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V. Insurance Information
This segment of face sheet contains all active insurance information of the patient. This segment includes primary, secondary, and/or tertiary insurance information. This segment is the most important field in patient demographic sheet. Information found in this field should always be the updated & correct one. If not, we would be submitting claims to incorrect insurance. Entry persons should always match this information with copy of insurance id cards. (if provided). This will reduce the risk of entering incorrect insurance information. Following information are found in this segment

1. Insurance Code/Name
2. Effective Date
3. Subscribers Name
4. Relationship Code
5. Pre-Certification/Pre-Authorization
6. Referral Number
7. Primary Insurance Group #
8. Primary Insurance Policy #
9. Date of Injury/Accident
10. Claim Number

1. Insurance Code/Name: This field is used to enter the insurance code or name of the coverage that the patient has. The insurance code is assigned by the Billing office for its internal purpose to reduce the PD entry time. Each Insurance company’s name, billing address, contact person, etc… are assigned a unique code. The entry person should be very careful while selecting the insurance code and should always verify the billing address with the given card copy or with the billing address given on the encounter form.
The Primary insurance name is printed in the 11c field and the Secondary insurance name is printed in the 9d field of the CMS-1500 claim form.

Insurance: Medicare, Medicaid, Blue Cross, Blue Shield …

2. Effective Date: This field contains the effective date of coverage. This date should not be after the Date of Service. The date format is MMDDYYYY. This date is used for the internal purpose of the Billing office and Hospitals. This does not form part of the HCFA-1500 claim form.

Eff. Date: 7-1-66; 07/01/1976; 07 01 66 …

3. Subscribers Name: This field contains the Subscribers name of the insurance policy. If the patient is a dependant who is covered under someone else’s policy then the name of the person who pays the premium is entered in this field. If patient is the subscriber then we need to enter the patient name itself. The name is entered in the Last Name, First Name MI format.
The Primary insurance subscribers name is printed in the 4th field and the Secondary insurance subscribers name is printed in the 9th field of the CMS-1500 claim form.

Subscriber: John Q. Public; Public, John Q …

4. Relationship Code: This field contains the relationship of the subscriber to the patient. The code is usually 1 – Self, 2 – Spouse, 3 – Parent, 4 – others etc…
This field does not form part of the CMS-1500 claim form.

5. Policy ID: This field contains the Policy number given by the insurance company to the subscriber and the dependants of the policy. This does not have any standard format across the insurance company but each insurance company has a unique format such as for Medicare the policy number is given as SSN + Alpha or Alphanumeric. The policy ID should be entered as given in the scanned card copy or as mentioned on the Encounter form.
The Primary insurance ID is printed in the 11th field and the Secondary insurance ID is printed in the 9a field of the CMS-1500 claim form.

Policy ID: 123-54-5478A; 215543251W1; 215-47-6491 …

6. Group ID: This field contains the Group ID as given by the insurance company for the policy. Not all the insurance companies have the Group ID hence if not given then this field can be left blank.
The Group ID is printed along with the Policy ID on the CMS-1500 claim form.

7. Pre-Auth. / Pre-Cert. Number: Review of "need" for inpatient care or other care before admission. This refers to a decision made by the payer, Managed Care Organization, or insurance company prior to admission. The payer determines whether or not the payer will pay for the service. Most managed care plans require pre-cert. This is a method of controlling and monitoring utilization by evaluating the need for service prior to the service being rendered. The practice of reviewing claims for inpatient admission prior to the patient entering the hospital in order to assure that the admission is medically necessary. A method of monitoring and controlling utilization by evaluating the need for medical service prior to it being performed. The process of notification and approval of elective inpatient admission and identified outpatient services before the service is rendered. An administrative procedure whereby a health provider submits a treatment plan to a third party before treatment is initiated. The third party usually reviews the treatment plan, monitoring one or more of the following: patient's eligibility, covered service, amounts payable, application of appropriate deductibles, co-payment factors, and maximums. Under some programs, for instance, pre-determination by the third party is required when covered charges are expected to exceed a certain amount. This number should be attached with the respective claim; otherwise the claim will be rejected. There is no standard format for Auth and Pre-Cert. number across all the insurance companies. Each insurance company has its own unique format of Auth and Pre-Cert. numbers.
This field is printed in the 23rd field of the CMS-1500 claim form.

8. Referral Number: A Referral number is provided by a PCP (Primary Care Physician) when he refers a patient to a specialist. Without the Referral number a patient cannot get a specialist’s service if he has a HMO plan.
This number is printed on the CMS-1500 claim form or entered in the attached documents as per the Insurance company requirements.

9. Date of Injury/Accident: This field is used to enter the Date of Injury/Accident when the claim is filed to Work Comp/Auto Accident insurance. This date is useful for the insurance companies to verify if the coverage was active or not. This date is mentioned in the documents attached while filing the claim.

10. Claim Number: This field is used to enter the Claim number for a particular claim given by the Work Comp/Auto Accident insurance company. Failing to mention this number on the claim form will result in the rejection of the claim.
This is mentioned in the attached documents while submitting the claim.


6. Marital Status: This field contains the Marital Status of the patient. It is usually entered as ‘S’ for Single, ‘M’ for Married, ‘D’ for Divorced, ‘W’ for Widow/Widower, ‘X’ for Separated and ‘O’ for Others. It marital status is missing from patient encounter form, we need to enter ‘O’ in the marital status field.
This field is printed in the 8th field of the CMS-1500 claim form.

Marital Status: Single; Married; Divorced; Widow …

7. Address: Patient’s address is split into 5 different fields. It is usually entered as Address1 (PO Box#/Door#/Appt. #), Address2 (Street/Ave. /Blvd. Name), City, State and ZIP code. This field can not be left blank. Patient address is a important field to file a claim & send patient statement. Following are the general abbreviations found in patient encounter forms:

a) Apt. # - Apartment number
b) Ave. - Avenue number
c) Blvd. - Boulevard
d) Ste. - Suite/Street
e) Dr. - Drive

This field is printed in the 5th field of the CMS-1500 claim form.

Address: 1067 Orange Grove Blvd.
Apt. # 194
Los Angeles, CA 90001

8. Patient Phone Number: This field contains the contact number of the patient including the area code. It contains a total of 10 digits (111-222-3333), the first 3 digits are the area code, and the next 7 digits are the phone number of the patient. If the area code is not specified the phone number can still be entered leaving the area code field blank or entering some dummy number as per the Billing Software specifications.
This field is printed in the 5th field of the CMS-1500 claim form along with the address.

Phone Number: 626-843-2846; (626)357-5496 …

II. Patient Employer information

This segment in the face sheet contains employer information of the patient. The entry person needs to enter this information if available in face sheet. Employer information is a must for worker’s comp claims. Non-worker’s comp claims do not require employer name to process claims but it is advisable to update employer information during entry. Following information’s are found in this segment

1. Employer Code
2. Employer Name
3. Employer Address & Phone #
4. Designation/Occupation
5. Contact Person

1. Employer Code: This field is used in most of the Billing Software’s to reduce the time of PD entry. The Names and Addresses of the major Employers are stored in the Employer database with a unique code assigned to each employer. Hence it is enough to just enter the code and skip to the next block.

Employer Code: IBM; A0012; MS024 …

2. Employer Name: This field contains the name of the patients Employer. If the patient is a Student or Not Employed or Retired then it can be entered as Student or Not employed or Retired in this field.
This field is printed in the 11b field of the CMS-1500 claim form.

Employer: Verizon Wireless; Microsoft Corp.; SUN Microsystems …

3. Employer Address: The address of the patients Employer is split into 5 different fields. It is usually entered as Address1 (PO Box#/Door#/Apt.#), Address2 (Street/Ave. /Blvd. Name), City, State and ZIP code.
Address: PO Box 1954
Los Angeles, CA 90001-1954

4. Employer Phone Number (Ext No.): This field contains the contact number of the patients Employer including the area code. It contains a total of 10 digits (111-222-3333), the first 3 digits are the area code and the next 7 digits are the phone number of the patient. If the area code is not specified the phone number can still be entered leaving the area code field blank or entering some dummy number as per the Billing Software specifications. Some software’s may also require you to enter the Extension number if given on the encounter form.

818-245-7849 [5478]; (818)-245-7849 …

III. Patient Guarantor Information

This segment in face sheet consists of guarantor or emergency contact information.

They are:

1. Guarantor Account #
2. Guarantor Name
3. Guarantor Address
4. Guarantor phone #
5. Guarantor/patient relationship
6. Guarantor employer & SSN

This block is mostly entered only in the case of the patient being a minor or if the patient is not responsible for the payment. This information is for the internal purpose of the Billing Office and the Hospitals for the purpose of Emergency Contact or follow-up of pending balances and hence does not form part of the CMS-1500 claim form.

1. Guarantor Account #: This field is used to enter the guarantor account #. If the guarantor is already stored in the database then the stored information can be pulled up using this number. This information is not part of the encounter form. The account number of the guarantor is pulled using search engine.

245818A; 6252315; 421154; …

2. Guarantor Name: This field is entered in the Last Name, First Name Middle Initial format. However in some software’s this field is split as Last Name First Name and Middle Initial fields. The guarantor name may also contain title (Junior, Senior, I, II, III …) and suffix (M.D. …) this information also needs to be entered along with the name. The title must be entered with the last name and the suffix should be entered with the first name or after the middle initial. The Name on the Encounter Form may not be given in above said format but still it should be entered as per the Billing Software specifications.

Joseph Warowes Sr.; Warowes, Virginia E M.D …

3. Relationship: This field contains the relationship of the Guarantor with the patient, such as Spouse, Parent, Others etc.

Relationship: Spouse; Parent; Grand Parent …

4. Address: The address of the Guarantor is split into 5 different fields. It is usually entered as Address1 (PO Box#/Door#/Apt.#), Address2 (Street/Ave. /Blvd. Name), City, State and ZIP code.

102 West 35th Street
Heathsville, GA 65418

5. Phone Number: This field contains the contact number of the Guarantor including the area code. It contains a total of 10 digits (111-222-3333), the first 3 digits are the area code and the next 7 digits are the phone number of the patient. If the area code is not specified the phone number can still be entered leaving the area code field blank or entering some dummy number as per the Billing Software specifications.

(517)373-1820; 517-374-5857 …

6. Guarantor Employer: This field contains the guarantor’s employer information. Basically the guarantor’s employer name, address, and contact details are entered here.

7. Emergency Contact: This field is used to enter the Emergency Contact details of the patients relative or next of kin. Contact information such as Name, Address Phone # and relation to the patient are entered here.

IV. Physician Information

This segment contains the following information.

1. Admitting physician code: The physician responsible for admission of a patient to a hospital or other inpatient health facility. Some facilities have all admitting decisions made by a single physician (typically a rotating responsibility), called an admitting physician. All the information’s related to a particular physician (Physician Name, UPIN, Federal Tax ID, License #, Facility Address & Phone #) are stored using a unique code in the provider database. Hence while selecting a physician codes the entry person should be very careful to select the correct code after cross checking all the relevant details. This field is optional; if the Admitting physician info is not given it can be left blank.
This field does not form part of the HCFA-1500 claim form.

Adm. Phy.: Mileski MD, William

2. Attending or Rendering physician code: The physician rendering the major portion of care or having primary responsibility for the care of the patient's major condition or diagnosis. In other words the doctor or supplier who actually renders the service (also referred to as a "rendering physician"). All the information’s related to a particular physician (Physician Name, UPIN, Federal Tax ID, License #, Facility Address & Phone #) are stored using a unique code in the provider database. Hence while selecting a physician codes the entry person should be very careful to select the correct code after cross checking all the relevant details.
The Name of the rendering physician is printed in the 33rd field along with the Address and Phone #. The rendering physician’s Federal tax ID stored in the database is automatically printed in the 25th field of the CMS-1500 claim form.

Att. Phy.: Pendridge MD, Dayton

3. Referring Physician/Primary Care physician code: The physician who has sent the beneficiary to another physician or, in some cases to a supplier (e.g., physical therapist, occupational therapist) for consultation and/or treatment is called a referring Physician or Primary Care Physician (PCP). The name of the facility may be reflected in this area if the patient has not identified a unique physician, but has identified a facility. All the information’s related to a particular physician (Physician Name, UPIN, Federal Tax ID, License #, Facility Address & Phone #) are stored using a unique code in the provider database. Hence while selecting a physician codes the entry person should be very careful to select the correct code after cross checking all the relevant details.
The name of the referring physician is printed in the 17th field and the corresponding UPIN stored in the database is printed in the 17a field of the CMS-1500 claim form.

About Social Secutiry Number

i. When did Social Security start?

The Social Security Act was signed by President Franklin Roosevelt on August 14, 1935. Taxes were collected for the first time in January 1937 and the first one-time, lump-sum payments were made that same month. Regular ongoing monthly benefits started in January 1940.

ii. What is the origin of the term ‘Social Security’?

The term was first used in the U.S. by Abraham Epstein in connection with his group, the American Association for Social Security. Originally, the Social Security Act of 1935 was named the Economic Security Act, but this title was changed during Congressional consideration of the bill. Under the 1935 law, Social Security only paid retirement benefits to the primary worker. A 1939 change in the law added survivor’s benefits and benefits for the retiree's spouse and children. In 1956 disability benefits were added.

iii. Who assigns the SSNs and how many SSNs have been assigned?

Social Security numbers are assigned by Social Security Administration. SSNs were first issued in November 1936. By December 1, 2002 more than 418 million numbers had been assigned.

iv. Is it true that Social Security was originally just a retirement program?

Yes. Under the 1935 law, Social Security only paid retirement benefits to the primary worker. A 1939 change in the law added survivor’s benefits and benefits for the retiree's spouse and children. In 1956 disability benefits were added.

v. Is Social Security just a program for the elderly and disabled?

Social Security is not just a program for the elderly and disabled. Survivors of deceased workers and the families of retired or disabled workers also qualify for benefits. In fact, about 3.8 million children are currently receiving such benefits and 9 out of 10 would be eligible to receive benefits if a parent retires, becomes disabled, or dies. They need a Social Security number (SSN) before they can receive benefits.

The SSN is also needed for reasons not connected with Social Security benefits. For example, to be claimed as a dependent on a tax return, to open a bank account and buy Savings Bonds, your child needs an SSN.

vi. Is there any significance to the numbers assigned in the Social Security Number?

The digits in the Social Security number allow for the orderly assignment of numbers. The number is divided into three parts: the area, group, and serial numbers. The first three (3) digits (area) of a person's social security number are determined by the ZIP Code of the mailing address shown on the application for a social security number. Generally, numbers were assigned beginning in the northeast and moving westward. So people on the east coast have the lowest numbers and those on the west coast have the highest numbers. The remaining six digits in the number are more or less randomly assigned and were organized to facilitate the early manual bookkeeping operations associated with the creation of Social Security in the 1930s.

Within each area, the group number (middle two (2) digits) range from 01 to 99 but are not assigned in consecutive order. For administrative reasons, group numbers issued first consist of the Odd numbers from 01 through 09 and then Even numbers from 10 through 98, within each area number allocated to a State. After all numbers in group 98 of a particular area have been issued, the Even Groups 02 through 08 are used, followed by Odd Groups 11 through 99.

Within each group, the serial numbers (last four (4) digits) run consecutively from 0001 through 9999.

vii. Are Social Security Numbers re-assigned after a person dies?

SSA does not reissue SSNs after someone dies. When someone dies their number is simply removed from the active files and is not reused. In theory, the time might come someday when SSA would need to consider "recycling" numbers in this way--but not for a long time to come. SSA does not have to face reissuing numbers since the 9-digit Social Security number allows about 1 billion possible combinations, and to date SSA have issued a little over 400 million numbers.

viii. How can one get a different Social Security number assigned to himself?

Generally, an individual is assigned only one Social Security number (SSN) which is used to record the individual’s earnings for future benefit purposes and to keep track of benefits paid under that number. However, under certain circumstances, SSA may assign an individual a new (different) SSN. When they assign a new number, the original number is not voided or deleted. For integrity reasons, they cross-refer in the records all the numbers assigned to the same individual.

SSA can assign new SSNs in the following situations, provided all of the documentation requirements are met:

• Sequential SSNs assigned to members of the same family
• Certain scrambled earnings situations
• Certain wrong number cases
• Religious or cultural objection to certain numbers/digits in the SSN
• Misuse by a third party of the number holder’s SSN and the number holder has been disadvantaged by that particular misuse
• Harassment, abuse or life endangerment situations (including domestic violence)

To apply for a new (different) SSN, you need to complete Form SS-5 (Application for a Social Security Card)

You will also need to submit evidence age, identity, and U.S. citizenship or lawful alien status. Form SS-5 explains what documents will satisfy these requirements. You will also need to submit evidence to support your need for a new number.

If you are age 18 or over, you must submit your request for a new SSN in person at your local Social Security office.

ix. When did Social Security cards bear the legend "NOT FOR IDENTIFICATION"?

The first Social Security cards were issued starting in 1936; they did not have this legend. Beginning with the sixth design version of the card, issued starting in 1946, SSA added a legend to the bottom of the card reading “FOR SOCIAL SECURITY PURPOSES -- NOT FOR IDENTIFICATION”. This legend was removed as part of the design changes for the 18th version of the card, issued beginning in 1972. The legend has not been on any new cards issued since 1972.

x. How to get a Social Security number for my baby?

The easiest way to apply for a baby's Social Security number (SSN) is at the hospital. Both parents’ Social Security numbers are required when applying for a baby’s SSN. When a parent requests a Social Security number (SSN) for his/her newborn as part of the birth registration process in the hospital, the State Vital Statistics Office forwards to the Social Security Administration (SSA) data we need to assign an SSN to the child and issue a card. This is known as the Enumeration at Birth (EAB) process. Once SSA receives the data, the process of assigning the number and issuing the card is the same as if the application were taken in a Social Security office.

In most States, the birth registration process is electronic. Hospitals submit birth registration information through local registrars to the State, where the information is entered into an automated database. In most States this process is completed and EAB data is sent to the Social Security Administration within 60 days of birth. EAB is a good service for most parents who have no immediate need for their child's SSN because they do not have to submit an application and evidentiary documents to a Social Security office.

xi. What types of Social Security cards does SSA issue?

SSA issues three types of Social Security cards depending on an individual's citizen or non-citizen status and whether or not a non-citizen is authorized by the Department of Homeland Security (DHS) to work in the United States.

 The first type of card shows the individual's name and Social Security number only. This is the card most people have and reflects the fact that the holder can work in the U.S. without restriction. SSA issues this card to:

- U.S. citizens, or

- Non-citizens who are lawfully admitted to the U.S. for permanent residence, or who have permission from the Department of Homeland Security (DHS) record to work permanently in the U.S., such as refugees, asylees and citizens of Compact of Free Association countries.

 The second type of card bears, in addition to the individual's name and Social Security number, the legend, "NOT VALID FOR EMPLOYMENT". SSA issues this card to non-citizens who:

- don't have DHS permission to work, but are receiving a federally-funded benefit; or

- are legally in the U.S. and don't have DHS permission to work but, are subject to a state or local law which requires him or her to provide a SSN to get general assistance benefits or a State driver's license for which all other requirements have been met.

 The third type of card bears, in addition to the individual's name and Social Security number, the legend, "VALID FOR WORK ONLY WITH INS (or DHS) AUTHORIZATION". SSA issues this card to people who have DHS permission to work temporarily in the U.S.

If you’re a non-citizen, SSA must verify your documents with DHS before SSA issues a SSN card. SSA will issue the card within two days of receiving verification from DHS. Most of the time, they can quickly verify your documents online with DHS. If DHS can’t verify your documents online, it may take several weeks or up to three months to respond to Social Security's request.

xii. Which Social Security numbers are invalid (impossible)?

An invalid (or impossible) Social Security number (SSN) is one which has not yet been assigned.

The SSN is divided as follows: the area number (first three digits), group number (fourth and fifth digits), and serial number (last four digits). To determine if an SSN is invalid consider the following:

• No SSNs with an area number in the 800 or 900 series, or "000" area number, have been assigned.

• No SSNs with an area number above 728 have been assigned in the 700 series, except for 729 through 733 and 764 through 772.

• No SSNs with a "00" group number or "0000" serial number have been assigned.

• No SSNs with an area number of "666" have been or will be assigned.

xiii. Is it legal to laminate your Social Security card?

SSA discourages the lamination of Social Security number (SSN) cards because lamination would prevent detection of certain security features. To deter potential fraud and misuse involving SSNs, SSA currently issues SSN cards that are both counterfeit-resistant and tamper-resistant. (For example, the card contains a marbleized light blue security tint on the front, with the words "Social Security" in white; intaglio printing in some areas on the front of the card; and yellow, pink, and blue planchets--small discs--on both sides). SSA cannot guarantee the validity of a laminated card. You may, however, cover the card with plastic or other material if the material could be removed without damaging the card.

SSA would also recommend that as a security precaution, you carry your Social Security card only when you expect to need it, for example, to show to an employer or other third party.

xiv. Is there any charge for replacing a Social Security card?

Social Security does not charge a fee for either an original or replacement Social Security card. A replacement card can be a duplicate card (one with the same name and number) or a corrected card (one with different name but the same number).

xv. Can metal or plastic versions of Social Security cards be used?

The official verification of your Social Security number is the card issued by the Social Security Administration. Third parties who request your Social Security card as verification of your number will want to see the card SSA issues. Although Social Security has no authority to prevent use of metal or plastic replicas of Social Security cards, SSA considers them an unauthorized use of the Social Security number and discourages their use.

xvi. Can Social Security number be canceled?

No. When someone has applied for and been assigned a Social Security number (SSN) based on a validly signed application, the Social Security Administration (SSA) may not cancel or destroy that record. The Privacy Act of 1974 authorizes agencies to maintain in their records any information about an individual that is relevant and necessary to accomplish a purpose of the agency that is required by law. SSA is required by law to establish and maintain records of wages and self-employment income for each individual whose work is covered under the program. The SSN is considered relevant and necessary for that record keeping purpose. Consequently, valid SSNs are permanently part of SSA's records.



• What is Patient Demographics and what does it contain?

Patient Demographics sheet contains all the basic demographic information about an individual or patient. Patient demographics ( PD ) include Patient name, Date of birth, Address, Phone number, Doctor information, Social security number (SSN) and Sex. Patient Demographic also contains Guarantors or emergency contact information, Health insurance information. Each piece of information is important because correct and quality entry of such information will directly impact physician’s monthly revenue. This sheet is also called as face sheet of a charge or claim.

A good patient demographic form is the key to obtaining accurate information which is required for claim submission. Providing as much information as possible will reduce the insurance company’s need to contact billing office. Avoiding unnecessary contact will reduce the costs of claims processing and delay in payments. Obtaining all the required demographic information will often determine how willing the patient is to complete the form. If the request is firm and professional without being offensive, we have great chances of getting the information’s which we need to settle a claim.

Ideally a patient’s insurance coverage should be verified before any service is rendered with the common exception of emergency treatment. This policy shouldn’t apply exclusively to new patients. Established patients may have changed employers, gotten married or divorced or are no longer covered by the policy which was in effect during their last visit. Photocopy of insurance cards is always a help.

• How Patient demographics originate and reach us ?

Patient Demographic sheets also known as face sheet are distributed to patients when they visit physician’s office for treatment. Before the services are rendered, front office staff ensures that patient demographic sheets are filled in by the patient or some one in patient’s family. This process ensures that all necessary patient’s demographic information are gathered accurately which would facilitate in timely reimbursement of physicians charges. In most of the physician’s front office, copies of insurance identification card are also taken. This is to ensure that all the information’s available in insurance identification card are captured. Insurance ID card contains very valuable information which would be very helpful in settling the claim.

These patient demographics are batched together at physician’s office and are forwarded to our office for patient demographics entry.

• For our easy understanding now let us see each of the information found in patient demographics. Information found in patient demographics have been classified into five major headings.
They are:

I. Patient Information.
II. Patient Employer Information.
III. Patient Guarantor Information.
IV. Physician Information.
V. Insurance Information.

I. Patient Information:

This segment in face sheet consists of basic demographic information.

They are:

1. Account #
2. Patient Name
3. Patient Sex
4. Patient Date of Birth
5. Marital Status
6. Patient Address
7. Patient phone number

Each patient record is assigned a patient account number. This is how a patient is identified in the system. Before filing any claim we would need to obtain clear, accurate information from the patients. A good patient information sheet is the key to this aspect of claims submission. Let us now see few more things about items listed below.

1. Account Number [Visit Number]: In case of a New Patient this field in almost all the Medical Billing software’s is updated automatically. In cases where it does not get updated automatically the billing office enters the Medical Record Number/Account Number as on the Encounter Form submitted by the Hospital/Provider.
In case of an Established Patient the Billing Office runs a query to search for the patient record with the help of the Medical Record Number/Account Number or using the Last Name or using the Date of Birth of the patient. If the software has a Visit Number concept then a new visit with the same Account number and the next visit number is created if not then the same Account is edited with the new details as on the Encounter Form.
This number is for the internal purpose of the Billing Office and the Hospitals. This field is usually in numeric format but may differ from software to software. This number does not form part of the HCFA-1500 claim form.
Account #: 24584951, 3205215 …
Account # and Visit #: 24584951-01, 24584951-02 …

2. Patient Name: This field is entered in the Last Name, First Name Middle Initial format. However in some software’s this field is split as Last Name First Name and Middle Initial fields. The patient name may also contain title (Junior, Senior, I, II, III …) and suffix (M.D. …) this information also needs to be entered along with the name. The title must be entered with the last name and the suffix should be entered with the first name or after the middle initial. The Name on the Encounter Form may not be given in above said format but still it should be entered as per the Billing Software specifications. Checking the spelling of patient name is a very important step. Simple errors such as transposition of letters or misspelled names can result in denial or suspension of the claim.
Patient name is printed in the 2nd field of the CMS1500 form in Last Name, First Name Middle Initial format.

Patient Name: Jones, Brenda K; Brenda K Jones; Miller John Jr.; …

3. Date of Birth: This field contains the Date of Birth of the patient. It is entered in the MM/DD/YYYY or MMDDYYYY as per the Billing Software specification.
This field is printed in the 3rd field of the CMS-1500 claim form in MM DD YY format. If Date of Birth detail is not available then generic DOB format have to be entered i.e., 01/01/1901.

Date of Birth: 02/12/1979; 02/12/79; 02-Dec-1979 …

4. Sex: This field contains the Gender of the patients. i.e., M for Male, F for Female, and U for Unknown when the gender of the patient is not specified on the patient encounter Form.
This field is printed in the 3rd field of the CMS-1500 claim form along with the Date of the Birth.

Sex: Male; Female; M; F.

5. Social Security Number: This field contains a 9 digit number which is allotted to the patient by the Social Security Administration. If SSN is missing from patient encounter form then this field is usually left blank or any 9 digit dummy number (000-00-0000/999-99-9999) is entered as per the Billing Software specifications.
This number is for the internal purpose of the Billing Office and the Hospital. It is mainly helpful to follow-up with the patients or insurance on their outstanding balances. This number does not appear on the CMS-1500 claim form.

SSN: 245-19-0124; 245190124


1.Identify all main terms or procedures included in the diagnostic/procedural statements(s).
2.Locate each main term/procedure in the Alphabetical Index. A main term may be followed by a series of terms in parentheses. The presence or absence of these parenthetical terms in the diagnosis has no effect upon the selection of the code listed for the main term.
3.Refer to any sub terms indented under the main term. These sub terms for individual line entries and describe essential differences by site, etiology or clinical type.
4.Follow cross reference instructions if the needed code is not located under the first main entry consulted.
5.Verify code selected from the Index in the Tabular List.
6.Read and be guided by any instructional terms in the Tabular List.
7.Fourth and fifth digit sub classification codes must be used where provided.
8.Continue coding diagnostic and procedural statements until all of the component elements are fully identified. This instruction applies even when no “use” statement appears.
9.Use both codes when a specific condition is stated as both acute (or subacute) and chronic and the Alphabetic Index provides unique codes at the third, fourth, or fifth digit level.
10.The term hypertensive means “due to”, but the presence of words such as “and or with hypertension” does not imply causality.
11.If the cause of a sign or symptom is specified in the diagnosis, code the cause but do not assign a code for the sign or symptom.
12.For inpatient coding, when a diagnosis statement consists of a symptom followed by comparative or contrasting diagnoses, assign codes for the symptom as well as for the diagnoses. When coding outpatient services, do not code diagnoses documented as “probable, suspected, questionable, rule out or working diagnosis”. Code the condition necessitating that visit, such as signs or symptoms, abnormal test, or other reasons.
13.Do not confuse V codes which provide for classifying the reason for visit with procedure codes documenting the performance of a procedure.
14.V codes are found in the Alphabetic Index under references such as Admission, Examination, History of, Problem, Observation, Status, Screening, Aftercare, etc.
15.When an endoscopic approach is utilized to accomplish another procedure (such as biopsy, excision of lesion or removal of foreign body), assign codes for both the endoscopy and the procedure unless the code books contain instructions to the contrary or the code identifies the endoscopic/laparoscopic approach.
16.No procedure code is assigned if an incision was not made. Code canceled surgeries to V64.1, V64.2 and V64.3. use code V64.1 if a closed fracture reduction was attempted but not accomplished.
17.Consult the Alphabetical Index first to code neoplasm in order to determine whether a specific histological type of neoplasm has been assigned a specific code.

18.Do not assign the code for primary malignancy or unspecified site if the primary site of the malignancy is no longer present. Instead, identify the previous primary site by assigning the appropriate code in category V10 “Personal history of malignant neoplasm.”
19.Cancer “metastatic from” a site should be interpreted as primary of that site and cancer described as “metastatic to” a site should be interpreted as secondary of that site.
20.Diagnostic statements expressed in terms of a malignant neoplasm with “spread to...” or “extension to...” are to be coded as primary site with metastases.
21.If no site is stated in the diagnosis but he morphologic type is identified as metastatic, code as primary site unknown and also assign the code for secondary neoplasm or unspecified site.
22.Code fractures as closed unless they are specified as open.
23.Code only the most severe degree of burn when different degrees of burns occur at the same site.
24.Assign separate codes for multiple injuries unless the coding books contain instructions to the contrary or sufficient information is not available to assign separate codes.
25.Poisoning by drugs includes drugs given in error, suicide and homicide, adverse effects of medicines taken in combination with alcohol, or taking a prescribed drug in combination with self prescribed drugs.
26.Adverse reactions to correct substances properly administered include: allergic reaction, hypersensitivity, intoxication, etc. The poisoning codes 960-979 are never used to identify adverse reactions to correct substances properly administered.
27.Complications of medical and surgical care are located in the Alphabetical; Index under Complication or the name of the condition.
28.The causes or residual illnesses or injuries are located in the Alphabetical Index under Late Effect.
29.When the late effect of an illness or injury is coded in the main classification, the E code assignment must also be one for late effect.


1.Follow all coding principles outline in the “Essentials of Accurate Coding,”

Use all codes necessary to completely code all diseases and procedures, including underlying diseases.

Refer all medical records of patients treated for multiple trauma and patients hospitalized over thirty days to the coding supervisor to verify selection of principal diagnosis before abstracting.

E codes are used whenever appropriate to identify external codes.

2.Consult the following sources to identify all diagnoses and procedures requiring coding and to increase the accuracy and specificity of coding.

Face Sheet-code diagnoses and complications appearing on the face sheet.
Progress Notes-Scan to detect complications and/or secondary diagnoses for which the patient was treated and/or procedures performed.
History and Physical-scan to identify any additional conditions; such as history of cancer or a pacemaker in situ. These conditions should be coded.
Discharge Summary-read if available and compare listed diagnoses with face sheet. Code diagnoses and procedures listed on discharge summary but not specified on face sheet..
Operative Reports-scan to identify additional procedures requiring coding.
Consult previous medical records in patients admitted for follow-up of neoplasm to determine the primary and secondary sites.
X-ray and laboratory-use reports as guides to identify diagnoses (e.g. types of infections) or more detail (e.g. type of fractures).
Physician’s Orders-scan to detect treatment for unlisted diagnoses-the administration of insulin, antibiotics, and sulfonamides may indicate treatment of diabetes, respiratory or urinary infections which should be confirmed by checking other medical record forms.

3.Code incomplete face sheets by reviewing the above items.

Record codes assigned in pencil on the fact sheet.
Request supervisor’s assistance if difficulty is encountered in identifying codable data by scanning record.
Call physician for diagnostic information only if instructed to do so by supervisor.

4.Exercise discretion in coding diagnostic conditions not identified on the face sheet or discharge summary.

Query physician on the deficiency report if the coding question influences Identification of most specific code..
Review all alcohol/drug abuse cases to confirm prior to coding.

5.Process special diagnostic coding situations as follows:

V codes are used to identify encounters for reasons other than illness or injury. V codes are used as principal diagnoses for newborn admissions (V30.0-V37.0), Chemotherapy session (V58.0), Radiotherapy session (V58.1), Removal of fixation devices (V54.0), and Attention to Artificial openings (V55). For inpatient coding, avoid the use of V codes as the principal diagnosis where a diagnosis of a condition can be made.
V codes are used in outpatient coding when a person who is not currently ill obtains health services for a specific purpose, such as, to act as a donor, or when a circumstance influences the person’s health status but is not in itself a current illness or injury. Patients receiving preoperative evaluations receive a code from category V72.8.
Avoid using codes that lack specificity. These vague codes should not be used if it is possible to obtain the information required to assign a more specific code.
Inpatient coding requires that signs and symptoms are coded when a specific diagnosis cannot be made or when the etiology of a sign or symptom is unknown. Do not code symptoms if the etiology is known and the symptom is usually present with a specific disease process. Example: Do not code convulsions with the diagnosis of epilepsy.
Outpatient coding requires that diagnoses documented as “probable, suspected, questionable, rule out or working”, should not be coded. Code the condition for that visit, i.e., signs or symptoms or abnormal test results.
Chronic conditions may be coded as many times as the patient receives treatment.
Code abnormal laboratory tests only when noted on the face sheet by the attending physician.
When there are more diagnoses for a hospitalization, acute conditions take precedence over chronic and at least one comorbid condition or complication should be included in the diagnoses which may be submitted to Medicare. All complications and comorbitities should be reported for calculating severity of illness.

6.Sequence diagnoses and procedures according to the “Guidelines for Sequencing and Designating Principal Diagnosis and Principal Procedure Codes.”


1.Charge sheets that must be coded are, upon receipt by the billing account, forwarded to the coding department for diagnosis and CPT coding.

2.Medical coders code the diagnosis description given in the charge sheets according to established guidelines, using the ICD-9-CM (International Classification of Diseases, Revision 9, Clinical Modification, and Volumes 1 & 2) diagnosis coding system and CPT/HCPCS codes according to the procedure performed.. The published diagnosis/CPT coding rules under the ICD-9-CM/CPT coding system are observed.

3.Codes are selected strictly based on documentation provided by the client, and to the highest specificity as indicated in the submitted documents. When documentation is insufficient or unclear, the charges are returned to the client for clarifications.

4.Coding policies and guidelines, if any, established by the client, the coding supervisor, or insurer are followed wherever applicable during the process of coding.

5.When coders identify procedure coding or other errors in the charge information given to them, such errors are corrected with an explanatory note written on the concerned charge sheet. If the coding department decides that the errors are of such a type that will require client authorization or clarification, then such authorization or clarification is obtained from the client by the concerned billing account.

6.When a coder finds that the information on the charge sheet is insufficient to select the appropriate diagnosis or procedure code, the coder writes a note in the charge sheet stating what additional information is needed to supply the code.

7.When a given diagnosis code is not in the list of covered diagnosis codes listed in the state Medicare carrier’s LMRP (Local Medical Review Policy), the coder will code the diagnosis as documented and write “Not in LMRP” in the charge sheet. A policy can be arrived on handling denials by the operation team and client can be alerted on the same.

8.Coders, where ever possible, advise billing departments on the appropriateness of the diagnosis codes and procedure codes documented in a charge sheet, toward ensuring accurate health care claim submission. The clients are also informed of the same.

9.Coders should not alter codes or change information documented in the charge sheet, or any other medical document, unless authorized by the client, except when there are definite errors, such as typographical errors. No attempt will be made to alter the procedure or diagnosis documented by the physician or medical service provider. (See also point 6 above)

10.Upon completion of coding, the coded charge sheets are forwarded to the charge entry department of the respective billing account.

11.The work of new coders who join the department will be fully audited before file submission, until such time the coders gain the required level of accuracy.

12.A hundred percent audit of all coding work can be conducted during project transition, until such time the coders gain the required experience and accuracy levels.

13.Account specific coding policies, if applicable, will be documented

Tools of the Medical Billing

1.CPT Book – Procedural Coding

Medical services provided by physicians are identified using the AMA Current Procedure Terminology or CPT codes. The AMA CPT book provides descriptors for each of the 8,000 codes listed. Frequently there are additional instructions for code use in each section of the book. These CPT rules should be followed when choosing the correct code to describe the service provided

2.ICD-9-CM - Medical Diagnosis Coding

The ICD-9-CM coding system contains three "volumes" of coding information although the volumes come in one book. Volume 1 contains the diagnosis codes that every provider needs for billing. Volume 2 is an alphabetical index of Volume 1. Outpatient diagnostic or treatment centers, like physician offices, need only Volumes 1 and 2. Thus, books that contain only Volumes 1 and 2 are often referred to as physician, office, or outpatient editions.

Volume 3 contains procedure codes, not diagnosis codes. Volume 3 codes are used for billing inpatient hospital stays in the DRG system so books that contain Volume 3 are called hospital, payer, or inpatient editions

3.HCPCS – CPT Level II codes

HCPCS Level II codes are used to bill Medicare for supplies, materials, injections, DME, rehab, and other services.

4.NCCI Manual

National Correct Coding Initiative guide will help us code our service for reimbursement in compliance with CMS’s policies to prevent claim rejection, delays, and audits.

CPT Coding System

CPT Coding System

Current Procedural Terminology (CPT), Fourth Edition, is a listing of descriptive terms and identifying codes for reporting medical services and procedures. The purpose of CPT is to provide a uniform language that accurately describes medical, surgical, and diagnostic services, and thereby serves as an effective means for reliable nationwide communication among physicians, patients, and
third parties

The American Medical Association (AMA) first developed and published CPT in 1966. The first edition helped encourage the use of standard terms and descriptors to document procedures in the medical record; helped communicate accurate information on procedures and services to agencies concerned with insurance claims; provided the basis for a computer-oriented system to evaluate operative procedures; and contributed basic information for actuarial and statistical purposes.

The first edition of the CPT code book contained primarily surgical procedures, with limited sections on medicine, radiology, and laboratory procedures.
The second edition was published in 1970, and presented an expanded work of terms and codes to designate diagnostic and therapeutic procedures in surgery, medicine, and the specialties. At that time, five-digit coding was introduced, replacing the former four-digit classification. Another significant change was a listing of procedures relating to internal medicine.

In the mid- to late 1970s, the third and fourth editions of the CPT code were introduced. The fourth edition, published in 1977, represented significant updates in medical technology, and a procedure of periodic updating was introduced to keep pace with the rapidly changing medical environment. In 1983, the CPT code was adopted as part of the HealthCare Common Procedure Coding System (HCPCS) (Formerly called as HealthCare Financing Administration's (HCFA) Common Procedure Coding System) . With this adoption, HCFA mandated the use of HCPCS to report services for Part B of the Medicare Program. In October 1986, CMS also required State Medicaid agencies to use HCPCS in the Medicaid Management Information System. In July 1987, as part of the Omnibus Budget Reconciliation Act, HCFA mandated the use of CPT for reporting outpatient hospital surgical procedures. Today, in addition to use in federal programs (Medicare and Medicaid), CPT is used extensively throughout the United States as the preferred work of coding and describing health care services

ICD coding system

ICD coding system

ICD (International Classification of Disease) is a coding system for which the first edition was published in 1900, and it is being revised at approximately 10-year intervals. The most recent version is ICD-10, which was published in 1992. WHO is responsible for its maintenance.

In US, the coding is still based on ICD-9-CM, which contains more detailed codes.
ICD consists of a core classification of three-digit codes, which are the minimum requirement for reporting the reason for the encounter. An optional fourth digit provides an additional level of detail. At all levels, the numbers 0 to 7 are used for further detail, whereas the number 8 is reserved for all other cases and the number 9 is reserved for unspecified coding.

The basic ICD is meant to be used for coding diagnostic terms, but ICD-9 as well as ICD-10 also contains a set of expansions for other families of medical terms. For instance, ICD-9also contains a list of codes starting with the letter “V” for reasons for encounter or other factors that are related to someone’s health status. A list of codes starting with the letter “E” is used to code external causes of death. The nomenclature of the morphology of neoplasms is coded by the “M” list.
The disease codes of both ICD-9 and ICD-10 are grouped into chapters. For example, in ICD-9, infectious and parasitic diseases are coded with the three-digit codes 001 to 139, and in ICD-10 the codes are renumbered and extended as codes starting with the letters A or B; for tuberculosis the three-digit codes 010 to 018 are used in ICD-9, and the codes A16 to A19 are used in ICD-10. The four-digit levels and optional five-digit levels enable the encoder to provide more detail. Table below gives examples of some codes in the ICD-9 system.

Example of a Four-Digit Code Level in ICD-9 and the Five-Digit Code Level as Extended by the ICD-9-CM
Code Disease
001 - 139 Infectious and parasitic diseases
001 - 009 Infectious diseases of the digestive tract
003 Other Salmonella Infections
- 003.0 Salmonella gastroenteritis
- 003.1 Salmonella Septicemia
- 003.2 Localized Salmonella Infections
- 003.20 Localized Salmonella Infection, Unspecified
- 003.21 Salmonella Meningitis
- 003.22 Salmonella Pneumonia
- 003.23 Salmonella Arthritis
- 003.24 Salmonella Osteomyelitis
- 003.29 Other Localized Salmonella Infections
- 003.8 Other Specified Salmonella Infections
- 003.9 Salmonella Infections, Unspecified
The U.S. National Center for Health Statistics published a set of clinical modifications to ICD-9, known as ICD-9-CM. It is fully compatible with ICD-9, but it contains an extra level of detail where needed. In addition, ICD-9-CM contains a volume III on medical procedures.

What is Medical Coding?

Every Healthcare Provider that delivers a Service receives money for these services by filing a claim with patient’s Health Insurance Carrier. This is also referred as an encounter. An encounter is defined as “a face to face contact between a healthcare professional and a eligible beneficiary.”

Codes exist for all types of encounters, services, tests, treatments, and procedures provided in a Medical office, clinic or hospital. Even patient complaints such as headaches, upset Stomach, etc have codes which consist of a set of numbers and a combination of set of numbers. The Combination of these codes tells the payer what was wrong with patient and what service was performed. This makes it easier to handle these claims and identify the provider on a predetermined basis.

Reason for the Visit /Encounter – Diagnosis Code
Service rendered - Procedure Code
Coding Systems:

The two major coding systems are

1. International Classification of Diseases – Clinical Modification – 9th Revision (ICD-9-CM)
2. Current Procedural Terminology (CPT)

CPT and ICD-9-CM are not the only coding systems. Here are few more coding systems that are used to code a variety of coding information:
1. CDT-3 codes
2. ABC codes
3. SNOMED codes
4. NDC codes
5. Home Healthcare (saba) codes
6. DRG systems.

What are the problems faced by US providers or physicians?

Constantly US physicians face the problems of insurance coding & payment reimbursement on their insurance claims. Optimizing reimbursement is like trying to piece together a puzzle with a lot of pieces. Not only is there a lot of complexity, but change is continuously occurring. There are a number of important factors, few are outlined below.

1. Providers are using invalid, obsolete or deleted codes while submitting claims to respective insurance carriers.
2. The code and fees may be okay, but providers may be losing charge information, missing super bill fees or billing insurance carriers wrongly or irregularly.
3. The practice is not well-informed about current coding and billing issues.
4. The practice doesn't have and/or doesn't follow written policies and procedures which support the billing, coding and collections processes.
5. Not participating in Medicare may allow providers to bill higher fees to patients, but this may not be in the best interests of their practices.
6. Poor understanding of how insurance carriers work and ineffective strategies and systems for dealing with them.
7. The practice is not using forms and documents which are current.

In general, the basic tools needed by health care providers for optimizing reimbursement are:
1. A thorough understanding of the billing process and related terminology.
2. Procedure coding and diagnostic expertise.
3. A well-designed super bill.
4. A fee schedule based on relative values.
5. Current and accurate forms and documents.
6. Current reference materials (such as code books).
7. Written policies and procedures covering billing guidelines.

A brief study on working of Medical billers?

Medical billers and coders usually work forty regular office hours from Monday through Friday on a desk in the billing office or billing department of the professional healthcare office. They must know the different methods of billing patients, understand various collection methods, ethical and legal implications have a good working knowledge of medical terminology, anatomy, medical billing and claims form completion, and coding.

They also must understand database management, spreadsheets, electronic mail, and possess state-of-the-art word processing and accounting skills, be proficient in bookkeeping, and be able to type at a speed of at least 45 words-per-minute.

The work area of medical billers and coders usually is in a separate area away from the patients and public eye. However, even though they are not involved in the actual process of doctors and healthcare professionals providing medical care they need to possess excellent customer service skills when it comes to making contact with clients, insurance companies, and often patients. Medical billers must know how to explain charges, deal with criticism, give and receive feedback, be assertive, and communicate effectively without becoming confused as the person is asking questions. Patients can quickly become frustrated when trying to deal with healthcare providers and bills over the phone.

While an increasing amount of patient care is being funded through HMO (Health Managed Organizations) related insurance, where the patient makes a small co-payment at the time of service and the doctor bills the managed care company for the balance, a number of patients still need to make arrangements to pay for their medical services over a period of time. Part of the medical biller and coder's job is to contact some of these patients from time to time regarding a past due bill. Incoming calls from patients who have questions regarding a bill are also directed to the medical biller's office. The way s/he communicates over the phone can make or break business relationships.

Other specialties closely related to the medical billing profession are:

• Medical Coders/Coding Specialists
• Patient Account Representatives
• Electronic Claims Processors
• Billing Coordinators
• Reimbursement Specialists
• Claims Assistant Professionals
• Medical Claims Analysts
• Medical Claims Processors
• Medical Claims Reviewers
• Medical Collectors

What is a Claim?

A claim is a request made to the insurance company, by the billing office on behalf of the insured person or the physician, for reimbursement of services rendered by the physician. A claim is sent out on standardized forms that contain information regarding the patient, his insurance coverage, the physician, the diagnosis and the treatment. A claim is either mailed or electronically transmitted to an insurance company.

In a small family practice or suburban clinic this task may be simple and assigned to the medical assistant or nurse but in bigger practices and clinics this is the medical biller's job! When a physician treats a patient, the doctor’s office must file an insurance claim to get paid. This claim is usually filed on paper and sent by mail. These paper claims are notoriously slow, often taking 60-90 days or more for the doctor to get paid.

Now, these claims can be processed electronically, saving healthcare provider’s time and money. With electronic claims processing, payment time is drastically reduced to just 7 to 21 days on average. This dramatic improvement in cash flow is exactly why medical billing is in such demand. Physicians are constantly seeking remedies to their medical billing difficulties.

Why Physicians go for Medical Billing Companies to do billing?

America has more than 3000 insurance companies, each with a number of plans. This posed a problem to the physicians. Every insurance company required the medical claims filed to them according to their own rules and formats. Also, when physicians sent out claims to these insurance companies the explanation of the diagnosis and the treatment, necessary to every claim, were voluminous and time consuming.

The forms and codes developed by Center for Medicare and Medicaid Services (CMS – formerly known as HealthCare Financing Administration HCFA) reduced the volume of the information to be transferred to the insurance companies but the volume was still considerable and required skill and time. The medical treatment performed still had to be encoded. These codes, with the patients’ demographic information, still had to be entered into specific medical billing software’s. This process was again time consuming and the extra personnel and infrastructure meant extra costs. They could not handle the volume and turned to specialist billing offices for assistance.

It was easier for a physician to source their non-medical, accounting work to a billing office so that he could concentrate on his practice. Thus the medical billing office became an intermediary between the physician and the insurance companies.

The billing office collects information relevant to the patients’ treatment from the physicians’ office. Using these codes and forms, the billing office bills the insurance companies and patients on behalf of the physicians. Until recently, medical billing was usually done by typing out and mailing claims to various insurance companies. Now the objective of the medical billing industry is to offer fast, efficient, and error-free claims processing using computers to log and transmit claims to the insurance companies.


What Is Medical Billing?

Medical billing is better described as full medical practice management and a doctor's key to getting paid. Full medical practice management," meaning that billing office handle all the bookkeeping and accounting functions for their doctor-clients, including patient statements, recording payments, preparing financial reports, and even consulting the physicians on issues such as how to negotiate contracts with the growing number of managed care companies such as HMOs and PPOs that are trying to reign in doctors' fees.

Medical billing involves preparation of medical bills on behalf of the doctor for the treatments performed on the patients. The work also involves sending the medical bills to the respective insurance company with whom the patient is a beneficiary. The billing department also collects the money from the insurance company on behalf of the doctors. The insurance company pays for the treatments billed by the billing office.

The Medical Billing industry is a subsidiary of the Health care industry. Medical Billing is the financial-data management of a physician or a group of physicians’ practices. This means maintaining all of the physician’s non-medical records and keeping track of and collecting all money due to him.

Understanding Health Insurance Terms

The amount patient / insured is required to pay for medical care in a fee-for-service plan, after deductible have been met. The coinsurance rate is usually expressed as a percentage. For example, if the insurance company pays 80 percent of the claim, patient / insured pay 20 percent.

Coordination of Benefits
A system to eliminate duplication of benefits, when an individual is covered under more than one group plans. Benefits under the two plans usually are limited to no more than 100 percent of the claim.

Another way of sharing medical costs. Individual pay a flat fee every time he receives medical service. (for example, $5 for every visit to the doctor). The insurance company pays the rest.

Covered Expenses
Most insurance plans, whether they are fee-for-service, HMOs, or PPOs, do not pay for all services. Some may not pay for prescription drugs. Others may not pay for mental health care. Covered services are those medical procedures the insurer agrees to pay for. They are listed in the policy.

Customary Fee
Most insurance plans will pay only what they call a reasonable and customary fee for a particular service. If patient’s doctor charges $1,000 for a hernia repair while most doctors in that area charge only $600, patient will be billed for the $400 difference. This is in addition to the deductible and coinsurance which patient is expected to pay.

The amount of money insured must pay each year to cover medical care expenses before insurance policy starts paying.

Specific conditions or circumstances for which the policy will not provide benefits.

HMO (Health Maintenance Organization)
Prepaid health plans. Insured pay a monthly premium and the HMO covers doctors' visits, hospital stays, emergency care, surgery, checkups, lab tests, x-rays, and therapy. Insured must use the doctors and hospitals designated by the HMO.

Managed Care
Ways to manage costs, use, and quality of the health care system. All HMOs and PPOs, and many fee-for-service plans, have managed care.

Maximum Out-of-Pocket Expenses
The most money insured will be required pay a year for deductibles and coinsurance. It is a stated dollar amount set by the insurance company, in addition to regular premiums.

PPO (Preferred Provider Organization)
A combination of traditional fee-for-service and HMO. When patient use the doctors and hospitals that are part of the PPO, he can have a larger part of medical bills covered. Patient can use other doctors, but at a higher cost.

Pre-existing Condition
A health problem that existed before the date insurance became effective.

The amount which insured or his employer pays in exchange for insurance coverage.

Primary Care Doctor
Usually patient’s first contact for health care. This is often a family physician or internist, but some women use their gynecologist. A primary care doctor monitors health and diagnoses and treats minor health problems, and refers the patient to specialists if another level of care is needed. In many plans, care by specialists is only paid for if the patient is referred by primary care doctor. An HMO or a POS plan will provide a list of doctors from which patient will choose primary care doctor (usually a family physician, internists, obstetrician-gynecologist, or pediatrician). This could mean patient might have to choose a new primary care doctor if his current one does not belong to the plan. PPOs allow members to use primary care doctors outside the PPO network (at a higher cost). Indemnity plans allow any doctor to be used.

Any person (doctor, nurse, dentist) or institution (hospital or clinic) that provides medical care.

Third-Party Payer
Any payer for health care services other than the patient / insured. This can be an insurance company, an HMO, a PPO, or the Federal Government.

Long-Term Care Insurance

Long-term care insurance is designed to cover the costs of nursing home care, which can be several thousand dollars each month. Long-term care is usually not covered by health insurance except in a very limited way. Medicare covers very few long-term care expenses. There are many plans and they vary in costs and services covered, each with its own limits

Hospital Indemnity Insurance

This insurance offers limited coverage. It pays a fixed amount for each day, up to a maximum number of days. An individual may use it for medical or other expenses. Usually, the amount the individual receive will be less than the cost of a hospital stay.

Some hospital indemnity policies will pay the specified daily amount even if patient has other health insurance. Others may coordinate benefits, so that the money patient /insured receive is not equal / more than 100 percent of the hospital bill.

Workmen’s Compensation Insurance

This insurance policy protects the insured party from legal liabilities against injury or death of any of his employees who is a "workman" as defined by the Workmen's Compensation Act.

This insurance policy is necessary for every employer since it indemnifies him against his legal liability as an "employer" towards accidental or fatal injuries sustained by his work men during work.

On extra payment of premium, medical, surgical and hospitalization expenses including transportation costs are also covered.
Liabilities that may arise owing to diseases mentioned in Section III (C) of Workmen's Compensation Act during the course of employment are also covered

Disability Insurance

Disability insurance replaces incomes which individual lose if he has a long-term illness or injury and cannot work. This is an important type of coverage for working-age people to consider. Disability insurance does not cover the cost of rehabilitation if an individual is injured.

Some employers offer group disability insurance and this may be one of the benefits where individual work. Or the individual might be eligible for some government-sponsored programs that provide disability benefits. Many different kinds of individual policies are also available.


The Medicaid Program provides medical assistance for certain individuals and families with low incomes and resources. Medicaid eligibility is limited to individuals who fall into specific categories. Although the Federal government establishes general guidelines for the program, the Medicaid program requirements are actually established by each State

Medicaid eligibility is limited to individuals who fall into specified categories. The federal statute identifies over 25 different eligibility categories for which federal funds are available. These categories can be classified in to five broad coverage groups:
• Children;
• Pregnant Women;
• Adults in Families with Dependent children;
• individuals with disabilities;
• and individuals 65 or over


Medicare is the federal (national) health insurance program for Americans age 65 and older and for certain disabled Americans. If individual is eligible for Social Security or Railroad Retirement benefits and are age 65, he and his spouse automatically qualify for Medicare.

Medicare has two parts: hospital insurance, known as Part A, and supplementary medical insurance, known as Part B, which provides payments for doctors and related services and supplies ordered by the doctor. If individual is eligible for Medicare, Part A is free, but insured must pay a premium for Part B.

Medicare will pay for many of insured health care expenses, but not all of them. In particular, Medicare does not cover most nursing home care, long-term care services in the home, or prescription drugs. There are also special rules on when Medicare pays patient’s bills that apply if patient have employer group health insurance coverage through his own job or the employment of a spouse.

Medicare usually operates on a fee-for-service basis.
Some people who are covered by Medicare buy private insurance, called "Medigap" policies, to pay the medical bills that Medicare doesn't cover. Some Medigap policies cover Medicare's deductibles; most pay the coinsurance amount. Some also pay for health services not covered by Medicare. There are 10 standard plans from which individual can choose (some States may have fewer than 10.) If an individual buy a Medigap policy, he should make sure that he does not purchase more than one.

Types of Insurance

Types of Insurance



Disability Insurance

Workmen’s Compensation Insurance

Hospital Indemnity Insurance

Long-Term Care Insurance



PPOs give policyholders a financial incentive — reasonable co-payments (also called co-pays) — to stay within the group's network of practitioners.

PPO advantages:
• The standard co-payment is $10 for a routine office visit during regular hours.
• Individual may go to any specialist without permission, as long as the doctor participates in the network.

PPO disadvantages:
• If individual see an out-of-network doctor, he may have to pay the entire bill himself, and then submit it for reimbursement.
• Individual may have to pay a deductible if he chooses to go outside the network, or pay the difference between what network doctors vs. out-of-network doctor’s charge.

POS Plan


POS plans are more flexible than HMOs, but they also require patient to select a PCP.

POS advantages:
• Depending on patient insurance company's rules, he may choose to visit a doctor outside the network and still receive coverage — but the amount covered will be substantially less than if patient went to a physician within the network.
• These plans tend to offer more preventive care and well-being services, such as workshops on smoking cessation and discounts to health clubs.

POS disadvantages:
• Individual must choose a PCP.
• While individual may choose to see a physician outside the network, if he did not receive permission from PCP, individual is likely to wind up submitting the bills himself and receiving only a nominal reimbursement — if any.

HMO Plans

HMOs are the least expensive, but also the least flexible of all the health insurance plans. They are geared more toward members of a group seeking health insurance.

HMO advantages: • They offer their customers low co-payments, minimal paperwork, and coverage for many preventive-care and health-improvement programs.

HMO disadvantages:• Individual must choose a primary care physician, also known as a PCP.

• HMOs require that individual see only network doctors or they won't pay.
• Individual must get a referral from your PCP to see a specialist.

FFS, Also Called Traditional Indemnity

FFS coverage offers flexibility in exchange for higher out-of-pocket expenses, more paperwork, and higher premiums.

FFS advantages:
• Individual may choose your own doctors and hospitals.
• Individual may visit any specialist without getting permission from a primary care physician.

FFS disadvantages:
• There's typically a deductible (anywhere from $500 to $1,500) before the insurance company starts paying claims, and then doctors are reimbursed about 80 percent of the bill while patient pick up the remaining 20 percent.
• FFS plans pay only for "reasonable and customary" medical expenses. If patient’s doctor charges more than the average for the area, patient will have to pay the difference.

Features of different Insurance Plans

Whether insured is opting for traditional indemnity fee-for-service plans (FFS)

Health maintenance organizations (HMOs)

Point of service plans (POS)

Preferred provider organizations (PPO).

Each plan has its own features to consider before making a choice.

What Types of Insurance Plans Are There?

What Types of Insurance Plans Are There?

Managed Care: An Explanation
You will hear the term "managed care" quite a lot in the United States. It is a way for insurers to help control costs. Managed care influences how much health care an individual use. Almost all plans have some sort of managed care program to help control costs. For example, if an individual need to go to the hospital, one form of managed care requires that he receive approval from his insurance company before he is admitted to make sure that the hospitalization is needed. If he goes to the hospital without this approval, he may not be covered for the hospital bill.
Fee-for-Service Plans
This is the traditional kind of health care policy. Insurance companies pay fees for the services provided to the insured people covered by the policy. This type of health insurance offers the most choices of doctors and hospitals. An individual can choose any doctor he wishes and change doctors any time. He can go to any hospital in any part of the country.
With fee-for-service, the insurer only pays for part of doctor and hospital bills. Individual’s pay a monthly fee, called a premium.
A certain amount of money each year, known as the deductible, is paid for by the individual before the insurance payments begin. In a typical plan, the deductible might be $250 for each person in a family, with a family deductible of $500 when at least two people in the family have reached the individual deductible. The deductible requirement applies each year of the policy. Also, not all health expenses have count toward the deductible. Only those covered by the policy do. Individual need to check the insurance policy to find out which ones are covered.
After individual has paid deductible amount for the year, he would share the bill with the insurance company. For example, individual might pay 20 percent while the insurer pays 80 percent. Individual’s portion is called "coinsurance".
To receive payment for fee-for-service claims, individual may have to fill out forms and send them to insurer. Sometimes doctor's office will do this for Insured. Individual also need to keep receipts for drugs and other medical costs and is responsible for keeping track of his own medical expenses.
There are limits as to how much an insurance company will pay for a claim if both individual and his spouse file for it under two different group insurance plans. A coordination of benefit clause usually limits benefits under two plans to no more than 100 percent of the claim.
Most fee-for-service plans have a "cap," the most individual will have to pay for medical bills in any one year. He reaches the cap when out-of-pocket expenses (for deductible and coinsurance) total a certain amount. It may be as low as $1,000 or as high as $5,000. The insurance company then pays the full amount in excess of the cap for the items listed in policy. The cap does not include what individual pay for monthly premium.
Some services are limited or not covered at all. Insured need to check on preventive health care coverage such as immunizations and well-child care.
There are two kinds of fee-for-service coverage: basic and major medical. Basic protection pays toward the costs of a hospital room and care while patient is in the hospital. It covers some hospital services and supplies, such as x-rays and prescribed medicine. Basic coverage also pays toward the cost of surgery, whether it is performed in or out of the hospital, and for some doctor visits. Major medical insurance takes over where insured basic coverage leaves off. It covers the cost of long, high-cost illnesses or injuries.
Some policies combine basic and major medical coverage into one plan. This is sometimes called a "Comprehensive Plan." Insured need to check whether his policy covers both kinds of protection.

Health Maintenance Organizations (HMOs)
Health maintenance organizations are prepaid health plans. As an HMO member, insured pay a monthly premium. In exchange, the HMO provides comprehensive care for the insured & his family, including doctors' visits, hospital stays, emergency care, surgery, laboratory (lab) tests, x-rays, and therapy.
The HMO arranges for this care either directly in its own group practice and/or through doctors and other health care professionals under contract. Usually, patient choices of doctors and hospitals are limited to those that have agreements with the HMO to provide care. However, exceptions are made in emergencies or when medically necessary.
There may be a small co-payment for each office visit, such as $5 for a doctor's visit or $25 for hospital emergency room treatment. Individual total medical costs will likely be lower and more predictable in an HMO than with fee-for-service insurance.
Because HMOs receive a fixed fee for your covered medical care, it is in their interest to make sure patient get basic health care for problems before they become serious. HMOs typically provide preventive care, such as office visits, immunizations, well-baby checkups, mammograms, and physicals. The range of services covered varies in HMOs, so it is important to compare available plans. Some services, such as outpatient mental health care, often are provided only on a limited basis.
Many people like HMOs because they do not require claim forms for office visits or hospital stays. Instead, members present a card, like a credit card, at the doctor's office or hospital. However, in an HMO individual may have to wait longer for an appointment than he would with a fee-for-service plan.
In some HMOs, doctors are salaried and they all have offices in an HMO building at one or more locations in individual’s community as part of a prepaid group practice. In others, independent groups of doctors contract with the HMO to take care of patients. These are called individual practice associations (IPAs) and they are made up of private physicians in private offices who agree to care for HMO members. Individual select a doctor from a list of participating physicians that make up the IPA network. If an individual is thinking of switching into an IPA-type of HMO, he needs to check whether doctor participates in the plan.
In almost all HMOs, individuals are either assigned or choose one doctor to serve as patient’s primary care doctor. This doctor monitors health and provides most of patient’s medical care, referring to specialists and other health care professionals as needed. Patient usually cannot see a specialist without a referral from primary care doctor who is expected to manage the care received by the patient. This is one way that HMOs can limit patient’s choice.

Point-of-Service Plans (POS)
Many HMOs offer an indemnity-type option known as a POS plan. The primary care doctors in a POS plan usually make referrals to other providers in the plan. But in a POS plan, members can refer themselves outside the plan and still get some coverage.
If the doctor makes a referral out of the network, the plan pays all or most of the bill. If patient refer themselves to a provider outside the network and the service is covered by the plan then patient will have to pay coinsurance.

Preferred Provider Organizations (PPOs)
The preferred provider organization is a combination of traditional fee-for-service and an HMO. Like an HMO, there are a limited number of doctors and hospitals to choose from. When patient use those providers (sometimes called "preferred" providers, other times called "network" providers), most of his medical bills are covered.
When patient go to doctors in the PPO, he present a card and do not have to fill out forms. Usually there is a small co-payment for each visit. For some services, patient may have to pay a deductible and coinsurance.
As with an HMO, a PPO requires that patient choose a primary care doctor to monitor his health care. Most PPOs cover preventive care. This usually includes visits to the doctor, well-baby care, immunizations, and mammograms.
In a PPO, patient can use doctors who are not part of the plan and still receive some coverage. At these times, patient will pay a larger portion of the bill himself (and also fill out the claims forms). Some people like this option because even if their doctor is not a part of the network, it means they do not have to change doctors to join a PPO.

Types of Health Insurance

What Types of Insurance Plans Are There?

Managed Care

Fee-for-Service Plans (Traditional Indemnity )

Health Maintenance Organization (HMO)

Point-of-Service Plan(POS)

Preferred Provider Organization (PPO)

Types of Health Insurance

The two main ways that people obtain health coverage are by paying into a group or buying individual insurance.

Ø Group Health Plans

Ø Individual Insurance Plans

Group Insurance Plans

Most Americans get health insurance through their jobs or are covered because a family member has insurance at work. This is called group insurance. Group insurance is generally the least expensive kind. In many cases, the employer pays part or all of the cost.

Some employers offer only one health insurance plan. Some offer a choice of plans: a fee-for-service plan, a Health Maintenance Organization (HMO), or a Preferred Provider Organization (PPO), for example. Employers with 25 or more workers are required by Federal law to offer employees the chance to enroll in an HMO.

What happens if an individual or his family member leaves the job? He will lose employer-supported group coverage. It may be possible to keep the same policy, but he will have to pay for it himself. This will certainly cost him more than group coverage for the same, or less, protection. A Federal law makes it possible for most people to continue their group health coverage for a period of time called COBRA (for the Consolidated Omnibus Budget Reconciliation Act of 1985), the law requires that if an individual work’s for a business of 20 or more employees and leave the job or are laid off, he can continue to get health coverage for at least 18 months. He will be charged a higher premium than when he was working.

He / she also will be eligible to get insurance under COBRA if their spouse was covered but now he /she is widowed or divorced. If an individual was covered under his parents group plan while he was in school, he can also continue in the plan for up to 18 months under COBRA until the individual find a job that offers individual health insurance.

Not all employers offer health insurance. Individual might find this to be the case with his job, especially if he work’s for a small business or work part-time. If the employer does not offer health insurance, he might be able to get group insurance through membership in a labor union, professional association, club, or other organization.

Individual Insurance Plans

If the employer does not offer group insurance, or if the insurance offered is very limited, one can buy an individual policy. One can get fee-for-service, HMO, or PPO protection.But an individual should compare the options and shop carefully because coverage and costs vary from company to company. Individual plans may not offer benefits as broad as those in group plans

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