Chapter 2 — Exercises

Items marked † have worked solutions in Answers to Selected Exercises, along with every odd-numbered item. All figures, plans, and payers are constructed for teaching.

A. Recall and vocabulary

2.1 Define premium, deductible, copayment, coinsurance, and out-of-pocket maximum. For each, say whether it is ever paid to the provider.

2.2 State the fixed order in which a benefit is applied to a claim line.

2.3 † Explain the difference between participation and assignment. Give a situation where a provider does one and not the other.

2.4 Name the three questions that separate HMO, PPO, EPO, and POS designs, and fill in the answer for each plan type.

2.5 What is a third-party administrator, and why can two patients holding cards from the same insurer have materially different coverage?

2.6 † Name the five payer contract structures in §2.6 and state, for each, what it puts at risk for the provider.

2.7 What does an eligibility response tell you, and what are the three most important things it does not tell you?

2.8 State the birthday rule precisely, including the condition under which it applies and the tiebreaker when both parents share a birthday.

2.9 Why is a work-related injury not billable to a patient's health plan? What must exist before the health plan becomes the payer?

2.10 Give three things the allowed amount encodes and one thing it does not.

B. Applied arithmetic

2.11 † A service is allowed at \$680.00. Compute patient responsibility and plan payment under each benefit position. Show the check for each.

2.12 A patient has a \$40 specialist copay and 20% coinsurance on other services. A visit produces: office visit allowed \$142.00, injection allowed \$61.40, drug allowed \$9.15. Deductible is met. Compute the four numbers if the charges were \$205.00, \$118.00, and \$24.00.

2.13 † A practice charges \$240.00 for a code. Compute the allowed amount and contractual adjustment under: (a) a flat fee schedule of \$151.20; (b) 122% of Medicare, where Medicare allows \$129.60; (c) 68% of billed charges. Then recompute all three with the charge raised to \$310.00 and state what changed.

2.14 A primary care group is capitated at \$29.50 per member per month for 5,200 attributed members. What is the monthly payment? If the group's cost to deliver care to those members averages \$27.10 PMPM, what is the monthly margin? What single change in patient behavior would eliminate it?

2.15 † A family has an aggregate \$5,000 family deductible with \$4,300 met and 20% coinsurance. One member incurs a service allowed at \$1,900.00. Compute patient responsibility and plan payment. Then recompute assuming the plan is embedded with a \$2,500 individual deductible of which this member has met \$2,500.

2.16 A patient's out-of-pocket maximum is \$4,000 with \$3,880 accumulated. A service is allowed at \$2,600.00 and coinsurance is 20% with the deductible met. What does the patient owe? What does the plan pay?

C. Read the document

2.17 † From an eligibility response:

  STATUS   ACTIVE   EFF 01/01   NETWORK: IN NETWORK for VALUE HMO
  DEDUCTIBLE  individual 2,500.00  met 2,500.00  remaining 0.00
  OOP MAX     individual 7,000.00  met 3,110.00  remaining 3,890.00
  PCP OFFICE VISIT      COPAY 25.00
  SPECIALIST            COPAY 65.00   REFERRAL REQUIRED: YES
  OUTPATIENT SURGERY    COINSURANCE 30% after deductible

(a) The practice is a specialty orthopedic group. A patient presents without a referral. What happens and why? (b) If a referral is on file and the patient has an office visit allowed at \$188.00 plus an injection allowed at \$74.00, what does the patient owe? (c) What can you not determine from this response?

2.18 An insurance card reads, in large type, the name of a national insurer, and in small type at the bottom: "Administered by [insurer] for [employer name]." List four operational consequences of that small line.

2.19 † A remittance advice shows a claim denied with CARC 22 ("this care may be covered by another payer per coordination of benefits"). Describe the correct sequence of actions, name whose problem this actually is, and state the one thing a biller should not spend time doing.

2.20 A contract exhibit reads: "Allowable shall be the lesser of billed charges or 118% of the then-current Medicare Physician Fee Schedule for the applicable locality, as amended from time to time." Identify three separate risks in that sentence.

D. Judgment and process

2.21 † A physician-owner asks you to waive a long-standing patient's \$50 specialist copay "as a courtesy — she's been coming here twenty years." Give your answer, the reasoning, and the compliant alternative. Assume the patient is a Medicare beneficiary.

2.22 Your practice has no copy of its contract with its second-largest payer. Write the five-step plan to fix that, and name the two things you would extract first.

2.23 † A patient with an EPO wants a referral to an out-of-network surgeon they have researched and prefer. Explain the financial consequence, and describe what you would do to help them without misrepresenting anything.

2.24 Your practice's contract with a payer is "112% of Medicare." The Medicare conversion factor falls the following year. Draft the three-sentence briefing you would give the practice manager, including what you would want to measure.

2.25 A biller argues that eligibility verification for established patients is a waste of time because "the system stores their insurance." Give the counterargument in terms of §2.4 and §2.8.

2.26 † Rank these four benefit-design facts by how much they change what a patient will owe, most to least, and defend the ordering: (a) the coinsurance percentage; (b) whether the deductible is met; (c) the plan type (HMO/PPO/EPO/POS); (d) whether the plan is self-funded.

E. Certification-style questions

2.27 † A dependent child is covered under both parents' plans. The parents are married. The mother's birthday is 02/19/1990; the father's is 07/04/1984. Which plan is primary?

• A. The mother's, because February precedes July
• B. The father's, because he is older
• C. Whichever plan has been in effect longer
• D. The parents may choose

2.28 An employer that funds employee health claims from its own assets and contracts with an insurer solely for administration has a plan best described as:

• A. capitated
• B. self-funded
• C. fully insured
• D. a point-of-service plan

2.29 † A patient's plan has a \$1,000 deductible (fully met) and 25% coinsurance. A service is charged at \$800.00 and allowed at \$500.00. The patient owes:

• A. \$200.00
• B. \$125.00
• C. \$300.00
• D. \$425.00

2.30 Which plan type generally provides no out-of-network benefit except for emergency services, while typically not requiring a primary care gatekeeper?

• A. HMO
• B. PPO
• C. EPO
• D. POS

2.31 † A patient is injured at work. The correct payer is:

• A. the patient's health plan, with workers' compensation as secondary
• B. workers' compensation
• C. whichever adjudicates first
• D. the patient, who seeks reimbursement

2.32 Payment of a fixed amount per member per month regardless of services furnished is:

• A. a case rate
• B. a per diem
• C. capitation
• D. a fee schedule

F. Write it

2.33 † Write the script a check-out clerk uses when a patient has had an office visit plus one additional service. Maximum 60 words. It must set an accurate expectation without quoting a number the practice cannot stand behind.

2.34 Draft the one-page payer summary sheet described at the end of §2.6. List the fields it should contain — not the values, the fields — for a practice with eight major payers.

2.35 Write the two-sentence explanation you would give a patient who says "I have insurance, why am I paying anything?" early in a plan year.

G. The Encounter

2.36 † Using Figure 2.1 and the fee schedule in §2.7, verify every figure in the Encounter checkpoint independently. Show both checks. Then identify the one line where per-line rounding and aggregate rounding could have disagreed, and say why they did not here.

2.37 The chapter says the practice could have told the patient \$47.58 at check-out on day 0. List everything that had to be true for that to be possible, and identify which item is the one most practices are missing.

2.38 † Suppose the patient's deductible had not been met, with \$900.00 remaining. Recompute the entire Encounter table. What does the patient owe, what does the plan pay, and what happens to the contractual adjustment?

2.39 The chapter predicts the plan will pay \$168.70 and then says plainly that it will not — not on the first remittance. Without looking ahead, name two categories of reason a payer might pay less than the benefit predicts, and say which category is not a coding error.

2.40 Update your Encounter Workbook (Appendix C) with the eligibility response, the fee schedule, and the four predicted numbers. In the "open questions" section, write in your own words what Q6 is asking and why Chapter 2 made it harder rather than easier to answer.