Module 11                         Return to the Beginning

Managed Care and the Medical Encounter

You Should Know This

Managed care processes are woven into the daily delivery of patient care in participating medical facilities and physician's offices. Medical facilities that participate in capitated, risk contracts (see Managed Care Arithmetic) may employ their own utilization management staff and may use specific strategies to control utilization. Physicians who sign a participation agreement with a MCO agree to abide by and to administer the plan's utilization management rules. In daily practice, this means obtaining all necessary authorizations, keeping accurate records of referrals and reporting to the managed care organization.

When acting in the gatekeeper role, the PCP is obligated to evaluate all medical situations in the light of medical necessity. The physician acts as the health plan's agent in controlling access to unnecessary, expensive services and in discharging patients from the hospital as soon as possible. Specialists must abide by plan rules for the number of allowed visits. In most cases, specialists must perform the specific service requested by the primary care patient and then return the patient to the care of the PCP.
 

Medical Encounter Flow - Managed Care

Before the Encounter	Medical Encounter	After the Medical Encounter
Schedule patient with plan participating physician  Obtain updated demographic and insurance information  Inform patient about services that will not be covered by the plan.	Assess, diagnose patient  Follow plan clinical guidelines  Order preventive screening per guidelines  Order medications on plan formulary  Refer to in-network providers  Obtain necessary prior authorizations	Complete billing document  Code level of service  Code diagnoses  Code procedures  Document care in medical record consistent with coding

Key Points

Prior to the medical encounter - The process of managed care at the medical facility level begins at the time of admission, or when an appointment is booked. Facility personnel should schedule appointments only for patients who are members of participating plans, for those who have point of service coverage from a non-participating plan, or those who choose to pay privately.

The type of appointment scheduled depends on the facility or doctor's credentialing status. Patients may be scheduled to see a primary care doctor for a full range of services. Some plans allow doctors who are credentialed as specialists in a plan to see plan members only for consultations or other specialized procedures. Other plans allow physicians (usually internists with a subspecialty) to function as both primary care doctors and specialists. Members of point of service plans must know whether the doctor or facility is considered in or out of network. The date on which the patient utilizes medical service or is hospitalized is called the date of service (DOS).

During the stay or visit - Theoretically, medical care should be delivered in the best interests of the patient regardless of payer source. In practice, physicians must often choose certain treatments, medications or tests based on insurance coverage or plan rules. In some instances, plan medical guidelines may encourage a physician to perform specific types of tests or procedures. For example, many plans encourage physicians to refer their diabetic patients for yearly visits to an ophthalmologist to prevent serious damage from diabetic retinopathy (damage to the retina from diabetes that can lead to blindness). The managed care plan formulary (the list of plan approved drugs) limits the type of drugs that can be prescribed and covered under the plan.

Use of network providers for ancillary services - Patients often require medical diagnostic testing, evaluation by medical specialists, or specialized therapy as a result of a medical encounter. In the case of managed care plan members, physicians must be sure to make referrals to participating laboratories, radiology facilities and specialists, using all authorized plan forms and identification numbers.

Coding - Coding is a very specific and standardized form of communication between the provider of medical services and the insurer. After the medical encounter or hospital admission, a billing document is created to capture information about the diagnosis, the complexity of the service provided and the types of procedures performed.

In medical practice this form is called by various names such as charge ticket, billing document or encounter form. Standardized codes are used to indicate, to a very detailed level, exactly what happened at the visit. Coding is standardized internationally, to ensure that each provider and each insurer defines procedures and services for payment in exactly the same way.

The commonly used types of codes are:

 ICD9 Codes - Diagnostic codes. ICD9 codes are composed of series of numbers. The first three digits of the code provide a general description of the diagnosis. Additional digits provide more specific detail about the diagnosis.

Coding Example

386.3 Labyrinthitis (General diagnostic category)
   386.30 Labryinthitis, unspecified (4 digit code gives nonspecific diagnostic information)
   386.31 Serous labyrinthitis (5 digit code give more specific diagnostic information)

"V" codes are used for services that are not disease related such as preventive care or laboratory services.

 Level of Service Codes – Codes that describe the level of complexity of the medical services delivered. Levels of service, as defined by the American Medical Association, are: minimal, brief, limited, intermediate, extended and comprehensive. The level of service code is determined by the amount of information taken in the medical history, the number of body systems reviewed, the extent of the physical examination and the level of complexity required in physician decision-making.

 Place of service - Describes the type of facility in which service was provided.

 CPT Codes - Codes used to describe specific procedures performed at the medical facility. There must be a clear connection between procedure codes and diagnoses codes for valid billing to occur. For example, if a blood glucose is obtained in the medical office a diagnosis code for diabetes or hypoglycemia would support billing for the procedure.

 HCPCS Codes - Specialized codes used by Medicare for durable medical equipment and other special services.

Coding in a Medical Office Billing Document

Note: Codes in the left column are level of service code examples

Code Service Level Fee   Established Patient   99211 Minimal   99212 Problem Focused   99213 Expanded problem

Note: Codes in the left column are Diagnosis Code (ICD) examples

Code Diagnosis DX# 784.7 Epistaxis   477.9 Rhinitis,   463 Tonsillitis, acute

Note: Codes in the left column are Procedure Code (CPT) examples

Code Service Fee 93000 EKG   45330 Flexible Sigmoidoscopy   92551 Hearing Test

Coding allows the medical facility to determine the visit charge and it allows the insurance company claims department to determine whether a covered service was provided and whether the charge was appropriate. Finally, codes are a good method for tracking and reporting the types of medical services being utilized by the member population. Coding may be done at the time of the service by the clinician, or after the visit by a professional coder.

Relative Value Units (RVUs) - Measurements that attempt to capture the amount of physician work, expense and malpractice exposure required to perform each coded service. RVUs are used to make comparisons of service intensity and level of medical effort between practices and institutions in different parts of the country.

Documentation - Coding and documentation complement each other. Coding, especially level of service codes, must be supported by adequate documentation. Documentation includes the following elements: medical history elements, review of systems (questions about symptoms within each body system), physical exam findings, a diagnosis and a plan for care. The more complex the encounter, the more medical care elements must be documented.

For example, a higher level office visit code would require the physician to document more elements of the medical history and to specifically indicate that more body systems were examined during the physical examination. High levels of coding with inadequate documentation can lead to allegations of fraud and abuse by insurers and regulatory agencies.

Coding verification and cost share collection - At the end of a medical encounter, medical facility staff collect the billing document and check it for completeness. The document may then be returned to the clinician for correction of errors and omissions. The billing or check-out person collects co-pays as required by the insurer. Many medical offices ask patients to pay any outstanding balances at the time of check-out. The billing document is then either immediately entered into the medical billing system or stored for data entry at a later time.
 

In Real Life

The Hartleyville Internal Medicine Group sees both capitated and fee-for-service managed care patients. Hartleyville participates in twelve MCOs and has gone to great lengths to organize its managed care information. The practice offers extensive staff training and has created a computer database with complete, updated reference information on each plan. Since HMOs have recently stepped up their fraud and abuse investigations, Hartleyville IM has hired a consultant to conduct physician coding and documentation training and to conduct chart audits.

Hartleyville now has three managed care coordinators whose job is to manage referral authorizations, patient length of stay admissions and to act as liaisons with the MCOs for problems. This has added greatly to practice expense, but has reduced the stress level of dealing with managed care for practice staff and physicians.

 Checkpoint

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1.) The date on which a patient receives medical care is called the __________.
	Date of service or DOS
2.) What is the type of code used to indicate that a procedure was performed?
	CPT
3.) Name three elements of medical records documentation.
	Medical history, Review of Systems, Physical examination finding
4.) RVU measures are used for _______________.
	Comparing service intensity and level of effort between different practices and different parts of the country.
5.) Insurance companies can allege fraud or abuse if _____________ and __________ don't match.
	Coding and documentation
6.) A formulary is a __________________.
	List of drugs approved for coverage by the managed care plan

Think About It

What administrative or patient care techniques might be used to manage care and maximize revenue in a practice that has many capitation contracts?

The medical group might hire its own utilization management staff to facilitate discharge planning and to suggest less expensive care alternatives. Physicians might manage problems by phone more frequently. Preventative activities like flu vaccine administration would be encouraged. The practice might develop a disease management program to educate patients and to avoid medical crises.

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