Patient Accounts and Data Flow
The purpose of this chapter is to provide a basic understanding of the patient care process and how data flow within a hospital from the time a patient is admitted to when charges are submitted for patient care services. The flow of information is a critical factor in providing efficient patient care and billing for services rendered during the patient visit. The patient care process includes all aspects of admitting, treating, and discharging the patient. The process of billing patient care services requires various departments to perform specific functions simultaneously. One function is to document all information regarding patient care services including the patient’s condition, disease, injury, illness, or other reason for treatment. Designated personnel within each department are responsible for documenting patient care services in the patient’s medical record. Patient care services are coded and charges are entered by specified personnel in various clinical departments and by the Health Information Management (HIM) Department. Patient charges are submitted to patients and third-party payers after the patient is discharged. The concepts presented in this chapter are critical to understanding the hospital billing and claims process, which will be discussed in the next chapter.
The flow of data begins when the patient reports to the hospital for patient care services. The patient’s demographic, insurance, and medical information is collected. Various administrative, financial, operational, and clinical departments use the data to perform functions required to provide efficient patient care services. The data is also used to prepare and submit charges for services rendered to patients, government, and other third-party payers. Clinical departments provide patient care services. Administrative and operational departments perform other critical functions such as human resource management, compliance, health information management, and utilization management. Financial departments are responsible for preparing charges for submission and accounts receivable management. The data flow in a hospital is designed to ensure that required data are accessible for personnel to perform various functions. Automation of the patient’s accounts, order entry, charge capture, billing, and accounts receivable allow greater access to patient information by various individuals within the hospital, as illustrated in Figure 4-1.
The hospital’s health information system allows the recording, storage, processing, and access of data by various departments simultaneously. Departments that perform specific functions may use data entered by another department. This level of automation enhances the flow and use of information throughout the hospital.
The flow of data is similar for various patient care services; however, variations in the flow will occur based on whether the patient presents for outpatient, ambulatory surgery, or inpatient services.
Outpatient services are those that are provided on the same day that the patient is released. The patient is received in various outpatient areas such as the Emergency Department (ED), clinic, primary care office, Ambulatory Surgery Center (ASC), or other ancillary departments, such as Laboratory or Radiology. The flow of data for outpatient services is illustrated in Figure 4-2. Admission tasks required to receive the patient are performed. Patient care services are rendered. Pharmaceuticals and other items such as supplies and equipment may be required. All patient care services are recorded in the medical record. Charges for hospital outpatient services are posted through the Charge Description Master (CDM), commonly referred to as the chargemaster. The Charge Description Master (CDM) is a computerized system used by the hospital to inventory and record services and items provided by the hospital. Charges for services provided in a clinic or primary care office are posted to the patient’s account. The patient is released and the services are billed to the patient or a third-party payer. Accounts are monitored for follow-up to ensure that payment is received in a timely manner.
The flow of information is driven by the patient care process in each outpatient area. Some variations in the type of data collected and how it flows involve the physician’s order or requisition that provides information to the department regarding the services required. The process of billing for physician services also varies in each area: ancillary departments, hospital-based clinics, primary care offices, and the emergency room.
A physician’s order or requisition is required for services provided by hospital ancillary departments, such as Laboratory, Radiology, or Physical Rehabilitation. For example the Radiology Department must have an order or requisition to provide services.
The hospital will submit facility charges that represent the hospital portion of the services, the technical component. The outside radiologist will bill for the reading and interpretation of the film, the professional component.
Hospital-based physician clinics or offices do not require a requisition when the patient presents for services. Hospital-based physician services are recorded in the patient’s medical record. An encounter form is used as a charge tracking document to record services, procedures, and items provided during the visit and the medical reason for the services provided (Figure 4-3). If services are required from other departments within the hospital, the clinic or primary care physician will prepare the required order or requisition.
In a hospital-based clinic or primary care office, the physician is generally hired as an employee of the hospital. The hospital can bill for physician services when the physician is an employee of the hospital.
Emergency Department (ED) visits do not require an order or requisition when the patient presents for service. If services are required from other departments within the hospital, the emergency room (ER) physician will prepare an order or requisition. If the patient is admitted to the hospital, all charges related to the ED visit are included on the inpatient bill.
The hospital will submit charges for the technical portion of services provided in the ED. The ED physician will bill for the professional portion, such as Evaluation and Management or surgical procedure. The hospital can bill for the emergency room physician services when the physician is an employee of the hospital.
Ambulatory surgery is a surgical procedure that is performed on a patient on the same day the patient is discharged to home. It is considered an outpatient service. Ambulatory surgeries can be performed in a hospital-based Ambulatory Surgery Center (ASC) or in a designated area within the hospital. Physician’s orders are prepared by the surgeon and submitted to the ambulatory surgery unit. The patient is received in the ambulatory surgery unit or the preadmission testing area. The appropriate clinical departments render patient care services. Pharmaceuticals, supplies, equipment, and other items may be required. All patient care services are recorded in the medical record. Services and the patient’s condition are assigned procedure and diagnosis codes. Hospital charges for services and items are posted through the chargemaster. The patient is discharged and the services are billed to the patient or a third-party payer. Accounts are monitored for follow-up to ensure that payment is collected in a timely manner. The flow of data for ambulatory surgery services is illustrated in Figure 4-4.
Ambulatory surgery involves a team of physicians, such as a surgeon and anesthesiologist. Similar to the process for outpatient services, physician services performed for an ambulatory surgery are recorded in the patient’s medical record. Each physician submits charges for the professional component of services performed to the patient, government, or other third-party payer. Professional charges for physician services are not billed by the hospital unless the physician is employed by or under contract with the hospital.
In an inpatient admission, the patient is admitted to the hospital with the expectation that he or she will be there for longer than 24 hours. A room/bed is assigned, and 24-hour nursing care is provided. There are several ways a patient can be referred to the hospital for an inpatient admission: through the emergency room (ER), by outside physician referral, or from another facility.
Physician’s orders are prepared by the admitting physician. The appropriate clinical departments render patient care services. Pharmaceuticals, supplies, equipment, and other items may be required. All patient care services are recorded in the medical record. Hospital charges for services and items are posted through the chargemaster. The patient is discharged and the services are billed to the patient or a third-party payer. Accounts are monitored for follow-up to ensure that payment is collected in a timely manner. The flow of data for inpatient services is illustrated in Figure 4-5.
Variation in the data and flow of information for an inpatient case varies based on where the patient is admitted. For example, if the patient is admitted through the ER, much of the admission process is performed there. Another variation in the process involves physician service charges.
As discussed previously, physician services are documented in the patient’s medical record. Each provider submits charges for his or her services. They are not billed by the hospital. Professional charges for physicians, such the radiologist, cardiologist, surgeon, or anesthesiologist, are not billed by the hospital unless the physician is employed by or under contract with the hospital.
Regardless of where the patient is received, the data collected at admission flows to various clinical departments that are involved in the patient’s care. Each department involved in patient care, directly or indirectly, records pertinent information regarding patient care services in the patient’s medical record. Hospital charges are posted to the patient’s account through the chargemaster. The chargemaster is reviewed and updated continually by the HIM Department. When the patient is discharged, the medical record is forwarded to the HIM Department for review, coding, and assignment of the appropriate Prospective Payment System (PPS) group, such as the Medicare Severity-Diagnosis Related Groups (MS-DRG) for inpatient cases or Ambulatory Payment Classifications (APC) for outpatient cases.
The Utilization Management (UM) Department is responsible for case management and utilization review of patient cases. UM conducts reviews of patient cases to determine the appropriateness of services provided based on the patient’s condition. The initial review performed by UM is done when the patient is admitted.
The Patient Financial Services (PFS) Department performs billing functions required to submit charges to the patient, government program, or other third-party payer. The information collected during the patient care process is used to submit charges. Outstanding accounts are monitored for follow-up by the Credit and Collections Department, a division under the Patient Financial Services (PFS) Department.
The patient care process is complex, as it involves many departments simultaneously performing various tasks related to patient care services. The process of providing patient care begins when a patient arrives at the hospital for care and continues until the patient is discharged. To provide effective and efficient patient care services and maintain financial stability, it is necessary to obtain all information required to evaluate and treat the patient and to bill for patient care services. All patient care activities must be recorded in the patient’s medical record to ensure that appropriate care is provided based on the patient’s condition. It is critical to capture all charges for submission to patients and third-party payers. Outstanding accounts must be monitored to obtain reimbursement in a timely manner. To achieve high standards of patient care and maintain financial stability, the hospital must have an efficient flow of information through the patient care process. Figure 4-6 illustrates the phases of the patient care process: patient admission, patient care services, medical record documentation, charge capture, coding, patient discharge, billing, and accounts receivable management.
The definition of admission is “the act of being received into a place” or “patient accepted for inpatient services in a hospital.” A patient can be received in the Emergency Department (ED), at an Ambulatory Surgery Center (ASC) or ambulatory surgery unit, or through admitting for inpatient services. Admission functions must be performed regardless of whether the patient presents to the hospital for outpatient services, ambulatory surgery, or inpatient admission.
A patient admission requires the hospital to follow specific procedures to ensure that quality patient care services are provided such as preadmission testing. Hospitals must meet Admission Evaluation Protocols (AEP) for admission. Utilization review (UR) is performed to evaluate compliance with AEP criteria and other standards. Payers also conduct reviews to ensure that services provided are medically necessary, such as those conducted by a Quality Improvement Organization (QIO).
Preadmission testing is required when a patient is admitted on an inpatient basis or for ambulatory surgery. The admitting physician prepares orders outlining preadmission testing requirements. Preadmission testing will vary based on the reason the patient is being admitted and the patient’s condition. Preadmission testing can include but is not limited to blood tests, x-ray, urinalysis, ultrasound, and echocardiograms.
The purpose of preadmission testing is to identify potential medical problems prior to surgery and to obtain a baseline of health care information on the patient’s bodily functions. The tests are done before the admission for surgery to allow time for the results to be reviewed before the patient is admitted. It is important to remember that preadmission diagnostic services provided by the hospital within 3 days prior to the admission of a Medicare patient are included in the inpatient payment. The 3-day payment window is called the 72-hour rule.
The purpose of the utilization review (UR) process is to ensure that the care provided is medically necessary and that the level where care is provided is appropriate based on the patient’s condition. Medical necessity refers to services or procedures that are considered reasonable and necessary in response to the patient’s symptoms, according to accepted standards of medical practice. The criteria for medical necessity varies from payer to payer. Hospitals have implemented utilization management measures to ensure that patient care standards are met as required by:
The hospital’s UM Department performs various functions to ensure that all guidelines for utilization are met and that hospital services are reimbursed appropriately. The UM Department monitors health care resources utilized at the facility by conducting utilization reviews of patient cases to determine whether:
The UM Department will determine whether documentation provides an explanation and support for medical necessity, level of care, length of stay, and quality of care. If the documentation is not sufficient, a request for additional information is submitted to the provider. Discharge planning is another function performed by the UM Department; it includes an evaluation of the patient to determine whether discharge is appropriate and to identify patient needs after discharge. The department assists in developing a discharge plan that addresses patient care needs after discharge, and coordinates various medical and financial resources in the community to meet patient care needs.
The UM Department is involved in resource utilization prior to or during the admission process, during the patient stay, and after the discharge process. Utilization reviews (UR) can be conducted before, during, and after services are rendered.
A function of the UM Department is to conduct utilization reviews (UR). Organizations are required to follow specific criteria for the admission of Medicare patients as implemented under the Prospective Payment System (PPS) mandate. Other health care payers, such as Blue Cross/Blue Shield, Aetna, and Cigna, have also implemented UR measures in their plans. UR criteria will vary from payer to payer. Most payer requirements for appropriateness of hospital cases are based on the patient’s condition. The purpose of the UR requirements is to ensure that hospital services provided are appropriate and medically necessary.
The review of hospital admissions for Medicare patients is designed to determine the appropriateness of an admission, based on the patient’s condition. Appropriateness of admission is determined using the Admission Evaluation Protocols (AEP), which outlines appropriate conditions for a hospital admission based on standards referred to as the IS/SI criteria. IS refers to the intensity of service criteria. SI refers to the severity of illness criteria.
Hospitals perform a utilization review (UR) for each patient admission to determine whether the AEP criteria for each specific payer are met. An admission can be certified if one of the SI or IS criteria is met. Contact is generally made with the payer within 24 hours to obtain admission certification. The purpose of obtaining admission certification is to ensure that the hospital is reimbursed for the hospital stay. Health care payers will also conduct a utilization review (UR) to determine the appropriateness of admission. For example, Medicare contracts with various organizations called Quality Improvement Organizations (QIO) to perform this function.
A Quality Improvement Organization (QIO) is an organization that contracts with Medicare and other payers to review patient cases to assess appropriateness and medical necessity. Medicare provides information on an admission to the QIO for evaluation. The QIO has a direct impact on reimbursement because it has the authority to deny payment for a hospital admission if it is determined that the AEP criteria are not met. The QIO may conduct reviews before the patient is admitted, at the time of admission, or at some point during the inpatient stay. The various reviews based on time are referred to as prospective, concurrent, or retrospective reviews, as defined: