In this article, we’re going to take a look at medical billing in the real world.
Below, there are a few examples of how you can create claims.
We’re going to use the same example as we did for the medical coding.
After examining the patient and conducting a pathology test, the doctor confirmed a diagnosis of streptococcal pneumoniae and prescribed the patient a two-week regimen of antibiotics.
We have the following codes from the medical report.
- 992013-4120F, new patient visit of low complexity, with the prescription or dispensation of antibiotics.
- 86060, antistreptolysin O titer (Pathology).
- 481, pneuomococcal pneumonia [streptococcus pneumoniae pneumonia].
The coder would also provide all the relevant information in the superbill, which would be used in the medical claim.
We’re going to use a simplified version of the CMS-1500 form.
The CMS-1500 form contains 33 fields that the biller should fill in with the information about the patient, their insurance, the provider, procedures and costs, and other things.
Fields from 1 to 20 are informational and include elements to list the patient’s name, ID, DOB, insurance policy number, address, etc.
There are also the fields to specify whether the patient is a health insurance subscriber (paying for insurance) or is merely covered by it (e.g., children on their parents’ insurance).
Mostly, the fields are self-explanatory, and the information that you need to fill is in the superbill.
As we move to field 21, we are getting to the core of the claim.
Field 21 contains the diagnosis code.
The next relevant field is 24, which is divided into six rows.
There, you should fill in the date of the procedure, its code, and duplicate the codes of procedures and diagnoses from field 21.
Keep in mind that diagnosis codes are used in claims to demonstrate medical necessity.
So, element 24 is where we specify the what (procedure) and the why (diagnosis) of the medical services.
There is also a column in the element 24 to list the charges for every procedure.
Element 25 is where the biller enters the taxpayer ID of the patient.
In element 26, they fill in the patient’s account number with the provider.
Next, we’ll take a look at Element 28, which is where the total charge of the procedure is listed.
In Element 29, the amount paid by the health insurance is included.
This amount is what biller asks the payer to cover, not what they already covered.
Element 30 includes the balance due for the procedure.
This is the amount calculated by subtracting the amount paid (Element 29) from the overall cost (Element 28).
Balance is what will be passed to the patient to pay.
Elements 31 and 32 include the information about the provider (the service facility location and the NPI).
The last Element 33 is where the biller should input the information about the provider/billing party.
Here’s a simplified table of the Element 24.
To enter the codes, we’ll use our first example.
The diagnosis codes will be attached to both procedures that we input.
The reason for it is that we need to justify the medical necessity for the procedures.
Before getting into more detail, we have to talk about charges.
In private practices, the cost of their procedures can be set by them, but they should be closely aligned with the Medicare costs.
The Medicare costs of procedures are determined by the evaluation of the Relative Value Units of the procedure (RVU).
The RVU is determined depending on the time the procedure takes (the Work RVU), the cost of that time (the Practice RVU), and the possibility of complications for the procedure (the Malpractice RVU).
All these values are multiplied by a geographic practice cost index and added together.
In turn, they are multiplied by a conversion factor, which stands for the dollar amount per RVU.
For this example, let’s say the E&M procedure cost is $200.
The Pathology procedure cost is $300.
Each of those we put in Column F next to the procedure.
So the total cost of the procedure is around $500.
This is what we input to the Element 28.
The amount paid by the payer depends on the subscriber’s insurance agreement.
In this example, let’s say our patient with pneumonia had a basic indemnity plan in which he owes a deductible of $200 and $50 of a co-pay.
After this amount is covered, the insurer will cover the rest.
The copay and deductible are already assigned to the patient, so the first $250 won’t be included in the bill.
The bill will have $250 listed as the amount paid by the payer, and the balance due will be zero.
In a very simplified way, this is what a medical claim looks like.
This is what is sent to the payer, and if they approve, it’s sent back to the biller for their records.
Our second example was a female patient, 67 years of age, with appendicitis.
This example involved more codes due to a more complicated set of procedures.
The codes that we ended up within that example were:
- 99284, (Emergency department visit for a condition that requires urgent evaluation by the physician… but [does] not pose an immediate significant threat to life or physiological function).
- 76705, ultrasound, abdominal, real-time with image; limited (e.g. single organ).
- 44970, laparoscopy, surgical, appendectomy.
- 00840-P3, Anesthesia for intraperitoneal procedures in the lower abdomen including laparoscopy; not otherwise specified; patient with severe systemic disease.
- 540.9, Acute appendicitis without mention of peritonitis.
So, after reviewing the codes, we can enter the information in appropriate fields.
Now as most of the claim is filled in, we only need to add the amount and balance due.
Remember that we’re just using random numbers in the Column F which do not accurately represent the cost of procedures.
To determine the balance due and amount, we need to know the type of coverage of this patient.
She is 67, so she qualifies for Medicare.
She’s on Traditional Medicare, and it covers hospital services such as procedures mentioned above.
Let’s assume she has $400 left for the deductible coverage.
So what’s left to cover is $1,495.
Part A of Medicare can function as co-insurance.
For instance, she has an 80-20 coinsurance.
It means that Medicare covers 80% of the procedure cost, and the patient owes the remaining 20%.
So 80% of $1,495 is $1,196, which we put in Element 29.
That makes the procedure balance, or what the patient should cover $299.
Here is our second claim.
At least the most relevant parts of it for the reimbursement process.
So, medical billing requires working knowledge of codes and how they work as well as proficiency in the financial side of healthcare.
You need to know the codes and how they work, but also, you should know the costs of procedures, and how to create every claim according to the specific agreement of the patient.