Patient Encounters and
Billing Information
Learning Outcomes
When you finish this chapter, you will be able to:
Explain the method used to classify patients as new
and or established.
List the five types of information that new patients
provide before their encounters.
Discuss the procedures that are followed to update
established patient information.
Explain the process for verifying patients’ eligibility for
insurance benefits.
Discuss the importance of requesting referral or
preauthorization approval.
Learning Outcomes (Continued)
When you finish this chapter, you will be able to:
Explain how to determine the primary insurance for
patients who have more than one health plan.
Summarize the use and typical formats of encounter
Identify the seven types of charges that may be
collected from patients at the time of service.
Explain the use of real-time claims adjudication tools
in calculating time-of-service payments.
Describe the billing procedures and transactions that
occur during patient checkout.
Key Terms
• accept assignment
• Acknowledgment of
Receipt of Notice of Privacy
• adjustment
• assignment of benefits
• birthday rule
• cash flow
• certification number
• charge capture
• chart number
• coordination of benefits
• direct provider
• encounter form
• established patient (EP)
• financial policy
• gender rule
• guarantor
• HIPAA Coordination of
• HIPAA Eligibility for a
Health Plan
Key Terms (Continued)
• HIPAA Referral Certification
and Authorization
• indirect provider
• insured
• new patient (NP)
• nonparticipating provider
• participating provider (PAR)
• partial payment
• patient information form
• primary insurance
• prior authorization number
• real-time claims
adjudication (RTCA)
• referral number
• referral waiver
• referring physician
• revenue cycle management
• secondary insurance
Key Terms (Continued)
self-pay patient
supplemental insurance
tertiary insurance
trace number
walkout receipt
Chapter 3 Introduction
• Cash flow—movement of monies into or out
of a business
• Revenue cycle management (RCM)—the
actions that ensure the provider receives the
maximum appropriate payment
3.1 New Versus Established Patients
• New patient (NP)—patient who has not seen
a provider within the past three years
• Established patient (EP)—patient who has
seen a provider within the past three years
• Figure 3-1, page 77
3.2 Information for New Patients
• When the patient is new to the practice, five
types of information are important:
1. Preregistration and scheduling information
2. Medical history
3. Patient/guarantor and insurance data
4. Assignment of benefits
5. Acknowledgment of Receipt of Notice of Privacy
3.2 Information for New Patients
• Referring physician—physician who refers a
patient to another physician
• Participating provider (PAR)—provider who
agrees to provide medical services to a payer’s
policyholders according to a contract
• Nonparticipating provider (nonPAR)—provider
who does not join a particular health plan
• Patient information form—form that includes a
patient’s personal, employment, and insurance
company data
3.2 Information for New Patients
• Other terms for the policyholder of a health
plan include:
– Insured
– Subscriber
– Guarantor
• Assignment of benefits—authorization
allowing benefits to be paid directly to a
3.2 Information for New Patients
• Acknowledgment of Receipt of Notice of
Privacy Practices—form accompanying a
covered entity’s Notice of Privacy Practices
• HIPAA requirement
• Direct vs. Indirect
– clinician who treats a patient face-to-face
– clinician who does not interact face-to-face with the patient
• Not required for TPO
• Patients must be informed once
• Signed or not kept in file
3.3 Information for Established Patients
• When EPs arrive for appointments, they are asked if
any pertinent personal or insurance information has
• EPs should review their information forms for accuracy
at least once per year
• Any changes to an EP’s information should be entered
in the practice management program (PMP)
• Check for current Notice of Privacy Practices
– Make sure one in file hasn’t expired
• Existing patients get new cases or records for new cc
– Chief complaint
• Chart number—unique number that identifies a
Communications w/Patients
• Most important – document EVERYTHING
OT 232 Ch 3 lecture 1
3.4 Verifying Patient Eligibility for
Insurance Benefits
• 1st step in establishing financial responsibility
• Abstract info from PIF & insurance card
– Patient information form
• Then contact the payer to verify
– Patient’s general eligibility for benefits
– Amount of copay
– Whether the visit is for a covered service that is
medically necessary
• All must be checked before patient sees provider
Verify Patient Eligibility for Insurance
Benefits (cont’d.)
• Factors affecting general eligibility
– Premiums
– Income
– Employment
• Checking Out-of-Network Benefits
– Additional charge or 100% responsible?
• Verifying the amount of copayment
– Usually listed on card, but January appointments?
OT 232 Ch 3 lecture 1
3.4 Verifying Patient Eligibility for
Insurance Benefits (Continued)
• Determine whether the planned encounter is
for a covered service
• Electronic benefit inquiries & responses
– HIPAA standard forms can be used (pg 59?)
• HIPAA Eligibility for a Health Plan—transaction in
which a provider asks for and receives an answer about
a patient’s eligibility for benefits (X12 270/271)
• Trace number—number assigned to a HIPAA 270
electronic transaction
– PMPs log transactions
– Be careful of info sent
3.5 Determining Preauthorization and 3-16
Referral Requirements
• Preauthorization is requested before a patient is given certain types of
medical care
Usually required
Controls access to specialists
HIPAA standard transaction
Prior authorization number—identifying code assigned when
preauthorization is required (also called a certification number)
• Referrals
– Often required
– HIPAA standard transaction
– HIPAA Referral Certification and Authorization: transaction in which a
provider asks a health plan for approval of a service and gets a response (X12
– Referral number—authorization number given to the referred physician
• Providers must handle these situations correctly to ensure that services
are covered if possible
• Procedures when patient is not covered
– Inform patient prior to increase odds of pmt
3.5 Determining Preauthorization and 3-17
Referral Requirements (Continued)
• Referral waiver—document a patient signs to
guarantee payment when a referral
authorization is pending
– Used if a patient does not have the required
referral document
3.6 Determining the Primary Insurance
• Primary insurance—health plan that pays
benefits first
• Secondary insurance—second payer on a
• Tertiary insurance—third payer on a claim
• Supplemental insurance—health plan that
covers services not normally covered by a
primary plan
3.6 Determining the Primary Insurance3-19
• To determine a patient’s primary insurance,
medical insurance specialists:
– Examine the patient information form and
insurance card
– Follow the coordination of benefits guidelines
– Follow any rules that may apply
– Communicate with the patient as needed
3.6 Determining the Primary Insurance3-20
• Coordination of benefits (COB)—explains how an
insurance policy will pay if more than one policy
– HIPAA Coordination of Benefits—transaction sent to
a secondary or tertiary payer (X12 837)
• Birthday rule—guideline that determines which
parent has the primary insurance for a child
• Gender rule—coordination of benefits rule for a
child insured under both parents’ plans
Establishing Financial Responsibility
• Entering insurance info in the PMP
• Communications with payers
– All communications with payers should be
documented in the patient’s…
• FINANCIAL (not medical/clinical) record
OT 232 Ch 3 lecture 2
3.7 Working with Encounter Forms
• An encounter form (electronic or paper) is completed
by a provider to summarize billing information for a
patient’s visit
– Aka ‘Superbill’
– Lists the medical practice’s most frequently performed
procedures with their procedure codes
– Blank spaces for diagnoses codes, and often includes other
various information
– Paper forms may be preprinted or computer-generated
• Charge capture—procedures that ensure billable
services are recorded and reported for payment
3.8 Understanding Time-of-Service (TOS)
• HIPAA tip – page 97
• Practices routinely collect these charges at the
time of service:
Previous balances
Noncovered or overlimit fees
Charges of nonPAR providers
Charges for self-pay patients
Deductibles for patients with CDHPs
3.8 Understanding Time-of-Service (TOS)
Payments (Continued)
• Accept assignment—participating physician’s
agreement to accept allowed charge as full
• Self-pay patient—patient with no insurance
• Partial payment—payment made during
checkout based on an estimate
Collecting Time-of-Service (TOS)
• Other TOS Collection Considerations
• Due to circumstances, funds can be delayed to
– Adjudicated amounts
– Annual deductible payments
– Differences in participation contracts
• So increase TOS collections
– Deductibles
– Partial payment
• % of estimated amount owed
OT 232 Ch 3 lecture 2
3.9 Calculating TOS Payments
• Real-time claims adjudication—process used to
generate the amount owed by a patient at the
time of service
• Wave of the future
• Must be coded first
• Get paid within 24 hours
• Real-time benefit information—process used to
generate information about a patient’s benefits
at the time of service
• Financial policy—practice’s rules governing
payment from patients
3.10 Collecting TOS Payments and
Checking Out Patients
• The PMP is used to record the financial
transactions from patients’ visits:
– Charges—amounts providers bill
– Payments—monies the practice receives
– Adjustments—changes to patients’ accounts
• Information from the encounter form is entered
into the PMP to calculate charges and compute
• Payment methods may include cash, check, and a
credit or debit card
Financial Policy
• Usually displayed in reception area or in new
patient info packet
• Should explain
– Unassigned claims
– Assigned claims
– Copayments
• Estimating what the patient will owe
– Based on deductible & allowed charges
• Financial arrangement for large bills
– Payment plan
– Interest or not?
OT 232 Ch 3 lecture 2
3.10 Collecting TOS Payments and
Checking Out Patients (Continued)
• Payment Methods
– Some sort of receipt is given as proof of payment
– Insurance questionable
• Patient or provider handles after patient pays in full
• Walkout receipt—report that lists the diagnoses,
services provided, fees, and payments received
and due after an encounter
– Insurance questionable
• Patient or provider handles after patient pays in full

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