Chapter 1 — Exercises

Work these before reading any solutions. Items marked † have worked solutions in Answers to Selected Exercises, along with every odd-numbered item.

All figures are constructed for teaching. All patients, providers, practices, hospitals, and health plans are constructed.

A. Recall and vocabulary

1.1 Name the four numbers on every healthcare account and give the two equations that relate them.

1.2 In one sentence each, distinguish: charge from allowed amount; contractual adjustment from write-off; denial from rejection.

1.3 What is the difference between an encounter, a claim, and an account? Give an example where one encounter produces two claims against one account.

1.4 † A patient's plan has 20% coinsurance. A service is charged at \$400.00 and allowed at \$232.00. Is the patient's coinsurance \$80.00 or \$46.40? State the rule and why it matters.

1.5 List the six stages of the revenue cycle in order and state, for each, what the money "is" at that stage.

1.6 Which zone — front end, middle, or back end — owns each of the following? (a) verifying that a patient's coverage is active; (b) deciding whether the documentation supports the level of service; (c) determining whether a remittance advice underpaid a line; (d) obtaining a prior authorization; (e) appealing a denial; (f) assigning a modifier.

1.7 † Define "clean claim" without using the word "clean." Then name three reasons a technically accurate claim might not be clean.

1.8 What is the difference between a facility claim and a professional claim? Which form and which electronic transaction does each use?

B. Applied arithmetic

1.9 † Complete the table. The patient has met their deductible and has 20% coinsurance with no copay.

Show both checks.

1.10 Using the totals from 1.9, what percentage of billed charges did the practice actually collect from all sources? What percentage of the allowed amount did the patient pay?

1.11 † A hospital outpatient claim has charges of \$5,120.00 and an allowed amount of \$1,438.00. The plan has a \$400.00 outpatient surgery copay and 20% coinsurance on the remainder. Compute the contractual adjustment, patient responsibility, and plan payment. Show both checks.

1.12 A practice's charge for a service is \$96.00. A payer's contracted allowed amount for that service is \$103.50. What will the practice be paid, and what is the lesson? (This is not a trick question; it is one of the most common and most expensive charge-setting errors in the field.)

1.13 A patient has not met their deductible. A service is charged at \$310.00 and allowed at \$186.40. The remaining deductible is \$120.00, and after the deductible the coinsurance is 20%. Compute patient responsibility and plan payment.

1.14 † A practice submits 1,400 claims per month at an average allowed amount of \$118.00. Its initial denial rate is 11%, and 55% of denials are eventually paid after rework. What is the monthly allowed value denied, the amount eventually recovered, and the amount written off? If front-end work reduced the denial rate to 6%, how many fewer denials per month would staff have to touch?

C. Read the document

1.15 † A patient statement shows:

  TOTAL CHARGES                      1,940.00
  INSURANCE PAYMENTS                  -612.40
  INSURANCE ADJUSTMENTS               -1,082.60
  PATIENT PAYMENTS                       0.00
  BALANCE DUE                          245.00

(a) What was the allowed amount? (b) Do the numbers foot? (c) Is there enough information here to tell whether the \$245.00 is a deductible, a copay, or coinsurance? What would you need?

1.16 A patient brings in two statements for one emergency department visit — one from the hospital for \$2,910.00 and one from an emergency physicians' group for \$540.00 — and says the hospital has billed them twice. Write the two-sentence explanation you would give at the window.

1.17 † An itemized hospital statement lists a "medical/surgical supplies" line of \$284.00 under revenue code 0270, and the explanation of benefits shows that line allowed at \$0.00 with no patient responsibility. The patient wants to know why the hospital billed for something the insurance "refused to pay." Explain, in plain language, what actually happened and why the patient owes nothing for it.

1.18 Below is an excerpt from a remittance advice.

  LINE  CODE     CHG      ALLOWED   ADJ     ADJ-CODE   PAID    PT-RESP
  1     99213    145.00    98.60    46.40   CO-45      68.60    30.00 (PR-3)
  2     36415     14.00     3.00    11.00   CO-45       2.40     0.60 (PR-2)

(a) What kind of patient responsibility is on each line? (b) Do both lines foot? (c) What is the total the practice will collect on this claim, and from whom?

D. Judgment and process

1.19 † A front desk representative tells you they have stopped verifying eligibility for established patients "because they were here last month and nothing's changed." Give three specific ways this costs the practice money, and estimate which is most likely.

1.20 Rank these five failures by total cost to the organization, cheapest first, and defend the ordering: (a) a claim rejected at the clearinghouse and fixed the next day; (b) a service performed and never charged, discovered eleven months later; (c) a denial worked on day 30 of a 60-day appeal window; (d) a denial discovered on day 95 of a 90-day appeal window; (e) a coding error caught by the scrubber before submission.

1.21 Your practice's work queue is sorted by account age, oldest first. Argue for or against re-sorting it by appeal deadline. What would you lose?

1.22 † A biller discovers that a batch of 41 claims submitted six weeks ago was rejected at the clearinghouse and never reached the payer. Write the five-step action plan, in order, including the one step most people forget.

1.23 A practice manager proposes measuring coders on "average charge per encounter" to encourage "appropriate coding." Explain, in three sentences, why this is a serious problem, and propose a metric that measures the same underlying concern without creating the same incentive.

1.24 A colleague says "it's safer to code down — nobody ever got in trouble for undercharging." Give the three-part response: the accuracy argument, the financial argument, and the compliance argument.

E. Certification-style questions

1.25 † A service is charged at \$500.00 and the contracted allowed amount is \$300.00. The patient has met their deductible and has 20% coinsurance. What amount may the provider bill the patient?

• A. \$100.00
• B. \$60.00
• C. \$200.00
• D. \$260.00

1.26 Which form is used to submit a claim for services furnished by a hospital as an institution?

• A. CMS-1500
• B. UB-04 (CMS-1450)
• C. 837P
• D. Advance Beneficiary Notice

1.27 † A claim is returned by the clearinghouse before reaching the payer because the subscriber identification number is invalid. This is best described as a:

• A. denial, appealable within the payer's stated window
• B. rejection, which must be corrected and resubmitted
• C. contractual adjustment
• D. remittance advice

1.28 The difference between the provider's charge and the payer's allowed amount, which the provider agrees not to collect, is the:

• A. coinsurance
• B. deductible
• C. contractual adjustment
• D. patient responsibility

1.29 † Patient responsibility under a coinsurance benefit is calculated as a percentage of:

• A. the provider's billed charge
• B. the allowed amount
• C. the plan payment
• D. the contractual adjustment

1.30 Which of the following is a middle revenue cycle function?

• A. verifying insurance eligibility
• B. assigning ICD-10-CM and CPT codes from the documentation
• C. posting an electronic remittance advice
• D. placing an account with a collection agency

F. Write it

1.31 † Write the paragraph a practice would put on the back of its patient statements explaining the four numbers. Maximum 120 words. It must be accurate, must not use the word "discount," and must be readable by someone who has never seen a medical bill.

1.32 Draft the three-sentence email a coder sends to a practice manager who has asked why last month's average visit level dropped after a new physician joined the group. Do not speculate about the physician; do say what you would look at.

1.33 Write a five-line checklist a front desk representative could tape to a monitor, covering the registration fields that most commonly cause denials. You may look ahead to Chapter 24 §24.2 if you wish, but try it from Chapter 1 first.

G. The Encounter

1.34 † Account 10-4471 is open. Using only what Chapter 1 established, list the four numbers you expect this account to produce and say which one you can already estimate and which three you cannot, and why.

1.35 For each of the six leaks in §1.8, write one sentence describing what that failure would look like specifically on Account 10-4471 — a five-physician family practice, an established patient, an office visit with an injection.

1.36 † The timeline in §1.3 shows 100 days from date of service to zero balance, with 49 of those days spent waiting on the payer. Identify every day on that timeline where a decision by the practice could have shortened the total, and estimate by how much.

1.37 Set up your own copy of the Encounter Workbook (Appendix C). Fill in what you know after Chapter 1: the practice, the patient's coverage, the benefit design, the date of service, and the six checkpoints. Leave everything else blank. You will return to it thirty-nine more times.

1.38 Q5 asks what is actually wrong with the patient's knee, and the book says it will not be resolved until Chapter 22. Why would a book about coding wait twenty-one chapters to answer a clinical question? What does the delay teach?

1.39 † The chapter says the encounter's four claim lines total \$367.00 in charges and that the allowed amount is \$216.28. Without looking ahead: what is the contractual adjustment, and what percentage of the charge is it? Compare that percentage to the emergency department example in §1.2 and account for the difference.

1.40 Write, in your own words and in under 100 words, what you think this book means by "a clean claim is a fast claim." Keep what you write. You will be asked to revise it in Chapter 29.