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What is Account Receivables?

Receivables are defined as amounts due and expected to be collected by billing / provider’s office for the services provided to individuals. In Medical Billing, receivables are handled by Account Receivables Department. Account Analyst plays a crucial role in identifying and resolving issues which helps to reduce or clear receivables.

What is the purpose of Claims review & AR Analysis?

The purpose of claim analysis is to identify and resolve medical claims billing and reimbursement issues toward maximizing collections and minimizing accounts receivables. It helps to ensure timely, accurate and final settlement of health insurance claims and patient bills by insurers or patients as appropriate. The scope of claim analysis is applicable to all health insurance claims and patient bills that have not been fully and finally settled by liable party or parties comprising health insurers, patients and others. It is the responsibility of the Accounts Receivables Analyst to ensure that AR is under control & acceptable by industry standards.

What is the scope of AR Department?

AR Department has to ensure steady inflow of money from the insurance company. The main motive of this department is to collect money for all the treatments taken by the patients in a timely fashion. Usually the turn around period for the payment by the insurance company is 30 – 45 days. Once the limit is exceeded AR department has to make an enquiry for the delay. There are various reasons for the delay like:
e) Correct details may not have been provided to the insurance companies.
f) Claims were sent correctly but Insurance Company may not have received the claims.
g) The checks issued might have been sent to the wrong address.
h) The insurance company may delay the payments if they have a backlog and they would inform us by a letter that they have received the claims and would be making the payments shortly.

AR department acts as a hub around which other departments revolve. This department can gather & update lot of billing information which is required to settle a claim. Account analyst uses various reports available in billing software to identify claims which have not been settled.

The Medical billing software is capable of running reports that pull out claims that are unpaid for greater than 30 days. These are called aging reports and these reports show pending payments in slots such as 0 – 30 days, 31-60 days and 61-90 days. Claims filed within the last 30 days will find themselves in the first slot (0-30days). Claims that are more than 30 days but less than 60 days old will be found in the 31-60 days slot. A glance at this report will show the AR personnel the claims that need to be followed up on with the insurance company.

Claims will be followed up over the telephone or by written correspondence. It would be necessary to find out why the claims are yet to be paid and what needs to be done to have these claims paid. The delay and denials will be corrected by the billing office in coordination with the physician’s office and the insurance carriers. The same applies when patient billing statements are sent out. The patient is given 3-4 weeks to pay the bill and if the payment is not received with in that time, the billing office will follow up with the patient

Denial, Balance Billing, Capitation Payment

• Denial :
Denial is the technical term used for the non-payment of a claim by the insurance. The insurance usually pays the claim if the details presented to them are sufficient enough for processing. If there is any lack of information then the insurance quotes a reason for which the claim is not considered for payment which is known to be the denial reason. These reasons are found in the EOB. Some insurance like Medicare follow a general set of denial codes which is uniform across all the states. But some commercial insurance follow their own set of reasons codes for the denials which will be clearly mentioned in the EOB.
For Example:-
If the claim has gone to the insurance without the patient date of birth then the insurance will not pay the claim stating a denial reason code to it.

• Balance Billing:
It is the difference between the billed amount and the amount approved by insurance. Once the claim payment had been made by the primary insurance and if there is any balance pending for the claim then the balance is either sent to the secondary payor or to the patient.
If the patient is enrolled with the secondary payor then the balance is billed to it. Generally for secondary billing the claim must be submitted along with the primary payor’s EOB. Only then the secondary payor will pay for the claim. In secondary billing primary payor EOB is the most important document. Some insurance like Medicare automatically transfers the pending balance to the secondary payer (Medicare Supplementary) if the patient has any. This procedure is termed as Crossover which reduces the work of the billing office.
If the patient is not enrolled with the secondary payor then the balance is billed to the patient. Patient billing cannot be done at all the cases. For certain cases we need the client’s approval for patient billing. Periodic patient statements are sent to the patient in order to intimate the balance which is pending from patient.

• Capitation Payment:-
Specified amount paid periodically to the provider for a group of specified health services, regardless of quantity rendered. This is a method of payment in which the provider is paid a fixed amount for each person served no matter what the actual number or nature of services delivered. The cost of providing an individual with a specific set of services over a set period of time, usually a month or a year. It is a payment system where managed care plans pay the health care providers a fixed amount to care for a patient over a given period. Providers are not reimbursed for services that exceed the allotted amount. The rate may be fixed for all members or it can be adjusted for the age and gender of the member.
Now let us see the diagrammatic representation of the cash posting process:

Billed amount,Allowed amount, Paid amount, Co-pay, Co-insurance, Deductible, , Posting Reference Number, Offset, Refund, Adjustment

• Billed amount:
It is the Amount charged for each service performed by the provider. In other words it is the total charge value of the claim. The billed amount for a specific procedure code is based on the provider. It may vary from place to place. It is not common across all the states.

• Allowed amount:
The maximum reimbursement the member's health policy allows for a specific service. It is the maximum dollar amount assigned for a procedure based on various pricing mechanisms. Allowed amounts are generally based on the rate specified by the insurance. This amount may be:

-a fee negotiated with participating providers.
-an allowance established by law.
-an amount set on a Fee Schedule of Allowance.

For Example:-

If the billed amount is $100.00 and the insurance allows $80.00 then the allowed amount is $80.00 and the balance $20.00 is the write-off amount.

Formula: -
Allowed amount = Amount paid + co-pay / co-insurance + Deductible

• Paid amount:
It is the amount which the insurance originally pays to the claim. It is the balance of allowed amount – Co-pay / Co-insurance – deductible. The paid amount may be either full or partial. i.e. Full allowed amount being paid or a certain percentage of the allowed amount being paid.
For Example:-
If the billed amount is $100.00 and the insurance allows $80.00 but the payment amount is $60.00. Here $60.00 is the actual amount paid for the claim.
Formula: -
Paid amount = Allowed amount – (Co-pay / Co-insurance + Deductible)

• Co-pay:
The fixed dollar amount that patient requires to pay as patient’s share each time out of his pocket when a service is rendered. This is paid during the time of the visit. Co-pay ranges from $5.00 to $25.00. Co-pay’s are usually associated with the HMO plan. The Co-pay amount is usually specified in the insurance card copy.

• Co-insurance:
Co-insurance is the portion or percentage of the cost of covered services to be paid either by insurance or patient. After the primary insurance making payment the balance of the cost covered (Co-insurance) will be sent to secondary insurance if the patient has one or to the patient.

For Example:-

If the billed amount is $100.00 and the insurance allows @80%. The payment amount is $60.00 then the remaining $20.00 is the co-insurance amount.

Formula: -

Co-insurance = Allowed amount – Paid amount – Write-off amount.

• Deductible:
Deductible is the amount the patient has to pay for his health care services, whereas only after the patient meets the deductible the health insurance plan starts its coverage. The patient has to meet the Deductibles every year. It is mostly patient responsibility and very rarely another payor pays this amount.

• Posting Reference Number:
This is the number which is given by the operator to the claims posted in order to keep track of the payment posted details. This is generally given in a specified format as per the client requirement.

For Example:-

01.3651.123103 here the 01 refers to the serial number, 3651 refers to the batch number and 123103 refer to the date and the year on which the file was received by us.

• Offset:
This is a kind of an adjustment which is made by the insurance when excess payments and wrong payments are made. If insurance pays to a claim more than the specified amount or pays incorrectly it asks for a refund or adjusts / offsets the payment against the payment of another claim. This is called as Offset.

For example:-

Let the total billed amount of two claims is $100.00 each and the specified payment for this is $80.00. The insurance pays $90.00 for the first claim. Here $10.00 is paid in excess. Now while making payment for the second claim the insurance pays $70.00 and sets $10.00 as offset. Now the insurance payment becomes normal as the excess payment had been adjusted off.

• Refund:
This is the process of returning back the excess money paid by the insurance / patient on request. If payment is received in excess than the specified amount, insurance / patient request for a refund. The process of Refund is usually done as per the client specifications.

For example:-

Let the total billed amount of a claim be $100.00 and the specified payment for this is $80.00. The insurance pays $90.00 for the claim. Here $10.00 is paid in excess. Now the insurance requests for a refund of $10.00 which will be done as per the client specifications.

• Adjustment:
An adjustment is an amount which had been adjusted for some reason and may be recoverable. It can be an additional payment or correction of records on a previously processed claim. Adjustments are done based on the client instructions. One specific type of adjustment is the write-off.

For Example:-

Let the billed amount of a claim be $100.00 and the paid amount is given as $70 and $ 30 is given as participating providers adjustment. So this $ 30 has to be adjusted.
Write-Off:- It is an amount which cannot be recovered at all. This write-off is usually done when the insurance payments are made. It is the balance of what the insurance have allowed on a particular charge i.e. Total Billed amount – Allowed amount. The main difference between an adjustment and write-off is that Adjustment may be recovered whereas write-off cannot be recovered at all.

For Example:-

If the billed amount is $100.00 and the insurance allowed amount is $80.00. The payment amount is $80.00 then the remaining $20.00 is the write-off amount.

General Terms associated with Cash posting and their definitions:

• Claim:

Forms submitted for payment of physician services, other medical services and supplies provided to Insurance beneficiaries. It is an itemized statement of healthcare services and their costs provided by hospital, physician's office or other healthcare facility. A charge when filed to insurance becomes a claim.

• Insurance Claim number:

It is the number given by the insurance to the claim in order to identify the claim in case of reference. Some insurance companies address the claim with the help of the claim number. It can be of the combination of any numeric values along with the alphabetical values. It is insurance specific and no general format is there for this.

For Example: - 12345ABXCQ78.

• EOB:

It is defined as Explanation of Benefits. This contains the claim details, the amount paid by the insurance, Co-pay / Co-insurance amount and write-off amount. It also contains the patient name, patient address, patient account number, SSN, insurance name, insurance address, insurance contact numbers and it’s customer care numbers (if any). If insurance does not pay the claim then the reason for which the claim was not paid i.e. the denial reason is also mentioned in EOB. In simple words it can be defined as the detailed explanation of the benefits provided by the insurance for the claim. Some insurance like Medicare have their own format of EOB.

For Example:-

EOMB (Explanation of Medicare Benefits) contains a statement detailing the amount of benefits paid or denied for services under the Medicare program.


What is Cash Posting?

Cash posting is a process by which the payments received from insurance companies, patients and other entities, towards settlement of claims, applied to the respective claims / patient accounts or other accounts in the billing system. Cash team receives the cash files (Check copy and EOB) and applies the payments in the billing software against the appropriate patient account. During cash posting, overpayments are immediately identified and necessary refund requests are generated for obtaining approvals. Also underpayments/denials are informed to the Analysts.

How the cash is generated, received and posted?

The charges submitted to the insurance will be processed payment is made according to the fee schedule. The insurance pays the cash through checks which is deposited in the specified banks date-wise. Each check has its own unique number and date on which the check was issued. The checks along with the claim details are received by the Billing Office in U.S who in turn groups a certain amount together and sends to the billing office here. The details which are received with the checks are known as the EOB (Explanation of Benefits).

The Billing office in U.S scans the Checks and EOB details to the Billing Office here. The Billing Office here receives the scanned documents as files. The received files are then collected by the cash poster who gives the file reference numbers based on the date on which the file was received. Then the cash poster matches the checks with the EOB details. This process is termed as file sorting or Check matching. Now the file had been sorted and the details are posted in the Software which is called as the Cash Posting.

Electronic Posting:

Cash posting can be done either manually or electronically. During manual posting the above said methods are carried on whereas in case of electronic posting the amounts deposited in the bank gets transmitted electronically to the billing office here. The transmitted details are known as Electronic File Transfer i.e. EFT’s. This Eft’s are received by the cash poster with the insurance reference number. Then the Cash poster retrieves the transmitted details and starts posting the cash electronically. In this posting the amounts that are allotted to the claims get identified by the software itself and the respective amounts are posted, for which the detailed EOB’S will be received later.

Once the posting is over the amount posted in the software is tallied with the amount received. Then a detailed report containing the claim and its posting details are taken which is helpful for any future references.


9. Modifiers: A modifier indicates that a service or procedure was altered by specific circumstances, but not changed in its definition or code. Modifiers are two digit numeric or alpha numeric codes that are appended to the end of CPT/HCPCS codes. Modifiers may be used to indicate that:
• A service or procedure has both a professional and technical component
• A service or procedure was performed by more than one physician
• A service or procedure has been increased or reduced
• Only part of a service was performed
• An additional service was performed
• A bilateral procedure was performed more than once
• Unusual events occurred
This field is printed along with the CPT/HCPCS Code in 24d field of the CMS-1500 Claim Form.

Modifiers that are currently approved for hospital outpatient use with CPT codes as defined by the 2002 AMA CPT manual are:
Modifier Description
-25 Significant, separately identifiable evaluation and management service by the same physician on the same day of the procedure or other service
-50 Bilateral procedure
-76 Repeat procedure by same physician
-77 Repeat procedure by another physician
Modifiers that are currently approved for use with HCPCS Level II codes as defined by the 2002 AMA CPT manual are:
Modifier Description
-LT Left side
-RT Right side

10. Diagnosis Code: Diagnosis code is used to indicate the health problem that a patient have. The first of these codes is the ICD-9-CM diagnosis code describing the principal diagnosis (i.e. the condition established after study to be chiefly responsible for causing this hospitalization). The remaining codes are the ICD-9-CM diagnosis codes corresponding to additional conditions that coexisted at the time of admission, or developed subsequently, and which had an effect on the treatment received or the length of stay. Medicare requires physicians to include a complete diagnosis code (or codes) on each claim submitted for payment. The first of these codes is the ICD-9-CM (International Classification of Diseases Ninth Revision Clinical Modification) diagnosis code describing the principal diagnosis (i.e. the condition established after study to be chiefly responsible for causing this hospitalization). A Maximum of 4 diagnosis codes can be printed on the HCFA-1500 claim form.
This field is printed in the 21st field of the CMS-1500 claim form.

11. Number of days/Units: This field contains the length of service performed. We need to enter number of days or units. This field is most commonly used for multiple visits, units of supplies, anesthesia minutes or oxygen volume. If only one service was performed the numerical 1 should be entered.
12. Billed Amount: It is the amount charged by a provider for a specific service. In other words it is the total charge value of the claim. The billed amount for a specific procedure code is based on the provider.


• What are Patient Charges and what does it contain?

Patient charge is nothing but the fees claimed by the physician who rendered the services to the patient. Charges can be either based upon demographic evaluation or a flat fee rate as prescribed by the physician’s office. 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.

• How Charge Sheets originate and reach us?

Once patient /spouse completes Pd sheet, patient is then referred to physician in the appointed time. After preliminary investigation physician provides the services required by the patient. In the super-bill, kind of treatment is denoted by procedure code and diagnosis code denotes the nature of illness for which services were administered.
Super bills or charge sheets contain information like Date of Service, Kind of Service, Diagnosis Code, Attending Doctor, Modifier details. Super bills are usually completed by physician or their assistant. Sometimes Coding of diagnosis & procedures are done by coding specialists.
Once Charge sheets are completed, they are batched with PD at physician’s office and are forwarded to our office for charge entry. Mode of transfer of data may vary from client to client. But most preferred mode is thru FTP. Here patient demographics are scanned & captured as image file. These image files are placed in FTP site. These image scan files are retrieved at our office & charge entry begins.

• For our easy understanding now let us see each of the information found in patient charge sheet. Information found in patient charge sheet is 1. Attending Physician 2. Referring Physician 3. Admit Date 4. Date of Service 5. Type of Service 6. Place of Service 7. Prior Authorization Number 8. Modifiers 9. Procedure code 10. Diagnosis Code 11. # Of days/ units, 12. Location Details 13. Physician Name, Address, Provider id

1. Attending Physician: Attending physician is also referred as rendering physician. A physician who renders the service to patients is called attending or rendering physician. Each Rendering/Attending Physician of a particular facility is assigned a unique code with the Name of the Physician, Address of the Clinic/Facility, PIN (Provider Identification Number), License number, Federal TaxID#.

The Rendering Physician Name, Address, and PIN are printed in the 33rd field and if the Address of the Facility where the service was rendered differs from the Physicians location then that address is printed in the 32nd field and the corresponding Federal Tax ID of the Provider is printed in the 25th field of CMS-1500 form.

2. Referring Physician: Physician who refers patient to specialists is called referring Physician or Primary Care Physician (PCP) information is integral to continuity of care, reimbursement and community relations. In simple words, 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 known as a Referring Physician. Each Referring Physician is allotted a unique code in the Medical Billing software which stores the Name of the Physician, Address of the Clinic/Facility, UPIN (Unique Physician Identification Number).
The Referring Physician Name is printed in the 17th field of the CMS-1500 claim form. The UPIN which is stored along with the code is printed in the 17a field of the CMS-1500 claim form.

3. Admit Date: Admit date refers to the date in which patient was admitted into the Hospital. For workers compensation Date of Injury (DOI) is very important for processing the claim. For the purpose of determining the date of injury for an occupational disease, the date of injury shall be taken to be the last date of injurious exposure to the hazards of such disease or the date on which the employee first knew or reasonably should have known of the condition and its relationship to the employee's employment, whichever is the later.

4. Date of Service: DOS is the date in which services were rendered to patient by attending physician. In certain cases we have thru date of service and also it will be in the single date format. Standard format for entering DOS is mm/dd/yyyy. DOS must be greater than or equal to admit date.

5. Type of Service: We need to input the type of service which was administered to patient. Broadly we have two digit TOS codes which needs to be entered in block 24C of CMS-1500 form. The type of service defines what type of service it is like radiology, cardiology and etc.

6. Place of Service: Two digit place of service needs to be entered in block 24b of CMS-1500 form while submitting claims to insurance carriers. POS can be for inpatient, Outpatient & ER. Health care that you get when you are admitted to a hospital is an inpatient. Medical or surgical care that does not include an overnight hospital stay is an outpatient. Care given for a medical emergency when you believe that your health is in serious danger when every second counts is an Emergency care. This field consists of the place or the location where services were provided to the patient. Location details are printed in block 32 of CMS-1500 form. Details like location name, address are printed. Where services are rendered in patient’s home & physician’s office location details in CMS-1500 form can be blank.
7. Preauthorization: An insurance plan requirement in which you or your primary care physician must notify your insurance company in advance about certain medical procedures (like outpatient surgery) in order for those procedures to be considered a covered expense. Preauthorization are of two types. 1) Requesting authorization of date of services that have not been previously requested or the request was previously rejected. 2) Requesting authorization for increase or decrease units for previously approved dates of service. In other words, Preauthorization means Insurance is notified in advance about specific procedures. This allows for a review of medical necessity, efficiency, and quality of proposed care. It is also an opportunity to inform patient/physician about benefits, including length-of-stay guidelines and plan limitations. This will help to understand the costs if patient receive the proposed care.

8. Procedure Code: Procedure codes are used to indicate the kind of treatment or service was administered in patient. Utmost care should be given while entering the procedure code. We need to first know what kind of procedure code each insurance accepts to process claims. Healthcare Common Procedure Coding System (HCPCS) is a coding system that is composed of Level I codes (Current Procedural Terminology (CPT) codes), Level II codes (national codes), and Level III codes (local codes). Level I (CPT) codes are five digit numeric codes that describe procedures and tests. CPT codes are developed and maintained by the AMA with annual updates. Level II (national) codes are five digit alpha numeric codes that describe pharmaceuticals, supplies, procedures, tests and services. Level II codes are developed and maintained by CMS with quarterly updates. Level III (local) codes are five digit alpha numeric codes that are being phased out by the fiscal intermediaries.
Examples of CPT codes:
• 85025 – CBC with automated differential
• 71020 – Chest x-ray 2 views
• 45378 – Colonoscopy
• 93501 – Right heart catheterization
In other words, this field contains the Code of the procedure done (CPT/HCPCS Code). 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. All the Procedure codes are stored in a Master database of the Medical Billing software with the description of the code and the dollar amount. This helps the charge entry person to cross verify the procedure before saving the claim.
This field is printed in the 24d field and the corresponding dollar amount of the procedure stored in the Medical Billing Software is printed in the 24f field of the CMS-1500 claim form

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