Critical Case for Billing & Coding

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Chapter 2

 

Billing and Coding for Health Services

LEARNING OBJECTIVES

After studying this chapter, you should be able to do the following:

· 1. 

Describe the revenue cycle for healthcare firms.

· 2. 

Understand the role of coding information in healthcare organizations in claim generation.

· 3. 

Define the basic characteristics of charge masters.

· 4. 

Define the two major bill types used in healthcare firms.

· 5. Appreciate the role of claims editing in the bill submission process.

REAL-WORLD SCENARIO

Riley Ilene, the Chief Financial Officer of Campbell Hospital, was concerned by the reduction in revenue during the last 3 months. The revenue reduction was most pronounced in the outpatient arena and represented a 15% reduction from prior-year levels. Loss of this revenue had eroded Campbell’s already thin operating margins, and the hospital was now operating with losses.

Riley’s first thought was that volume may be down from prior-year levels. She asked her controller, Michael Dean, to report on comparative volumes for last year and this year. Michael’s report showed that total numbers of outpatient visits were actually above last year. Furthermore, the increases in volumes appeared relatively uniform across all product line groupings. Riley then directed Michael to review “Revenue and Usage” summaries for the current year and last year. A revenue and usage summary would show the quantity of items billed by charge code and payer. The summaries would also break out the volumes by inpatient and outpatient areas.

After reviewing these data Michael reported back to Riley with some startling news. Volumes for several procedures in the hospital’s “charge master” were well below prior-year levels. Specifically, the numbers of drug administration codes that are reported when an injectable or infusible drug is administered were well below prior-year levels. This was surprising because the number of injectable and infusible drugs had actually increased.

Riley Ilene thought she had discovered the problem and reported back to her CEO, Meredith Lynn. Meredith, however, asked Riley whether this could have caused the revenue reduction. Meredith believed that a heavy percentage of the hospital’s payment was related to either case payment for inpatients or APC (ambulatory patient classification) groups for outpatients. Meredith believed that these bundled payments would not be impacted by a failure to document the drug administration procedures.

Riley said that this was a good point and she would do some additional research and report back to Meredith. Riley found that Medicare provides separate payment for the drug administration procedure when performed in outpatient visits. The average loss for the undocumented procedure codes appeared to average about $130 per occurrence. Riley also found that many of their commercial payers paid on a discount from billed charge basis. Failure to report these procedures for these payers would result in lost revenue. The only remaining task was to discover why charges for drug administration procedures for outpatient procedures were not being recorded.

LEARNING OBJECTIVE 1

Describe the revenue cycle for healthcare firms.

Healthcare firms are for the most part business-oriented organizations. Their ultimate financial survival depends on a consistent and recurring flow of funds from the services they provide to patients. Without an adequate stream of revenue these firms would be forced to cease operations. In this regard, healthcare firms are similar to most business entities that sell products or services in our economy. 

Figure 2–1

 depicts the stages involved in the revenue cycle for a healthcare firm. The critical stages in the revenue cycle for healthcare firms are the provision and documentation of services to the patient, the generation of charges for those services, the preparation of a bill or 

claim

, the submission of the bill or claim to the respective payer, and the collection of payment.

Figure 2-1 Revenue Cycle

A simple review of the six stages of the revenue cycle in 
Figure 2–1
 hides the significant degree of complexity involved in revenue generation for healthcare providers. No other industry in our nation’s economy experiences the same level of billing complexity that most healthcare firms face. Part of this complexity is related to the nature and importance of the services provided. Regulation is also a factor that further complicates documentation and billing for healthcare services. Finally, the existence of different payment methods and rates for multiple payers further complicates the revenue cycle for most healthcare firms. Payment complexity is addressed in 

Chapter 3

.

LEARNING OBJECTIVE 2

Understand the role of coding information in healthcare organizations in claim generation.

GENERATING HEALTHCARE CLAIMS

Figure 2–2

 provides more detail to the steps and processes involved in the actual generation of a health-care bill or claim. The process and steps mirror those in 
Figure 2–1
 except additional detail unique to health-care firms is included. The process often begins with the collection of information about the patient before the delivery of services in the patient registration function. Information about the patient, including address, date of birth, and insurance data, is collected to facilitate bill preparation after services are provided. Once services have been provided, data from that encounter(s) flow into two areas: medical documentation and charge capture.

Figure 2-2 Detailed Revenue Cycle

Although the primary purpose of the data accumulated in the medical record may be related to clinical decision making, a substantial proportion of the information may also be linked to billing. For example, the assignment of diagnosis and procedure codes within the medical record by physicians plays a key role in diagnosis-related group (DRG) assignment. Many healthcare payers provide payment for inpatient care based on DRG assignment. Data in the medical record are also the primary source for documenting the provision of services. For example, if a patient’s bill listed a series of drugs used by the patient but the medical record did not show those drugs as being used, the claim would not be supported. The primary linkage between the claim and the medical record is related to the documentation of specific services provided and their reporting in a series of clinical codes. We explore the categories of coding and their importance to billing shortly.

Data from the provision of services also flow directly to billing through the capture of charges. The posting of charges to a patient’s account is usually accomplished through the issuance and collection of “charge slips” in a manual mode or through direct order entry or bar code readers in an automated system. The critical link here is the firm’s price list, often referred to as its “charge master” or 

charge description master (CdM)

. The CDM is simply a list of all items for which the firm has established specific prices. In a hospital setting it is not unusual to find more than 20,000 items on its charge master.

Information from the medical record and the charge master then flow into the actual claim. For most healthcare firms there are two basic categories of claims: the Uniform Bill

200

4 (UB-04) and the Centers for Medicare & Medicaid Services (CMS) 1500. The UB-04 is the claim form used for most hospitals to report claims for both inpatient and outpatient services. The CMS-1500 is used primarily for physician and professional claims. Appendix 2–A provides samples of these two claim forms.

The final step before actual claim submission is claims editing. Although this step may not be performed by all healthcare firms, it is a critical step for many. In this editing process several key areas are reviewed. First, does the claim have enough information to trigger payment by the patient’s payer? For example, perhaps the claim is missing the patient’s social security number or healthcare plan identification number. Second, does the claim meet logical standards and is it complete? For example, a claim may have a charge for laboratory panel but no charge for a blood draw to collect the sample. Editing is critical to accurate and timely payment by third-party payers.

REGISTRATION

In most cases a patient or their representative provides a basic set of information regarding the patient before the actual delivery of services. In a physician’s office this may be done just before medical service performance. For an elective hospital inpatient admission, it may be done a week or more before admission. A number of clinical and financial sets of information are collected at this point. From the financial perspective, three activities are especially important in the billing and collection process.

Perhaps the most important activity is insurance verification. If the patient has indicated they have third-party insurance coverage, it is important to have this coverage verified from the payer. The patient may also have secondary coverage from another health plan. Verification of that coverage is also critical to accurate and timely billing. The critical piece of information to collect from the patient in this regard is their health plan identification number, which may sometimes be their social security number. Queries to the health plan before service can validate the type of coverage provided by the health plan and the eligibility of the patient for the scheduled service. In today’s current environment insurance verification is often done online. Sometimes prior approval for elective services is required by the health plan before a claim can be submitted. This prior verification is often referred to as precertification. Information regarding coverage for large governmental programs such as Medicare and Medicaid is not often needed because the benefit structure is standardized. It is important, however, to verify the existence of current coverage.

The second activity in registration is often related to the computation of 

copayment

 or 

deductible

 provisions that may be applicable for the patient. Once insurance coverage has been determined, it is usually possible to calculate the required amount that may still be due from the patient. For example, a Medicare patient without supplemental coverage may report to a hospital for a scheduled computed tomography. It is possible for the registration staff to calculate the amount of copayment due by the patient. The registration staff can then advise the patient regarding the amount of payment due and try to make arrangements for payment at the point of service.

The third activity in this registration process relates to 

financial counseling

. Patients who have no coverage may be eligible for some discount through the healthcare firm’s charity care policy. Any residual that may still be due can be discussed with the patient, and financing may be arranged before the point of service. It is also possible that an uninsured patient may be eligible for some governmental programs, especially Medicaid. Staff at the healthcare firm can advise the patient regarding eligibility and help them to complete the necessary documents required for coverage.

MEDICAL RECORD AND CODING

Information regarding the services provided to the patient is recorded in the patient’s medical record. Critical pieces of information contained in that record are used in the billing process and are communicated to the payers to trigger payment. The Health Insurance Portability and Accountability Act (HIPAA) of 1996 designated two specific coding systems to be used in reporting to both public and private payers:

· 1. International Classification of Diseases, 9th revision, 

Clinic

al Modification (ICD-9-CM)

· 2. Healthcare Common Procedure Coding System (HCPCS)

HIPAA requires that two categories of information be reported to payers: diagnosis codes and procedure codes. The 

iCd-9-CM

 has sets of codes that provide information for both diagnoses and procedures. A 10th revision to ICD is scheduled to be adopted in the United States in 2013.

The HCPCS provides information in the procedure area but does not provide information regarding diagnoses. HIPAA therefore requires that ICD-9 codes be used for diagnosis reporting for all healthcare providers, including hospitals and physicians. ICD-9 procedure codes are required for procedure reporting for hospital inpatients, whereas HCPCS codes are used for procedure reporting by hospitals for outpatient services and also by physicians (

Table 2–1

).

Table 2-1 HIPAA-Designated Coding

Diagnosis

Procedure

ICD–9–CM

CPT

ICD–9–CM

ICD–9–CM

ICD–9–CM

Inpatient

Outpatient

Provider

Diagnosis

Procedure

Physician

ICD–9–CM

CPT

Facility

HCPCS (CPT and HCPCS Level II)

ICD-9 diagnosis codes are composed of three digits that may be followed by a decimal point with two additional digits. For example, all ICD-9 codes that start with 428 refer to the primary diagnosis of heart failure. Additional digits after 428 further specify the patient’s exact condition. For example, 428.1 refers to left heart failure. 

Table 2–2

 provides a listing of the top 10 inpatient diagnoses reported by Medicare in Fiscal Year 2008.

Table 2-2 2008 Public Data: Primary Diagnosis Frequency

1.9%

Dx1						Definition						Frequency						% of Total
486	Pneumonia, Organism Unspecified	430 ,535	3.7%
414.01	Coronary Atherosclerosis of Native Coronary Artery	365,228		3.2%
428.0	Congestive Heart Failure	338,746					2.9%
491.21	Obstructive Chronic Bronchitis, With Acute Exacerbation	285,152		2.5%
038.9	Unspecified Septicemia	264,325		2.3%
599.0	Urinary Tract Infection, Site Not Specified	240,731			2.1%
584.9	Acute Renal Failure, Unspecified	226,539	2.0%
427.31	Atrial Fibrillation	220,171					1.9%
410.71	Subendocardial Infarction, Initial Episode of Care	213,917
715.36	Osteoarthrosis, Localized, Not Specified Whether Primary or Secondary, Involving Lower Leg.	191,866					1.7%

Sourc:e Cleverley & Associates, 2010

ICD-9 procedure codes are used to report hospital inpatient procedures. These codes may be up to four digits in length, with a decimal point following the first two digits. For example, a code with 37 as the first two digits would refer to procedures on the heart and pericardium. A code of 37.23 would refer to a combined right and left heart cardiac catheterization. 

Table 2–3

 shows a listing of the top 10 inpatient ICD-9 procedure codes reported by Medicare in Fiscal Year 2008.

Table 2-3 2008 Public Data: Primary Procedure Frequency

Definition

Frequency

% of Total

2.9%

2.9%

1.9%

1.7%

Px1
9904	Packed Cell Transfusion	333,161	4.8%
00.66	PTCA or Coronary Athererectomy	298,464	4.3%
81.54	Total Knee Replacement	278,443	4.0%
38.93	Venous Cath NEC	265,661	3.8%
39.95	Hemodialysis	230,754			3.3%
45.16	EGD With Closed Biopsy	201,288
37.22	Left Heart Cardiac Cath	200,616
88.72	Dx Ultrasound-Heart	129,105
96.71	Cont Mech Vent < 96 Hrs	125,010		1.8%
81.51	Total Hip Replacement	119,074

Source: Cleverley & Associates, 2010.

ICD-9 diagnosis and procedure codes are very important in the assignment of a DRG. DRG payment is widely used by many payers, especially Medicare. Coding therefore has a critical link to provider payment. 

Table 2–4

 provides a list of the top 10 DRGs reported by Medicare in Fiscal Year 2008.

Table 2-4 2008 Public Data: DRG Frequency

Definition

Frequency

% of Total

1.9%

1.9%

1.8%

1.7%

1.7%

DRG
470	Major joint replacement or reattachment of lower extremity w/o MCC	422,105				3.6%
871	Septicemia w/o MV 96+ hours w MCC	275,846	2.4%
392	Esophagitis, gastroenteritis, and miscellaneous digestive disorders w/o MCC	251,442	2.2%
291	Heart failure and shock w MCC	217,600
194	Simple pneumonia and pleurisy w CC	217,319
292	Heart failure and shock w CC	209,590
313	Chest pain	197,140
690	Kidney and urinary tract infections w/o MCC	196,011
641	Nutritional and miscellaneous metabolic disorders w/o MCC	188,261	1.6%
312	Syncope and collapse	170,386		1.5%

Source: Cleverley & Associates, 2010.

HCPCS codes are used for reporting procedures by physicians for both inpatient and outpatient procedures. HCPCS codes are also used by facilities for reporting outpatient procedures; however, they use ICD-9 procedure codes for reporting inpatient procedures. There are two tiers used in HCPCS coding, Level I and Level II. Level I codes are referred to as current procedure terminology (CPT) codes that have been developed and maintained by the American Medical Association. Level I and CPT are used interchangeably to describe these sets of codes. Six main categories of CPT codes are currently used:

· • Evaluation & Management (

99201

to 99499)

· • 

Anesthesia

(01000 to 01999)

· • Surgery (10021 to 69979)

· • Radiology (70010 to 79999)

· • Pathology and

Laboratory

(80047 to 89398)

· • Medicine (90281 to 99607)

The five-digit CPT code may also contain a “modifier” that is a two-digit numeric or alphanumeric code that may provide additional information essential to process a claim. For example, modifier 91 is used to indicate that a laboratory procedure was repeated. 

Table 2–5

 provides a list of the top 10 hospital outpatient CPT codes reported to Medicare in Fiscal Year 2008.

Table 2-5 2008 Public Data: CPT Frequency

Definition

Frequency

% of Total

3.6%

3.5%

2.5%

2.1%

1.7%

1.5%

CPT
36415	Drawing blood	35,458,489	8.0%
85025	Automated hemogram	21,717,488	4.9%
80053	Comprehensive metabolic panel	15,692,752
97110	Therapeutic exercises	15,422,938		3.5%
85610	Prothrombin time	15,334,616
80048	Metabolic panel total Calcium	11,164,798
80061	Lipid panel	9,324,755
9 300 5	Electrocardiogram, tracing	7,542,177
84443	Assay thyroid-stimulating hormone	6,807,786
71020	Chest x-ray	5,295,099		1.2%

Source: Cleverley & Associates, 2010.

Level II HCPCS codes were developed by CMS to report services, supplies, or procedures that were not groups within the Level II HCPCS codes: permanent and temporary. Permanent codes are five-digit codes that begin with an alpha character. 

Table 2–6

 provides a list of the top 10 Level II permanent HCPCS codes reported to Medicare in Fiscal Year 2008 for hospital outpatients.

Table 2-6 2008 Public Data: Level II (Permanent) Frequency

Definition

Frequency

% of Total

3.6%

3.6%

3.3%

3.3%

2.9%

2.9%

Level II (Permanent)
J0878	Daptomycin injection	21,888,295	9.9%
J0881	Darbepoetin alfa, injection, non-ESRD, 1 mcg	12,766,223	5.8%
J1756	Iron sucrose injection	11,503,369	5.2%
J9263	Oxaliplatin injection, 0.5 mg	8,718,047	3.9%
J2405	Ondansetron HCl injection, 1 mg	8,008,488
A0425	Ground mileage	7,929,252
A9579	Gadolinium-based MR contrast NOS, 1 ml	7,389,759
J2 250	Injection midazolam hydrochloride	7, 370 ,339
J0583	Bivalirudin	6,486,356
J0885	Epoetin alfa, non-ESRD, injection, 1,000 units	6, 391 ,367

Source: Cleverley & Associates, 2010.

Level II temporary HCPCS codes are used to meet a temporary need for a new code. These codes are also five-digit codes that begin with an alpha character. These codes can exist for a long time, but they may be replaced with a permanent code.

Table 2–7

 provides a list of the top 10 Level II temporary HCPCS codes reported to Medicare in Fiscal Year 2008 for hospital outpatients.

Table 2-7 2008 Public Data: Level II (Temporary) Frequency

Definition

Frequency

% of Total

3.2%

2.3%

2.1%

1.4%

1.2%

Level II (Temporary)
Q9967	LOCM 300–399 mg/ml iodine, 1 ml	45,516,823	54.2%
G0378	Hospital observation per	16,595,696	19.7%
Q9966	LOCM 200–299 mg/ml iodine, 1 ml	4,208,007	5.0%
Q9965	LOCM 100–199 mg/ml iodine, 1 ml	2,692,423
G0202	Screening mammography	1,902,534
Q9963	HOCM 350 –399 mg/ml iodine, 1 ml	1,803,358
Q9958	HOCM <=149 mg/ml iodine, 1 ml	1,166,681		1.4%
G0283	Electrical stimulation other than wound	1,145,531
G0103	PSA screening	1,018,693
G0008	Administer influenza virus vaccine	776,491	0.9%

Source: Cleverley & Associates, 2010.

HCPCS/CPT codes have a significant effect on provider payment for both facilities and physicians. CPT codes are often linked to fee schedules for many physicians by a large number of payers, which makes coding by medical groups especially critical. CPT and Level II HCPCS codes are also used by Medicare to define payment for many hospital outpatient services in the ambulatory patient classification (APC) system.

LEARNING OBJECTIVE 3

Define the basic characteristics of charge masters.

CHARGE ENTRY AND CHARGE MASTER

Performing actual medical services is the lifeblood of a healthcare firm’s revenue cycle. Without the provision of services there is no revenue, but it is imperative that charges for those services are captured. A service that is performed but not billed does not produce revenue. The three greatest concerns in billing are:

· • Capture of charges for services performed

· • Incorrect billing

· • Billing late charges

Charge capture

 is usually accomplished in one of two ways. For a number of providers actual paper documents or charge slips are used to identify services performed.

These charge slips are then posted to a patient’s account in a batch-processing mode by data processing or the business office. Alternatively, an order entry system could be used that may involve direct entry of charges to the patient’s account through a computer terminal. Scanning of bar codes may also be used.

Sometimes healthcare firms may use a “

charge explosion

” system to better organize charge entry for selective services. For example, a specific type of surgery may routinely require a standardized set of supplies. Rather than entering all these supplies, one code may be used that then explodes into the list of supply codes used for that surgery.

The key link between charge capture and the billing process is the “

charge code

” that is reflected in the order entry system or the charge slips and also represented on the firm’s charge master (also known as CDM). There is a unique charge code for each service procedure, supply item, or drug in the CDM. For hospitals, some charge masters can have up to 100,000 items. Every charge master usually has the following six common elements:

· • Charge code

· • Item description

· • Department number

· • Charge/price

· • Revenue code

· • CPT/HCPCS code

Table 2–8

 provides a sample of selected codes in a hospital’s charge master. The first column in the charge master is the charge code or item code for the specific service or product to be billed. The second column provides a short description of the specific item code. For example, item code 3

3023001

is “Daily Care Fourth North.” The third column is the department number and may reference a specific department within the firm that might also relate to their accounting system or general ledger. The fourth column is the current price or standard price for the service or product. In some cases there may be multiple prices for a given code. For example, a hospital might price a laboratory procedure at one rate for inpatient care and at another for outpatient care. These differences may reflect differences in cost or competitive price pressure. Competition for outpatient laboratory procedures may be intense, and the hospital may believe that it must discount its price if it wants to maintain its market share for outpatient laboratory services.

Table 2-8 Partial Chargemaster File

 

 

 

 

13190

13190

360

 

13190

360

 

13190

360

 

13190

360

 

13190

360

 

13190

360

 

 

14520

370

 

14520

370

 

14520

370

 

14520

370

 

14520

370

 

13160

13160

450

99218

13160

450

13160

450

14465

510

14465

510

14465

510

14465

510

Item Code	Item Description	Dept Num	Standard Price ($)	Revenue Code	HCPCS
3023001	DAILY CARE FOURTH NORTH	13030	665.50	111
3120000	DAILY CARE ICU	13120	1,172.50	200
4156159	MINERAL OIL 30ML								13190	11.50	250
4400206	SINGLE TOWEL	14430	2.25	270
4440302	HEP C ANTIBODIES-0288	14440	53.50	300	86803
4470220	HAND XRAY-0183	14470	102.50	320	73130
4472538	C/T PELVIS W & W/O ENHANCEMENT	14302	1,069.75	350	72194
4416000	LASIK SURGERY—PER EYE	2,105.25							360	66999
4416013	O.R. MINOR CHARGE—0.5 HOUR	556.75
4416014	O.R. MINOR CHARGE—1 HOUR	770.75
4416015	O.R. MINOR CHARGE—1.5 HOURS	983.00
4416016	O.R. MINOR CHARGE—2 HOURS	1,197.25
4416017	O.R. MINOR CHARGE—2.5 HOURS	1,409.25
4416018	O.R. MINOR CHARGE—3 HOURS	1,622.25
4520013	ANESTHESIA MINOR—0.5 HOUR						14520	110.25						370
4520014	ANESTHESIA MINOR—1 HOUR	151.25
4520015	ANESTHESIA MINOR—1.5 HOURS	192.75
4520016	ANESTHESIA MINOR—2 HOURS	233.00
4520017	ANESTHESIA MINOR—2.5 HOURS	274.75
4520018	ANESTHESIA MINOR—3 HOURS	317.00
3167020	BLOOD TRANSFUSION					13160	303.25	391	36430
4532057	MASSAGE, 8 MINS	14532	21.00	420	97124
3050717	EVALUATION—OT	13050	130.00	430	97003
3160001	EMERG DEPT OBSERVATION 0–3HRS	241.25				450		99218
3160002	EMERG DEPT OBSERVATION 3–6HRS	406.00
3160003	EMERG DEPT OBSERVATION 6–12HRS	492.00	99219
3160004	EMERG DEPT OBSERV. OVER 12 HRS	592.75	99220
4465350	OUTPAT VISIT LEVEL 1 (NEW)					14465	78.50					510	99201
4465351	OUTPAT VISIT LEVEL 2 (NEW)	92.25	99202
4465352	OUTPAT VISIT LEVEL 3 (NEW)	112.50	99203
4465353	OUTPAT VISIT LEVEL 4 (NEW)	159.75	99204
4465354	OUTPAT VISIT LEVEL 5 (NEW)	$209.00	99205

The fifth column is the revenue code. Revenue codes are a required field in any hospital claim that is submitted on a UB-04. The current categories used have been mandated by CMS, and the current list is presented in 

Table 2–9

. The last column included in many charge masters is the field for the HCPCS code. In our sample charge master not all entries have an HCPCS code. For example, the first two entries that relate to room and board charges do not have an HCPCS code. Also notice that surgery and anesthesia do not have an HCPCS code. Most hospitals bill for a great majority of their surgeries on a time/level basis. Someone from Health Information Management assigns a CPT code or an ICD-9 procedure code to the procedure at a later point in time before billing. Where an HCPCS code is present in the charge master, less time is required in coding claims at the back end, but care needs to be taken that appropriate charge codes are used at charge entry.

Table 2-9 Revenue Code Categories

Reserved for National Assignment

Reserved for National Assignment

Reserved for National Assignment

Accommodation Revenue Codes
010X	All-Inclusive Rate
011X	R&B–Private (Medical or General)
012X	R&B–Semiprivate (2 Beds) (Medical or General)
013X	Semiprivate (3 and 4 Beds)
014X	Private (Deluxe)
015X	R&B–Ward (Medical or General)
016X	Other R&B
017X	Nursery
018X	LOA
019X	Subacute Care
020X	Intensive Care
021X	Coronary Care
Ancillary Services Revenue Codes
022X	Special Charges
023X	Incremental Nursing Care Rate
024X	All-Inclusive Ancillary
025X	Pharmacy (See also 063X , an extension of 025X)
026X	IV Therapy
027X	Medical/Surgical Supplies and Devices (See also 062X , an extension of 027X)
028X	Oncology
029X	DME (Other than Renal)
030X	Laboratory
031X	Laboratory Pathological
032X	Radiology–Diagnostic
033X	Radiology–Therapeutic and/or Chemotherapy Administration
034X	Nuclear Medicine
035X	Computed Tomographic TCPScans
036X	Operating Room Services
037X	Anesthesia
038X	Blood
039X	Blood and Blood Component Administration, Processing and Storage
040X	Other Imaging Services
041X	Respiratory Services
042X	Physical Therapy
043X	Occupational Therapy
044X	Speech-Language Pathology
045X	Emergency Room
046X	Pulmonary Function
047X	Audiology
048X	Cardiology
049X	Ambulatory Surgical Care
050X	Outpatient Services
051X	Clinic
052X	Freestanding Clinic
053X	Osteopathic Services
054X	Ambulance
055X	Skilled Nursing
056X	Medical Social Services
057X	Home Health—Home Health Aide
058X	Home Health—Other Visits
059X	Home Health—Units of Service
060X	Oxygen (Home Health)
061X	Magnetic Resonance Technology (MRT)
062X	Medical/Surgical Supplies (Extension of 027X)
063X	Pharmacy—Extension of 025X
064X	Home IV Therapy Services
065X	Hospice Service
066X	Respite Care
067X	Outpatient Special Residence Charges
068X	Trauma Response
069X	Not Assigned
070X	Cast Room
071X	Recovery Room
072X	Labor Room/Delivery
073X	EKG/ECG (Electrocardiogram)
074X	EEG (Electroencephalogram)
075X	Gastrointestinal Services
076X	Treatment or Observation Room
077X	Preventive Care Services
078X	Telemedicine
079X	Extra-Corporeal Shock Wave Therapy
080X	Inpatient Renal Dialysis
081X	Acquisition of Body Components
082X	Hemodialysis—Outpatient or Home
083X	Peritoneal Dialysis—Outpatient or Horne
084X	CAPD—Outpatient or Home
085X	CCPD—Outpatient or Home
086X	Reserved for Dialysis (National Assignment)
087X	Reserved for Dialysis (State Assignment)
088X	Miscellaneous Dialysis
089X				Reserved for National Assignment
090X	Behavioral Health Treatments/Services (See also 091X , an extension of 090X)
091X	Behavioral Health Treatments/Services—Extension of 090X
092X	Other Diagnostic Services
093X	Medical Rehabilitation Day Program
094X	Other Therapeutic Services
095X	Other Therapeutic Services—Extension of 094X
096X	Professional Fees (See also 097X and 098X )
097X	Professional Fees (Extension of 096X)
098X	Professional Fees (Extension of 096X and 097X)
099X	Patient Convenience Items
100X	Behavioral Health Accommodations
101X–209X
210X	Alternative Therapy Services
211X–300X
310X	Adult Care
311X–999X

Direct coding of HCPCS codes into the charge master is referred to as 

static coding

 or “hard coding.” When codes are left off the charge master and entered later by Health Information Management personnel, the process is referred to as 

dynamic coding

 or “soft coding.” Many ancillary procedures such as laboratory or radiology procedures can be coded statically; that is, HCPCS codes can be placed in the charge master. In contrast, many surgery codes are dynamically coded and Health Information Management staff will assign the appropriate HCPCS code after the procedure.

LEARNING OBJECTIVE 4

Define the two major bill types used in healthcare firms.

BILLING AND CLAIMS PREPARATION

For most healthcare providers medical claims fall into one of two types: CMS-1500 and CMS-1450 (UB-04). The CMS-1500 form is used by noninstitutional providers and suppliers to submit claims to Medicare and many other payers. The HCFA-1450 or UB-04 is used by institutional providers to submit claims to Medicare and most other payers. Sample copies of both a CMS-1500 and a UB-04 are shown in Appendix 2–A.

Most claims in today’s environment are submitted in an electronic format. Usually, claims are submitted directly to the payer or indirectly to a “clearinghouse” where the claims are grouped and then sent to the appropriate payer. The HIPAA administrative simplification provisions direct the Secretary of Health and Human Services to adopt standards for administrative transactions, code sets, and identifiers as well as standards for protecting the security and privacy of health data. After October 16, 2003, all providers who were not small providers (institutional organizations with fewer than 25 full-time employees or physicians with fewer than 10 full-time employees) had to send all claims electronically in the HIPAA format.

The electronic format required under HIPAA is 837I for the UB-04 and 837P for the CMS-1500. These formats specify both the nature of data exchange and the required data fields. There have been a few additional data elements included in the 837I and 837P protocols that were not in the current CMS-1500 and UB-04 claim forms.

Two primary payment grouping algorithms are DRGs and APCs, both of which are used by Medicare for hospital payment and also many commercial payers. Both DRGs and APCs are assigned based on data in the UB-04. A DRG is often assigned depending on values found in the UB-04 for ICD-9 procedure codes and ICD-9 diagnosis codes. Surgical procedures require an ICD-9 procedure code and may also require an ICD-9 diagnosis code. A medical DRG requires one or more ICD-9 diagnosis codes. Note that in the UB-04 form in Appendix 2–A there are spaces allowed for a principal diagnosis code and up to eight additional diagnosis codes. There is also a field for the principal procedure, and up to five additional procedures may be coded. Many diagnosis and procedure codes may group to more than one DRG. A complete review of the DRG title is necessary to understand the correct DRG assignment. To illustrate this concept, let’s examine the following related DRGs: