Green_UHI_2022_PPT_Ch05.pptx

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Michelle A. Green, Understanding Health Insurance: A Guide to Billing and Reimbursement, 2022, Seventeenth Edition, © 2023 Cengage. All
Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1
Chapter 5
Legal Aspects of Health
Insurance and Reimbursement
Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

2
Chapter Objectives
By the end of this chapter, you should be able to:
5.1 Define key terms related to legal aspects of health insurance and
reimbursement.
5.2 Identify sources of laws and regulations related to health care reimbursement.
5.3 Summarize federal legislation and regulations affecting health care.
5.4 Explain how record retention is determined.
5.5 Describe health care audit and compliance programs.
5.6 Explain the provisions of HIPAA legislation.

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Chapter Outline
• Overview of Laws and Regulations
• Federal Laws and Events that Affect Health Care
• Retention of Records
• Health Care Audit and Compliance Programs
• Health Insurance Portability and Accountability Act (HIPAA)

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Introduction
• Health insurance specialist must be knowledgeable about laws and
regulations for
• Maintaining patient records
• Processing health insurance claims
• Health insurance processing is impacted by
• Legal and regulatory terminology
• Laws and regulations

5
Knowledge Check Activity 5.1
1) What legal and regulatory terms are you most familiar with, as you begin
learning the content of this chapter?
2) Which laws and regulations that impact health insurance processing can you
easily explain?
Hint: Review the list of key terms at the beginning of the chapter to select (1)
legal and regulatory terms that you can define and (2) laws and regulations that
you can explain.

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Knowledge Check Activity 5.1: Answer
• This chapter contains many legal and regulatory terms that are defined and for
which examples are provided.
• Laws and regulations that impact health insurance processing are also included
in the chapter.
• You are encouraged to create “flash cards” using 3×5 index cards by writing key
terms on one side and definitions on the reverse. You may want to separate the
stack of cards into the legal, regulatory, laws, and regulations topics.

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Overview of Laws and Regulations
• Statute (statutory law)
• Regulation (regulatory law)
• Case law (common law)
• Precedent
• Civil law
• Criminal law
• Subpoena
• Subpoena duces tecum
• Deposition
• Interrogatory
• Qui tam
• Federal Register
• CMS transmittals
• CMS Internet-only manual
• CMS Online Manual System
• Medicare administrative
contractor (MAC)
• Listserv
• Conditions of Participation (CoP)
• Conditions for Coverage (CfC)
• Deeming

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What is the topic of this CMS transmittal?

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What is the topic of this CMS transmittal?
The International Classification of Diseases, 10th Revision (ICD-10) and Other
Coding Revisions to National Coverage Determination (NCDs) is the topic of this
CMS transmittal.

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Federal Laws and Events that
Affect Health Care
• Health care industry is heavily
regulated by:
• Federal legislation
• State legislation, which
varies state-by-state and
must be researched
individually
• Example: New York State
law restricts the cost of
copying patient records to
75 cents per page.

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What do you think about the 1135 waivers that were activated during the COVID-
19 pandemic, which allowed nurses and physicians to travel to other states to
provide health care services in shortage areas and to relieve other nurses and
physician due to what was termed combat fatigue.

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• During the COVID-19 pandemic, nurses and physicians traveled to other states
to provide health care services in shortage areas and to relieve other nurses and
physicians due to what was termed combat fatigue.
• For example, the 1135 waivers facilitated this process in Massachusetts where
licensed, out-of-state medical professionals were provided with a Massachusetts
license to practice within one day.
• For example, in Colorado, state regulators allowed licensed medical
professionals from another state to immediately begin working in their state.

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Retention of Records
• Record retention: storage of documentation for established period of time
• Mandated by federal and/or state law
• Purpose is to ensure the availability of records for use by government
agencies and other third parties
• CMS and HIPAA mandate retention of records

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• In South Dakota, patient records maintained by a medical practice must be
retained until the records have become inactive, such as for patients for whom
the whereabouts are unknown to the physician. Thus, a medical practice in
South Dakota must retain patient records for
a. 5 years
b. 6 years
c. 7 years
d. 10 years

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• In South Dakota, patient records maintained by a medical practice must be
retained until the records have become inactive, such as for patients for whom
the whereabouts are unknown to the physician. Thus, a medical practice in
South Dakota must retain patient records for
b. 6 years

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Health Care Audit and Compliance Programs
• Ensure integrity of government health programs by
• Combating fraud, waste, abuse, and finding and correcting improper
payments
• Coordinating intelligence sharing among investigators, agents, prosecutors,
analysts, and policymakers
• Facilitating coordination and cooperation among providers to improve quality
of care and reduce unnecessary costs
• Detecting inappropriate codes submitted on claims and eliminating improper
coding practices
• Compliance program: internal policies and procedures that an organization
follows to meet mandated requirements

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Compliance Programs
• Guidance identifies four specific compliance risk areas for physicians:
• Proper coding and billing
• Ensuring that services are reasonable and necessary
• Proper documentation
• Avoiding improper inducements, kickbacks, and self-referrals

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Medicare Integrity Program
• Mandated by HIPAA to combat fraud, waste, and abuse
• Medical Review (MR) conducted by MACs to:
• Review claims to determine whether services provided are medically
reasonable and necessary
• Follow up on effectiveness of previous corrective actions
• Targeted Probe and Educate Process for Medical Review: MACs assist
providers and suppliers with reducing claim denials and appeals

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Medicaid Integrity Program
• Mandated by Deficit Reduction Act of 2005 to combat fraud, waste, and abuse
• Includes the Payment Error Rate Measurement (PERM) program, which
measures improper payments in the Medicaid program and the Children’s
Health Insurance Program
• Medicaid Fraud Control Units: investigate and prosecute Medicaid provider
fraud and patient abuse/neglect

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Recovery Audit Contractor Program
• Find and correct improper
Medicare payments
• Overpayments
• Underpayments
• Five regions

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Health Care Fraud Prevention and
Enforcement Action Team
• Joint effort between DHHS and DOJ to fight health care fraud by increasing:
• Coordination and intelligence sharing among agencies
• Training among investigators, agents, prosecutors, analysts, and
policymakers
• Medicare Strike Force teams: interagency teams of analysts, investigators, and
prosecutors who target emerging or migrating fraud schemes, including fraud by
criminals masquerading as health care providers or suppliers

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Medicare Shared Savings Program
• Established to improve quality of patient care and reduce unnecessary costs
• Promotes accountability for patient care
• Requires coordinated care of services
• Encourages investment in infrastructure and redesigned care processes

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Reducing Overpayments Program
• Overpayments: funds a provider or beneficiary receives in excess of amounts
due and payable under Medicare and Medicaid statutes and regulations
• 60-day overpayment rule: requires providers to report and return overpayments
within 60 days of identification or be subject to civil monetary penalties and
exclusion from federal health care programs, such as Medicare
• Overpayment demand letter: information about review and statistical sampling
methodology used, as well as corrective actions the provider can take

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National Correct Coding Initiative Program
• Reduces Medicare expenditures by
• Detecting in inappropriate codes submitted on claims
• Denying payment for inappropriate codes submitted on claims
• Promoting national correct coding methodologies
• Eliminating improper coding practices
• Denying claims as a result of
• NCCI procedure-to-procedure edits
• Medically unlikely edits
• Add-on code edits

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• What ways can you think of that health care audit and compliance programs
ensure the integrity and financial viability of government health care programs?

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Health care audit and compliance programs have been established by the
Department of Health and Human Services (DHHS) to ensure the integrity of
government health care programs by:
• Combating fraud, waste, and abuse, and finding and correcting improper
payments (e.g., overpayments)
• Coordinating intelligence sharing among investigators, agents, prosecutors,
analysts, and policymakers
• Facilitating coordination and cooperation among providers to improve quality
of care and reduce unnecessary costs
• Detecting inappropriate codes submitted on claims and eliminating improper
coding practices

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Health Insurance Portability and
Accountability Act (HIPAA)
• In 1996, Congress passed HIPAA due to fraud and abuse concerns
• Federal False Claims Act: provides CMS with regulatory authority to enforce fraud and
abuse statutes for all government health programs
• Amended Internal Revenue Code of 1986 to
• Improve portability and continuity of health insurance coverage in group/individual
markets
• Combat waste, fraud, and abuse in health insurance and health care delivery
• Promote use of medical savings accounts
• Improve access to long-term care services and coverage
• Simplify administration of health insurance
• Create standards for electronic health information transactions
• Create privacy and security standards for health information

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HIPAA Provisions

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HIPAA defines fraud as “an intentional deception or misrepresentation that
someone makes, knowing it is false, that could result in an unauthorized
payment.”
• What are the examples of HIPAA fraud?
• What are the consequences of HIPAA fraud?

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Examples of Fraud Possible Outcomes of Fraud
• Accepting or soliciting bribes, kickbacks, and rebates
• Altering claims to increase reimbursement
• Billing for services or supplies not provided
• Misrepresenting codes to justify payment (e.g., upcoding)
• Entering a health insurance identification number other
than the patients to ensure reimbursement
• Falsifying certificates of medical necessity, plans of
treatment, and patient records to justify payment
• Billing noncovered services as covered services
• Billing or claim processing errors
• Reporting duplicative charges on a claim
• Charging excessively for services, equipment, and
supplies
• Improper billing that results in payment by a government
program when another payer is responsible
• Submitting claims for services not medically necessary
• Violating participating provider agreements with third-party
payers
• Administrative sanctions
• Civil monetary penalties
• Exclusion from the health program (e.g., Medicare)
• Referral to the Office of Inspector General:
• Exclusion from Medicare program
• Sanctions and civil monetary penalties
• Criminal penalties (e.g., fines, incarceration, loss of
license to practice, restitution, seizure of assets)
• Education
• Referral for Medical Review:
• Prepayment review of submitted claims
• Post-payment review (audit) of submitted claims
• Recoup overpaid funds:
• Provider refunds payer
• Payment is withheld from future processed claims
• Suspension of payer payments (e.g., MAC holds checks)
• Warnings

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Self-Assessment
• Which federal legislation do you believe has had the most significant impact on
health insurance and reimbursement?
• What are the patient record retentions laws in your state?
• How has HIPAA legislation changed access to health insurance, prevention of
fraud and abuse, and administration simplification?
• What is the major difference between HIPAA’s Security Rule and Privacy Rule?

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Summary
Now that the lesson has ended, you should have learned how to:
• Define key terms related to legal aspects of health insurance and
reimbursement.
• Identify sources of laws and regulations related to health care reimbursement.
• Summarize federal legislation and regulations affecting health care.
• Explain how record retention is determined.
• Describe health care audit and compliance programs.
• Explain the provisions of HIPAA legislation.

Green_UHI_2022_PPT_Ch05.pptx

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