Third Party Billing
Third-party billing for health and wellness services basically involves contracting with an insurance vendor as a provider of services. It also involves credentialing providers as specified by the contract with the insurance vendor.
In addition, it includes modifying operations within the health or wellness service to include:
- Registering the patient (including a statement of financial responsibility, insurance medical release, and updated insurance information)
- Determining what is covered under the patient’s insurance plan
- Patient payment of copay or coinsurance
- Appropriate coding for the elements of the visit
- Creation and submission of the medical or mental health claim
- Monitoring the adjudication of the claim
- Generation of patient statements
- Follow-up on payments and collections
The infrastructure required includes:
- adequate administrative services to support contracting and credentialing (initial and on-going)
- registration/front desk personnel
- practitioners (and/or coders) trained in proper coding
- billing and accounting personnel
- an accounting system that can effectively track payments from the third party
- patient information technology services to support all the above functions
Each claim ultimately contains the patient demographic information, the codes of the office visit, and/or the procedures performed. Each of these is paired with a diagnosis code (an ICD code) that should justify medical need. Electronic billing is recommended. For health/wellness centers with a lower volume of claims, billers may use manual claims. However, manual systems have high rates of errors and are inefficient. Most electronic medical record systems have billing capabilities and at a minimum have the capability to determine eligibility, deductibles, and copays and create explanations of benefits (EOBs). Sometimes a clearinghouse is used to reformat claims and transmit them to payers. Also, many independent companies offer third-party billing services and contracting assistance. Most of these companies receive a percentage of the total claims paid. Because the learning curve for the contracting, credentialing, and billing process is fairly steep, the health or wellness service may want to start with the most common health insurance companies insuring their student population.
It may be necessary to hire an outside party to assist with establishing fees for services at the appropriate level to achieve maximum reimbursement, to assist with the initial credentialing and contracting process, and to provide educational assistance with coding knowledge.
For more information on the billing process, go here.
Contracting with Insurance Vendors
Contracts with payers (insurance companies) determine the reimbursement conditions for the services provided. Most contracts include medical necessity conditions, provider network information, and reimbursement rates. Credentialing requirements are also outlined. The insurance company often has the upper hand in negotiating the contract, as the health/wellness service may be one of many providers. Pay close attention to the reimbursement rate proposed for the codes (office visits, procedures, and tests) that are the highest volume in your health service. Understanding the relationship of the reimbursement amount to the cost of delivering common services can help focus reimbursement negotiations. Knowledge of the contract conditions is important to avoid claim denials.
Credentialing is a process of reviewing a provider’s qualifications. The process involves review of education, licensing, specialty training or certificates, and experience. The process usually must be completed before billing an insurance vendor for services. Many accreditation organizations also require the process upon hiring a medical or mental health provider. The provider must submit an extensive application, and the process can be quite lengthy because of the background information that must be verified. Some insurance companies require individual credentialing with the company, but most now use a centralized database, CAQH Proview. The process can often take up to 90 days to complete.
CAQH (Center for Affordable Quality Healthcare, Inc.), offers an online database that collects the information required for credentialing and provides the data to third-party payers. If the third-party payer does not participate in CAQH Proview (formerly Universal Provider Datasource), the information may need to be submitted directly to the insurance vendor. Additional information about CAQH Proview can be found here. The information in the CAQH database will need to be periodically updated and attested to.
Modifying Health Services Operations
Coding Education (Providers and Coding/Billing Staff)
Educating providers and billing staff regarding the requirements and rules around coding is essential and ongoing. Providers or coders must correctly assign Evaluation and Management (E&M), ICD, and CPT codes for the office visit to provide precise reimbursement. The office visit note must correctly document the essential elements needed to assign a specific code. The Centers for Medicare and Medicaid Services (CMS) guide for codes may be found here. Auditing the coding process and providing ongoing feedback to practitioners help to standardize use of E&M codes within the practice and identify outliers. Both over-coding and under-coding can be problematic for the health or wellness center, resulting in delays in payments and possible penalties.
Appropriate accounting and reconciliation systems should be developed to manage the billing process. The development and maintenance of the internal accounting processes and the expertise in medical and behavioral health billing practices is costly and should be included in any cost-benefit decision regarding third-party billing. Roughly, the accounting for such a system involves setting up a master price list that includes each billing code, usually based on a percentage above Medicare reimbursement rates or rates set within the health/wellness center and based on cost of delivering the service. Each insurance plan reimburses a certain amount for each code (the contracted rate), and the balance between the billed amount and the contracted rate is adjusted and absorbed by the health or wellness service (assuming rate billed is above contracted rate).
Some health or wellness services are able to apply the student fee subsidy if a student is uninsured or if the student’s deductible/coinsurance costs are higher than a predetermined rate. The rate, with the fee subsidy applied, is designated at a level to maintain affordability, assure student access, and fairly apply health fees that the student pays the college for affordable access to the health/wellness center. Communication to students (and their families) should include insurance plans accepted at the health or wellness center and the maximum office visit charge (after student fee subsidy is applied) that will be billed to the student, regardless of their insurance status or insurance plan coverage.
Periodic auditing should be performed to ensure correct coding, accounting, billing, and reconciliation processes. Cash handling processes should also be periodically audited. The auditing of these processes can be easily incorporated into quality management programs within the health or wellness services. Also, insurance vendors will frequently conduct audits of medical records for accurate coding. The insurance vendor audits can be educational and helpful. CMS can also audit health/wellness services billing Medicare or Medicaid. Penalties can apply if inaccurate coding practices or other compliance issues are discovered.
The billing system should meet the standards and guidelines of the Health Insurance Portability and Accountability Act (HIPAA) and the Office of the Inspector General. It is often the conclusion that a student health or wellness center is a HIPAA-covered entity because the center provides medical treatment to students and transmits electronic billing information; however, because of the exception to health records maintained by an educational institution under the Family Educational Rights and Privacy Act, the student records are often exempt from HIPAA’s privacy rule, even if electronic billing is performed. Regardless, it is best to configure any third-party billing system to meet HIPAA Transactions and Code Set Standards.
HIPAA Transactions and Code Set Standards
HIPAA Transactions and Code Set Standards generally apply to patient-identifiable information that is transmitted electronically. The intention was to simplify administrative billing processes through standardization of vocabulary and codes when conducting electronic data transfer. Standard rules for transactions for the electronic exchange of health care data include:
- Claims and encounter information
- Payment and remittance advice
- Claims status
- Enrollment and disenrollment
- Referrals and authorizations
- Coordination of benefits
- Premium payment
Information on the specific standard for the transactions can be found on the Center for Medicare and Medicaid Services website.
Code set standards outlined in HIPAA include:
Additional information can be found on the CMS website.
HHS Security Risk Assessment
U.S. Health and Human Services has developed a tool to assist HIPAA-covered organizations in implementing safeguards to protect confidentiality of electronic personal health information (e-PHI). A risk analysis tool to help covered entities meet the requirements of the Security Rule can be found on the following here.