NHA Medical Billing & Coding (CBCS) — All Questions

The CMS-1500 claim form is used primarily to bill for:

• a.Professional services rendered by physicians and other non-institutional providers✓
• b.Inpatient hospital facility charges
• c.Pharmacy prescriptions filled at a retail counter
• d.Ambulance mileage only

The CMS-1500 is the standard paper claim form for physician and other professional (non-institutional) services submitted to Medicare, Medicaid, and many commercial payers. Its electronic equivalent is the 837P transaction. Institutional charges, such as hospital facility fees, are billed on the UB-04 instead.

The UB-04 (CMS-1450) claim form is used to bill for:

• a.Individual physician office visits only
• b.Durable medical equipment sold at retail
• c.Dental cleanings
• d.Institutional and facility services such as hospital and skilled nursing care✓

The UB-04, also called the CMS-1450, is the standard claim form for institutional providers such as hospitals, skilled nursing facilities, and home health agencies. Its electronic counterpart is the 837I transaction. It captures facility-specific data such as revenue codes and type-of-bill codes not found on the CMS-1500.

A 'clean claim' is best defined as a claim that:

• a.Contains all required, accurate information and can be processed without additional data from the provider✓
• b.Includes only the diagnosis codes without procedure codes
• c.Has been denied and resubmitted at least once
• d.Is submitted on paper rather than electronically

A clean claim has no defects, errors, or missing information and does not require the payer to seek additional documentation to adjudicate it. Clean claims are paid faster and are central to healthy cash flow. Scrubbing claims before submission increases the clean-claim rate.

Claim 'scrubbing' refers to the process of:

• a.Negotiating fees with the insurance company
• b.Deleting a patient's record after payment
• c.Reviewing claims for errors and missing data before submission to reduce rejections and denials✓
• d.Manually mailing claims to payers

Scrubbing is the automated or manual review of claims to catch coding errors, missing fields, and formatting problems before they reach the payer. Correcting issues upfront improves the clean-claim rate and speeds reimbursement. Scrubber software often flags NCCI edit conflicts and invalid code combinations.

A remittance advice (RA) or explanation of benefits (EOB) is a document that:

• a.Requests prior authorization for a service
• b.Lists the provider's entire fee schedule
• c.Serves as the patient's insurance card
• d.Explains how a claim was adjudicated, including payments, adjustments, and denials✓

A remittance advice (sent to the provider) or explanation of benefits (sent to the patient) details how each claim line was processed, showing amounts allowed, paid, adjusted, and any patient responsibility. Billers use the RA to post payments and identify denials for follow-up. Reason and remark codes on the RA explain adjustments.

When a claim is denied, the first appropriate step for a billing specialist is usually to:

• a.Resubmit the identical claim without changes
• b.Bill the entire amount to the patient
• c.Immediately write off the balance
• d.Review the denial reason on the remittance advice to determine the cause✓

Understanding why a claim was denied is essential before taking corrective action; the remittance advice provides reason and remark codes that explain the denial. Some denials require correcting and resubmitting the claim, while others require a formal appeal. Blindly resubmitting an unchanged claim usually results in another denial.

The difference between a claim rejection and a claim denial is that a rejection:

• a.Can never be corrected
• b.Only happens with paper claims
• c.Always results in full payment
• d.Occurs before adjudication due to errors and can be corrected and resubmitted, while a denial occurs after the payer processes the claim✓

A rejected claim never entered the payer's adjudication system, typically because of missing or invalid data, and can be fixed and resubmitted as a new claim. A denied claim was processed but payment was refused, and it generally must be appealed or corrected through the payer's formal process. Distinguishing the two guides the correct follow-up path.

Medicare Part A primarily covers:

• a.Physician office visits
• b.Vision and dental care
• c.Inpatient hospital, skilled nursing facility, hospice, and some home health care✓
• d.Outpatient prescription drugs

Medicare Part A is hospital insurance covering inpatient hospital stays, skilled nursing facility care, hospice, and limited home health services. Part B covers outpatient and physician services, and Part D covers prescription drugs. Knowing which part applies is essential for correct claim routing.

Medicare Part B primarily covers:

• a.Inpatient hospital room and board only
• b.Physician services, outpatient care, preventive services, and durable medical equipment✓
• c.All prescription drugs picked up at a pharmacy
• d.Long-term custodial nursing home care

Medicare Part B is medical insurance covering physician services, outpatient hospital care, preventive services, laboratory tests, and durable medical equipment. Beneficiaries typically pay a monthly premium and an annual deductible, then coinsurance. Part B is the source of most professional-service claims billed on the CMS-1500.

Medicare Part C is also known as:

• a.The Medicare prescription drug benefit only
• b.Medicare Advantage, offered through private plans that bundle Parts A and B and often D✓
• c.Original fee-for-service Medicare
• d.Medicaid for low-income beneficiaries

Medicare Part C, or Medicare Advantage, is offered by private insurers approved by Medicare and combines the benefits of Parts A and B, frequently adding drug coverage and extra benefits. These plans may have their own networks and prior-authorization rules. Claims for Part C members go to the private plan, not directly to traditional Medicare.

Medicare Part D provides coverage for:

• a.Skilled nursing facility stays
• b.Inpatient surgery
• c.Emergency ambulance transport
• d.Outpatient prescription drugs✓

Medicare Part D is the outpatient prescription drug benefit, offered through private plans that contract with Medicare. Beneficiaries choose a stand-alone drug plan or receive drug coverage bundled in a Medicare Advantage plan. Formularies and cost-sharing tiers vary by plan.

Medicaid is a program that is:

• a.Available only to people over age 65 regardless of income
• b.Jointly funded by federal and state governments to serve eligible low-income individuals, with state-specific rules✓
• c.Funded solely by the federal government with uniform rules nationwide
• d.A private commercial insurance plan

Medicaid is a joint federal-state program providing coverage to qualifying low-income individuals and families, with eligibility and benefits varying by state. When a patient has both Medicare and Medicaid, Medicaid is generally the payer of last resort. Billers must follow each state's specific Medicaid guidelines.

Workers' compensation insurance covers:

• a.Job-related injuries and illnesses arising out of employment✓
• b.Routine preventive care unrelated to work
• c.Cosmetic procedures
• d.A patient's dependents' medical care

Workers' compensation is a state-regulated program that pays for medical care and lost wages when an employee is injured or becomes ill because of their job. Claims are billed to the workers' compensation carrier, not the patient's health plan. These claims often require an injury date, employer information, and a claim number.

TRICARE is the health program that covers:

• a.Only civilian federal employees
• b.Active-duty and retired members of the uniformed services and their families✓
• c.Low-income adults under Medicaid expansion
• d.Railroad retirees exclusively

TRICARE provides health coverage for active-duty service members, retirees, and their eligible family members and survivors. It offers several plan options with differing cost shares and network rules. Billers must verify the specific TRICARE plan and follow its authorization and filing requirements.

Coordination of benefits (COB) is the process used to:

• a.Assign CPT modifiers
• b.Determine the patient's diagnosis
• c.Determine the order in which multiple insurance plans pay when a patient has more than one coverage✓
• d.Set the provider's charge for a service

Coordination of benefits establishes which plan is primary and which is secondary when a patient is covered by more than one policy, preventing duplicate payment beyond the total charge. The primary plan pays first, and the secondary may cover remaining allowed amounts. Correct COB prevents overpayment and reduces denials.

Under the 'birthday rule' for coordinating benefits on a dependent child covered by both parents' plans, the primary plan is generally the one belonging to the parent whose:

• a.Employer is largest
• b.Birthday falls earlier in the calendar year✓
• c.Policy is the most expensive
• d.Coverage started most recently

The birthday rule states that when a child is covered under both parents' plans, the plan of the parent whose birthday (month and day) comes first in the calendar year is primary. The year of birth is not considered. This common COB rule helps payers consistently decide the order of payment.

Timely filing limits refer to:

• a.The waiting period before coverage begins
• b.The time a provider has to see a patient
• c.The number of days a patient has to pay a bill
• d.The deadline by which a claim must be submitted to the payer to be considered for payment✓

Each payer sets a timely filing limit, the maximum time after the date of service within which a claim must be received. Claims submitted after the deadline are typically denied, and the balance often cannot be billed to the patient. Tracking these limits is essential to avoid preventable revenue loss.

On the CMS-1500 form, the National Provider Identifier (NPI) is used to:

• a.Uniquely identify the rendering or billing provider✓
• b.Record the date the claim was paid
• c.Identify the patient's diagnosis
• d.List the patient's copayment

The NPI is a standardized ten-digit identifier assigned to covered health care providers and required on claims to identify the billing and rendering providers. It replaced older, payer-specific provider numbers. Missing or invalid NPIs are a common cause of claim rejections.

The electronic equivalent of the paper CMS-1500 professional claim is the:

• a.835 remittance transaction
• b.837I transaction
• c.270 eligibility inquiry
• d.837P transaction✓

The 837P is the HIPAA standard electronic transaction for professional claims, corresponding to the paper CMS-1500. The 837I is the institutional version corresponding to the UB-04, and the 835 is the electronic remittance advice. Using the correct transaction format is required for electronic data interchange with payers.

Prior authorization (precertification) is:

• a.A patient's written consent to treatment
• b.Approval obtained from the payer before a service to confirm it will be covered✓
• c.Payment made before a service
• d.The final step after a claim is paid

Prior authorization is the payer's advance approval that a planned service or item is medically necessary and covered, often required for imaging, surgeries, and certain drugs. Failing to obtain required authorization commonly leads to denial. It is separate from, and does not guarantee, final payment.

Verifying a patient's insurance eligibility before the visit helps to:

• a.Increase the provider's fee schedule
• b.Confirm active coverage and benefits, reducing the risk of denials✓
• c.Eliminate the need for coding
• d.Change the patient's diagnosis

Eligibility verification confirms that the patient has active coverage, identifies the plan's benefits, and reveals copay, deductible, and authorization requirements before services are rendered. Doing this upfront prevents avoidable denials and helps collect patient responsibility. The HIPAA 270/271 transactions support electronic eligibility inquiries and responses.

The 'place of service' code on a professional claim indicates:

• a.The patient's home address
• b.The provider's specialty
• c.The amount the payer will reimburse
• d.The setting where the service was provided, such as office, hospital, or telehealth✓

The place of service code tells the payer where the service occurred, such as an office, inpatient hospital, emergency department, or the patient's home. It affects reimbursement because payment can vary by setting. An incorrect place of service code can cause denials or incorrect payment.

Which item is generally required for a clean professional claim?

• a.Valid diagnosis and procedure codes with supporting patient and insurance information✓
• b.A photograph of the patient
• c.The provider's personal bank account number
• d.The patient's employer performance review

A clean claim requires accurate patient demographics, insurance information, provider identifiers, and valid diagnosis and procedure codes that support medical necessity. Missing or mismatched data is a leading cause of rejections. Verifying these elements before submission maximizes first-pass acceptance.

An appeal of a denied claim is:

• a.A formal request asking the payer to reconsider its decision, often with supporting documentation✓
• b.A way to increase the fee schedule
• c.A request to change the patient's diagnosis
• d.An automatic payment reversal

An appeal is the provider's formal challenge to a payer's adverse determination, typically supported by medical records, corrected coding, or a letter of medical necessity. Payers set deadlines and levels for appeals that must be followed. A well-documented appeal can overturn denials for services that were actually covered.

The term 'assignment of benefits' means that the patient:

• a.Assigns their deductible to another patient
• b.Transfers the claim to a collection agency
• c.Authorizes the insurance payment to go directly to the provider✓
• d.Waives all coverage

Assignment of benefits is the patient's authorization directing the insurer to pay the provider directly rather than reimbursing the patient. It is commonly documented at registration and referenced on the claim. Without it, payment may be sent to the patient, complicating collection.

When Medicare is the secondary payer (MSP), it means that:

• a.Medicare always pays first
• b.Another insurer is responsible for paying before Medicare✓
• c.The claim cannot be submitted electronically
• d.The patient has no other coverage

Medicare Secondary Payer rules apply when another payer, such as an employer group health plan or a liability insurer, has primary responsibility. In those cases the primary payer is billed first, and Medicare may then consider the remaining balance. Correctly identifying the primary payer prevents improper billing to Medicare.

A superbill (encounter form) is used to:

• a.Capture the diagnoses, procedures, and charges from a patient encounter for claim creation✓
• b.Serve as the patient's insurance card
• c.Record the payer's remittance
• d.Authorize a surgery

A superbill documents the services provided during a visit, including diagnosis and procedure codes and charges, and serves as the source document for generating the claim. Accurate superbills reduce coding errors and support timely billing. Many practices now generate this information electronically within the practice management system.

Which of the following would most likely cause a claim to be rejected at the clearinghouse before reaching the payer?

• a.Accurate patient demographics
• b.An invalid or missing subscriber identification number✓
• c.A correctly matched diagnosis and procedure
• d.A valid, active NPI

Clearinghouses perform front-end edits and will reject claims with missing or invalid data such as an incorrect subscriber ID, invalid NPI, or format errors before the claim reaches the payer. These rejections can be corrected and resubmitted quickly. Catching errors at this stage is faster than resolving a payer denial.

A clearinghouse in the billing workflow functions to:

• a.Set the patient's copayment amounts
• b.Provide medical treatment
• c.Receive claims from providers, check and format them, then route them to the appropriate payers✓
• d.Assign diagnosis codes to encounters

A clearinghouse is an intermediary that accepts electronic claims from providers, scrubs and standardizes them into the required format, and forwards them to the correct payers. It also returns rejection reports so errors can be fixed quickly. Using a clearinghouse streamlines electronic submission to many payers at once.

On the CMS-1500 claim, diagnosis codes are linked to each service line by:

• a.Using diagnosis pointers that connect each procedure to the diagnosis that justifies it✓
• b.Writing them in the remittance advice
• c.Placing them only on the UB-04
• d.Listing the codes in random order

The CMS-1500 uses diagnosis pointers to associate each billed procedure line with the specific diagnosis that supports its medical necessity. Proper linkage demonstrates why each service was needed and helps prevent medical-necessity denials. Mispointed or missing links are a common cause of claim rejections.

In the medical billing revenue cycle, the step that occurs first, before a claim can be created, is:

• a.posting of the insurance payment
• b.patient registration and insurance verification✓
• c.adjudication of the claim by the payer in every billing situation without exception
• d.appeal of a denied claim

The revenue cycle begins at the front end with scheduling, registration, and insurance verification, before charge capture, coding, claim submission, adjudication, and payment posting.

Claim 'adjudication' is the process by which:

• a.the clearinghouse formats the claim
• b.the provider assigns the diagnosis codes in every billing situation without exception
• c.the patient selects an insurance plan
• d.the payer reviews the claim and decides to pay, deny, or reduce it✓

Adjudication is the payer's determination that applies benefits, edits, and medical-necessity rules to pay, deny, or adjust each claim line. The results are reported on the remittance advice.

The HIPAA electronic transaction used to submit institutional (facility) claims, corresponding to the UB-04, is the:

• a.837I✓
• b.270 eligibility inquiry
• c.835 remittance
• d.837P

The 837I is the institutional claim transaction that corresponds to the paper UB-04. The 837P is the professional version for the CMS-1500, and the 835 is the electronic remittance advice.HIPAA

The HIPAA 835 transaction is used to transmit:

• a.electronic remittance advice and payment information from payer to provider✓
• b.a prior authorization request
• c.the professional claim from provider to payer in every billing situation without exception
• d.an eligibility and benefit inquiry

The 835 is the electronic remittance advice, detailing payments and adjustments. It is often paired with electronic funds transfer for automated payment posting.HIPAA

The paired HIPAA transactions 270 and 271 are used respectively for:

• a.an eligibility inquiry and the payer's response✓
• b.a prior authorization request and response
• c.a claim status request and response
• d.a claim and its remittance advice

The 270 is an eligibility and benefit inquiry and the 271 is the payer's response. The 276 and 277 handle claim status, and the 278 handles prior authorization.HIPAA

To electronically check the status of a submitted claim, a provider uses the HIPAA:

• a.270 and 271 transactions
• b.276 inquiry and 277 response transactions✓
• c.820 premium payment transaction in every billing situation without exception
• d.834 enrollment transaction

The 276 is a claim status request and the 277 is the response. The 834 handles enrollment, and the 820 handles premium payments.HIPAA

The HIPAA 278 transaction is used for:

• a.electronic remittance advice
• b.prior authorization and referral requests and responses✓
• c.enrollment of members in a health plan in every billing situation without exception
• d.submission of a professional claim

The 278 is the health care services review transaction, used for prior authorization and referral certification requests and responses.HIPAA

The current HIPAA-mandated standard format governing electronic health care claim transactions is known as:

• a.ASC X12 version 5010✓
• b.the National Drug Code
• c.CPT Category III
• d.ICD-10-CM

HIPAA electronic transactions use the ASC X12 version 5010 standards. Code sets such as ICD-10-CM and CPT populate the data, but the transaction format itself is X12 5010.HIPAA

On the CMS-1500 (02/12) claim form, Item 21 requires an ICD indicator to show:

• a.the number of service lines on the claim
• b.the billing provider's NPI
• c.the place of service
• d.which diagnosis code set is being reported✓

Item 21 holds the diagnosis codes plus an ICD indicator that identifies the code set version, such as ICD-10-CM, and can list up to twelve diagnoses.

Item 24 of the CMS-1500 claim form is where the biller enters:

• a.the dates of service, procedure codes, modifiers, charges, and units✓
• b.the patient's insurance policy number in every billing situation without exception
• c.the referring provider's name
• d.the notice of privacy practices

Item 24 contains up to six service lines with dates of service, place of service, procedure codes, modifiers, diagnosis pointers, charges, and units.

Item 33 of the CMS-1500 form identifies the:

• a.patient's employer
• b.billing provider's name, address, and NPI✓
• c.rendering diagnosis
• d.date of the accident in every billing situation without exception

Item 33 records the billing provider information, including the NPI, identifying who is to be paid. Item 32 records the service facility location.

The referring or ordering provider's name is entered in which area of the CMS-1500 form?

• a.Item 21, the diagnosis box
• b.Item 24J, the rendering provider box
• c.Item 33, the billing provider box
• d.Item 17, with the provider's NPI in 17b✓

Item 17 captures the referring or ordering provider's name, with the NPI in 17b. It is required for services that must be ordered or referred, such as labs, imaging, and durable medical equipment.

Item 27 of the CMS-1500 form, labeled 'Accept Assignment?', indicates whether the provider:

• a.is the patient's primary care provider in every billing situation without exception
• b.agrees to accept the payer's allowed amount as payment in full✓
• c.has obtained prior authorization
• d.will submit the claim electronically

Marking 'yes' in Item 27 means the provider accepts assignment, agreeing to the payer's allowed amount and billing the patient only for applicable cost-sharing.

On the UB-04 institutional claim, revenue codes are used to identify:

• a.the patient's principal diagnosis in every billing situation without exception
• b.the type of insurance plan
• c.the accommodation or department where a service was provided✓
• d.the referring physician

Revenue codes are four-digit codes on the UB-04 that identify the cost center or department, such as room and board, pharmacy, or laboratory. They often pair with a HCPCS or CPT code.

The 'type of bill' code on the UB-04 claim indicates:

• a.the facility type, bill classification, and claim frequency✓
• b.the ordering provider's NPI
• c.the diagnosis pointer
• d.the patient's copayment amount in every billing situation without exception

The type-of-bill code identifies the facility type, the kind of care, and the claim frequency, such as an original or a corrected claim. It is specific to institutional billing.

When resubmitting a corrected electronic claim to replace one already processed, the biller typically indicates this using a:

• a.second notice of privacy practices in every billing situation without exception
• b.new National Provider Identifier
• c.modifier 76
• d.claim frequency code identifying it as a replacement✓

A claim frequency code, such as 7 for a replacement or 8 for a void, tells the payer the claim corrects or voids a prior one, which prevents a duplicate-claim denial.

On a remittance advice, a Claim Adjustment Reason Code (CARC) explains:

• a.the date of service
• b.the provider's tax identification number in every billing situation without exception
• c.the patient's principal diagnosis
• d.why a claim or line was paid differently than billed✓

CARCs give the reason for a payment adjustment or denial. Remark codes, or RARCs, provide supplemental explanation. Billers use both to determine the correct follow-up.

A Remittance Advice Remark Code (RARC) is used to:

• a.set the payer's fee schedule
• b.identify the rendering provider in every billing situation without exception regardless of what the medical record documents
• c.provide additional explanation that supplements a claim adjustment reason code✓
• d.assign the CPT procedure code

RARCs supplement CARCs with more detail about an adjustment or convey information about the claim. Together the two code types guide correction or appeal.

The first level of appeal in the Medicare fee-for-service claims process is a:

• a.reconsideration by a Qualified Independent Contractor
• b.redetermination by the Medicare Administrative Contractor✓
• c.hearing before an Administrative Law Judge
• d.review by the Medicare Appeals Council

The Medicare appeal levels are redetermination by the MAC, reconsideration by a Qualified Independent Contractor, an Administrative Law Judge hearing, Appeals Council review, and federal court.CMS

In the Medicare appeals process, the second level, following a redetermination, is a:

• a.review by a federal district court
• b.redetermination by the Medicare Administrative Contractor
• c.reconsideration performed by a Qualified Independent Contractor✓
• d.peer review by the provider's own staff

The reconsideration, performed by a Qualified Independent Contractor, is the second level of Medicare appeal. Each level has its own filing deadline and required forms.CMS

When a claim was denied because of a simple coding or data error, the appropriate action is usually to:

• a.file a formal first-level appeal immediately
• b.submit a corrected claim✓
• c.bill the patient the full charge
• d.write off the entire balance

Straightforward errors, such as a wrong modifier or a transposed identification number, are fixed with a corrected claim. Formal appeals are reserved for disputes over payment decisions like medical necessity.

A Local Coverage Determination or National Coverage Determination specifies:

• a.when Medicare considers a service medically necessary✓
• b.the clearinghouse's editing rules
• c.the patient's monthly premium amount in every billing situation without exception
• d.the provider's malpractice coverage

National and Local Coverage Determinations define coverage and medical-necessity criteria, including which diagnosis codes support a service. Claims that do not meet them are denied, and an ABN may be indicated.CMS

In a health maintenance organization, a patient typically must obtain a referral from a primary care physician before:

• a.seeing a specialist for covered care✓
• b.paying the monthly premium in every billing situation without exception
• c.filling any prescription
• d.receiving emergency care

HMOs use a primary care physician as a gatekeeper who must refer the patient for specialist care. Care obtained without a required referral may be denied, though emergency care is an exception.

Compared with a health maintenance organization, a preferred provider organization generally:

• a.requires a referral for every specialist visit in every billing situation without exception
• b.pays providers by capitation only
• c.covers only in-network care with no exceptions
• d.allows out-of-network care at higher cost and needs no referral✓

A preferred provider organization offers more flexibility than an HMO, with no gatekeeper referral required and out-of-network coverage available at a higher cost share.

An exclusive provider organization is characterized by:

• a.having no provider network at all
• b.full coverage of out-of-network care
• c.coverage limited to in-network providers, usually without referrals✓
• d.payment of providers only by capitation in every billing situation without exception

An exclusive provider organization covers only in-network providers, except in emergencies, but typically does not require primary care referrals, falling between an HMO and a PPO in flexibility.

A traditional indemnity (fee-for-service) health plan is best described as one that:

• a.lets the insured use any provider and reimburses part of covered charges✓
• b.pays providers a fixed monthly capitation
• c.restricts care to a closed network with a gatekeeper in every billing situation without exception
• d.covers only preventive services

Indemnity plans allow free choice of provider and reimburse a percentage of covered services after a deductible, with no network restrictions. These plans are less common today.

A Medicare 'crossover' claim is one that Medicare automatically forwards to:

• a.the clearinghouse for scrubbing
• b.the patient's secondary payer, such as Medicaid or a Medigap plan✓
• c.the referring provider
• d.the Office of Inspector General for audit in every billing situation without exception

After processing, Medicare crosses the claim over to the secondary or supplemental payer through a coordination-of-benefits agreement, so the provider does not have to bill the secondary separately.

A Medigap policy is:

• a.a Medicaid managed-care plan
• b.private supplemental insurance that helps cover Original Medicare cost-sharing✓
• c.the Medicare prescription drug benefit in every billing situation without exception
• d.a replacement for Medicare Part A

Medigap, or Medicare Supplement, plans are sold by private insurers to pay some of the deductibles, coinsurance, and copays left by Original Medicare.

When a patient has both Medicaid and another form of health coverage, Medicaid is generally:

• a.the payer of last resort, billed after all other payers✓
• b.billed at the same time as the primary in every billing situation without exception
• c.always the primary payer
• d.excluded from paying anything

By law, Medicaid is typically the payer of last resort. Other liable payers must be billed first, and Medicaid then considers any remaining balance.

Under a capitated managed-care contract, providers still submit claims or encounter data primarily to:

• a.obtain fee-for-service payment for each visit in every billing situation without exception
• b.document the services rendered even though payment is a fixed monthly amount✓
• c.increase the capitation payment per service
• d.avoid submitting any documentation

Even when paid by capitation, providers report encounter data so the plan can track utilization, quality, and risk adjustment. The payment remains the fixed per-member-per-month amount.

A 'participating' provider is one who has:

• a.contracted to accept a payer's allowed amounts as payment in full✓
• b.agreed to waive all patient cost-sharing in every billing situation without exception
• c.opted out of Medicare entirely
• d.chosen not to contract with any payer

A participating provider contracts to accept the payer's allowed amount and bills the patient only for cost-sharing. A non-participating provider has not agreed and may balance-bill within legal limits.

For non-participating providers who do not accept assignment, Medicare sets a 'limiting charge' that:

• a.doubles the allowed amount
• b.caps how much above the fee schedule the patient can be charged✓
• c.eliminates all patient responsibility
• d.applies only to participating providers in every billing situation without exception

The limiting charge, generally 115 percent of the non-participating fee schedule amount, is the most a non-participating, non-assigned provider may bill a Medicare patient, protecting beneficiaries from excessive charges.CMS

State 'prompt payment' laws generally require payers to:

• a.pay or deny clean claims within a specified number of days✓
• b.set the provider's charges
• c.waive the patient's deductible
• d.approve every claim that is submitted in every billing situation without exception

Prompt-payment laws require insurers to process clean claims within a set time, often 30 to 45 days, or owe interest, which incentivizes timely adjudication.

Submitting many claims together at scheduled intervals through a clearinghouse is known as:

• a.real-time adjudication
• b.manual pegboard billing
• c.batch processing✓
• d.capitation payment

Batch processing groups claims for periodic transmission, while real-time transactions such as eligibility inquiries return an immediate response. Most claims are transmitted in batches.

After electronic claims are transmitted, a clearinghouse or payer returns acknowledgment reports, such as the 277CA, so the biller can:

• a.post the insurance payments
• b.verify the patient's deductible in every billing situation without exception
• c.confirm acceptance or identify rejected claims for correction✓
• d.assign the diagnosis codes

Acknowledgment reports such as the TA1, 999, and 277CA tell the biller whether files and claims were accepted or rejected, enabling quick correction before the payer adjudicates.

When billing certain physician-administered drugs, payers may require, in addition to the HCPCS drug code, the:

• a.National Drug Code identifying the exact product✓
• b.provider's DEA number for every drug in every billing situation without exception
• c.patient's Social Security number
• d.revenue code from the UB-04

Many payers require the eleven-digit National Drug Code and its units alongside the HCPCS code to identify the specific drug, manufacturer, and package for accurate pricing and rebates.

A provider taxonomy code reported on a claim identifies the provider's:

• a.daily office hours
• b.malpractice carrier
• c.bank account for payment in every billing situation without exception
• d.type, classification, and area of specialization✓

The taxonomy code is a standardized code that describes the provider's type and specialty. Payers may use it together with the NPI to route and adjudicate claims correctly.

Enrolling for electronic funds transfer with a payer allows the practice to:

• a.avoid coordination of benefits
• b.receive claim payments deposited directly into its bank account✓
• c.increase the payer's allowed amount in every billing situation without exception
• d.bypass the need to submit claims

Electronic funds transfer deposits payments directly into the practice's account, speeding cash flow. It commonly pairs with the 835 electronic remittance advice for automated posting.

When a payer or patient overpays and a credit balance results, the practice is generally required to:

• a.apply it to an unrelated patient's balance
• b.refund the overpayment to the appropriate party promptly✓
• c.keep the overpayment as additional revenue in every billing situation without exception
• d.ignore it until the next external audit

Credit balances, or overpayments, must be refunded to the payer or patient. Retaining a known overpayment can violate the False Claims Act and payer contracts.

A contractual write-off differs from a bad-debt write-off in that a contractual write-off represents:

• a.the payer's share of the coinsurance
• b.an amount the patient refused to pay in every billing situation without exception regardless of what the medical record documents
• c.a fraudulent billing adjustment
• d.the difference between the charge and the allowed amount the provider agreed to accept✓

A contractual write-off comes from the negotiated allowed amount and cannot be billed to the patient. A bad-debt write-off is an amount owed by the patient that proves uncollectible.

Practices often establish a policy to write off very small balances because:

• a.small balances are illegal to collect in every billing situation without exception
• b.patients never owe small amounts
• c.the cost to collect them may exceed the amount owed✓
• d.payers prohibit collecting them

A small-balance write-off policy avoids spending more on statements and collection than the balance is worth. Such policies should be applied consistently and comply with payer rules.

A remittance advice showing a service applied entirely to the patient's deductible means the biller should:

• a.resubmit the same claim unchanged
• b.bill the patient for that amount rather than treat it as a denial✓
• c.appeal the claim as a denial
• d.write the amount off as an adjustment in every billing situation without exception

An allowed service applied to the deductible is patient responsibility, not a denial. The biller transfers the balance to the patient or the secondary payer rather than writing it off or appealing.

A claim denied as a 'duplicate' most commonly occurs when:

• a.the same service, patient, and date was already submitted or paid✓
• b.the provider used the correct modifier in every billing situation without exception
• c.the diagnosis code was too specific
• d.the patient changed insurers

Duplicate denials result from resubmitting an already-processed claim. If a second distinct service truly occurred, an appropriate modifier or documentation distinguishes it from the first.

When billing a secondary payer after the primary has paid, the biller must include:

• a.the provider's income tax return
• b.a new prior authorization number
• c.the primary payer's remittance showing what it paid and adjusted✓
• d.only the patient's demographic information in every billing situation without exception

Secondary claims require the primary payer's remittance data, showing the paid, allowed, and adjusted amounts, so the secondary payer can coordinate benefits and determine its payment.

Verifying eligibility before a visit also allows the front-desk staff to identify the patient's:

• a.copay, deductible status, and referral or authorization requirements✓
• b.prior surgical history
• c.provider's fee schedule
• d.principal diagnosis code in every billing situation without exception

Eligibility responses reveal active coverage plus benefit details such as copay, remaining deductible, coinsurance, and any authorization or referral needs, which supports accurate collection at the time of service.

A referral differs from a prior authorization in that a referral is primarily:

• a.a guarantee of full payment for surgery
• b.the payer's confirmation that a specific service is medically necessary
• c.a primary care physician's approval for the patient to see another provider✓
• d.a code set used on the UB-04

A referral, common in HMOs, authorizes the patient to see another provider such as a specialist. A prior authorization confirms a specific service or item will be covered. Some care requires both.

'Charge capture' in the billing process refers to:

• a.recording all billable services and supplies so none are missed on the claim✓
• b.collecting the copay at check-out in every billing situation without exception
• c.posting the insurance payment
• d.appealing a denied claim

Charge capture ensures every service and supply is documented and coded for billing. Missed charges mean lost revenue, so charge capture links the clinical documentation to the claim.

A hospital's 'chargemaster' (charge description master) is:

• a.the patient's complete medical record in every billing situation without exception
• b.the payer's contracted fee schedule
• c.a master list of all billable items and their standard charges✓
• d.a report of all denied claims

The chargemaster is the facility's comprehensive list of billable services and supplies with codes and prices. Accurate maintenance of it is essential for correct institutional billing.

The main purpose of insurance accounts-receivable follow-up is to:

• a.verify eligibility for future visits in every billing situation without exception
• b.assign new diagnosis codes
• c.resolve unpaid or underpaid claims and reduce days in accounts receivable✓
• d.set the chargemaster prices

Accounts-receivable follow-up works aged, unpaid, or underpaid claims by appealing, correcting, or rebilling, to collect owed revenue and lower the average number of days claims remain outstanding.

A rising 'days in accounts receivable' metric generally signals that:

• a.the practice is collecting faster than before in every billing situation without exception
• b.patient volume has dropped sharply
• c.claims are taking longer to be paid, suggesting billing problems✓
• d.the fee schedule has increased

Days in accounts receivable measures the average time to collect. An increase suggests slower payment, more denials, or follow-up gaps that need attention.

Best practice for patient collections is to send statements:

• a.before the claim is submitted to insurance
• b.only after the balance exceeds one thousand dollars in every billing situation without exception
• c.only once per calendar year
• d.promptly and at regular intervals after insurance has adjudicated the claim✓

Timely, regular statements sent after the insurer processes the claim improve patient collections. Sending a statement before adjudication risks billing the patient an incorrect amount.

When a practice uses an outside agency to collect patient debts, the process is governed by:

• a.the HIPAA transaction standards only in every billing situation without exception
• b.the anesthesia payment formula
• c.the Fair Debt Collection Practices Act and applicable state laws✓
• d.the CPT codebook

The Fair Debt Collection Practices Act regulates third-party debt collection, including contact rules and prohibited conduct. Practices and their agencies must comply to avoid legal liability.FDCPA

When a practice lets a patient pay a balance in more than four installments with a finance charge, it may trigger disclosure requirements under:

• a.the federal Truth in Lending Act✓
• b.the Stark physician self-referral law
• c.the False Claims Act
• d.the Anti-Kickback Statute

Offering an installment plan with a finance charge, or more than four payments, can invoke Truth in Lending Act disclosure rules. Many practices structure payment plans to stay exempt.Truth in Lending Act

On an accounts-receivable aging report, balances in the 'over 90 days' column are significant because they:

• a.belong only to Medicare
• b.are less likely to be collected and need prompt follow-up✓
• c.are always uncollectible and should be deleted in every billing situation without exception
• d.have the highest likelihood of payment

The longer a balance ages, the lower the chance of collection. Over-90-day balances warrant priority follow-up before timely-filing or collection windows close.

On a remittance advice, a group code of 'PR' next to an adjustment means the amount is:

• a.a payer information note only
• b.a contractual obligation of the provider
• c.a corrected-claim indicator
• d.patient responsibility✓

Group codes classify adjustments. PR means patient responsibility, such as a deductible, coinsurance, or copay. CO means a contractual obligation, and OA means other adjustment. This directs where the balance goes.

After the primary payer applies part of a charge to the patient's coinsurance, a secondary payer may:

• a.reassign the patient's diagnosis
• b.always deny the claim as a duplicate
• c.pay some or all of that remaining balance under its own benefits✓
• d.increase the primary payer's allowed amount in every billing situation without exception

The secondary payer coordinates benefits and may cover the coinsurance or deductible left by the primary, up to its own allowed amount and rules, reducing the patient's out-of-pocket responsibility.

If a claim is denied for exceeding the timely filing limit but the provider has proof of timely submission, the appropriate step is to:

• a.resubmit the claim without any explanation
• b.appeal with documentation showing the claim was originally filed on time✓
• c.immediately bill the patient the full amount in every billing situation without exception
• d.write off the balance automatically

A timely-filing denial can be overturned with proof of the original timely submission, such as clearinghouse acknowledgment reports. Supporting documentation is key to a successful appeal.

A claim line denied because the service is considered included in another billed procedure most likely triggered a(n):

• a.duplicate claim edit
• b.NCCI bundling edit✓
• c.eligibility rejection
• d.timely filing denial

When one service is bundled into another, a National Correct Coding Initiative procedure-to-procedure edit denies the component. A modifier such as 59 may override it when documentation supports a distinct service.

If a service is a benefit exclusion that is never covered under the patient's plan, the biller should:

• a.write it off as a contractual adjustment in every billing situation without exception regardless of what the medical record documents
• b.resubmit it until it eventually pays
• c.recognize it as patient responsibility and consider an ABN for Medicare when applicable✓
• d.appeal it as medically necessary

Statutorily excluded or non-covered services are patient responsibility, and an appeal will not create coverage. For Medicare, a GY modifier flags the exclusion, and an ABN may support billing the patient when appropriate.

When a service required prior authorization, the authorization number should be:

• a.mailed separately after payment
• b.omitted to speed processing
• c.reported on the claim so the payer can match it to the approval✓
• d.kept only in the patient's chart in every billing situation without exception

Including the authorization number on the claim links it to the approved service. A missing authorization number is a common cause of denial even when authorization was actually obtained.

An incorrect patient date of birth or member identification number on a claim most often results in a:

• a.front-end rejection because the data does not match the payer's records✓
• b.procedure bundling edit
• c.medical-necessity denial
• d.higher reimbursement amount in every billing situation without exception

Mismatched demographic or subscriber data causes eligibility and identity rejections at the clearinghouse or payer. Verifying registration data prevents these avoidable rejections.

A denial stating 'coordination of benefits information needed' usually requires the:

• a.patient to update which plan is primary with the insurer✓
• b.clearinghouse to reformat the claim
• c.provider to change the diagnosis code in every billing situation without exception
• d.payer to raise its fee schedule

This denial means the payer's coordination-of-benefits records are incomplete or conflicting. The patient must update the primary and secondary status with the plans before the claim can process.

An explanation of benefits sent to the patient is intended to:

• a.show how the claim was processed and what the patient may owe✓
• b.demand immediate payment to the insurer in every billing situation without exception
• c.replace the patient's medical record
• d.serve as the provider's claim form

The explanation of benefits informs the patient how the claim was adjudicated and their potential responsibility. It is not a bill; the provider's statement is the actual bill.

Before a practice can send electronic claims to a specific payer through a clearinghouse, it usually must complete:

• a.an ABN for each patient
• b.a new patient registration form in every billing situation without exception
• c.EDI enrollment or a payer agreement for that payer✓
• d.a chargemaster review

Many payers require electronic data interchange enrollment or an agreement before they will accept electronic claims or send remittance and funds transfers. Without enrollment, claims to that payer may reject.

On a claim, the 'subscriber' (insured) is the person who:

• a.is the billing provider
• b.holds the insurance policy, who may differ from the patient✓
• c.is the referring physician
• d.is always the patient receiving care in every billing situation without exception

The subscriber or insured holds the policy, while the patient may be a covered dependent. Correctly distinguishing the subscriber from the patient prevents eligibility mismatches and denials.

When an injury results from an auto accident, the biller should first determine whether the primary payer is:

• a.the clearinghouse
• b.always the patient's health plan
• c.the automobile or liability insurer rather than the health plan✓
• d.the Medicare prescription drug plan in every billing situation without exception

For accident-related care, automobile, liability, or no-fault coverage is often primary over the health plan. Identifying the correct primary payer avoids improper billing and payment delays.

If the entire allowed amount of a paid service is consumed by a contractual adjustment and the payer's payment, the patient balance for that line should be:

• a.the full billed charge
• b.the coinsurance regardless of the plan
• c.the contractual adjustment amount
• d.zero, unless cost-sharing applies✓

When the payer pays the allowed amount less any patient cost-sharing, and the remainder is a contractual write-off, the patient owes only applicable deductible, copay, or coinsurance, which is often zero.

A claim scrubber that flags a procedure code as invalid for the date of service is checking for:

• a.the patient's premium amount
• b.the provider's daily schedule in every billing situation without exception
• c.the payer's bank balance
• d.code validity and effective dates before submission✓

Scrubbers verify that codes are valid and effective for the service date, that required fields and modifiers are present, and that edits pass, which reduces rejections and denials.

When a payer reduces a billed E/M level to a lower one during processing, this is known as:

• a.upcoding
• b.bundling
• c.downcoding✓
• d.balance billing

Downcoding is the payer's reduction of a code to a lower-paying one when the documentation or edits do not support the level billed. The provider may appeal with supporting documentation.

Posting payments and reconciling them against expected reimbursement is important because it:

• a.sets the patient's diagnosis
• b.eliminates the need to submit claims in every billing situation without exception
• c.replaces eligibility verification
• d.identifies underpayments and denials that require follow-up✓

Accurate payment posting and reconciliation against contracted rates reveal underpayments, denials, and adjustment errors, which trigger appeals or rebilling to capture all owed revenue.