Hi everyone, this is a brief overview of the healthcare domain and how a business analyst would play a part in it. We will be going through a couple of basic concepts like EDI transactions, basic terminologies, how a claim is processed, the claim workflow, how it starts, how it starts as a claim, gets processed and finally the claim gets paid. These are some of the concepts that we'll be covering and let's start off with a couple of healthcare terminologies. So we're going to start with a couple of terminologies that we are familiar with.
The first one is subscriber. So a subscriber is an individual who meets the health plans eligibility requirement and who can enroll in a health plan and he or she accepts the financial responsibility for any premiums or co-payments, coinsurance or deductibles. So the next term is member. A member is a person who is eligible to receive or is receiving benefits from an HMO or an insurance policy.
This includes those who have enrolled or subscribed and they're eligible dependents. So a subscriber is a person who gets these benefits whereas a member gets enrolled and also his dependents are covered. So person becomes a member of a healthcare plan whereas a subscriber is just an individual.
The next term is provider. So provider is a supplier of health care services like a hospital, nursing home, lab. or physician. So anyone who provides you with a healthcare service is called a provider. The next term is claim.
So a claim is like a detailed invoice that your healthcare provider, like we talked about in the earlier term, a doctor or a clinic or a hospital, this claim is like an invoice that's being sent to the health insurance, health insurer who is your insurance provider. this invoice will exactly show what services you have received, your member ID, your name, your demographics, everything that's needed to actually pay out that claim. And the next term is coinsurance. So coinsurance, you might have come across this term.
This is a form of cost sharing between the member and the insurance company, so you and the health insurance provider. So if you're insured you pay a percentage of the cost of covered medical services and the insurance company pays a percentage. So usually it's like after you cross a certain amount of money and after you pay it out the insurance company won't usually pay you the entire amount of money.
It's like we'll pay you 90% and you have to cover the remaining 10%. Now I want to include another word here it's called out-of-pocket maximum. So For example, the out-of-pocket maximum is like $10,000.
You are only liable to pay $10,000. So if your claim amount is $20,000, the 10% that I mentioned earlier would be applicable only for the $10,000 out-of-pocket maximum. After that, the claim usually covers the entire charges that you have to incur.
The next one is co-payment. So co-payment again is a form of cost sharing where the insured person pays a specified flat amount per unit of service. So for example if you're visiting a doctor and the doctor charges 200 bucks the co-payment is going to be $30 so you only pay $30 the remaining $70 is being taken care of by the health insurance that you have. And the next term is deductible.
So a deductible is a certain dollar amount that you must pay before your health insurance coverage actually begins to cover your medical expenses. It might be $500 per year and once you cross the $500 then the VICO insurance applies if applicable and the plan then proceeds. Now getting a bit more technical.
So the next word is EDI. The definition is electronic data interchange. Now this is applicable in different industries and basically this is just a computer to computer exchange of business documents in a standard electronic format between business partners.
So basically it's an encrypted way of sending information from one organization to another because the data that you're transmitting is sensitive. The next term is going to be personal health information or PH. Now, PHI is also referred to as protected health information. So this generally refers to demographic information like your age, your location, your first name, your last name, your medical history, the test and lab results, the insurance information, and any other data that a healthcare professional collects to identify an individual and determine appropriate care. Now this is protected information because this is confidential and it is should be only accessible by you.
So when you're transmitting this information from one organization to another they make sure that it's encrypted and it doesn't get leaked. The next one is going to be HIPAA. So HIPAA is Health Insurance Portability and Accountability Act of 1996 because that was the year that it was introduced. So HIPAA is nothing but a law that sets standards regarding the security and privacy of a person's health information. This has several titles but we are just going to talk about Title I and Title II because these titles are more, apply more to healthcare claims processing.
So the first title is called Health Insurance Reform. Now this is a title that protects health insurance coverage for individuals who lose or change jobs. So suppose you lose your job or you change your job, the time interval should be covered by your health insurance plan.
And this also prohibits group health plans from denying coverage to individuals with specific diseases and pre-existing conditions and from setting lifetime coverage limits. So that basically means that if you have a pre-existing condition that should be covered by your health insurance plan and that is the law. Moving on to Title II.
Title II is HIPAA Administrative Simplification. So this title basically says that it establishes national standards for processing these health insurance transactions. So it basically requires your healthcare organizations to implement secure systems to transmit this health data from one organization to another or to the state.
The next term is coordination of benefits. So this is a process where if an individual has two group health plans, The amount payable is divided between the two plans. So to combine the coverage amounts do not exceed 100% of the charges. So it basically means that if the person has two plans, it shouldn't be more than 100% of what the person should be actually getting. The next term is ICD codes.
So we're going to talk about ICD-10 first. So ICD just means International Classification of Diseases and previously the version was ICD-9 and after October 1st of 2015 ICD-10 was introduced and it's basically a clinical cataloging system that went into effect and this basically accounts for modern advances in clinical treatment and medical devices. So these codes actually offer many forms of classifying options compared to ICD-9. So ICD-10 actually covers about 68,000 medical devices and healthcare health conditions, whereas ICD-9 covers about 13,000. And HL7.
So HL7 is, it provides a framework. It's a help. level seven and this provides a framework where the exchange, the sharing and retrieval of electronic health information.
This basically follows a certain structure and these standards are basically how information is defined and communicated from one party to another. So it sets what language to use, what the data structure of the file should be, what the data type should be. So this basically helps the integration between different systems.
The last term is AXC-X12. So AXC is Accredited Standards Committee. So it's an organization and it was charted by the American National Standards Institute and it develops and maintains these X12 EDI content and establishes standards for it. So these EDI files are basically XML schemas and the organization or committee they actually determine how these standards should be and how the file structure should be.
Great, so moving on to the next slide. So in this slide we'll be looking at how the claim is processed. So starting off, a person goes to a healthcare provider.
So the healthcare provider is the hospital or a doctor or clinic. So the member actually has a valid health insurance and he will visit an in-network healthcare provider or a doctor for a particular service. Now this healthcare provider provides this service to the member and then the healthcare provider submits a claim or an invoice to the health insurance provider.
This is basically a document that gives you details about the patient, what service was received, and this is sent in an encrypted way to the insurance provider. Now the insurance provider actually processes these claims. He makes sure that there are no data errors or there are no conflicting data from previous claims and make sure that the correct amount is paid.
So after this is played, the An explanation of benefits is provided to the member. So this basically states that, okay this was the service that you received and this was the amount that we paid. This is why we didn't cover some of the costs.
So it's basically information for the member. Then the healthcare provider will send a bill to the member if a balance needs to be paid. So if there's 100 bucks that can be covered by the healthcare provider, the the amount is sent to the member and the member has to pay it back.
So that's a brief overview of how a claim is processed. Now if you look on the right we have a flow chart and these four functionalities at the top transaction management, risk management, business intelligence, content management these are some of the payer services. A payer is nothing but someone who reimburses a member for the cost of the health service. Now these systems are in place to make sure that the claim is correctly processed and the correct amount is paid. And these services can be broken down into the stats of the member services, then it verifies if the member is enrolled.
It goes to provider credentialing where it makes sure that the correct provider is being sent that particular claim. It goes to the eligibility where the eligibility team checks whether the patient is qualified for receiving that claim or receiving that money and how much should he be given. That goes on to claims administration where these claims are segregated into different departments and based on that it's sent to different parties for processing.
After this is done, the transactions are verified and they are repriced if needed. And the next step is adjudication where the claims are processed. This is where most of data mining and data science apply because this is the place where they determine how much money should be paid and if there are issues with previous claims.
and all that. Then this is settled, an explanation of benefits is sent. to the member and all this information is being stored in a database. Moving on, we'll briefly be talking about healthcare plans and healthcare plans are basically of two types, so commercial and government. To start off with commercial, commercials classified into majorly classified into five categories.
The first commercial plan is a preferred provider organization or PPO. So a PPO provides more flexibility when you're picking a doctor or a hospital. They feature a network of providers but there are fewer restrictions on seeing non-network providers.
Additionally, your PPO insurance will pay if you see a non-network provider, although it may be at a lower rate. So it just basically means that the PPO would allow you to see members that are not in their network compared to a plan that we'll be discussing in a few minutes. And the key features are that you can see any doctor or specialist that you like. without having to see a preferred care provider.
Now a preferred care provider is just a doctor that you have to visit to assess your condition and the PCP actually determines what kind of treatment should be given to you and if a specialist is needed to provide a service for you, he refers it. So you can see a doctor or go to a hospital outside the network and you may be covered. However, your benefits will be better if you stay in the network. Now an EPO is an exclusive provider organization. This is a hybrid plan but the healthcare providers must be seen within a predetermined network and it just tells you that this is the network we'll be using and you should be getting services from this network not outside of it.
The next plan is HMO. Now HMO gives you access to certain doctors and hospitals within a network. It's the exact opposite of PPO and this network is basically made up of providers and the rates are usually lower if the person, if the member actually visits.
the providers within the network. So supplemental insurance. So supplemental insurance is anything that covers the amount of money or the procedures that aren't covered by your main insurance either a PPO or an EPO or a HMO.
And Medigap is basically an insurance that you get to cover health care costs such as co-payments, deductibles, if you're traveling outside the US. So moving on, we'll talk a bit about HIPAA. So HIPAA is, again, like I mentioned, Health Information Portability and Accountability Act.
They set standards for automating business processes of claims and administrations, and they define certain criteria. to make sure that the claims are processed and the information is handled in a secure way to make sure that the information isn't being accessible by people who shouldn't be accessing it. The next topic we're going to talk about is HIPAA transactions. Now HIPAA transactions are basically When we move on to the next slide, HIPAA transactions or EDI transactions are basically files or XML schemas that are used to transfer information from one organization to another.
So a brief overview would be a 270 file is used to request information from a health insurance company. about policies coverage typically that's related to a particular plans subscriber and a 271 file is used to provide information about these policy coverages to the specific subscriber or a person who is actually seeking the medical service. So this is a response that's being sent for 270. The next file is an 834 or benefit enrollment file and this basically represents a benefit enrollment and maintenance document and it's used by employers or people who actually provide you with insurance to enroll them in a particular benefit plan.
And some of the information includes subscriber name identification, the name of the network, subscriber eligibility, etc. And the next file is going to be an 835. So 835 is used by health insurance plans to make payments. to healthcare providers and it also includes information about the benefits that the member received and when the health service provider actually submits an 837 the insurance plan uses an 835 to detail the payment to that claim and this 835 file is important because it tracks what payments were received for that particular service.
The next file is going to be an 837. So an 837 is just a format that should meet HIPAA requirements and it's a standard healthcare clean file. This just gives you a description of the patient, the condition, services received, and the cost of the treatment. And these 837 files are split into three groups, professional, institutional, and dental practices. And a 276 file is used by healthcare providers to verify the status of a claim submitted previously to a payer, such as an insurance company.
And a 277 file is used by healthcare prayers to report on the status of that claim. So, 277 is a response to pay 276. And we'll briefly touch about the Affordable Care Act plan or Obamacare. This was enacted in March 2010. So, the intention of the plan was to make sure that most people are covered and they get no benefits.
They have to pay less money for the benefits that they are seeking and the initiative actually funded the movement and it provided a cheaper means of coverage to people, to a lot of people and this basically increased employment and built on infrastructure for these providers. This also made sure that companies can no longer exclude these patients with conditions, with pre-existing conditions, which we earlier covered in Title I. And their children will be covered under the plan if they are 26 or younger. We'll briefly touch about eligibility and benefits.
So patient eligibility is a section of healthcare claims processing where the patient's eligibility and benefits are verified to every appointment. So if a member actually seeks a provider he goes with the insurance information that he's been that he has and this insurance plan is actually analyzed to make sure that the patient is eligible to receive those benefits and the eligibility and benefit actually gives you the membership verification, how long the plan duration is, how long will the patient be covered, the different services that the patient can receive within this plan. the co-payment, the deductibles, the co-insurance, all that information. So this actually gives information to members and providers because providers are the ones giving you the service. And the information basically includes identifiers like the patient information, demographics, first name, last name, the condition, is there a group ID for it, what the name of the plan is, who the healthcare provider is, the dates.
during which the actual plan is valid, the co-payment for that particular service, the deductibles, the out-of-pocket maximum, like we talked earlier. Has that person actually reached that amount? Co-insurance, like we discussed earlier.
Are there any limitations for this particular healthcare plan? So is there a service that the patient wouldn't be covered. And pre-authorization is basically a service that makes sure that the patient meets certain criteria before the services are administered to the patient. And it gives you information about whether the person is allowed to actually receive those benefits that the healthcare plan promises to. So we did skip two topics here, the x12 standards and the 401 to 501 version.
So x12 standards are basically HIPAA standards that make sure these conditions, whatever information goes into these files that we discussed earlier are of a certain syntax. And 401 or 501 or I just HIPAA standards, so 401 was the previous one, which covered a certain number of conditions and these conditions are basically presented by code. So if it's diabetes it's something like E42. So the claim file doesn't actually contain information that says the patient has diabetes, it just says the patient information like first name, last name and the code for that particular condition.
and 5010 is basically a code that was implemented as an update for 401 and the conversion process was put in place so people who were using the older 401 version for example e42 would be converted into e429 to make sure that it responds with the 501 standards so that is basically a brief overview of the healthcare system in America and it's basically information that would get you started about the health insurance domain, how claims are processed and other details.