Accounts Receivable (A/R) Management

1 Chapter 00: Chapter Title169169 Section One: Section Title169 Chapter 6 Accounts Receivable (A/R)ManagementThe objective of this chapter is to provide an overview ofpatient account transactions and Accounts receivablemanagement. Hospitals provide services to patients fortreatment of conditions utilizing highly specialized equip-ment and personnel. It is critical for hospitals to maintain anefficient cash flow by obtaining timely compensation forresources utilized in order to provide services in thehospital environment. Claim forms and patient statementsare prepared to bill for services rendered on an outpatientand inpatient basis.

2 Once the claim is submitted or patientstatement is sent, the hospital must monitor outstandingaccounts to ensure that payment is received within anappropriate time frame. This function is critical tomaintaining a positive cash flow for the hospital. Thischapter provides a brief overview of the life cycle of ahospital claim. A discussion of the payer s review of a claimand the remittance advice will provide an understanding ofcommunications from the payer regarding a claim. Payerdeterminations are reviewed to provide an overview ofissues handled by the Patient financial services and theCredit and Collection Departments.

3 The chapter will closewith a discussion of Accounts Receivable follow-up and theappeals process to provide a greater understanding ofaspects involved in managing Accounts Objectives Define terms, phrases, abbreviations, and acronymsrelated to patient account transactions and accountsreceivable follow-up. Demonstrate an understanding of the life cycle of ahospital claim. Discuss elements related to patient transactions. Provide an overview of key information found on anexplanation of benefits or remittance advice. List common reasons for claim denials and delays. Demonstrate an understanding of A/R Management . Provide an overview of the purpose and function of anaccounts Receivable report.

4 Describe the process of monitoring and follow-up ofoutstanding Accounts . Demonstrate an understanding of the appeals CYCLE OF A HOSPITAL CLAIMHOSPITAL BILLING PROCESS Insurance Claims and Patient Statements Third-Party Payer (TPP) Claim ProcessingRemittance Advice (RA) PATIENT TRANSACTIONSP atient Payments Third-Party Payer PaymentsAdjustmentsBalance Billing Secondary BillingACCOUNTS Receivable (A/R) Management Accounts Receivable Reports Accounts Receivable Procedures LOST, REJECTED, DENIED, AND PENDED CLAIMSLost ClaimRejected ClaimDenied ClaimPended ClaimCOLLECTION ACTIVITIESP rioritizing Collection ActivitiesPatient and Third-Party Follow-up ProceduresUncollectible Patient Accounts Insurance Commissioner InquiriesCREDIT AND COLLECTION LAWS Statute Of Limitations Fair Credit Billing Act Fair Debt Collection Practices ActOUTSTANDING PATIENT Accounts Patient Statements Patient Phone ContactCollection Letters OUTSTANDING THIRD-PARTY CLAIMS Prompt Pay StatutesInsurance Telephone Claim InquiryInsurance Computer Claim Inquiry Insurance Claim TracerTHE APPEALS PROCESSC laim Determinations That Can Be AppealedWho Can Request an

5 AppealTime Requirement for Appeal SubmissionLevels of Appeals Appeal Submission ProceduresCh 2/6/06 5:58 PM Page 169 LIFE CYCLE OF A HOSPITAL CLAIMThe life cycle of a hospital claim begins when thepatient arrives at the hospital for diagnosis and treat-ment of a condition(s) and ends when the claim is paid,as illustrated in Figure 6-1. As discussed in previouschapters, the Admissions department is responsible forobtaining required demographic, financial , and insurnceinformation from the patient. Another function that isequally important is obtaining appropriate referrals andauthorizations. Information obtained by the AdmissionsDepartment is entered into the computer on the patient saccount.

6 Patient care services are rendered and docu-mented by various departments within the hospital, andcharges are generated. Most charges are posted at thedepartment level through the chargemaster during thepatient stay (Figure 6-2). Charges posted through thechargemaster are automatically dropped to the claimand submitted after the patient is discharged. Generallythe hospital does not submit a claim or send a patientstatement for inpatient services until after the patient isdischarged. On discharge, the Health Information Man-agement (HIM) department receives the patient s chartfor review and coding. The HIM department codesservices, procedures, and items that were not posted170 Section Two.

7 Billing and Coding ProcessKey TermsAccounts Receivable (A/R) Accounts Receivable (A/R) aging reportAccounts Receivable ratio (A/R ratio)AdjustmentAdvance Beneficiary Notice (ABN)AgingAppealBalance billingClean claimContractual adjustmentCMS-1450 (UB-92)CMS-1500 Days in Accounts Receivable (A/R)Denied claimDun messageElectronic remittance advice (ERA)Explanation of benefits (EOB)Fair Credit Billing ActFair Debt Collection Practices ActFinancial classHospital Issued Notice of Noncoverage (HINN)Insurance claim tracerNational Correct Coding Initiatives (CCI)Outstanding accountsPayer data filesPended claimPrompt pay statutesRejected claimRemittance advice (RA)

8 Statute of LimitationsUnbundlingWrite-offAcronyms and AbbreviationsABN Advance Beneficiary NoticeAPC Ambulatory payment classificationsA/R Accounts receivableCCI National Correct Coding InitiativesCMS Centers for Medicare and Medicaid ServicesCOB Coordination of benefitsDRG Diagnosis Related GroupEOB Explanation of BenefitsEOMB Explanation of Medicare BenefitsEMC Electronic media claimERA Electronic remittance adviceHIM Health Information ManagementHINN Hospital Issued Notice of NoncoverageMCE Medicare Code EditorOCE Outpatient Code EditorPFS Patient financial ServicesRA Remittance adviceTPP Third-party payerPatient presentsfor diagnosis andtreatment of conditions.

9 (Patient admission)Information referral/authorizationobtained atadmissionPayer determinationReimbursement(paymentproces sed)Patient servicesrendered(documentation)Charge capture(chargemaster)HIMchart review/coding(APC/DRGassignment)Claimsub mission(CMS-1450/CMS-1500)Accountsreceiv ables (A/R)managementPayerdetermination(denial or pended)Resubmit/appealFigure 6-1 Life cycle of a hospital 2/6/06 5:58 PM Page 170 Chapter 6: Accounts Receivable (AR) Management171 Chapter 6: Accounts Receivable (AR) Management171 Community General HospitalCharge Description Master (CDM)ChargemasterNumber/ department #/GeneralLedger #Procedure/Item CodeHCPCS/NDC andModifierItem/ServiceDescriptionRevenu eCodeQuantity/DoseChargeRoom C532 Cefepime inj 2 GTray hyperal dreABD/KUB flatplatOximeterProthrombin timeCBC with diffBlood cultureBasic metabolicDopp-venous loweX-ray chestX-ray chest fluoroscopy100/977200/164300/116300/1694 00/137700/138700/138700/139700/140700/16 7700/169700/169J0692A455074470S810585210 8502587040800489330371020710900110025002 7003200410030003000300030004000320032012 g111111111110421333314849576812153583185 185 Figure 6-2 Charge Description Master (CDM)

10 , commonlyreferred to as the Cycle of a Hospital ClaimInformation obtained at admissionPatient care services rendered and documentedCharges captured through chargemasterHIM review, coding, and APC or DRG assignmentProcess and submit insurance claims and patientstatementsPayer review and determination remittance adviceBOX 6-1 KEY POINTSH ospital Encoder and GROUPER ProgramsAn encoder program is computer software that allows theHIM professional to enter specified information regardingpatient care services and the patient s condition. Theprogram utilizes data entered to identify potential GROUPER program is software that allows the HIMprofessional to enter specified information regarding thepatient s care including condition(s) and procedure(s).