HIM 104
Unit 1 Inpatient Cycle
The revenue cycle begins in patient registration. When the patient registers for that date of
service, whether it is inpatient or outpatient, co-pays are collected. The patient receives care and
is discharged and the chart goes to the coders to be coded. The coders code the chart and the
coding extracting format gets sent to the business office where the bill is dropped to the payor.
Once the payor gets the bill, the provider writes off the difference between the charge amount
and the allowable amount. The payor will pay their portion of the allowable amount and the
provider picks up the rest of the allowable amount by sending the patient the bill for their
amount. The provider will contact the patient by end cycles by sending a bill every 30 days.
After 120 days, that bill will go to collections and the payor can write it off as bad debt if they
have made three documented attempts to contact the patient. This may impact the patient’s
credit score. Every single time a patient seeks health care, a revenue cycle is open. Hospitals can
have thousands and thousands of revenue cycles going on at one time. Doctor’s offices have
hundreds of revenue cycles going on at any time because it is based on the date of service. So,
patients themselves can have multiple revenue cycles.
Medical Necessity-The determination from the payor that a service is needed
Certification of Admission-The insurance company gives permission for the patient to be
admitted to the hospital
Collection of Copay at Inpatient Registration-Hospitals let the patient know what they owe
Coding does not occur until the patient has been discharged. The charts are coded after the
patient is discharged and the bill does not drop to the payor until it’s been coded. Before the bill
is dropped to the payor, they may have a scrubber (internal auditing system that will look at the
bill to see if it clear (clean)).
Clearinghouse to a Third-Party Payor-Insurance companies have clearinghouses based on
geographical locations
Claim Payor Denial-The claim comes back and says there is a problem with the claim that must
be fixed or come back saying what is not deemed medically necessary and to not submit the
claim
Post Payments in Accounts Receivable- If payments come in, they will be posted in accounts
receivable. Whenever the payor portion of the allowable amount is received, that will be posted
on the patient’s account and anything left from the allowable amount will be balance billed to the
patient. These are deductible, copays, and coinsurances. If it’s after 120 days, the account will go
to collections and once everything has been paid or has been written off as bad debt, that
particular revenue cycle will close.
Unit 1 Outpatient Cycle
Patient work: All the effort that goes into the study, decisions and practice of a physician. For
example: schooling, medical licensing, and credentialing.
,Patient overhead: Physicians required overhead costs to provide the best treatment possible.
Some examples of these costs include: facility fees, payroll, medical supplies, insurance
premiums, and rent costs.
Malpractice premiums: Physicians must have insurance and malpractice insurance coverage to
protect them, their medical license, and the safety of patients. In order to keep their malpractice
insurance coverage active, a monthly premium is due.
Unit 1 Quiz
Question 1: In which type of healthcare payment method does the healthcare plan pay for each
service that a provider renders? Fee-for-service reimbursement
Question 2: In the accounting system of the physician office, the account is categorized as “self-
pay.” How should the insurance analyst interpret this category? The guarantor will pay the
entire bill
Question 3: Which healthcare payment method does Medicare use to reimburse physicians
based on the cost of providing services in terms of effort, overhead, and malpractice insurance?
Resource-based relative value scale
Question 4: In which type of healthcare payment method, does the healthcare plan recompense
providers with a fixed rate for each day a covered member is hospitalized? Per diem
Question 5: In the healthcare industry, what is the term for receiving compensation for
healthcare services? Reimbursement
Question 6: The health plan reimburses Dr. Tan $15 per patient per month. In January, Dr. Tan
saw 300 patients so he received $4,500 from the health plan. What method is the health plan
using to reimburse Dr. Tan? Capitated rate
Question 7: A patient saw a neurosurgeon for treatment of a nerve that was severed in an
industrial accident. The patient worked for Basic Manufacturing Company where the industrial
accident occurred. Basic Manufacturing carried workers’ compensation insurance. The workers’
compensation insurance paid the fees of the neurosurgeon. Which entity is the “third party”?
Workers Compensation Insurance
Question 8: The physician’s office sent a request for payment to Able Insurance Company.
The term used in the healthcare industry for this request for payment is a(n) . Claim
Question 9: The financial manager of the physician group practice explained that the healthcare
insurance company would be reimbursing the practice for its treatment of the exacerbation of
congestive heart failure that Mrs. Zale experienced. The exacerbation, treatment, and resolution
covered approximately five weeks. The payment covered all the services that Mrs. Zale
incurred during the period. What method of reimbursement was the physician group practice
receiving? Episode-of-care
,Question 10: In its payment notice (remittance advice), the healthcare plan lists that the payment
for the individual laboratory test is $39.00. The bill that the pathologist’s office submitted for
the laboratory test was $45.00. What does the amount of $39.00 represent? Allowable fee
Unit 2 Inpatient Revenue Cycle
1. Research and discuss the concept of medical necessity in terms of intensity of services
consumed and the severity of illness. Create an example of a patient whose condition is approved
for admission and one who must be treated as an outpatient. What are resources payers use to
determine medical necessity? For medical necessity in regards to inpatient, it is not so much does
the patient need the treatment but does this patient have to be inpatient to receive that particular
treatment. It goes by a formula of looking at in terms of the intensity of services consumes and
severity of illness. If the patient has active bleeding that cannot be stopped or the patient has a
fever that is not going down, does this patient require some kind of surgery based on how sick
the patient is. These factors require an inpatient admission. Medical necessity for inpatient is
based on whether or not the care the patient needs must be performed in the inpatient setting
because of the intensity of the services needed and the severity of illness the patient has. An
example would be being admitted for severe gastroenteritis and receiving care/treatment for
gastroenteritis on an outpatient level. For reimbursement under the Inpatient Prospective
Payment System (IPPS), cases are grouped into Medicare Severity Diagnosis Related Groups
(MS-DRGs) based on the severity of the illness, the diagnosis (ses), and the hospital stay.
2. Research and discuss admission certification and certification numbers. How are these
obtained? If it is determined that it is medically necessary for a patient to be treated as an
inpatient, then the insurance company must certify the admission. The admitting
physician, whether it is the ER doctor, the patient’s PCP or a specialist, must contact the
insurance company and get the approval for the admission and they will get the
certification number, which is obtained from the insurance company.
Unit 2 Outpatient Revenue Cycle
1. Go to the CMS website and find the formulas for both physician and facility
RVUs The formula to calculate RVU’s is:
For in-facility procedures: (PW x PW GPCI + PE x PE GPCI + PLI x PLI GPCI) x CF =
PP To calculate out-of-facility amounts: (PW x PW GPCI + Transitioned Non-Facility PE
x PE GPCI + PLI x PLI GPCI) x CF = Out-of-Facility PP
2. Discuss how CPT modifiers "modify" the reimbursement requested. Give two examples
of how the use of modifiers 50 and 59 modify the reimbursement requested when appended
to a CPT code. Describe in detail a separate procedure.
Modifiers tell the insurance company the physician is asking for a modification for the
allowable amount. For instance, if a modifier 50 is used on a claim for a radical mastectomy, it
means the patient is having a bilateral radical mastectomy. The provider is proactively saying to
the insurance company he/she is asking for a modified amount for the same operative session,
the patient is using the same anesthesia, and the patient is not coming in for two separate
surgeries. The provider wants 100% for one side and is requesting 50% for the second side. The
provider wants 150% of the allowable amount.
, Modifier 50 is used on procedures that do not already indicate bilateral. This modifies the bill to
a higher reimbursement amount. It is not to be used with designated add-on codes. Example: A
patient goes to their ophthalmologist’s office complaining of burning, watering eyes and
inability to open eyes for long after working on a windy day. Foreign bodies are discovered in
both eyes. The Dr. removes debris bilaterally in the office. The procedural code would reflect
this as 65205
- 50. This modifies the payment to reflect the procedure on both eyes, but requesting 50% of
allowable amount for the second eye.
Modifier 59 might be used for laceration repairs or removal of a benign or malignant lesion and
repair it. If multiple repairs are being done in the same operative session and those repairs are of
different complexity, modifier 59 is used on the second and subsequent repairs because the
provider is letting the payer know the repairs are of different complexities. One repair may be
simple and the next repair may be complex. Modifier 59 is used on the simple repair because it is
the lesser complexity.
Modifier 59 is used to identify distinct procedures/services not normally reported together. This
is not to be used with E/M services. An example would be that a patient was seen for a
procedure that day and went home, but later in the day had a fall and suffered a cut on their arm
requiring an intermediate repair. Modifier 59 would be used to indicate two distinct services
were performed on the same day. This modifies the reimbursement to a higher amount.
3. Find a list of status indicators on the web, cut and paste it into your thread, and use the
appropriate citation.
Unit 1 Inpatient Cycle
The revenue cycle begins in patient registration. When the patient registers for that date of
service, whether it is inpatient or outpatient, co-pays are collected. The patient receives care and
is discharged and the chart goes to the coders to be coded. The coders code the chart and the
coding extracting format gets sent to the business office where the bill is dropped to the payor.
Once the payor gets the bill, the provider writes off the difference between the charge amount
and the allowable amount. The payor will pay their portion of the allowable amount and the
provider picks up the rest of the allowable amount by sending the patient the bill for their
amount. The provider will contact the patient by end cycles by sending a bill every 30 days.
After 120 days, that bill will go to collections and the payor can write it off as bad debt if they
have made three documented attempts to contact the patient. This may impact the patient’s
credit score. Every single time a patient seeks health care, a revenue cycle is open. Hospitals can
have thousands and thousands of revenue cycles going on at one time. Doctor’s offices have
hundreds of revenue cycles going on at any time because it is based on the date of service. So,
patients themselves can have multiple revenue cycles.
Medical Necessity-The determination from the payor that a service is needed
Certification of Admission-The insurance company gives permission for the patient to be
admitted to the hospital
Collection of Copay at Inpatient Registration-Hospitals let the patient know what they owe
Coding does not occur until the patient has been discharged. The charts are coded after the
patient is discharged and the bill does not drop to the payor until it’s been coded. Before the bill
is dropped to the payor, they may have a scrubber (internal auditing system that will look at the
bill to see if it clear (clean)).
Clearinghouse to a Third-Party Payor-Insurance companies have clearinghouses based on
geographical locations
Claim Payor Denial-The claim comes back and says there is a problem with the claim that must
be fixed or come back saying what is not deemed medically necessary and to not submit the
claim
Post Payments in Accounts Receivable- If payments come in, they will be posted in accounts
receivable. Whenever the payor portion of the allowable amount is received, that will be posted
on the patient’s account and anything left from the allowable amount will be balance billed to the
patient. These are deductible, copays, and coinsurances. If it’s after 120 days, the account will go
to collections and once everything has been paid or has been written off as bad debt, that
particular revenue cycle will close.
Unit 1 Outpatient Cycle
Patient work: All the effort that goes into the study, decisions and practice of a physician. For
example: schooling, medical licensing, and credentialing.
,Patient overhead: Physicians required overhead costs to provide the best treatment possible.
Some examples of these costs include: facility fees, payroll, medical supplies, insurance
premiums, and rent costs.
Malpractice premiums: Physicians must have insurance and malpractice insurance coverage to
protect them, their medical license, and the safety of patients. In order to keep their malpractice
insurance coverage active, a monthly premium is due.
Unit 1 Quiz
Question 1: In which type of healthcare payment method does the healthcare plan pay for each
service that a provider renders? Fee-for-service reimbursement
Question 2: In the accounting system of the physician office, the account is categorized as “self-
pay.” How should the insurance analyst interpret this category? The guarantor will pay the
entire bill
Question 3: Which healthcare payment method does Medicare use to reimburse physicians
based on the cost of providing services in terms of effort, overhead, and malpractice insurance?
Resource-based relative value scale
Question 4: In which type of healthcare payment method, does the healthcare plan recompense
providers with a fixed rate for each day a covered member is hospitalized? Per diem
Question 5: In the healthcare industry, what is the term for receiving compensation for
healthcare services? Reimbursement
Question 6: The health plan reimburses Dr. Tan $15 per patient per month. In January, Dr. Tan
saw 300 patients so he received $4,500 from the health plan. What method is the health plan
using to reimburse Dr. Tan? Capitated rate
Question 7: A patient saw a neurosurgeon for treatment of a nerve that was severed in an
industrial accident. The patient worked for Basic Manufacturing Company where the industrial
accident occurred. Basic Manufacturing carried workers’ compensation insurance. The workers’
compensation insurance paid the fees of the neurosurgeon. Which entity is the “third party”?
Workers Compensation Insurance
Question 8: The physician’s office sent a request for payment to Able Insurance Company.
The term used in the healthcare industry for this request for payment is a(n) . Claim
Question 9: The financial manager of the physician group practice explained that the healthcare
insurance company would be reimbursing the practice for its treatment of the exacerbation of
congestive heart failure that Mrs. Zale experienced. The exacerbation, treatment, and resolution
covered approximately five weeks. The payment covered all the services that Mrs. Zale
incurred during the period. What method of reimbursement was the physician group practice
receiving? Episode-of-care
,Question 10: In its payment notice (remittance advice), the healthcare plan lists that the payment
for the individual laboratory test is $39.00. The bill that the pathologist’s office submitted for
the laboratory test was $45.00. What does the amount of $39.00 represent? Allowable fee
Unit 2 Inpatient Revenue Cycle
1. Research and discuss the concept of medical necessity in terms of intensity of services
consumed and the severity of illness. Create an example of a patient whose condition is approved
for admission and one who must be treated as an outpatient. What are resources payers use to
determine medical necessity? For medical necessity in regards to inpatient, it is not so much does
the patient need the treatment but does this patient have to be inpatient to receive that particular
treatment. It goes by a formula of looking at in terms of the intensity of services consumes and
severity of illness. If the patient has active bleeding that cannot be stopped or the patient has a
fever that is not going down, does this patient require some kind of surgery based on how sick
the patient is. These factors require an inpatient admission. Medical necessity for inpatient is
based on whether or not the care the patient needs must be performed in the inpatient setting
because of the intensity of the services needed and the severity of illness the patient has. An
example would be being admitted for severe gastroenteritis and receiving care/treatment for
gastroenteritis on an outpatient level. For reimbursement under the Inpatient Prospective
Payment System (IPPS), cases are grouped into Medicare Severity Diagnosis Related Groups
(MS-DRGs) based on the severity of the illness, the diagnosis (ses), and the hospital stay.
2. Research and discuss admission certification and certification numbers. How are these
obtained? If it is determined that it is medically necessary for a patient to be treated as an
inpatient, then the insurance company must certify the admission. The admitting
physician, whether it is the ER doctor, the patient’s PCP or a specialist, must contact the
insurance company and get the approval for the admission and they will get the
certification number, which is obtained from the insurance company.
Unit 2 Outpatient Revenue Cycle
1. Go to the CMS website and find the formulas for both physician and facility
RVUs The formula to calculate RVU’s is:
For in-facility procedures: (PW x PW GPCI + PE x PE GPCI + PLI x PLI GPCI) x CF =
PP To calculate out-of-facility amounts: (PW x PW GPCI + Transitioned Non-Facility PE
x PE GPCI + PLI x PLI GPCI) x CF = Out-of-Facility PP
2. Discuss how CPT modifiers "modify" the reimbursement requested. Give two examples
of how the use of modifiers 50 and 59 modify the reimbursement requested when appended
to a CPT code. Describe in detail a separate procedure.
Modifiers tell the insurance company the physician is asking for a modification for the
allowable amount. For instance, if a modifier 50 is used on a claim for a radical mastectomy, it
means the patient is having a bilateral radical mastectomy. The provider is proactively saying to
the insurance company he/she is asking for a modified amount for the same operative session,
the patient is using the same anesthesia, and the patient is not coming in for two separate
surgeries. The provider wants 100% for one side and is requesting 50% for the second side. The
provider wants 150% of the allowable amount.
, Modifier 50 is used on procedures that do not already indicate bilateral. This modifies the bill to
a higher reimbursement amount. It is not to be used with designated add-on codes. Example: A
patient goes to their ophthalmologist’s office complaining of burning, watering eyes and
inability to open eyes for long after working on a windy day. Foreign bodies are discovered in
both eyes. The Dr. removes debris bilaterally in the office. The procedural code would reflect
this as 65205
- 50. This modifies the payment to reflect the procedure on both eyes, but requesting 50% of
allowable amount for the second eye.
Modifier 59 might be used for laceration repairs or removal of a benign or malignant lesion and
repair it. If multiple repairs are being done in the same operative session and those repairs are of
different complexity, modifier 59 is used on the second and subsequent repairs because the
provider is letting the payer know the repairs are of different complexities. One repair may be
simple and the next repair may be complex. Modifier 59 is used on the simple repair because it is
the lesser complexity.
Modifier 59 is used to identify distinct procedures/services not normally reported together. This
is not to be used with E/M services. An example would be that a patient was seen for a
procedure that day and went home, but later in the day had a fall and suffered a cut on their arm
requiring an intermediate repair. Modifier 59 would be used to indicate two distinct services
were performed on the same day. This modifies the reimbursement to a higher amount.
3. Find a list of status indicators on the web, cut and paste it into your thread, and use the
appropriate citation.
