NHA Medical Billing & Coding (CBCS) — All Questions

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.

A prospective payment system (PPS) reimburses providers by:

• a.Paying a percentage of the patient's annual household income
• b.Paying a predetermined, fixed amount for a service or episode set in advance of care✓
• c.Reimbursing the provider's full billed charges only after the service has actually been rendered
• d.Basing payment on the number of staff a facility employs

A PPS pays a fixed, predetermined amount rather than actual costs or full charges. Medicare's inpatient (DRG) and outpatient (APC) systems are examples. It contrasts with retrospective, cost-based reimbursement paid after the fact.CMS

Under the Medicare Inpatient Prospective Payment System (IPPS), hospital payment for a stay is based primarily on:

• a.The number of days multiplied by the hospital's billed charges
• b.The patient's out-of-pocket maximum for the year
• c.The individual CPT code for each item furnished
• d.The MS-DRG assigned to the discharge✓

IPPS pays a set rate per discharge determined by the MS-DRG, which reflects the diagnoses, procedures, and severity. Each MS-DRG carries a relative weight multiplied by the hospital base rate. It creates an incentive for efficient inpatient care.CMS

A hospital's Medicare base payment rate is $6,000 and a discharge is grouped to an MS-DRG with a relative weight of 1.5. Ignoring other adjustments, the DRG payment is:

• a.$6,000
• b.$4,000
• c.$7,500
• d.$9,000✓

DRG payment equals the relative weight times the base rate, so 1.5 x $6,000 = $9,000. The fixed per-discharge amount does not change with the number of individual services. This rewards efficient inpatient resource use.CMS

The Medicare Outpatient Prospective Payment System (OPPS) reimburses hospital outpatient services using:

• a.The Resource-Based Relative Value Scale for physician work only
• b.Ambulatory Payment Classifications (APCs)✓
• c.A straight percentage of the hospital's chargemaster amount
• d.Medicare Severity Diagnosis-Related Groups (MS-DRGs)

OPPS groups clinically similar outpatient services into APCs, each carrying a payment rate. A single outpatient encounter may map to multiple APCs. It is the outpatient facility counterpart to the inpatient DRG system.CMS

The three relative value unit (RVU) components used in the Medicare Physician Fee Schedule are physician work, malpractice, and:

• a.The patient's annual deductible
• b.Practice expense✓
• c.The hospital inpatient base rate
• d.The geographic conversion factor

Each service has work, practice expense, and malpractice (professional liability) RVUs. Each component is adjusted by a geographic index, summed, and multiplied by the conversion factor. This ties payment to the resources a service requires.

Geographic Practice Cost Indices (GPCIs) are applied in the Medicare Physician Fee Schedule to:

• a.Convert a diagnosis code directly into a procedure code
• b.Determine a hospital's inpatient DRG weight
• c.Set the patient's coinsurance percentage
• d.Adjust each RVU for local cost-of-practice differences✓

GPCIs adjust the work, practice expense, and malpractice RVUs to reflect local cost differences before the conversion factor is applied. This is why the same service can pay differently across regions. It keeps payment aligned with local practice costs.CMS

In the Medicare Physician Fee Schedule, the conversion factor is best described as:

• a.The percentage a patient owes after meeting the deductible
• b.The allowed amount remaining after the copayment is subtracted
• c.The code that identifies the rendering provider on a claim
• d.A dollar multiplier that converts RVUs into a payment amount✓

The conversion factor is a single dollar figure, updated periodically, that translates geographically adjusted RVUs into an actual payment. Payment equals adjusted RVUs times the conversion factor. It scales the relative values into real dollars.CMS

A service has a total geographically adjusted RVU of 2.0 and the conversion factor is $33.00. The approximate fee-schedule payment is:

• a.$35.00
• b.$66.00✓
• c.$330.00
• d.$16.50

Payment equals adjusted RVUs times the conversion factor, so 2.0 x $33.00 = $66.00. The conversion factor is the dollar multiplier applied after RVUs are adjusted geographically. This is the core Medicare physician payment calculation.CMS

For a covered Medicare Part B service after the annual deductible is met, Medicare generally pays what share of the approved amount?

• a.80 percent, leaving the beneficiary responsible for 20 percent✓
• b.100 percent, with no patient responsibility
• c.50 percent, splitting the cost evenly with the patient
• d.20 percent, leaving the beneficiary responsible for 80 percent

After the annual Part B deductible is met, Medicare pays 80 percent of the approved amount and the beneficiary owes 20 percent coinsurance. Secondary coverage or a Medigap policy may cover that 20 percent. This 80/20 split is a defining feature of Part B.CMS

A Medicare Part B service has an approved amount of $300 and the patient has already met the annual deductible. The patient's 20% coinsurance is:

• a.$300
• b.$60✓
• c.$30
• d.$240

Coinsurance is 20 percent of the approved amount, so 0.20 x $300 = $60. Medicare pays the remaining 80 percent, which is $240. Coinsurance is always calculated on the approved (allowed) amount, not the billed charge.CMS

A participating (PAR) provider with Medicare agrees to:

• a.Bill patients the full charge and collect any remaining balance directly from them
• b.Accept assignment on all claims and take the approved amount as payment in full✓
• c.Set fees above the Medicare limiting charge
• d.Refuse to treat any Medicare beneficiaries

A PAR provider always accepts Medicare assignment, meaning the approved amount is payment in full, and may bill only the deductible and coinsurance. A nonPAR provider may choose not to accept assignment and is subject to the limiting charge. PAR status generally yields a higher fee schedule and faster payment.CMS

The Medicare 'limiting charge' for a nonparticipating provider who does not accept assignment is:

• a.Exactly the same as the participating provider approved amount
• b.Twice the provider's billed charge
• c.115 percent of the reduced nonparticipating fee schedule amount✓
• d.150 percent of the provider's usual billed charge

The nonPAR fee schedule is 95 percent of the PAR amount, and the limiting charge caps billing at 115 percent of that reduced amount. This limits how much a nonassigned provider may collect from the patient. Charging above the limiting charge violates Medicare rules.CMS

A nonparticipating Medicare provider's reduced fee schedule amount for a service is $80. The most the provider may bill under the limiting charge is:

• a.$120.00
• b.$80.00
• c.$96.00
• d.$92.00✓

The limiting charge is 115 percent of the reduced nonPAR amount, so 1.15 x $80 = $92.00. The patient may be billed up to this ceiling when assignment is not accepted. Exceeding the limiting charge is prohibited.CMS

'Accepting assignment' on a Medicare claim means the provider agrees to:

• a.Waive the patient's deductible entirely
• b.Transfer the account to a collection agency
• c.Assign the patient to a particular specialist
• d.Accept the approved amount as payment in full✓

Accepting assignment means the approved amount is payment in full; Medicare pays its 80 percent directly to the provider and the patient owes the 20 percent coinsurance. The provider cannot balance-bill above the approved amount. This differs from a nonassigned claim subject to the limiting charge.CMS

When a provider's billed charge is LOWER than the payer's allowed amount, the payer generally reimburses based on:

• a.The lower billed charge, since payers pay the lesser amount✓
• b.An average of the billed and allowed amounts
• c.The patient's remaining deductible balance
• d.The higher allowed amount, to make up the difference for the provider

Payers reimburse the lesser of the billed charge or the contracted allowed amount. If a provider bills below the allowed amount, the lower charge caps the payment. This is why fees are generally set at or above expected allowed amounts.

A payer that reimburses using 'usual, customary, and reasonable' (UCR) charges sets the allowed amount by:

• a.Charging the patient the entire billed amount
• b.Comparing the provider's fee to prevailing charges in the area✓
• c.Multiplying RVUs by a hospital inpatient base rate
• d.Using one flat national fee for every service regardless of area

UCR considers the provider's usual fee, the customary range of fees in the area, and whether the charge is reasonable for the circumstances. It is an older methodology largely replaced by fixed fee schedules. Amounts above UCR may become patient responsibility on some plans.

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

• a.The payer's remittance advice for a claim
• b.A list of the patient's active diagnoses
• c.The internal schedule of employee wages, benefits, and bonuses
• d.A master list of billable items and their standard charges✓

The chargemaster is the facility's comprehensive list of billable items, services, and their standard gross charges used to generate claims. These gross charges are usually higher than negotiated allowed amounts. Keeping it accurate and current is essential for correct billing.

'Charge capture' in the revenue cycle refers to:

• a.Collecting the patient's copayment at check-in
• b.Recording all billable services a patient received✓
• c.Posting the insurance payment to the account
• d.Writing off an uncollectible patient balance

Charge capture ensures every documented, billable service is entered so it appears on the claim. Missed charges mean lost revenue that is hard to recover later. Accurate charge capture links documentation to the codes billed.

Which activity occurs at the FRONT end of the revenue cycle, before the patient is seen?

• a.Insurance eligibility verification and registration✓
• b.Posting a remittance advice to the account
• c.Following up on aged accounts receivable
• d.Appealing a denied claim with medical records

Front-end tasks include scheduling, registration, eligibility verification, and prior authorization, all completed before or at the visit. Back-end tasks include claim submission, payment posting, and collections. Strong front-end work prevents many later denials.

The 'days in accounts receivable (A/R)' metric measures:

• a.How long a patient waits for an appointment
• b.The number of days a medical record must be retained
• c.The average number of days it takes to collect payment after billing✓
• d.The number of days remaining before the timely-filing limit expires

Days in A/R estimates how quickly a practice converts billing into cash; a lower number signals faster collections. It is a core revenue-cycle key performance indicator. Rising A/R days can indicate billing or follow-up problems.

The 'net collection rate' for a practice measures:

• a.The percentage of claims denied on first submission
• b.The share of the collectible amount actually collected✓
• c.The proportion of patients who carry insurance
• d.The ratio of chargemaster prices to competitor prices

Net collection rate compares actual payments to the amount the practice was entitled to collect after contractual adjustments. A low rate reveals revenue lost to bad debt, missed follow-up, or write-offs. It gauges how well a practice collects what it is owed.

A high 'first-pass resolution rate' (clean-claim rate) indicates that:

• a.Most claims are denied and later appealed
• b.Patients rarely pay their portion of the bill
• c.The practice writes off the majority of balances
• d.Most claims are paid on the first submission✓

First-pass resolution measures claims paid the first time without correction or resubmission. A high rate reflects clean claims, good scrubbing, and accurate front-end data. It shortens the time to payment and lowers administrative cost.

Tracking a practice's claim 'denial rate' is important because it:

• a.Replaces the need for a chargemaster
• b.Determines the Medicare conversion factor that is used to set fees
• c.Signals coding or eligibility problems that reduce revenue✓
• d.Sets each patient's copay amount

The denial rate highlights systemic issues that can be fixed, such as missing authorizations or coding errors. Monitoring and categorizing denials guides process improvement. Reducing denials directly protects revenue and cash flow.

On an electronic remittance, a group code of 'CO' (Contractual Obligation) indicates an amount that:

• a.Is the patient's responsibility to pay
• b.Must be refunded to Medicare immediately
• c.A contractual write-off not billable to the patient✓
• d.Represents the provider's full original billed charge

CO amounts are contractual adjustments the participating provider agreed to write off and may not bill to the patient. The 'PR' group code, by contrast, marks patient responsibility. Posting these correctly prevents improper patient billing.

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

• a.An incentive bonus paid to the provider
• b.The patient's responsibility to pay✓
• c.A payer data-entry error to be ignored
• d.A contractual write-off absorbed by the provider

PR (patient responsibility) amounts move to the patient or a secondary payer, unlike CO amounts that are written off. Reading group codes correctly ensures the right party is billed. Misposting PR as CO would understate collectible revenue.

Claim Adjustment Reason Codes (CARCs) on a remittance advice are used to:

• a.Identify the rendering provider who is listed on the claim
• b.List the patient's active diagnoses
• c.Set the payer's timely-filing deadline
• d.Explain why a paid amount differs from the billed charge✓

CARCs give the specific reason for each payment adjustment or denial. Remittance Advice Remark Codes (RARCs) add supplemental explanation. Together they guide payment posting and any needed follow-up or appeal.

The HIPAA electronic remittance advice transaction a payer sends to report claim payments and adjustments is the:

• a.835✓
• b.276
• c.270
• d.837P

The 835 is the electronic remittance advice, which can auto-post payments and adjustments. The 837 is the claim, the 270 is an eligibility inquiry, and the 276 checks claim status. Using the 835 streamlines payment posting.HIPAA

An Explanation of Benefits (EOB) differs from a remittance advice (RA) mainly in that the EOB is:

• a.Sent to the patient rather than the provider✓
• b.Used to order laboratory tests
• c.A binding contract guaranteeing future care
• d.Identical to the patient's insurance ID card

Both documents explain how a claim was adjudicated, but the EOB is directed to the patient and the RA to the provider. Neither is a bill by itself. Comparing them helps reconcile what the patient owes.

A capitation contract pays $15 per member per month and a provider has 400 enrolled members. The monthly capitation payment is:

• a.$6,000✓
• b.$4,000
• c.$60,000
• d.$15

Capitation pays per member per month regardless of services used, so $15 x 400 = $6,000 for the month. The provider receives this whether or not each member seeks care. It shifts utilization risk to the provider.

A key financial feature of capitation for the provider is that it:

• a.Guarantees higher revenue for each additional service performed
• b.Shifts financial risk to the provider regardless of care used✓
• c.Requires the patient to pay for every visit
• d.Removes any need to actually see patients

Under capitation the provider assumes financial risk, earning the same per-member fee regardless of volume. This rewards preventive, efficient care and penalizes overutilization. It contrasts sharply with fee-for-service, which pays per service.

A 'bundled' (episode-of-care) payment reimburses:

• a.A fixed monthly fee per enrolled member
• b.Each individual service or item separately
• c.Only the physician's office visits during the year
• d.A single amount covering all services for one episode✓

A bundled payment covers an entire episode across providers with one payment, encouraging coordination and efficiency. Providers share the payment and any savings or losses. It differs from fee-for-service and from monthly capitation.

Value-based (pay-for-performance) reimbursement ties a portion of payment to:

• a.The quality and outcomes of care, not service volume✓
• b.The sheer number of separate claims that are submitted
• c.The number of items in the chargemaster
• d.The provider's total years in practice

Value-based models reward measurable quality, outcomes, and efficiency, moving away from volume-driven fee-for-service. Providers may earn bonuses or face penalties based on performance. The goal is better care at lower cost.

An Accountable Care Organization (ACO) is a group of providers that:

• a.Shares responsibility for the cost and quality of care✓
• b.Sells insurance policies directly to patients
• c.Processes and forwards electronic claims as a clearinghouse
• d.Sets the national Medicare conversion factor

An ACO coordinates care for an assigned population and may share in savings when it meets cost and quality targets. It is a value-based arrangement rather than an insurer or clearinghouse. Shared accountability aligns incentives toward efficiency.

A 'per diem' reimbursement arrangement pays a facility:

• a.A percentage of the physician's professional fee
• b.An amount based solely on the patient's deductible
• c.One flat fee for the entire admission regardless of length of stay
• d.A fixed amount for each day the patient is hospitalized✓

Per diem pays a set rate for each inpatient day, so total payment scales with length of stay. It differs from a DRG, which pays one amount per discharge, and from fee-for-service. Payers use per diem in some facility contracts.

When a patient has primary and secondary insurance, the secondary payer generally:

• a.Pays first, before the primary payer processes the claim
• b.Refuses to process the claim at all
• c.Automatically pays the full billed charge
• d.Considers the balance after the primary pays✓

The primary payer adjudicates first, and the secondary then considers remaining patient responsibility within its own rules and allowed amount. Coordination of benefits prevents total payment above the allowed charge. Correct order avoids denials and overpayment.

When a patient has both Medicaid and other coverage, Medicaid is generally:

• a.Always the primary payer on every claim
• b.Prohibited from paying anything at all
• c.The payer of last resort✓
• d.Responsible for the full billed charge first

By law Medicaid pays last, so all other liable payers are billed before Medicaid. Billing Medicaid before other coverage causes denials or recoupment. This 'payer of last resort' rule protects Medicaid funds.CMS

For an employed Medicare beneficiary age 65 or older who is covered by a large employer's group health plan, the primary payer is usually:

• a.The patient, who must pay the full amount first
• b.The employer group health plan, with Medicare paying secondary✓
• c.Medicare, which always pays first for beneficiaries over 65
• d.Medicaid, acting as the payer of last resort

Under the Medicare Secondary Payer 'working aged' rule, a large-employer group health plan is primary and Medicare is secondary. Billing Medicare first in this situation is improper. Verifying other coverage prevents MSP errors.CMS

A claim has an allowed amount of $200. The primary payer paid $120 and applied $80 to patient coinsurance. If the secondary plan also allows $200 and covers coinsurance, the secondary generally pays up to:

• a.$200, paying the full allowed amount a second time
• b.$80, the remaining patient responsibility✓
• c.$0, because a primary payer already paid something
• d.$120, exactly matching the primary payment

The secondary considers the $80 left as patient responsibility, subject to its own rules, so combined payments do not exceed the allowed amount. This is how coordination of benefits prevents overpayment. The patient may owe nothing if the secondary covers the balance.

The main purpose of coordination of benefits is to:

• a.Ensure total payments do not exceed the allowed charge✓
• b.Increase the provider's contracted fee schedule
• c.Let the patient select any diagnosis they prefer
• d.Guarantee the provider is paid twice for one service

Coordination of benefits establishes payment order and limits total reimbursement to the allowed amount. It prevents duplicate payment when a patient has more than one policy. Accurate COB reduces overpayments and refunds.

In a family health plan, the 'family deductible' is:

• a.The same figure as each member's flat copay
• b.A fee charged only to the youngest dependent
• c.A combined threshold after which the plan pays for the family✓
• d.The amount the provider is required to write off at each visit

Many plans include both individual and family deductibles; once the family deductible is met, cost-sharing begins for all members even if some never met their individual deductible. Knowing which deductible applies helps collect the right amount. It differs from copays and coinsurance.