Overcome Facility Billing Process Weaknesses

Ensure billing staff members are diligent and adequately skilled in claims administration.


The purpose of facility billing is to submit timely, clean claims to the payer; but the processes that go into filing in a facility claim differ from those on the physician side. Although exact facilities’ processes may vary, depending on size and internal structure, many facilities manage the billing process in a similar fashion. We’ll provide examples of how facilities manage the billing process and we’ll review necessary skills for a facility biller.

Process Begins with the CDM

Departments providing services to patients enter charges to patients’ accounts using a charge description master (CDM). This is a large file containing all services supplied by that specific facility. Included is the revenue code, CPT®/HCPCS code (if applicable), and current charge. When the department enters the charge, this information is posted to the patient’s account and entered on the UB-04. The site of service determines the exact revenue code; more than one revenue code may be available, depending upon the charging department.
As an example, consider a gastrointestinal (GI) procedure. If the hospital has a designated GI lab, the procedure likely is done in that department, and would be charged under revenue code 0750. If no GI lab exists in the facility, the procedure likely is performed in the minor surgery department and would be charged under revenue code 0360 or 0361 Operating room services.
The charging department is responsible for entering the number of units and any drugs and supplies used to perform the procedure. Minor procedures performed in specific labs already may have the CPT®/HCPCS code embedded in the CDM, but major procedures are coded by the coding staff. Inpatient room and care charges are entered by the unit on which the patient is admitted.

Coders and Billers Work at Discharge

When the patient is discharged, the coding staff is responsible for determining the diagnosis and procedure codes, any modifier application, and abstracting the record. Inpatient records also must contain Present on Admission (POA) indicators.
Medicare requires reporting of the POA indicator for all inpatient claims paid under the Inpatient Prospective Payment System (IPPS) in hospitals using Medicare severity diagnosis related groups (MS-DRGs) with a few exceptions. The coder must review all reported diagnosis codes to determine whether that condition was present at the time the physician wrote the inpatient admission order. The purpose is to identify hospital-acquired conditions that should have been avoided, and to determine whether the hospital will receive reimbursement for managing those problems. The four common indicators are:

  • Y—diagnosis was present at time of inpatient admission
  • N—diagnosis was not present at time of inpatient admission
  • U—documentation insufficient to determine if condition was present at time of inpatient admission
  • W—provider unable to clinically determine whether condition was present at time of the inpatient admission

Facility financial systems usually are programmed to drop the claim a certain number of days after discharge. This action will cause a claim to enter the biller’s queue, regardless of whether the claim is correct or complete. For example, if the patient is discharged and the system is set for six days, the claim will be in the biller’s queue on day seven.
It is now the biller’s responsibility to ensure charging is accurate and complete before releasing the claim to the payer. Facilities must incorporate hiring standards to assess adequately the biller’s ability to make these determinations, based on all entries appearing on the claim. Because the biller is the final person to handle the claim prior to releasing it to the payer, this person must pay strong attention to detail and have problem-solving abilities to manage adequately potentials for rejected/denied and suspended claims. The biller’s skills are crucial to effective revenue management.

Claims Scrubbers Are No Substitute for Knowledge

Although claims scrubbers can be helpful in directing the biller to potential problems, they are not a substitute for expertise in billing and payer knowledge. The biller must consider:

  • Is the type of bill correct?
  • Do the “from” and “through” dates match the number of room charges, if this is an inpatient?
  • Do relevant condition, occurrence, and value codes appear on the claim?* If not, the biller will enter this information.

The biller should review all revenue codes on the claim for missing or incorrect information. For example:

  • Missing information—For example, revenue code 0370 (anesthesia) and revenue code 0710 (recovery) appear on the claim with no 0360 range (surgery).
  • Incorrect information—For example, charges appearing under revenue code 0250 (pharmacy) and 0270 (supplies) are out of proportion to the surgery. An example is a minor surgical procedure with high dollar drugs and supplies.
  • Number of units should be reviewed for likely errors.
  • Surgery and anesthesia revenue units should be reviewed for likely errors. These services usually are charged in 15 minute increments in a facility. Do these units appear in proportion to the coded procedure?
  • Any applicable modifiers should be present.
  • When insertion of devices or implants are described in the procedure code, the charge for that item must also appear on the claim under revenue codes eg, 0275 pacemaker, eg, 0276 intraocular lens, or eg, 0278 other implants. For example, 66984 Extracapsular cataract removal with insertion of intraocular lens prosthesis (1 stage procedure), manual or mechanical technique (eg, irrigation and aspiration or phacoemulsification) is reported for cataract extraction with lens implant, one stage. The lens charge also must appear under revenue code 0276.
  • The claim should be reviewed for payer-specific coding requirements. Some payers require both CPT® and Volume III ICD-9-CM procedure codes on outpatient claims. Other payers require only CPT® codes on outpatient claims, and may reject the claim if the Volume III codes are reported.
  • Any charging and/or coding deficiencies found on the claim should be audited for accuracy before releasing the claim. Although it may not be a hiring requirement, hospitals often utilize a revenue nurse in this capacity to review physician orders, drug administration, and other clinical notes for charging accuracy. Entries to the claim must be corrected prior to submission to the payer.
  • The biller should ensure that any applicable authorization codes were entered, as well as correct insured, payer, employer, and physician information before releasing the claim to the payer.

It is critical that employees who are facility billers be much more than data entry personnel. Weaknesses in these staff members’ skills result in claims denials, suspensions, and reduced reimbursement. Repeated submission of erroneous claims may invite a payer audit. Rejected claims should be used as a tool to assess the biller’s ability to review the charges and other entries adequately. Training should be implemented, as indicated. Examples of repeated departmental charging errors should be reviewed with that department management. The revenue audit nurse is a resource in identifying these service areas. If revenue is to be managed effectively, all staff involved in the charging and billing process must be diligent and adequately skilled in claims administration.
*Condition codes – describe circumstances that relate to specific issues affecting claims processing. For example: condition code 07—treatment of non-terminal condition for a hospice patient.
Occurrence codes – report dates that have relevance to the claim. For example: occurrence code 25—date benefits terminated by the primary payer.
Value codes – report information in dollars or units that have relevance to the claim. For example: value code 06—Medicare blood deductible.
Dorothy Steed, CPC-H, CHCC, CPC-I, CEMC, CFPC, CPMA, CPUM, CPUR, CPHM, CCS-P, ACS-OP, RCC, RMC, PCS, FCS, CPA, is an independent consultant and educator in Atlanta. She was a Medicare specialist for a large hospital system with 34 years of experience in health care. She is a technical college instructor in Atlanta and performs coding reviews for the Quality Improvement Organization in Georgia, performing physician audits and education. She has been a contributor to several medical publications, presented at several health care conferences, and developed training classes focusing on facility billing, coding, and reimbursement.

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