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Definition of Healthcare Healthcare is the prevention, treatment, management of illness, and the preserva tion of mental and physical well-being through the services offered by medical a nd allied health establishments. Healthcare system is an organization which, provides healthcare services. A healthcare system can be defined as: 1.An organization that finances and delivers healthcare services 2.An organization wherein there are interactions among all the participating org anizations 3.The governing body and organization that monitors the quality and effectivenes s of the healthcare system ----------------------------------------------------------------------------------------------------------------------------------Providers A provider can be anyone who provides services to a patient. A provider can be a physician, a hospital, a pharmacist, and so on. There can be two types of healthcare providers: 1.Contracted 2.Non-contracted The basic difference between contracted and non-contracted providers lies in the ir participation and non-participation with the insurance company, and payment t erms for the services rendered as defined in the contract with the insurance com pany. Providers can be broadly categorized as either professional provider or facility or institutional provider based on the kind of services they provide. ----------------------------------------------------------------------------------------------------------------------------------Insurance Companies Insurance companies, also known as Payers, provide different health plans to the ir subscribers. Health insurance is a type of insurance where the insurer pays for the medical e xpenses of the insured. There are two types of health insurance companies, based on how they are finance d: 1.Private health insurance 2.Government sponsored health insurance Medicare - 65 > Madicate - underPrivilege ----------------------------------------------------------------------------------------------------------------------------------Facility

A facility is a place where medical services are provided. Common facilities are : 1.Hospitals 2.Ambulatory surgery centers 3.Skilled nursing facilities 4.Home health agencies 5.Freestanding substance abuse facilities 6.Hospices 7.End-stage renal disease centers ----------------------------------------------------------------------------------------------------------------------------------Laboratory A laboratory is defined as any facility, which performs laboratory testing on sp ecimens collected from patients. These laboratory tests provide information for the diagnosis, prevention, and treatment of a disease or impairment or assessmen t of health. Laboratory Reimbursement Factors that can influence billing and payment of laboratory services are: 1.Point of service: Reimbursement methods may be specific to a laboratory type o r point of service. 2.Code selection: Valid procedures and diagnosis codes should be used. 3.Modifiers: Modifiers, used by providers, are codes used on a claim; it provide s additional information to the payer regarding services offered by the provider . Some of the modifiers may affect the reimbursement while others are seen as in formation only. The use of modifiers eliminates the need for a separate procedur e list that describes the modifying circumstance. Example: modifier 23 stands fo r unusual anesthesia, modifier 47 stands for anesthesia by surgeon. 4.Units of service: Specify the number of times a particular test was conducted. 5.Clinical Laboratory Improvement Amendments (CLIA) Regulatory authority; all cl inical laboratories must enroll in CLIA and be certified to test in order to rec eive payments. ----------------------------------------------------------------------------------------------------------------------------------Third Party Administrators (TPA) Third Party Administrators (TPA) are outsourcing vendors who work with companies and organizations on several aspects of their medical benefit plans but do not assume any financial risk. Note: TPA is an entity that processes claims. It subcontracts with employer, client, i nsurance company, and so on for processing claims. Medical claims include surgic al, dental, vision, pharmaceutical, disability, long-term care, cafeteria plans with a health component, non-self-funded worker s compensation medical plans, and credit disability. Subsidiaries of a TPA that process health claims have to be certified as TPAs. D ivisions of the TPA that are processing claims do not need to be separately cert ified as TPAs. ----------------------------------------------------------------------------------------------------------------------------------Clearing House A clearing house acts as an intermediary between the provider and payer.

Administrative functionalities of a clearing house: 1.Converts claims into the desired format 2.Sends claims to payers on behalf of providers, either electronically (via EDI - electronic data interchange) or manually (conventional mailing options). Clearing houses can also be categorized as TPAs. ----------------------------------------------------------------------------------------------------------------------------------Banks Functionalities of a bank in a health care system include: 1.Patient credit and collection 2.Financial management 3.Accounts reconciliation Providers receive payments through: 1.Cheques 2.Electronic Funds Transfer (EFT): In Electronic Funds Transfer, the amount is d irectly credited to the providers account. ----------------------------------------------------------------------------------------------------------------------------------Key Health Insurance Terms 1.Payer / Carrier: This is the health insurance company that is responsible for financing and delivery of healthcare. 2.Premium: This is the fixed periodic payment made by the insured to the insurer for the coverage provided. 3.Policy: This is the legal contract between the insured and the insurer. 4.Co-Pay: This is a capped contribution defined in the policy and paid by an ins ured person each time a medical service is availed. It must be paid before any p olicy benefit is payable by an insurance company. 5.Plan: This is the insurance product bought by insurers like: HMO (Health Maint enance Organization), PPO (Preferred Provider Organization), and so on. 6.Deductible: This is a fixed amount that the member will incur from his/her own pocket before the coverage starts. 7.Coinsurance: This indicates how an insurer and an insured will share the costs of a medical service. It is defined as a percentage of the total cost. 8.COB: Coordination of Benefit (COB) is a method by which two or more carriers c oordinate their respective benefits so that the total benefit paid does not exce ed 100% of the total allowable expenses in cases where a member has more than on e health plan. 9.Subscriber: A subscriber is the policy holder of a plan. In a group insurance, subscribers are mostly employees. 10.Dependent / Member: Dependents of a subscriber are also covered through the s ame plan. A subscriber is a member too. 11.Pre-existing condition: A pre-existing condition is a condition for which an individual has received medical care for three months prior to the effective dat e of coverage. These conditions are waived if: a.No treatment has been received for three months prior to the start date of the plan b.The member has been covered under a group plan for 12 consecutive months ----------------------------------------------------------------------------------------------------------------------------------Health Insurance Plans Health insurance plans can be divided into two broad categories: 1.Traditional indemnity plan 2.Managed care plan

The traditional indemnity plan and managed care plan provide health insurance co verage, but are different in terms of the coverage they provide and the manner i n which they are administered. ----------------------------------------------------------------------------------------------------------------------------------Traditional Indemnity Plan Features of traditional indemnity plan: 1.In a traditional indemnity plan, members have the freedom to select a provider of their choice. There is no concept of provider network in this plan. 2.The concept of a PCP (Primary Care Physician) is not present and no referrals are required to visit a specialist. 3.Preventive care is not a focus area in this plan. 4.The risk is not shared by providers. 5.Providers do not get any incentive for keeping the members healthy. 6.The plan uses Fee for Service (FFS) payment mechanism. 7.It is a more expensive health insurance plan than other managed care products. ----------------------------------------------------------------------------------------------------------------------------------In a traditional indemnity plan: 1.A subscriber takes a traditional indemnity plan through its employer. 2.Employer pays the premium. 3.Insurance company covers the benefits and services offered by the provider. 4.Insurance company pays the provider on FFS (Fee for service) basis. These paym ents are made against the claims, providers have submitted for every service the y have provided. In this type of plan: A. There are no incentives for a provider to control the cost B. Provider does not take any financial risk In FFS reimbursement method, providers are paid either based on the treatment or on a service basis. Provider bills a plan after providing a service or treatmen t. FFS payment agreement contains a no-balance-billing clause. No balance billin g implies that the physician agrees to accept the payment made by the health pla n as full payment for the service and will not bill the member for that service. No balance billing is used in combination with reimbursement systems other than FFS. No-balance-billing is attractive to plan members and plan sponsors because it reduces the possibility of their incurring unexpected healthcare costs. Inst ead, their healthcare costs are defined by premiums, co-payments, and other elem ents as specified in the contract. Physicians are financially rewarded for providing more services. From the health plan s point of view, the main disadvantage with FFS reimbursement method is that there is no guarantee that more services necessarily translate into better plan member care in all cases. Although the number of physicians or other providers who engage in fraud by supplying excessive services is relatively small, there a re physicians or other providers who are rewarded for supplying more services. F or this reason, an FFS reimbursement system will encourage providers to bill mor e services leading to greater healthcare costs. ----------------------------------------------------------------------------------------------------------------------------------Coordination of Benefits Coordination of Benefits (COB) is a method by which two or more carriers coordin

ate their respective benefits so that the total benefit paid does not exceed 100 % of the total allowable expense. COB is necessary when a member has more than o ne health plan. 1.The primary plan pays for the benefits covered. 2.The secondary plan pays the difference between the actual expense and the amou nt paid by the primary plan. 3.Birthday rule - The insurance plan of the parent whose birthday occurs first i n the calendar year is designated as the primary plan. The date of birth is the determining factor and not the year. Hence, it does not matter which spouse is o lder. The birthday rule is often used to determine which plan is primary or secondary. After implementing this rule, health insurance companies will be able to: a.Coordinate benefits b.Prevent either the subscriber or the doctor from being reimbursed for more tha n 100% of the actual cost of the claim 4.Gender rule - Primary coverage for dependent children is determined by the gen der rule when the insurance carrier does not abide by the birthday rule. The gen der rule states that the father s insurance will be the primary plan. Some payers follow the gender rule while others follow the birthday rule. ----------------------------------------------------------------------------------------------------------------------------------Let us now understand how the coordination of benefit takes place between a prim ary and secondary health plan: 1.A member presents his or her primary membership card to a provider. 2.Next, the provider sends the claim to a primary insurance carrier for reimburs ement. 3.Now, the primary insurance carrier, upon receiving the claim, pays the dollar amount to the provider. 4.If any dollar amount is still left, then the provider checks for a secondary c overage. In such cases, the provider needs to submit another claim to the second ary carrier for the balance amount. 5.Only then does the secondary insurance carrier pay the balance dollar amount t o the provider. ----------------------------------------------------------------------------------------------------------------------------------Goals of Managed Healthcare Objectives of managed healthcare are to ensure that: 1.Providers deliver high-quality care in an environment that manages or controls costs 2.Care delivered is medically necessary and appropriate for the patient s conditio n 3.Care is rendered by the most appropriate provider in an appropriate and leastrestrictive setting ----------------------------------------------------------------------------------------------------------------------------------Managed care plans are based upon the principle of supporting care that is desig ned to: 1.Prevent illness from developing in the first instant. 2.Detect and treat the illness at an early stage when treatment is often relativ ely simple and costs are low. Managed care plans aim to provide quality healthcare in low cost and that is why these plans use many features which are typical of managed care. Some of these features are: 1.Network of providers: Insurance company forms its network of providers and enc

ourages members to use services of network providers 2.Quality Management 3.Medical Management 4.Emphasis on preventive care 5.Risk sharing by providers ----------------------------------------------------------------------------------------------------------------------------------Features of Managed Care Plan 1.In a managed care plan, a network of providers is developed by the insurance c ompany. 2.There is a Primary Care Physician (PCP) assigned to each member, who acts as a gatekeeper. 3.The focus is on preventive care. 4.The financial risk is shared by providers. 5.Different payment mechanisms like Capitation, Discounted Fee for Service (DFFS ) are used. 6.It is less expensive than traditional indemnity. 7.The plan provides a range of products with varying degrees of freedom and prem ium cost. ----------------------------------------------------------------------------------------------------------------------------------The main entities involved in Managed Care Delivery of healthcare are: 1.Member 2.Employer 3.Provider 4.Health Insurance Organization Entities, in managed care plan, are very similar to that of the traditional inde mnity plan. Major differences lie in the: 1.Relationship that the contract providers have with the Health Insurance Compan ies 2.Benefit or plan design 3.Premium paid by the groups or members A subscriber takes a managed care plan through its employer. Employer pays the p remium. Insurance company covers the benefits and services provided by the provi der. The coverage varies based on whether the provider is a part of the network or not. In case of a typical HMO model, there is a Primary Care Physician attached to ea ch member, who acts as a gatekeeper. The providers are usually paid not on the FFS basis, which is the case with inde mnity model. To reimburse providers, different payment mechanisms are used. An e xample of this is Capitation, which is where providers also share the financial risk of medical cost exceeding the payments coming in from members or groups ----------------------------------------------------------------------------------------------------------------------------------Risk Sharing 1.Financial risk occurs when there is a possibility that the actual cost of prov iding the care will differ from the projected cost. 2.Managed healthcare integrates the delivery and finance function, the result of which is that the financial risk of providing healthcare no longer rests with h ealth plan alone; providers, plan, and members share the risk. 3.Managed care plans achieve risk sharing with providers by negotiating fee and contractual agreements with them. -----------------------------------------------------------------------------------------------------------------------------------

Various kinds of payment mechanisms can be used by a payer to reimburse provider s for medical services. If we look at the financial risk assumed by the provider s in each of the payment mechanisms, we can see that the Traditional Fee for Ser vices is at one extreme, where providers are paid based on the amount they charg e and they do not assume any financial risk. Providers will be able to make more money by offering more services. At the other extreme, there is capitation, where almost all the risks are assume d by the provider. Here, an insurance company does not face the risk of unexpect ed outflow of money. ----------------------------------------------------------------------------------------------------------------------------------Risk Sharing Payment System: Capitation 1.Capitation is a method of paying for healthcare services based on the number o f patients who are covered for specific services over a specified period of time rather than the cost or number of services that are actually provided. 2.Healthcare providers are compensated per member, per month. ----------------------------------------------------------------------------------------------------------------------------------Difference between Fee For Service (FFS) and Capitation FFS Capitation 1. The physician is paid after a service has been provided. 1. The physician is paid in advance for all services. 2. The income increases with volume and variety of services offered. 2. There is no increase in income with more services. 3. There is little incentive to practice preventive care or focus on improving h ealth. 3. There are positive incentives for keeping the population healthy. ----------------------------------------------------------------------------------------------------------------------------------Difference between FFS and Managed Care Models 1.Managed care is a planned system for delivering comprehensive care services. 2.Managed care organizations ensure that services will be provided in return for an approved financial payment. 1.Don is a doctor in a traditional FFS healthcare environment. He is selected by a patient and is paid by the patient's insurance company without any prior appr oval. 1.Joe is a doctor in a managed care environment. The managed care organization m ust approve the care that Joe provides to his patient. ----------------------------------------------------------------------------------------------------------------------------------Health insurance companies offer different types of plans. Each of these plans h as varying degrees of managed care features like cost containment, freedom of ch oice for provider, and so on. There are traditional indemnity plans, which do not have any managed care featur es in it, whereas HMO plans have all the features of managed care. There are intermediate plans, like PPO and POS plans, which contain a few compon ents from the managed care plan. ----------------------------------------------------------------------------------------------------------------------------------Health Maintenance Organization (HMO) In Health Maintenance Organizations, a member: 1.Is required to consult only providers within the network

2.Selects a Primary Care Physician (PCP), often called a gatekeeper 3.Can only visit a specialist if authorized by the PCP HMOs charge a monthly premium lower than traditional indemnity because of the re strictions imposed by the network. ----------------------------------------------------------------------------------------------------------------------------------Types of Managed Care Plans Health maintenanceOrganization (HMO) Preferred provider organization (PPO) Point of service plan (POS) Exclusive provider organisation (EPO) plan ----------------------------------------------------------------------------------------------------------------------------------Types of HMO closed panel open panel Staff model Group model ----------------------------------------------------------------------------------------------------------------------------------Preferred Provider Organization (PPO) In the health insurance industry, a PPO is a managed care organization comprisin g of medical doctors, hospitals, and other healthcare providers who have covenan ted with an insurer or with a third-party administrator to provide reduced rates to their clients. List of PPO operations: 1.The PPO provider network is large compared to the HMO which, gives more choice s to members in selecting a provider. 2.No balance billing clause is used where a physician agrees to accept the payme nt in full made by the health plan. The plan member will not be billed for that service. 3.Referrals are not needed to visit a specialist. 4.It is cost effective as it contains the cost containment features of the HMO p lan and also provides more freedom to members. 5.There is greater flexibility in the benefits received compared to the HMO as c overage is provided for both in-network and out-of-network services. ----------------------------------------------------------------------------------------------------------------------------------Point-of-Service (POS) plans POS plans provide more flexibility because it permits you to seek treatment from providers, included in your plan s network or out of the network. You can select your own provider without a referral. 1.If you stay within the network, you receive the full amount of covered healthc are benefits after co-payments are made. 2.If you choose to use physicians outside the network, you will generally pay mo re out-of-pocket expenses, which include deductible and coinsurance. ----------------------------------------------------------------------------------------------------------------------------------Type of Plan What it Offers Method of Cost Control Features Health Maintenance Organization (HMO) Services from network providers only 1. Gatekeeper managing utilization and referrals 1. Comprehensive care 2. Negotiated provider discounts 2. Low c

o-payments 3. Low out of pocket expenses Indemnity from any provider Freedom to choose any provider Preferred Provider Organization (PPO) Services from any provider, but at a 1. Discounts are negotiated with providers 1. Freedom to ch oose any lower cost inside the provider s 2. Savings are made when network participating network providers are used network Point-of-Service (POS) Services from any provid er, but at a 1. Within the network, gatekeeper manages 1. Freedom to choose any lower cost inside the provider network utilization provider 2. Savings are made when network providers 2. Negotiated provider discounts 2. Prior approval for hospitalization Services None

3. Preventive care is covered ----------------------------------------------------------------------------------------------------------------------------------Health insurance companies, like any other organization, have various department s or functions with defined roles and responsibilities to meet the overall goal of the company. There are support functions like Finance, Information Technology , Administration and HR, which are also present in other industries. There are also functions like underwriting, Medical Management, claims, and so o n, which are specific to the Insurance industry. Departments required to support a health insurance company are as follows: 1.Finance 2.Information technologies 3.Administration and humar resources Core functions in health insurance companies include: 1.Underwriting 2.Acturarial 3.Customer service 4.Claims 5.Billing 6.Medical management 7.Membership 8.Sales and marketing

9.Network ----------------------------------------------------------------------------------------------------------------------------------In a healthcare system, entities often share data electronically with each other , which is termed as a transaction. Healthcare transactions follow the standards as required by HIPAA. These transactions are usually identified by their transa ction set, which is typically a three digit number. The HIPAA standard includes the following administrative and financial healthcar e transactions: 1.For health claims or equivalent encounter information Providers (dental / prof essional / institutional) send 837 to payers. 837 is the three digit transaction set. 2.For enrollment and cancellation of the enrollment in a health plan transaction set 834 is sent by groups to health plans. 3.Eligibility for a health plan Here two types of transaction sets are used; 270 and 271. The transaction set 270 is Eligibility Inquiry sent by providers to pa yers. Payers respond to 270 by 271 transactions, which is Eligibility Response. 4.For healthcare payment and remittance advice 835 is sent by payers to provider s. 5.For health plan premium payments 820 is sent by groups to payers. 6.Health claim status Here two types of transaction sets are used; 276 and 277, where 276 is the claim status enquiry sent by providers to payers. Payers respon d to 276 by 277 transactions, which is claims status enquiry response. 7.For referral certification and authorization 278 is sent by providers to payer s and vice versa. Apart from the HIPAA transactions, there are non HIPAA transactions as well; for example 810 for invoice, 850 for Purchase order and so on. They are used in the healthcare industry like in any other industry. ----------------------------------------------------------------------------------------------------------------------------------overnment Sponsored Healthcare Programs In commercial health insurance programs, groups or individuals pay the premium. However, there are some programs where the government (state or federal) shares the premium. These programs are: 1.Medicare 2.Medicaid ----------------------------------------------------------------------------------------------------------------------------------Medicare Medicare is a federal government program, administered by the Centers for Medica re and Medicaid Services (CMS). Medicare is available for: 1.People aged 65 or older 2.Younger people with disabilities 3.People with end stage renal disease Medicare is partially financed by the 2.9% tax applied on wages or on self-emplo yed income to a specified maximum (the maximum is not yet defined). The tax of 2 .9% comprises of 1.45% withheld from the worker and the remaining 1.45% from the employer. The different categories in Medicare plans are: Part A-Institutional Part B-Professional Part C-Advantage plans

Part D-Prescription drug coverage ----------------------------------------------------------------------------------------------------------------------------------Medicare Part A (Institutional) The Medicare institutional plan is financed by the US Government general fund. The services covered by Medicare Part A plan are: 1.Basic hospital services 2.Confinement in nursing facility 3.Extended care facility after hospitalization 4.Hospice care 5.Automatic enrollment to Medicare Part A for Medicare eligible members 6.No premium for Part A coverage 7.Annual deductible 8.Coinsurance for inpatient hospital care and skilled nursing care ----------------------------------------------------------------------------------------------------------------------------------Medicare Part B (Professional) The Medicare professional plan is financed by USA Government general fund and by contributions from the covered persons by way of a deduction from their monthly social security check. The services covered by Medicare Part B plan are: 1.Physician s professional service in hospital, office, and home 2.Ambulance services 3.Hospice outpatient care and diagnostic test 4.Medical supplies Features of the plan: 1.Medicare Part B is a voluntary program; one needs to enroll for Part B 2.Funded by premium, co-payments, and government grants 3.Includes annual deductible and coinsurance (80: 20 ratio) ----------------------------------------------------------------------------------------------------------------------------------Medicare Part B (Continued) Medicare Supplement Insurance

1.Medigap is a supplemental insurance plan, which is used to cover healthcare ex penses and services that are not covered by Medicare. 2.Fee-For-Service (FFS) Medicare generally does not pay for benefits such as pre scription drugs, eyeglasses, hearing aids, routine physical exams, and basic den tal services. 3.HMO enrollees have seen a reduced need for Medigap insurance because HMOs offe r more comprehensive coverage to their Medicare enrollees than FFS Medicare. ----------------------------------------------------------------------------------------------------------------------------------Medicare Part C (Advantage Plan) 1.The Medicare advantage plan is also known as Medicare + Choice. 2.The Balanced Budget Act restructured Medicare in 1997 and created the third co mponent Medicare + Choice which covers both Part A and Part B as well as some ad ditional services. 3.A member may have to pay for extra services.

4.Unlike Part A or Part B, Medicare + Choice addresses the delivery of covered s ervices. 5.Medicare + Choice offers additional delivery options: a.Coordinated care plan which can be managed using POS, PPO, and PSO delivery b.There is also a flexibility to get a private fee for service plan c.Members can also link their plans to a savings account ----------------------------------------------------------------------------------------------------------------------------------Medicare Part D (Prescription Drug Coverage) 1.The Medicare Prescription Drug Coverage plan was initiated from January 1, 200 6. 2.Covered Part D Drugs: a.A Part D drug is a drug that is approved by the Food and Drug Administration, for which a prescription and payment is required under Medicaid. b.Medicare Part D excludes coverage of those categories of drugs for which Medic aid payment is optional and for over the counter medications. It also excludes c overage of drugs for which payment could be made under Medicare Part A or Part B . 3.The plan states that, from 2006 onwards, people with the following eligibility criteria will pay no premium or deductible and there will be no gap in their co verage as well: a.People eligible for both Medicaid and Medicare b.People with low income and assets 4.If an eligible Medicare beneficiary puts off getting the Medicare Part D beyon d the initial enrollment date, he or she will have to pay a higher premium. ----------------------------------------------------------------------------------------------------------------------------------Medicaid 1.Medicaid is a governmental healthcare program 2.It provides healthcare coverage to low-income groups 3.It differs from state to state 4.Eligibility is related to financial need Title XIX of Social Security Act 1965, established Medicaid as part of a joint f ederal state program. 1.Hospital and medical expenses are covered for: a.People in the low income group b.Aged and disabled individuals 2.The federal government through Centers for Medicare and Medicaid Services (CMS ) provides partial funding to states and establishes guidelines for: a.Eligibility criteria b.Benefits c.Provider participation d.Reimbursement mechanism 3.Individual states provide additional funds and administer the welfare program 4.The eligibility for this program is based on: a.The individual s monthly income and financial resources b.The medical needs of individuals c.Dual eligible (some people may also qualify for Medicare)

----------------------------------------------------------------------------------------------------------------------------------Medicaid (continued) Medicaid and managed care 1.The state can enroll Medicaid recipients into managed care plans on a voluntar y basis. 2.Three types of organizations may be contracted. They are: a.MCOs ( HMOs and Health Insurance Organizations) b.Prepaid Health Plans (PHPs) c.Primary Care Case Managers Program (PCCMP): In PCCMPs, the PCP coordinates dir ectly with the state to provide case management services to Medicaid patients. A primary care case manager gets case management fees and reimbursement for servi ces on a FFS basis. PHPs are plans, which accept financial risk for a limited set of clearly defined services, such as ambulatory care or behavioral healthcare for Medicaid members . ----------------------------------------------------------------------------------------------------------------------------------Definition of HIPAA HIPAA stands for Health Insurance Portability and Accountability Act. 1.It is a federal law passed by Congress in 1996. 2.It is a part of the Social Security Administration Act. 3.HIPAA is designed and enacted to make healthcare coverage available and portab le in both group and individual markets by creating standards applicable to acce ss, portability, and renewing ability. 4.HIPAA provisions are divided into two main categories: a.Title I Addresses the portability and continuity of coverage b.Title II Addresses the administrative simplification provisions and provisions related to privacy and security ----------------------------------------------------------------------------------------------------------------------------------Need for HIPAA HIPAA is required to: 1.Ensure that individuals who change jobs are not denied healthcare coverage or discriminated against on the basis of their employment or health status 2.Protect the confidentiality and security of health information as it is used, disclosed, and electronically transmitted 3.Create a framework using standardized formats for transmitting electronic heal th information more efficiently The primary purpose of HIPAA was to enable employees and their families to trans fer healthcare benefits from one employer to another or to continue coverage in the case of a layoff. Efficiency and cost-effectiveness of the overall healthcar e system has improved significantly after eliminating the paper-based processing associated with administrative work. ----------------------------------------------------------------------------------------------------------------------------------Who manages HIPAA HHS CMS OCR WEDI

DSMO WPC

All the organizations that have access to a Protected Health Information (PHI) h ave to follow HIPAA guidelines. Entities like providers, health plans, and so on have a direct applicability of HIPAA. Other entities like clearing houses, billing companies, and so on get health inf ormation through a contract with organizations having direct applicability. Thes e organizations have indirect applicability of HIPAA. End of Audio Transcript. Please select Alt F4 to close the browser window. ----------------------------------------------------------------------------------------------------------------------------------Course Map > Module5 Health Insurance Portability and Accountability Act (HIPAA ) of 1996 > Topic3 Components of HIPPA Components of HIPAA Title II Administrative simplification, privacy, and security

Each of the following components affects different aspects of the covered entity s organization: 1.Privacy 2.Security 3.Transactions and Code Sets The transaction rule applies to any covered entity that transmits any health inf ormation in electronic form in connection with HIPAA transactions. ----------------------------------------------------------------------------------------------------------------------------------Course Map > Module5 Health Insurance Portability and Accountability Act (HIPAA ) of 1996 > Topic3 HIPAA Privacy HIPAA Privacy 1.HIPAA privacy regulations limit the way health plans, pharmacies, hospitals, a nd other covered entities use personal medical information of a patient. 2.The regulations protect medical records and other individually identifiable he alth information, whether it is on paper, computers, or communicated orally. Key provisions of these new standards include: 1.Access to medical records 2.Notice of privacy practices 3.Limits on use of Personal Health Information (PHI) 4.Prohibition on marketing 5.Stronger state laws 6.Confidential communications 7.Complaints ----------------------------------------------------------------------------------------------------------------------------------Course Map > Module5 Health Insurance Portability and Accountability Act (HIPAA ) of 1996 > Topic3 Protected Health Information (PHI) Protected Health Informati on (PHI) The privacy rule protects all individually identifiable health information held or transmitted by a covered entity or its business associate, in any form, wheth er electronic, paper, or oral. The privacy rule refers to this information as Pr otected Health Information (PHI).

A CE must obtain an individual's written authorization for any use or disclosure of PHI. 1.If an individual chooses not to give written authorization for disclosure of P HI, the CE cannot deny treatment, payment, enrollment, or benefits. 2.Examples of disclosures, that would require an individual's authorization, inc lude: a.Disclosures to a life insurer for coverage purposes b.Disclosures of results of pre-employment physical or lab test to an employer c.Disclosures to a pharmaceutical firm for their own marketing purposes ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Course Map > Module5 Health Insurance Portability and Accountability Act (HIPAA ) of 1996 > Topic3 Psychothe rapy Notes Psychotherapy Notes A covered entity must obtain an individual's authorization to use or disclose ps ychotherapy notes. Exceptions 1.The CE who originated the notes may use them for treatment. 2.A CE may use or disclose psychotherapy notes without an individual's authoriza tion: a.For its own training b.To defend itself in legal proceedings brought by the individual c.For HHS to investigate or determine the covered entity's compliance with the p rivacy rules d.To a health oversight agency for lawful oversight of the originator of the psy chotherapy notes e.For lawful activities of a coroner or medical examiner or as required by law ----------------------------------------------------------------------------------------------------------------------------------Course Map > Module5 Health Insurance Portability and Accountability Act (HIPAA ) of 1996 > Topic3 Security Overview Security Overview The purpose of security is to protect both the system and its information from u nauthorized access and misuse. It encompasses all safeguards in a covered entity structure including: 1.Information systems (hardware or software) 2.Personnel policies 3.Information practice policies 4.Being prepared for disaster ----------------------------------------------------------------------------------------------------------------------------------Course Map > Module5 Health Insurance Portability and Accountability Act (HIPAA ) of 1996 > Topic3 Security Overview (continued) Security Overview (continued) HIPAA security standards are divided into: 1.Administrative procedures

Administrative actions, policies, and procedures, for managing security measures to protect PHI and for managing conduct of workforce 2.Physical safeguards Physical measures, policies, and procedures to protect electronic information sy stems and related buildings and equipments 3.Technical safeguards Technology, policies, and procedures to protect PHI and control access to it dur ing storage and electronic transmission ----------------------------------------------------------------------------------------------------------------------------------Course Map > Module5 Health Insurance Portability and Accountability Act (HIPAA ) of 1996 > Topic3 The Security Rule The Security Rule 1.The security rule pertains to health information that is exchanged in electron ic form only. 2.An organization must demonstrate that they have taken prudent steps to meet th e security requirements of HIPAA. 3.It involves developing policies and maintaining the security of electronic PHI , such as shutting down computers and keeping cabinets containing PHI locked. 4.Like in the privacy rule, this involves training employees to make them aware of security policies and ensure that they adhere to them. ----------------------------------------------------------------------------------------------------------------------------------Course Map > Module5 Health Insurance Portability and Accountability Act (HIPAA ) of 1996 > Topic3 Administrative Safeguards Administrative Safeguards 1.Security management process: a.Risk analysis b.Implement security measures to reduce identified risks c.Apply appropriate sanctions in case of violation of policy by workforce d.Procedures for reviewing records of system activity such as audit log, access reports, and security incidence reports e.Assigned security responsibility 2.Workforce security and information access management 3.Security awareness and training 4.Contingency plan 5.Evaluation ----------------------------------------------------------------------------------------------------------------------------------Course Map > Module5 Health Insurance Portability and Accountability Act (HIPAA ) of 1996 > Topic3 HIPAA Technology Provisions HIPAA Technology Provisions There are three categories of technology requirements: 1.Transaction sets: Transaction sets address key business interactions among hea lthcare providers, health plan payers, and health plan sponsors. 2.Code sets: Code sets define the values of data elements used in standard trans actions. 3.Identifiers: Uniform data values are used to uniquely identify the key partici pants in the standard transactions. Code Sets 1.The Healthcare Common Procedure Coding System (HCPCS) code set, which was esta blished by the Center for Medicare and Medicaid Services (CMS), primarily repres ents items, supplies, and Non-physician services not covered by the American Med ical Association CPT-4 codes.

2.The Current Procedure Terminology (CPT) codes are used to describe medical pro cedures and are maintained by the American Medical Association. 3.The International Classification of Diseases, 9th revision, Clinical Modificat ion ICD-9-CM Volume 1 and 2 (diagnosis codes) are maintained by the National Cen ter for Health Statistics and Center for Disease Control (CDC) within the Depart ment of Health and Human Services (HHS). 4.The International Classification of Diseases, 9th revision, Clinical Modificat ion ICD-9-CM Volume 3 (procedures) is maintained by the CMS. 5.The National Drug Code (NDC) is a code that identifies the vendor (manufacture r), product, and package size of all medications recognized by the FDA. ----------------------------------------------------------------------------------------------------------------------------------Course Map > Module5 Health Insurance Portability and Accountability Act (HIPAA ) of 1996 > Topic3 HIPAA Testing HIPAA Testing There are seven levels of testing for HIPAA transactions. Level 1: Integrity testing - Testing for valid EDI syntax for each type of trans action Level 2: Requirement testing - Testing for HIPAA-specific syntax. This test ensu res that the transaction sets adhere to the HIPAA implementation guide Level 3: Balancing - Testing of the transaction for balanced field totals, finan cial balancing of claims or remittance advice, and balancing of summary fields Level 4: Situation testing - Testing of specific inter-segment situations as def ined in the implementation guide Level 5: Code set testing - Testing the correct use of external code sets. This test ensures that only valid values of external data elements are used Level 6: Specialty or line of service testing - Specialized testing required for certain healthcare specialties like chemotherapy, behavioral health, and so on Level 7: Trading partner testing - Testing of trading partner ability to transmi t and receive HIPAA compliant data ----------------------------------------------------------------------------------------------------------------------------------Course Map > Module5 Health Insurance Portability and Accountability Act (HIPAA ) of 1996 > Topic3 Penalties for Non Compliance to HIPAA Penalties for Non Compl iance to HIPAA Type of violation: 1.Civil: Penalties are 100 USD per violation, up to 25000 USD per year. 2.Criminal: Penalties are 50000 USD and one year in prison. For false pretenses, penalties are 100000 USD and five years in prison. Penalties for selling or mis using PHI are 250000 USD and ten years in prison. ----------------------------------------------------------------------------------------------------------------------------------Course Map > Module5 Health Insurance Portability and Accountability Act (HIPAA ) of 1996 > Topic3 Summary Health Insurance Portability and Accountability Act ( HIPAA): Summary You should now be able to: 1.Describe an overview of HIPAA 2.Describe the key terms and general rules associated with HIPAA 3.Describe HIPAA privacy, security policies and standards

4.State the seven levels of testing for HIPAA transactions ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Premium Industries buying health insurance all of the above Commercial and government claims submission All of the above Code selection TPA never assumes financial risk co-payment deductable true Both provide health insurance coverage but differ in terms of the manner in whic h they are administered. false Both A and B ________________________________________________________________________________ _ Gatekeeper Of the restrictions imposed by the network Open panel HMO Staff model HMO Both A and B Claims All of the above All of the above Disease management Part A-Institutional, Part B-Professional, Part C-Advantage plans, Part D-Prescr iption drug coverage All of the above Nursing facilities Both A and B TRICARE gold None of the above True Investigates all complaints regarding Privacy Washington Publishing Company (WPC) All of the above Notice of privacy practices Portability and Continuity of coverage True True False Finance Medical management Processing claims submitted by network providers See material, above

Worker's compensation Seven