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What is a healthcare claim?

Keep in mind...
  • A healthcare claim is a detailed invoice for payment for a covered service.
  • Healthcare claims can be for services, equipment, or fees.
  • Healthcare claims include consumer requests for reimbursement.
  • The technical nature of claims reflects the insurance dominance of the industry

A healthcare claim is an invoice that itemizes a service covered by insurance. It is typically a request for payment or reimbursement. Detailed billing is essential to a claim. There must be an accurate and complete accounting for the charges for which the claim seeks payment.

Some claims involve reimbursements to customers. Customers must sometimes fill out detailed paperwork to support the request for insurance funds.

Comparison shopping is a great way to determine the plans that are easiest to use. Click here to use our free search tool and find affordable health insurance from your state’s most reliable providers.

A Claim is Detailed Information

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The essence of a claim is the information that goes into it. The things that must be there include the date, place and time. The other parts that must be there are the services that were delivered.

The part that holds it together is the medical necessity of the service. The detailed level of information is critical to the successful processing and payment of the claim. It is also a key part of the record of medical care.

Medical Necessity

Claims can be for cosmetic services or optional treatments. Some policies cover these types of choices. Most health policies do not cover treatments unless they are medically necessary.

A licensed doctor or other qualified professional must determine that a service is medically necessary. Disputes over medical necessity require an external review by a neutral party.

Understanding the Medical Claims Process

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The medical claims process in the US involves hundreds of billions of dollars each year. Healthcare is a trillion dollar industry. The basics of it are easy to understand. A large part of the health industry involves the medical claim.

The claim is a demand for payment. It runs from the policyholder, to the medical service provider, and then to the insurance company. If there are unpaid balances, then those go back to the policyholder as a balance billings.

  • The policyholder is the guarantor of any debts made in his or her name for medical services. The policyholder must maintain the insurance contract by paying premiums and meeting the conditions for insurance coverage. These can include employment with a particular employer.
  • Medical services providers are the doctors, hospitals, clinics, and other medical care facilities that serve members and emergency cases.
  • Insurance company is the payer in private plans. In public plans, insurance companies work for state or federal government agencies to handle and pay claims

Processing Health Insurance Claims

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A claim is a demand for payment, and it is a demand for timely payment. Someone has extended a service or paid a bill covered by insurance.

The claim is the business way to say pay me now. The state, federal government, or private insurance company has a short menu, it can really do one of three below itemized things with any claim things with any claim.

The process that the designated payer follows is basically to review the claim, investigate the claim, make any adjustments necessary to meet the terms of the contract, and respond to the claim.

  • Pay in full. The insurer can review the claim. They can determine that the service was covered and under contract at the time delivered. They can determine that all condition were met and it was medically necessary. They can pay in full
  • They can pay in part and partially deny the claim. The adjustment process can yield a mixed result. Some parts of the claim may pass while other parts may not. The insurance company can pay the parts not in dispute and deny the balance.
  • They can deny the claim when something is missing, wrong, or not clearly covered. Denials are not usually final, and the first step is often to correct something in the original submission

Coding and Processing

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Insurance companies have taught the medical profession to speak its language. The doctors retain the official power to decide medical necessity, but the insurance companies decide necessary for what purpose. The coding of procedures has risen to a form of control.

The doctor must fit the diagnosis, his or her professional judgment, in the categories designed for maximizing actuarial factors for investors.

Coding is the language that doctors must master to get prompt payment for their services. There may have been a time when the opposite was true. A time when insurance companies stretched and learned to understand the doctor’s actions.

Today, the insurers prescribe the economics of medical services.

The Payer’s Billing Codes

Payers have rules for billing, and the codes are vital to the process. The payer has an obligation to pay for covered services. The codes represent the covered services.

Every service must be assigned to a billable code if it is to be paid promptly. Coding medical services in the ways that insurers wish is a key to prompt payment of health insurance claims.

The claims process focuses on volume. For example, there is no code box to check for an amazing client outcome.

Adjusting and Settling

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Claims adjustments intend to create fair results from possibly confused circumstances. Part of a claim may be valid while other parts do not pass review.

The adjustment and settlement process can shorten the time needed to unwind a transaction and set it on a footing that is reasonable to both sides in the dispute.

Medical Office Claims

Medical offices require billing and coding as back-office functions. It begins with the initial contact or intake. Accurate information on the guarantor (the patient usually) and the payers (usually one or more insurance or public agencies).

The patient’s status is important as a member of the provider’s network or not. The prices and services will depend on that status. Fraud and abuse systems focus on billing practices.

Remedies for Denied Claims

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There are many ways to handle a denied claim. The one most likely to fail is to do nothing.

  • The usual corrective action involves the details of the service. Often the denial stems from some part of the service not understood or explained.
  • Medical necessity can be a source of denial as well as citing the wrong category or code.
  • A large category of potential problems occurs when a patient has multiple payers. Many patients have layers of insurance coverage. In today’s expensive and intensive medical environments, patients try to cover as much risk as possible. They cover risks by overlapping coverage from multiple sources. For example, many people with Medicare coverage also try to get Medicaid coverage.

Medicare Claims

Because of the large volume of claims that Medicare must handle, the federal government uses private contractors to process the paperwork and get the claims paid promptly.

Medicare has two major parts, there is Original Medicare administered by the US government, and Medicare Advantage consisting of private plans.

  • Original Medicare uses MAC contractor processing with Government oversight.
  • Medicare Advantage uses private plans and private sector claims processing. The CMS has review and regulatory responsibility.
  • Medicare Part D use private plans and private claims processing.
  • Medicare Supplement uses private claims processing with state government regulations.

Original Medicare Claims

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Medicare Administrative Contractors or MACs carry most of the claims processing load for the Original Medicare system. Original Medicare meets the individual mandate as qualified health plans. It has essential health benefits and minimum essential content required by the Affordable Care Act. It serves millions of older Americans and families.

The MACs have primary responsibility for accepting claims, processing then and paying them promptly. They also have first review authority to investigate claims and deny those that are not supported by sufficient or accurate information. They determine coverage and the amount of funds due to the service provider.

  • A/B MACs are private insurance companies under contract to the CMS to perform processing for Medicare Part A, and Medicare Part B claims. Each MAC manages a regional area; they pay claims from fee for service providers. These are the doctors and hospitals that accept Medicare beneficiaries for inpatient hospital care and outpatient care.
  • DME MACs are private companies under contract to handle requests and claims for durable medical equipment, prosthetics, orthotics, and related supplies. These items that doctors determine are medically necessary to extend treatment to the home environments of beneficiaries.

Medicare Advantage Claims

Private payers handle Medicare Advantage claims and some of these plans include Part D Prescription Drug coverage.

Part D Prescription Drug Claims

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Prescription drugs can amount to the highest amount of expense in an annual cycle for some beneficiaries. They can use large amounts of upper tier prescription drugs. Even when switched to generics, the annual bill can put them in the Donut Hole of reduced subsidy and support.

Prescription claims often involve disputes over drug pricing and the amount of subsidy. Prescription plans can sometimes charge higher amounts for beneficiaries that use a lot of a restricted medication.

Remedies for Denied Medicare Claims

Medicare has an appeals process that begins with the MACs and Carriers. The appeals can come from denials of claims as well as denials of requests for durable medical equipment, prosthetics, and orthotics. The appeals require a time limit for consideration and response to the claiming party.

The process involves medical services, and it does not drag out. Speed is a good thing; some people cannot maintain their health situations for a prolonged appeal process.

Network and Outside Network Claims

Payers do not treat claims equally. Claims from network providers get payments as agreed in the services contracts. Outside-of-network providers get paid by a different standard. It goes by many names, but generally, it is the usual and customary, prevailing rates, or reasonable rate standard.

The Affordable Care Act and Health Insurance Claims

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The Affordable Care Act affects claims process in many important ways. It promotes prompt payment as part of the CMS oversight over the Obamacare Marketplace.

  • Reinsurance from the federal government softened the higher than expected claims for many insurers. They lacked initial experience in the first year of the ACA. Most insurers got it right, and the expected volume and amounts of claims were not far from their estimates.
  • Prompt payment among Marketplace plans and in Medicare plans is important. Non-payment can cause denial of service.
  • Hardship Exemptions- the Centers for Medicare and Medicaid oversee the federal Marketplace. They permit a grace period for non-payment of premiums. The period also consists of hardship exemptions from the mandate of up to three months in an annual cycle. During such grace periods for hardship times, payers may delay payments until they determine the outcome of the coverage.

Health Insurance Claims Close the Loops

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A health insurance claim is a detailed invoice for payment; it closes a medical service. In a typical setting, a medical service provider sends a claim to the patient’s designated payer. The law requires everyone to have health insurance coverage. A claim tells the payer the identity of the recipient, the service requested, the services provided, the date and place, and the medical necessity.

The payer reviews the claim and determines the amount of coverage that it must pay.

Comparison shopping is the ideal method for finding the health insurance plans with prompt reimbursement. The freedom to use doctors and specialists outside of a provider’s network must also have prompt processing of reimbursement with as little paperwork as possible.

To find a health insurance company you can count on, enter your zip below and compare quotes for free!

References:
  1. https://www.healthcare.gov/glossary/claim/
  2. https://www.healthcare.gov/glossary/benefits/
  3. https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNProducts/Downloads/Items-and-Services-Not-Covered-Under-Medicare-Booklet-ICN906765.pdf
  4. https://www.healthcare.gov/glossary/external-review/
  5. https://www.healthcare.gov/glossary/balance-billing/
  6. https://www.cms.gov/Medicare/Coordination-of-Benefits-and-Recovery/ProviderServices/Your-Billing-Responsibilities.html
  7. https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNProducts/downloads/How-To-Use-NCCI-Tools.pdf
  8. https://www.cms.gov/Medicare/Coding/place-of-service-codes/Place_of_Service_Code_Set.html
  9. https://www.cms.gov/Regulations-and-Guidance/Guidance/Manuals/downloads/clm104c38.pdf
  10. https://www.cms.gov/Outreach-and-Education/Medicare-Learning-Network-MLN/MLNProducts/Downloads/Avoiding_Medicare_FandA_Physicians_FactSheet_905645.pdf
  11. https://marketplace.cms.gov/outreach-and-education/appealing-your-insurers-decision-not-to-pay.PDF
  12. https://www.cms.gov/Medicare/Medicare-Contracting/Medicare-Administrative-Contractors/MACPerformanceCompliance.html
  13. https://www.cms.gov/Medicare/Medicare-Contracting/Medicare-Administrative-Contractors/MedicareAdministrativeContractors.html
  14. https://www.cms.gov/Medicare/Medicare-Advantage/MAPDContracting/index.html
  15. https://www.cms.gov/Newsroom/MediaReleaseDatabase/Press-releases/2016-Press-releases-items/2016-02-08.html
  16. https://www.cms.gov/Medicare/Appeals-and-Grievances/OrgMedFFSAppeals/index.html?redirect=/orgMedFFSAppeals/
  17. https://marketplace.cms.gov/outreach-and-education/what-you-should-know-provider-networks.pdf
  18. https://www.cms.gov/Regulations-and-Guidance/Legislation/EMTALA/index.html?redirect=/EMTALA/
  19. http://obamacarefacts.com/obamacare-individual-mandate/

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