The purpose of this chapter is to provide a basic understanding of claim forms used by hospital facilities to submit charges to payers for reimbursement. A discussion of the purpose of a claim form is followed by a review of manual and electronic claim submission. The provider, payer, and type of service determine claim form usage. A review of claim form variations will describe two forms used for submitting charges to payers: the CMS-1500 and the CMS-1450 (UB-04). Previous chapters have outlined information regarding the claims process, coding diagnoses and procedures, and the relationship between billing and coding. The standard code set currently listed under HIPAA for coding procedures, services, and items is the Healthcare Common Procedure Coding System (HCPCS) and the International Classification of Diseases, 9th Revision, Clinical Modification (ICD-9-CM), Volume III. In accordance with HIPAA provisions, the ICD-9-CM will be replaced with the International Classification of Diseases, 10th Revision (ICD-10). The compliance date for implementation of ICD-10 was set for October 1, 2013. However, the Department of Health and Human Service (DHHS) has published a final rule that delays the ICD-10 compliance date to October 1, 2014.
Hospital coding and billing professionals will be required to have an understanding of the ICD-9-CM coding system and will need to transition to ICD-10. For this reason, this chapter will provide examples of claim form completion using the ICD-10 coding systems. The chapter illustrates how various elements relate to claim forms. Although hospitals may use both claim forms to submit charges, the CMS-1450 (UB-04) is the primary claim form used for submission of charges for most services, procedures, and items. Therefore, this chapter will provide a brief overview of the CMS-1500, followed by an in-depth discussion on claim form completion requirements for the CMS-1450 (UB-04).
An insurance claim form is a form that is completed by providers for the purpose of submitting charges for medical services and supplies to various third-party payers. Claim forms contain fields for recording data about the provider, insured, date of service, and charges. A provider is an individual or entity that provides medical services and/or supplies to patients. Examples of providers are physician, physician assistant, nurse practitioner, clinic, laboratory, radiology center, hospital, and Ambulatory Surgery Center. Charges are submitted to third-party payers for reimbursement using claim forms. Reimbursement is a term used to describe the payment received from a third-party payer for services rendered by the provider to a patient. Third-party reimbursement for medical services or supplies is determined based on the information reported on the claim form. Claim form information is also used by various organizations and agencies for research, education, and administrative purposes, as discussed in previous chapters.
Claim forms can be submitted to third-party payers manually on paper or by electronic transmission. A manual claim is a paper claim that is typed or computer generated on paper and sent by mail. This is referred to as manual claim submission. An electronic media claim (EMC) is a claim that is transmitted through electronic data interchange (EDI). Electronic data interchange (EDI) is the process of sending data from one computer to another by telephone line or cable. EDI requires data to be in a specific format, and both computers must be set up to send and receive data in the required format.
Today, most claim forms are computer generated and submitted electronically in accordance with payer requirements and Health Insurance Portability and Accountability Act (HIPAA) Title II provisions. Two universal claim forms are used to submit charges to all payers, the CMS-1500 and CMS-1450 (UB-04). Although these claim forms are universal, the guidelines for completion vary by payer. These variations are addressed by setting up a computer template that includes required information by payer type. A template defines all the information required on the claim for the payer, and specific payer edits can also be programmed. The payer-specific knowledge is beyond the scope of this text; however, an overview of general claim form completion requirements is provided. Hospital billing and coding professionals should have knowledge of payer specifications available when submitting claims to various payers. The following review of electronic versus manual claim submission is illustrated in Figure 10-1.
Manual claim submission involves paper claims that are sent to third-party payers by mail. Historically, all claims were submitted on paper and manually processed by third-party payers. Today, claim forms are designed to be scanned and read using optical character recognition (OCR) technology. Optical scanning is a process whereby the claim form is scanned and the data is transferred into a computer system. Claim forms are outlined in red, which allows the scanner to pick up only data in the fields. Optical scanning replaces the process of having to input data manually from the claim form into a computer system. This technology has improved the efficiency of processing claims for third-party payers. Paper claims are typed or computer generated on paper and sent to various payers primarily by mail. The payer manually inputs or scans the data from the claim form into its computer system. The data on the claim form is then subject to computer edits. When the claim successfully passes through the computer edits, payment determination can be made. An advantage of the paper claim is the ability to review the paper claim before submission; however, there are many disadvantages for providers.
A paper claim requires transfer of the data from the claim form to the payer’s computer system. The transfer of data may be accomplished through data entry or scanning. Scanning the claim form does improve the time required for payers to process a claim; however, there are still many disadvantages to the submission of paper claims.
Paper claims can be lost in the mail. The claim could also have been lost or misplaced after the payer received it. From the time the claim is received to when the claim data is entered into the payer’s system, there is a chance the claim could be lost. There are no tracking mechanisms with paper claims.
There is no proof of receipt indicating when the payer received the claim unless the claim is sent by registered or certified mail, which can be costly. When payment is not received for a claim, a provider representative will contact the payer to find out the status of the claim.
This inquiry may result in the payer indicating the claim was never received. Unless the provider can show proof that the payer received the claim, it must be resubmitted. Resubmission of claims will delay the reimbursement process. Reimbursement will be denied if the claim is not filed within the timely filing period specified by the payer.
The time to process a manual claim will vary by payer. If the payer does not have the ability to scan the claim, manual input of claim data will delay reimbursement and increase the potential for error. If the payer does scan the claim it will be processed in a more timely fashion.
Due to the increased processing time required for manual claims, reimbursement from payers for manual claims generally takes longer than reimbursement for electronic claims. The average turnaround time for processing a paper claim can be 4 to 8 weeks, as opposed to a turnaround time of 7 to 14 days for claims submitted electronically.
While there may be a circumstance when a paper claim is required, most payers require electronic submission of claims. Providers who are not equipped to submit electronic claims will not be in compliance with these payer guidelines. Additionally, covered entities must comply with the electronic transaction provisions outlined under HIPAA, which require most health care transactions to be completed electronically.
In an effort to improve the efficiency of processing claims and reduce associated costs, payers have been moving toward a “paperless” claim process. Electronic claim transmission greatly improves the time it takes for payers to process a claim. Many payers accept paper claims; however, many require claims to be submitted electronically. For example, the Centers for Medicare and Medicaid Services (CMS) requires covered entities to submit claims electronically.
In accordance with HIPAA regulations, standard formats for electronic transactions have been adopted. The adopted standard formats were developed by the American National Standards Institute (ANSI). The standard transaction format for the CMS-1500 is the ANSI X12 837 and the format for the CMS-1450 (UB-04) is ANSI X12 837I. The standard transaction formats contain elements found on the CMS-1500 and CMS-1450 (UB-04) paper claims. The current standard format, Version 5010, was adopted and implemented. The compliance date for all HIPAA-covered entities to transition to Version 5010 was January 1, 2012. Details regarding Version 5010 can be viewed on the CMS Web site at www.cms.gov/ICD10/11a_Version_5010.asp#TopOfPage.
The electronic claim process can be accomplished in two ways: direct transmission to the payer or transmission through a clearinghouse. Direct transmission is when a provider transmits claims directly to various payers. Providers can also submit claims through a clearinghouse that reformats claim data to meet payer requirements and then transmits claim data to various payers.
Direct transmission requires software that can transmit claim data in the format required for receipt by the payer’s computer system. This can pose a problem for providers because it requires software that is compatible with the software of various payers, such as Medicare, Medicaid, TRICARE, Blue Cross/Blue Shield, Aetna, Cigna, and a number of other payers. To eliminate this problem, many providers use a clearinghouse.
A clearinghouse is an organization that reformats claim data received from providers to meet compatibility specifications for submission to various payers. After the data on the claim is reformatted and edited, the claim is electronically transmitted by the clearinghouse to the appropriate payer.
The electronic claim submission process for a hospital is illustrated in Figure 10-2. Functions required to complete the process are performed by the hospital’s Patient Financial Services (PFS) Department. Data required for claim submission is recorded on the patient’s computerized account during the patient visit. The hospital’s computer system performs edits to identify issues with the claim data. Any issues identified during the edit process can be resolved before transmission. Claims are then prepared and transmitted to the payer directly or through a clearinghouse. The clearinghouse may also conduct edits. After the claim has satisfied the payer’s edit, payment determination is made. A remittance advice (RA) is forwarded to the hospital that explains payment determination. Remittance advices can also be transmitted electronically by various payers.
The major disadvantage to electronic claim submission is the need for various versions of software or a clearinghouse. Another disadvantage is that claims requiring attachments cannot be submitted electronically. Despite these disadvantages, many providers elect to transmit claims electronically because the advantages are greater than the disadvantages.
Electronic transmission of claims improves the payer’s processing time and therefore helps to improve cash flow. The advantages of electronic claims involve tracking, proof of receipt, processing time, reimbursement, and compliance.
Electronic claim submission eliminates the potential for claims to be lost in the mail or within the organization. Claims transmitted electronically are tracked by the hospital’s health information system. The system records the batch number, patient identification, date of service, and claim amount for all transmitted claims. This tracking provides the hospital with confirmation of claims transmitted.
The clearinghouse and the payer will provide a confirmation report that acknowledges receipt of the batch. This report is referred to as a transmission report and it outlines the claims received in the batch. The transmission report is used as proof of receipt of the claims, which is critical to prove claims were filed within the timely filing period as required by the payer.
Electronic claim submission reduces the amount of time required to process the claim. Data from the claim is directly transmitted into the payer’s computer system. This eliminates any manual handling and data entry of claim information, which delays payment determination. Electronic claim submission also eliminates the potential for errors during manual data entry.
The reduction in the time required to process claim data improves the amount of time it takes for the payer to make a payment determination and to send a remittance advice (RA). Reimbursement on claims transmitted electronically is generally 7 to 14 days, as opposed to 4 to 8 weeks for a paper claim.
While there may be a circumstance when a paper claim is required, most payers require electronic submission of claims. Providers who are equipped to submit electronic claims will be in compliance with these payer guidelines. Additionally, providers who submit electronically will be in compliance with the electronic transaction provisions outlined under HIPAA.
Two claim forms are universally accepted by payers today: the CMS-1500 and the CMS-1450 (UB-04). The CMS-1500 is used by non-institutional providers to submit professional charges for physician and outpatient services to payers for reimbursement. The CMS-1450 (UB-04) is used by institutional providers to submit hospital facility charges for services, procedures, and items to payers for reimbursement. It is necessary to complete these claim forms in accordance with payer guidelines and specifications. Claim form completion specifications vary by payer. Hospital billing professionals are required to gain knowledge regarding various payer specifications for claim form completion. The category of service generally dictates which claim form is used. Claim form variations for outpatient, inpatient, and non-patient services are outlined in Figure 10-3.
The CMS-1500 is the universal claim form accepted by most payers for submission of charges for physician and outpatient services. The Health Insurance Association of America (HIAA) and the American Medical Association (AMA) developed the CMS-1500, formerly known as the HCFA-1500, in 1958. The claim form was developed in an attempt to standardize the form used to submit charges to payers. In 1992, the claim form was printed in red ink and adopted by the CMS for use in submission of claims for Medicare patients. Other payers followed suit, and the claim form is now accepted by most payers. Completion requirements and specifications vary by payer to accommodate computer systems and various health insurance plans. This section will focus on the CMS-1450 (UB-04), since most hospital services are submitted using this claim form.
Information about the patient such as name, address, zip code, phone, sex, and employer is recorded in this area. The patient’s insurance information, including the name of the plan, the insured’s identification number, and other insurance information, is also recorded in this section so the payer can identify the patient and plan within its system.
This section is used to report information about the patient’s condition, including the diagnosis code(s). This section contains lines used to record diagnosis codes. The line reference number is recorded below to link the diagnosis to the procedure. Blocks 22-23 are used to report a resubmission code and prior authorization number for the claim.
Charge information for each service or item on the claim is required, including the date of service, place of service, procedure code, days or units, and the charge. The diagnosis code(s) that explains the medical necessity for services provided is referenced in Block 24E.
This area is used to record information about the provider who rendered the services that are reported on the claim. The provider’s name, address, identification number, and tax identification are listed. When services are provided at a location other than the provider’s address, the name and address of that location is indicated in this section.
The CMS-1450 (UB-04) is also referred to as the UB-04 because it is the universal bill accepted by payers. It is the required form outlined under HIPAA. The CMS-1450 (UB-04) is used to submit facility charges for outpatient, inpatient, and non-patient services. This claim form was developed and is maintained by the National Uniform Billing Committee (NUBC). The National Uniform Billing Committee (NUBC) was formed by the American Hospital Association in 1975 to develop a single billing form and a standard data set that could be used nationally by institutional providers. The original standard form was the UB-82, which was adopted for use in 1982. The form underwent revisions again in 1992, and the UB-92 was adopted. The UB-92 was replaced by the CMS-1450 (UB-04) effective May 2007. Today, the role of the NUBC is to maintain the integrity of the CMS-1450 (UB-04) data set. The data set contains information required for each field on the claim form. State Uniform Billing Committees (SUBC) are responsible for the oversight of state-specific CMS-1450 (UB-04) billing requirements.
The CMS-1450 (UB-04) consists of 81 data fields that are referred to as form locators (FL). The billing requirements for each field and the revenue codes are revised on an ongoing basis by the NUBC, SUBC, and CMS. The CMS-1450 (UB-04) can be viewed in four sections, in which information about the patient, facility, charges, and physicians involved in the patient’s care is recorded, as illustrated in (Figure 10-4).
Detailed information about the facility, patient admission, patient control number, medical record number, admission, and discharge is recorded in FL 1 to 17. Condition codes are reported in FL 18 to 30 to provide information regarding circumstances of the claim that may influence the payer’s processing. Occurrence and value codes are listed in FL 31 to 41 to provide information used by the payer to determine the need for medical services. The payer uses these codes in their benefit determination process.
This section requires detailed information about the charges submitted, including revenue code and description, Healthcare Common Procedure Coding System (HCPCS) code and rates, National Drug Code (NDC), service date, service units, total charges, and non-covered charges. Charge capture data gathered during the patient visit are used to print a detailed itemized statement and to complete FL 42 to 49. Charges are captured during the patient visit and posted through the Charge Description Master (CDM), which is also referred to as the chargemaster. Each item in the chargemaster is associated with the appropriate revenue code category, HCPCS code, and other charge information. The detailed itemized statement lists each charge individually. Completion of FL 42 to 49 requires all charges captured during the patient stay to be grouped in revenue code categories. Each revenue code category is listed on one line in FL 42 to 49 along with other associated data, such as HCPCS code, charge, and units.
Information about primary, secondary, and tertiary payers that are responsible for payment on the claim is recorded in these fields. Tertiary payer refers to the insurance company that is responsible to pay the claim after the primary and secondary payers have issued a payment determination. Information in FL 50 to 65 includes the payer name, insured’s name and identification number, group name and number, treatment authorization codes, and employer.
Diagnosis and procedure information related to the charges submitted is recorded in FL 66 to 74. Information regarding the attending and other physician, the payer’s name and address, and provider signature is recorded in FL 76 to 81.
The CMS-1450 (UB-04) is a summary of the hospital visit and charges incurred. Information used to complete the claim form is entered into the patient’s account on the computer. Required claim data for each field are pulled from the patient’s account and the hospital data file. Information about charges for services provided is outlined on the detailed itemized statement, which may be attached to manual claims. Payers who require electronic claims submission may request a detailed itemized statement after initial review of the CMS-1450 (UB-04) claim data. Completion requirements and specifications for the CMS-1450 (UB-04) vary by payer; therefore, it is critical to obtain payer specifications to ensure compliance with payer guidelines. Detailed information regarding the claim form and instructions for completion can be viewed on the CMS Web site at www.cms.gov/ElectronicBillingEDITrans/15_1450.asp. General instructions for each form locator (FL) are outlined below in four sections to provide a basic understanding of the data required.
This section is used to provide information about the facility, when the patient was admitted and discharged, the patient’s name and address, and other information about the hospital visit, as illustrated in Figure 10-5. An overview of data required for each form locator (FL) is outlined below.
Record the name, complete service location, mailing address, and telephone number of the provider (hospital) that is submitting the claim. List each on a separate line, with a total of four lines. The address must be a street address. Abbreviations for the state are acceptable. The zip code may be five or nine digits.
When the address is outside the United States, a two-digit country code is also recorded to the right of the telephone number. The country code for the United States is US. This information is required by Medicare and other payers to forward payments and other communications to the hospital.
This field is completed when the provider requires payment to be sent to an address other than the address recorded in FL 1. Record the pay-to name; street address or PO Box number; and city, state, zip code, and country code on three lines. Line four is reserved for assignment by the NUBC. The country code is required when the address is outside the United States.
FL 3a is used to record the patient control number (PCN). The patient control number (PCN) is a unique number assigned by the hospital to identify the patient account for the claim. The PCN is used to identify the patient’s account for posting payments and retrieving information. This field allows 20 alphanumeric characters with no spaces between digits. When the patient control number (PCN) is placed in this field, the payer will record the number on the remittance advice. The PCN is generally different from the medical record number.
FL 3b is used to record the medical record number. The medical record number (MRN) is a number assigned by the facility to a patient’s medical record. The MRN is used to identify, track, and retrieve the medical record for a patient. The medical record number is not the same as the patient control number (PCN). Remember, the PCN is assigned by the facility to a specific claim. The MRN is also referred to as the health record number (HRN). This field is required by Medicare, and most other payers require completion of this field.
The four-digit type of bill number is recorded in this field to provide information about the facility bill type. The first digit is zero. The second digit describes the facility type. The third digit indicates the type of care. The fourth digit is designed to let the payer know the expected frequency of the bills that will be submitted. Examples of type of bill code options include 0111 (Hospital inpatient-admit through discharge claim) and 0113 (Hospital outpatient-admit through discharge claim) as illustrated in Concept Review Box 10-7. A detailed listing of FL 4, type of bill, three-digit options and common fourth-digit frequency code options is outlined in Appendix B.