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