures/services are represented with the
help of pre-defined codes.

Insurance decides on payment or denial of a claim

based on various factors pertaining to its contract
with policy holders and providers.

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 Learning check/ Try it yourself

• What is Outsourcing?
• Why does a provider hire a billing office?
• What are the other names of Insured?
• Who can be called as a payer?
• What is role of adjudication in US medical
billing process?
• Who is considered as a provider?

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 "All administrative and
clinical functions that
contribute to the capture,
management, and
collection of patient
service revenue.“
- Definition of Revenue cycle by Healthcare Financial
Management Association (HFMA)

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 Revenue Cycle Management

RCM is a term that includes the Revenue cycle includes various

entire life of a patient account processes that flow into and affect
from creation to payment. one another.

The process includes keeping

track of claims in the system,
RCM encompasses everything
making sure payments are
from determining patient
collected and addressing denied
insurance eligibility and properly
claims, which can cause up to 90
coding claims.
percent of missed revenue
opportunity

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 Revenue Cycle Management

It includes four main entities:

1 Patient

2
4
Provider’s Office

3 Medical Billing Office

4 Health Insurance Company

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 Revenue cycle management – Overview
Provider’s
Patient
office
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Pre-Determination
Patient Scheduling Patient’s Registration & Prior-Authorization Medical encounter

Patient’s demo- Medical

Patient billing
graphic & Insurance Records
and treatment
Medical billing office details

Charge
sheet

Payment posting Accounts Receivable Demographics Entry Charge Entry Medical Coding

Payment
E – claims /
EOBs / Denial
Paper claims
EOBs
Heath insurance company

Claims Adjudication Pre-Audit Claims entry

Let us discuss the processes at each entity in detail:

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 RCM - Patient

Scheduling

• Patient calls the Patient

providers front desk to 23
fix date & time for their
visit or admission . Patient Scheduling

• Patient’s personal
information and
insurance information
are also collected by
the front desk staff
during scheduling.

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 RCM - Provider’s Office

Processes at provider's office includes:

Provider’s office

Pre-Determination
Patient’s Registration & Prior-Authorization Medical encounter

• Pre-determination
• Prior Authorization
• Patient’s Registration
• Medical Encounter

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 RCM - Provider’s Office

Pre determination

Provider’s office

Pre-Determination
Patient’s Registration & Prior-Authorization Medical encounter

• Provider's office contacts the Insurance Company to verify the Patient’s

policy coverage details, in all possible cases.
• This is not compulsory, but a proactive step which all providers do to
reduce billing error and denials.

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 RCM - Provider’s Office

Prior Authorization

Provider’s office

Pre-Determination
Patient’s Registration & Prior-Authorization Medical encounter

• Provider’s need to take permission from insurance before providing certain

services listed by insurance. This process is called Prior authorization.

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 RCM - Provider’s Office

Registration: Information collected

• Patient’s demographic details

− Name, Age, Address, Sex, Phone number

• Insurance details
− Policy #. Insurance name, Address, Phone number

• Guarantor’s details
− compulsory if the Patient is minor

• Employer’s details
− Important if the medical condition is related to work

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 Learning check/ Try it yourself

• What does a providers office collect patient

information ?
• Is prior authorization applicable to a non-
participating provider?
• How does pre-determination helps a
provider in reimbursement of his /her
medical claims?
• Is it appropriate, if a claim is denied by
insurance company stating the services
billed are medically not necessary?

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Sample 1 – Demographic Sheet – Part1

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Sample 1 – Demographic Sheet – Part 2

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Sample 2 – Demographic Sheet

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Sample 3 – Demographic Sheet with declarations

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Sample 1 – Insurance card

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Sample 2 – Insurance card

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Sample 3 – Insurance card

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 RCM - Provider’s Office

Encounter: Provider performing diagnosis & procedure

Provider’s office

Pre-Determination
Patient’s Registration & Prior-Authorization Medical encounter

Diagnosis
• Disease or medical condition of the patient (or) Reason for Patient’s visit
Procedures
• Treatment or Check up done by the doctor

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 POP Quiz!

Identify True or False. Substantiate

• A patient cannot meet a healthcare provider

without prior appointment.
• It is mandatory for a patient to have a health
insurance policy to meet a provider
• Billing address of an insurance company can be
verified during pre-determination.
• Insurance company can deny an prior
authorization request, if there is no medical
necessity.
• A provider cannot bill a patient’s insurance, if
AOB is not signed.
• Patient is responsible to pay the provider, if she
/he is not willing to sign ROI.

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 RCM – Medical Billing Office

Processes before claims submission:

Medical billing office

Charge
sheet

Payment posting Accounts Receivable Demographics Entry Charge Entry Medical Coding

• Medical Coding
• Demo Entry
• Charge Entry

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 RCM – Medical Billing Office

Medical Coding: Diagnosis codes & Procedure codes

Medical billing office

Charge
sheet

Payment posting Accounts Receivable Demographics Entry Charge Entry Medical Coding

• Towards standardizing and simplifying the billing process,

predefined numeric and alpha numeric codes are assigned to
diagnosis (Diagnosis Codes) and procedure (Procedure Codes).

• These codes are added to/on the charge sheet.

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 RCM – Medical Billing Office

Demo & Charge entry

Medical billing office

Charge
sheet

Payment posting Accounts Receivable Demographics Entry Charge Entry Medical Coding

• Demo Entry - Entering of demographic and insurance information

in provider’s billing software.

• Charge Entry - Entering of Codes and treatment details from

charge sheet in provider’s billing software.

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 Sample 1 – Charge Sheet

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 Sample 2 – Charge Sheet

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 Sample 2 – Charge Ticket

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 RCM – Medical Billing Office

Demo & Charge entry

Medical billing office

Charge
sheet

Payment posting Accounts Receivable Demographics Entry Charge Entry Medical Coding

• Billing office will prepare claim form with demographic

information, insurance information and charge information
available in the billing software. Claim is a document like bill, that
includes details of the Patient, his insurance, medical condition
and treatment with the charges

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 Learning check/ Try it yourself

• Medical coding simplifies the process of

claims submission. Substantiate.
• What are demographic details?
• Identify the process of entering patient‘s
demographic details into billing software.
Why is it done?
• What are the different details available in a
charge sheet?
• Identify the process of entering patient‘s
treatment details into billing software. Why
is it done?
• What is Patient account number?

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 RCM - Claim submission

E-claims

• Electronic claims are sent to Clearing House software instead of

sending to Insurance Processing.
• The following functions happen in the clearing house.
− Claims will be checked for errors and if there is any error that claim will be
Rejected .
− Clean claims (error free) are sent to Insurance Pre-Audit Process.
− Scrubber report – A report available in the clearing house software, that
contains the details of the Clean Claims and Rejected Claims . Based on
this report, errors are corrected and then claims are resubmitted.

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 RCM - Claim submission

Paper Claims

• Paper claims are directly sent to Insurance Processing.

• Separate claim forms need to be used for billing physician

charges and hospital charges.

− Physician billing (Professional component) - CMS 1500 or HCFA

− Hospital Billing (Technical component) - UB 04 (old name UB 92)

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 POP Quiz!

Identify True or False. Substantiate

• Paper claims and electronic claims are sent

through clearing house.
• Clearing house would correct the errors on a e-
claim before forwarding it to insurance
company.
• Insurance company can deny an prior
authorization request, if there is no medical
necessity.
• A provider cannot bill a patient’s insurance, if
AOB is not signed.
• Patient is responsible to pay the provider, if she
/he is not willing to sign ROI.

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 RCM – Insurance Company

Processes at insurance company includes:

Heath insurance company

Claims Adjudication Pre-Audit Claims entry

• Claims Entry
• Pre-edit/Pre-Audit
• Claims Adjudication
• Communication of Decision

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 RCM - Insurance Company

Claims Entry

Heath insurance company

Claims Adjudication Pre-Audit Claims entry

• Paper claims received by insurance will be scanned and

uploaded in to the insurance system.

• Information from the scanned claim forms are entered by the

Claims Entry team in to the Insurance software.

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 Insurance Company

Pre-edit/Pre-Audit

Heath insurance company

Claims Adjudication Pre-Audit Claims entry

• E-claims received from clearing house will be audited by the

insurance software. Claims with incorrect and missing
information will be rejected here by insurance.

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 Insurance Company

Claims Adjudication

Heath insurance company

Claims Adjudication Pre-Audit Claims entry

• Insurance decides whether to pay or to deny the claim during the

adjudication process

• This is done by comparing the providers and the patient contracts.

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 Insurance Company

Communication of Decision

Heath insurance company

Claims Adjudication Pre-Audit Claims entry

• Decision made by insurance is communicated to provider and the

patient through a document called Explanation of Benefits.

• If it is a payment EOB, there will be a check attached.

• If it is a denial EOB the denial reason will be mentioned in the

EOB.
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 Learning check/ Try it yourself

• Claims entry is not required for e-claims.

Substantiate
• What is claims adjudication.
• List out a few parameters for which a claim
can be denied during adjudication?
• Why should the insurance company send
EOB to the patient and the provider.
• Can insurance companies make payment to
the providers through Electronic Fund
Transfer (EFT)?

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 Sample 1 – Payment EOB

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 Sample 2 – Denial EOB

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 POP Quiz!

Identify True or False. Substantiate

• Insurance company can deny a claim for

inappropriate diagnosis or procedure codes.

• Adjudicators verify only the patient’s treatment

details during claims adjudication.

• Insurance company may request additional

information like medical records, proof of timely
filing, student status certificate, for processing a
claim.

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 RCM – Medical Billing Office

Processes after claims submission:

Medical billing office

Charge
sheet

Payment posting Accounts Receivable Demographics Entry Charge Entry Medical Coding

• Payment Posting
• Account Receivable Management

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 RCM : Medical Billing Office

Payment Posting Process

Medical billing office

Charge
sheet

Payment posting Accounts Receivable Demographics Entry Charge Entry Medical Coding

• Process of entering payment and denial information from EOB

into client software is called Payment posting or Cash posting

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 Accounts Receivable Management

A R Management

Medical billing office

Charge
sheet

Payment posting Accounts Receivable Demographics Entry Charge Entry Medical Coding

• The A/R follow up process involves checking the status of unpaid

claims with insurance companies, and taking necessary action to
accelerate reimbursements.

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 Revenue cycle management

Patient Provider’s office

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Pre-Determination
Patient Scheduling Patient’s Registration & Prior-Authorization Medical encounter

Patient’s demo- Medical Records

Patient billing
graphic & Insurance and treatment
details
Medical billing office
Charge
sheet

Payment posting Accounts Receivable Demographics Entry Charge Entry Medical Coding

Payment EOBs /
Denial EOBs E – claims /
Paper claims

Heath insurance company

Claims Adjudication Pre-Audit Claims entry

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 Learning check/ Try it yourself

• Payment posting is done only for claims

paid by the insurance company.

• How does AR process help in accelerating

claim reimbursements?

• What is the role of a medical billing office in

revenue cycle management?

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 Activity:

Identify the
samples.

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 Thank you

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