Module 1, Topic 1
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Day 6: Life Cycle of a Claim

Petria September 3, 2020
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Life Cycle of a Claim

There are two different methods used to deliver insurance claims to the payer: 

Manually (on paper) and 
A “manual claim” is a paper claim form that refers to either the Centers for Medicare & Medicaid Services CMS-1500 form (formerly HCFA-1500) or a Uniform Billing UB-04 form, both of which are typically sent to the payer through the mail and require postage. 
Electronically 
The majority of healthcare providers and insurance companies prefer electronic claim systems
Electronic claims submission helps reduce the administrative burden and expense generally associated with manual claims processing and submission.   
The use of electronic claims can result in significant financial savings
Electronic claims can be generated in a practice management system and then transmitted  to Medicare

 

Cycles for a Medicare Claim 

Billing a Medicare claim is one of the more complex tasks providers must frequently perform. Just what happens to a claim once it’s billed? 

I will illustrates the life cycle of a Medicare claim, from the time of a billable patient visit, through final reimbursement and the important stops in between. 

 

PROVIDER 

Each and every claim starts with a healthcare provider.  Without a provider, there aren’t any claims to bill. 

 

SOFTWARE 

Providers use a variety of Practice Management Software programs to streamline their operations. While the functionality of the software may differ depending on the facility type, most Practice Management Software programs include features like patient information storage, appointment scheduling and staff management. 

 

CLAIM FILE 

Providers must generate an Electronic Claim File (also known as an EDI 837 File) to submit any claim. This file includes Medicare required claim data, and the file can include multiple claims. The 837 holds claim details such as patient description, why treatment was provided, the treatment, and the cost. 

 

837i Example

 

FISS

Providers send Medicare Part A claims to the Fiscal Intermediary Standard System (FISS) for processing. The Fiscal Intermediary Standard System (FISS) is the standard Medicare Part A claims processing system.

It allows you to perform the following functions: 

  • Enter, correct, adjust, or cancel your Medicare home health billing transactions 
  • Inquire about the status of claims 
  • Inquire about the need to respond to an additional development request (ADR) 
  • Access various inquiry screens (e.g., revenue codes, diagnosis codes, reason codes, etc.)

FISS is available Monday through Friday typically between the hours of 5:00 a.m. and 8:00 p.m. CT (Central Time) and Saturday between the hours of 5:00 a.m. and 5:00 p.m. CT. Note: Depending on the time it takes the nightly system cycle to run, FISS may not always be available at 5:00 a.m. CT. In addition, FISS system releases may affect availability over weekends. FISS is not available on Sunday or on national holidays. 

 

 

SUSPENSE 

When a claim is being worked by Medicare it is in "suspense", which means in most cases, the provider won’t need to take any action. However, if Medicare finds something wrong with a claim, it can return it to the provider (RTP), reject it, deny it, or request additional development. 

 

Claims Correction (T-STATUS)

When a provider submits a claim that includes incorrect information, Medicare issues a RTP claim indicating the provider needs to make fixes. Oftentimes, there are errors in patient name, gender and date of birth the provider must correct for a successful claim. ​

 

Rejected Claim

A rejected claim means that the claim is not payable in its current state and must be corrected and re-submitted. This generally happens when a provider tries to bill the wrong payer or other eligibility issues arise. ​​

 

Denied Claims

Denied claims are the worst-case scenario because Medicare won’t pay them and a rebill isn’t allowed. 
In order for a Home Health Claim to be denied, it must have gone through a "medical review". The most common cause for denials occurs when Medicare asks for a Request for Additional Development (ADR) to help determine medical necessity, and the provider fails to respond.  The only way to rectify a denied claim is to appeal.

 

 

Adjustments/Cancels

Adjustment claims (type of bill XX7) are submitted when it is necessary to change information on a previously paid claim. The change must impact the processing of the original bill or additional bills in order for the adjustment to be performed. The claim being adjusted must be in a finalized status location (i.e., P B9997 or R B9997).

If a claim in a P status has been reviewed by Medical Review and has one or more line items denied, adjustments can be made to the paid line items. Please note: Adjustments cannot be made to any part of a denied line item on a partially paid claim.

In addition, only rejected claims (R B9997) that have posted information to the Common Working File (CWF) should be adjusted, such as a claim that rejected due to an open Medicare Secondary Payer (MSP) record or a home health date of service that overlaps a beneficiary’s stay in an inpatient facility.

It is not appropriate to adjust home health Requests for Anticipated Payment (RAPs). Incorrect RAPs with an incorrect date of admission must be canceled and rebilled with the correct information. 

Cancel claims/RAPs (type of bill XX8) may be necessary when the incorrect provider number was submitted, an incorrect Medicare ID number was submitted, or a duplicate payment was received. Home health agencies may need to cancel RAPs for reasons such as removing an episode from the CWF that was submitted and processed with an incorrect Health Insurance Prospective Payment System (HIPPS) code, or service date on the 0023 line.

Claims/RAPs needing canceled must be in a finalized paid status/location (P B9997). 

 

 

ERA – REMITTANCE ADVICE

After a claim has made its way through the Medicare system, an explanation of the results are sent back to the provider in the form of an Electronic Remittance Advice (ERA). This document provides details on payments and reasons for any denials.