This is the second part of US Healthcare Basics. If you haven’t studied part 1, it will be hard to understand part 2, so please read part 1 before starting part 2. In this part, I will discuss the more advanced terminologies associated with Healthcare systems.
You may know that the healthcare system comprises Patients, Providers(Hospitals) and Insurance Companies. And the procedures that happen between the above components are standardized to make the system transparent.
- Patient responsibilities: Patient responsibilities refer to certain cost-sharing amounts that the insured/subscriber needs to pay directly to the provider(Hospital). There are different types of patient responsibilities such as Deductibles, Copay, Co-Insurance etc.
- Deductibles: It is a fixed amount that the insured/subscriber needs to pay to the provider for covered healthcare services before the insurance benefit plan starts to pay. It is the amount you pay before your insurance kicks in. For example: If you need to pay $1000 for a CT scan and $2000 for MRI, and you have a $500 deductible in your policy, then you will need to pay $500 deductible for a CT scan, and then the rest($2500) will be paid by the insurance company.
- Copay/Co-Payment: It is a fixed amount that needs to be paid by a subscriber(patient) to the service provider before receiving the service on each visit. Usually, it is defined in the policy and is probably mentioned in the insurance card. For example: If the copay is $20 for a subscriber policy, then on each visit to the hospital he/she needs to pay $20 before medical service begins.
- Co-Insurance: It is a risk-sharing agreement between the insured and insurer under a particular insurance policy where the subscriber/insured agrees to cover the percentage of the losses(medical bill)after the deductible is paid by the insured. It is the percentage of covered service cost that the subscriber should pay after the subscriber has paid his/her deductible. For example: Suppose, a subscriber has a plan with a $50 copay for each visit, a $2,000 annual deductible and 20% coinsurance with a $10,000 out-of-pocket maximum. For instance let's say, a subscriber, needs surgery costs around $200,000. Now, the subscriber needs to pay $50 for the visit, and $2000 of his/her bill as a deductible. Then coinsurance comes into play. The health plan pays 80% and the subscriber will be responsible for payment of 20% of those expenses until the remaining $7,950 of his/her annual $10, 000 out-of-pocket maximum is met. Then, the health insurance plan will cover 100% of his/her remaining eligible medical expenses i.e. $190,000 for that calendar year.
- out-of-pocket maximum: Out-of-pocket maximum is the most an insured have to pay for covered medical expenses in a plan year. The amount includes money an insured spend on deductibles, copays, and coinsurance. Once the insured reaches his/her annual out-of-pocket maximum then, covered costs will be paid by the insurance plan for the rest of the plan year. Example: refer to the coinsurance example.
- CPT(Current Procedural Terminology): According to AMA(American Medical Association, maintainer of CPT codes) CPT codes offer doctors and healthcare professionals a uniform language for coding medical services and procedures to streamline reporting, and increase accuracy and efficiency. CPT codes are five-digit codes and can be either numeric or alphanumeric depending on the category with descriptive terms for reporting.
- ICD(International Classification of Diseases): It is a system of codes used to classify and identify diseases, injuries, and other health conditions. The ICD is maintained by the World Health Organization (WHO) and is used by healthcare providers and researchers around the world to record and track patient diagnoses and treatments, which can be used for billing purposes, research, and public health surveillance. ICD codes consist of 3–7 digits alphanumeric codes that represent different diagnoses and procedures. The eleventh revision of the ICD code is ICD-11.
- Modifiers: Modifiers are used when the doctor decides to perform a procedure in a slightly different manner without changing its definition. Depending on the code for the medical procedure, the doctor is required to record the need for the alternation of the procedure to get compensation for services. CPT Modifiers are two digits numeric codes and are used to give additional information on medical procedures describing the need to use medical procedures, the site of the procedure, change in procedure, and the total number of surgeons performing the procedures. All of this information is represented in the ‘CPT code — modifier’ format and forwarded to the insurance payer. For example, 24115–52 is used to represent reduced services by the physician for “excision or curettage of a bone cyst or benign tumour, humerus; with autograft (includes obtaining the graft)” due to minor complications.
- Fee Schedule: Fee schedule refers to a complete list of fees used by insurance to pay doctors/providers on the basis of the medical services they provided. Here is an example of a fee schedule for a primary care physician in the US: Office visit (new patient):$150, Office visit (established patient): $100, Blood Test: $50, ECG: $75, X-ray: $150 etc
- NPI(National Provider Identifier): According to Wikipedia, NPI is a unique 10-digit identification number issued to healthcare providers in the United States by the Centers for Medicare and Medicaid Services. Simply it is the unique identification number for covered healthcare providers (hospitals).
- TIN(Taxpayer Identification Number): TIN is a unique identifying number used for tax purposes that identify individuals, corporations, and other entities such as nonprofit organizations (NPOs).
- EIN(Employer Identification Number): An Employer Identification Number (EIN) also known as a Federal Tax Identification Number is a unique nine-digit number assigned by the Internal Revenue Service to each business entity and is used to identify a business entity.
- Medical Billing: In the medical billing process, the healthcare provider obtains insurance information from a patient, files it and submits claims to insurance companies and billing patients(subscribers) in order to receive payment for services rendered, such as testing, treatments, and procedures.
- Denial of claim: Denial of claim is the refusal of an insurance company to a request by a healthcare provider to pay for healthcare services obtained by patients from the healthcare professional.
- Global period: Global period is a specified period before and after a surgical procedure where all related medical services are combined and charged as a single payment. This payment encompasses all services related to the surgery, including preoperative visits, the surgical procedure itself, and postoperative visits. The duration of the global period is set by the Medicare Physician Fee Schedule, usually 10 days for minor surgeries and 90 days for major surgeries. Within this time frame, any related services given to the patient are considered to be included in the bundled payment and cannot be billed separately.
- COBRA(Consolidated Omnibus Budget Reconciliation Act): According to Investopedia, COBRA is a health insurance program that allows eligible employees and their dependents the continued benefits of health insurance coverage when an employee loses their job or experiences a reduction of work hours.
- COBRA Code: COBRA code refers to whether the employee is working or not. For example: 00 code refers to not Specified 01 refers to working and 02 refers to terminated.
- Capitation: Capitation is a payment model where healthcare providers are paid a fixed amount of money per patient for a specific period of time, typically a year, regardless of the number of services that the patient receives during that time. Health maintenance organizations (HMOs) and independent practice associations (IPAs) often use capitation programs.
- POS(place of service): A place of service is a location where medical services are performed by healthcare professionals. The place of service is mentioned in the place of service code. It is a two-digit code. For example, 01 refers to a pharmacy, 03 refers to a school, 09 refers to prison, 11 refers to an office etc.
- crossover claim: crossover claim refers to a medical insurance claim that involves multiple insurance plans. This commonly happens when a patient has coverage under both Medicare and Medicaid or when they have primary insurance with an additional secondary plan. In such cases, the primary insurance is responsible for paying the majority of the claim, while the secondary insurance covers the remaining claim amount.
- Adjudication: Adjudication refers to the legal process of resolving a dispute or deciding a case. Adjudication is the process of reviewing and paying, or denying, claims that have been submitted by a healthcare provider. After receiving the claims from the health care provider, the insurance company spends some time adjudicating the claims.
- Arbitration: Arbitration is a method of resolving the dispute between two parties outside the court with the help third neutral party called an arbitrator. In an arbitration agreement, patients and providers agree to submit their dispute to one or more neutral third parties(arbitrators), who hear evidence and arguments from both sides and render a binding decision.
I think the above terminologies are more advanced than what I have discussed in part 1 but I hope that these are helpful to increase your healthcare knowledge. If it is helpful to you, please don’t forget to clap and share it with your friends. See you in part 3…