Insurance Terms You Need to Know 2 of 5 with Jeremy Zug | PoP 403

Insurance Terms You Need to Know

What are some of the basic insurance terms I need to know in private practice? What are some of the terms I need to know from the billing side? How can I better understand these terms in private practice?

In this podcast episode, Joe Sanok speaks with Jeremy Zug about all the insurance terms you need to know in private practice, with examples to help you understand along the way.

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In This Podcast

Summary

In this podcast episode, Joe Sanok speaks with Jeremy Zug about all the insurance terms you need to know in private practice.

 

A few terms you should know about insurance in private practice

All the fancy acronyms from the insurance and billing side will make little to no sense without this complete guide to understanding them. Listen as Jeremy explains the following terminology.

 

Explanation of Benefits (EoB): A document that comes with payment from the insurance company (and also explains why the payment was denied).

Electronic Remittance Advice (ERA): Same as an EoB, except it is the electronic version.

Electronic Health Record (EHR) / Electronic Medical Record (EMR): For example, Therapy Notes. 

Electronic Data Interchanges (EDI): Electronic claim / Electronic version of the Health Insurance Claim Form (HICF) or Centre for Medicare Services 1500 (CMS 1500).

Verification of Benefits (Vob): Eligibility of benefits check. Verify with the insurance what the patient owes and whether or not the insurance is going to pay and also whether or not the patient is active with the insurance company.

Deductible: The set amount that the patient needs to pay before the insurance benefits kick in.

Co-Insurance / Co-Pay: The amount the patient should owe when they’ve met their deductible. The co-pay is a flat rate, while the co-insurance is a set percentage.

Stop Loss / Out of Pocket Maximum Amount: The maximum that your patient should pay for healthcare services in the given term of the policy.

 

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Podcast Transcription

 

 [JOE]: Do you ever wish for a financial therapist who could relieve you from the last few months bookkeeping, talk you off the edge when you’re setting up QuickBooks or help you work through a profit plan for growth? Green Oak Accounting does just that. Green Oak Accounting is an accounting firm that specializes in working with therapists and counselors in private practice. Their value goes way beyond bookkeeping. They can help you get on track for financial success. Schedule a free consultation by going to greenoakaccounting.com/Joe. Again, that’s greenoakaccounting.com/Joe.
This is the Practice of the Practice podcast with Joe Sanok. Session number 403. All right, we are back with Jeremy Zug here on the Practice of the Practice podcast and on YouTube. So, if you don’t follow us on our YouTube channel and you want to see what my new home studio looks like and what Jeremy’s awesome brick wall looks like, head on over to our YouTube channel. You can check it out there. But we just covered the biggest myths in insurance on the previous episode, and today we’re diving into insurance terms you have to know. So, Jeremy, where should we start?

[JEREMY]: There’s so many good places to start, but I think that we should start with all of the really fancy acronyms that you’re going to hear if you take insurance and if you launch into private practice. You’re going to hear a bunch of acronyms from the billing side that are going to make little to no sense because nobody has any training on this stuff. So, let’s just start with the most exciting stuff. Let’s say you get a payment, and it’s going to come from the insurance company and it’s going to come with a piece of paper, and that piece of paper is called an Explanation of Benefits; Or an EOB, right?
That document is very, very important because it’s going to tell you what the insurance company paid, what the patient owes. Or, if they denied the claim, they’re going to tell you exactly why they denied the claim and then you’ll know, or your biller will know or your administrator will know what they need to do to solve it. So that’s really important. [crosstalk] [JOE]: Is it done electronically, can it integrate with your, if you’re using like Therapy Notes or something. [JEREMY]: It’s a great question. So, an EOB is always on paper. There’s a different term for the electronic version which will come into Therapy Notes; it’s called [inaudible 00:02:40]. Yes, I know. Yes, I wish it could be easy, but it’s not. It’s called an Electronic Remittance Advice. So, ERA. So those two terms, ERA and EOB are the exact same document in concept, but in delivery they’re different. One is in paper that would be an EOB and an ERA would be an electronic version of an EOB that you would see in your e-HR, which is a good segue for the next one. So electronic health record, we’ve already talked about Therapy Notes, and I’m sure everybody’s heard of the main ones, but Therapy Notes is an electronic health records system or EHR. The other electronic or the other acronym for an electronic health record is Electronic Medical Record or EMR. That term, EMR tends to be more common in community mental health. I’m sure Joe, you’ve probably interacted with both of those terms and — [JOE]: The CMHD. I just had little flashbacks as they said, I might be off for a minute or two while I recover. [JEREMY]: That’s right. You got to go do some self-care or something. [JOE]: Yes. [JEREMY]: So, there are a lot of e-terms, right? So, there’s EOB (Explanation of Benefits, ERA (Electronic Remittance Advice). Those are the exact same things. Electronic health record, electronic medical record, again, same thing. But then there’s something called EDI (Electronic Data Interchange), which is again, fancy acronym for an electronic claim. So, for anybody who’s been in the industry or in private practice for a long time, you remember the HCFA forms (the Health Insurance Claim Form, which is the paper form. It’s called a CMS 1500. CMS is the Center for Medicare Services, and that form is just the, that’s the designation title of a claim form. And EDI is simply that HCFA paper form sent electronically. And I know that Joe, you have a blog post about how to read or fill out a claim form. So that’s exactly what we’re talking about. [JOE]: Yes, a lot. Alison. I almost said Alyssa. Alison Pidgeon, I don’t know where that came from. Alison Pidgeon did an awesome video series on kind of filling those out and so yes, we’ll link to that in the show notes. [JEREMY]: Okay, great. Yes, that’d be perfect because that’s a great blog to check out. The next term to know which is very, very important, and again, it’s exciting because let’s say you get a new patient. They reach out through Psychology Today or through your website or any of your other marketing channels, they send you all of their information and you network with their insurance. And so, this next step is really important. It’s called a V (as in Victor) OB (Verification of Benefits) or an eligibility and benefits check. VOB is a nice packaged term, but basically in a, and this idea of an eligibility and benefits check or verification of benefits comes with a bunch of other terms which we’re going to talk about, but that’s where you verify with the insurance what the patient will owe for your services, what you think the insurance is going to pay and whether or not the patient is active with that insurance, whether they haven’t been paying there premiums and their insurance got terminated.
Well you don’t want to submit a claim with that insurance because it’ll get rejected and then you won’t be able to get that money. So that’s really your first line of defense if you take insurance to get paid. But in a verification of benefits, you want to talk about, you know, what is the patient’s deductible? And a deductible is a set amount that the patient needs to pay before the insurance benefits kick in. Most, everybody’s interacted with the deductible personally, right? If you go to the ER or you have a baby or you know, you break a bone or something you want to know what your deductibles because that’s the amount you’re going to have to pay. That’s sort of the first tier of a verification of benefits. [JOE]: I have a quick question to like zoom out a bit? Because as I’m hearing this, I’m thinking if I was new, like I’m not, you know, I sold my practice in June and I’m not even in private practice anymore and I’m feeling stressed out by all these terms. If someone works with a biller or someone works with a consultant like you to set this up, how much of this do they actually, not that I don’t want them to absorb what you’re saying, but like how much of this is stuff that they really need to know every day and like, so, “Hey, if you’re tuning out, you need to tune in,” or is it, you honestly can just outsource this to somebody else in-house out, not outhouse in-house or [inaudible 00:07:27]. [JEREMY]: That’s a really good question, Joe. So, and I think it really depends, and this is where a consultant would come into play, but I think that it really depends on how you’re going to set up your business operating processes in your practice. So, are you going to have, let’s say you’re scaling, right? You hire five clinicians and you’re building out your processes. Are your clinicians going to be the one to talk with the patients about their insurance and their benefits and what they owe? And are the clinicians going to be the ones to collect money? If that is your system or if that’s the strategy that you want to take to scale your business, you need to tune into these terms because you and your clinicians will deal with these concepts in these terms on a daily basis.
And it will be important even sacrosanct to your practice that you’re well versed and sound like an expert on those terms. Otherwise, your patient may not trust you as much, right? The other way to go is if you’re an owner of a practice and you want to hire an admin to do that for your clinicians or for you or for your practice, it will be important for you to have a rudimentary understanding of how this stuff works. But it won’t be necessary for you to really sound like an expert or be an expert. Does that make more sense? [JOE]: Yes. I think that helps people know like you absolutely have like what percent do I have to pay attention to? Because it, I think it can be, there’s so many things in private practice, let alone taking insurance that you need to know, and we’ll, we get every single podcast transcribed so you can go, you know, copy that over. And we’ll probably have this as a download over in the show notes too, and I’m going to encourage Jeremy to put this into a blog post also and we’ll share all of that so that you have it all kind of handy, because you know, as you’re talking I’m thinking I would not know how to keep all this organized if I was just out for a run right now. [JEREMY]: Totally. Yes. And I think the way to organize it in your mind is to think about it from the perspective of the patient. So, if you’re going to build a framework of services and it’s sort of like tangentially, if I could, think about like Steve Jobs or any of those big fancy tech guys. What was their main philosophy in business? Always, always, always start with the customer experience. It doesn’t matter how fancy or complex or thorough your processes on the backend are if you are customer experience is poor. In this case, in private practice, your customer experience is really your clients, or your patients. And to think about it from the patient perspective and then reverse engineer, and as if you were a client coming into the practice, what would you want to experience?
Would you want to experience a lot of bumps in the road with this administrative stuff for this billing stuff? Or would you want for all of that to be taken care of or for them to have access to an expert? So, if you’re outsourcing, or out-of-housing it you want to hire a biller that can eruditely explain what this stuff is. But if you’re going to be in-house and you want your clients to feel really taken care of, you want to start with, you know, we need to be the expert on this stuff. And I think when you think of billing terms or billing processes, think about it from the patient flow perspective. They come in, you do an eligibility check before they hit your seat, right? So that way you know what they should owe and then from there — [crosstalk] [JOE]: On the 5th episode, we’re going to do that entire kind of walk-through for everybody. So [crosstalk] let us stick with the terms and then we’ll keep moving. But like we will bring it altogether in episode five to make sure you have a whole flow to it. [JEREMY]: Totally. But these are the cornerstone terms that you need to know. The big picture things, so — [JOE]: I give you attention again. Here we go. [JEREMY]: Alright, so we got the deductible. It’s usually like a thousand to $5,000, if you’re in network, right? In the last episode we talked about insurance myths and out of network. Out of network providers, the deductible is going to be typically huge, right? Five to $10,000 is not uncommon. So, you’ll want to keep that in mind. The next term that you’ll want to know, and this is applicable to if you’re a therapist, your own health insurance too, whether or not they have a co-insurance or a copay. Oftentimes those two terms are interchangeable. Those are the, that’s the amount the patient should owe when they’ve met their deductible. So, co-insurance is a percentage to variable rate of the allowed amount, which is another term we’ll get to in a minute and a copay is a flat rate. Really easy. 25 bucks.
So, if your patient has a copay, it’s a really nice round number. If they have a co-insurance, it’s not a nice round number. So, what’s the best way to explain this? If I’m a clinician and I’m in network and I have my fee schedule or what the insurance company will pay me for a 60-minute session, you’re going to take that number and multiply it by 0.2 for 20% or 0.3 for 30% and that will give you that number. So, I always find that examples are probably the best thing. If, let’s say your allowed amount is $100 and they have a 20% co-insurance, you would take a hundred times 0.2 and you’d get $20 for the patient amount. [JOE]: Perfect. [JEREMY]: So, I know that’s confusing. [JOE]: No, I think it makes sense. And you know, I think like we aren’t billers, and so this is why to me, we’d come into like the billing webinar or even just talking with you to get things, the basic set up, like you’re going to screw things up and not get paid if you don’t work with someone that knows what they’re doing or you’re going to spend so much time figuring it out yourself, which is fine. If you love billing and you want to also be a biller and a clinician, sweet. Go do that. Most of us don’t want to be that. So, in the same way that it’s like we learn from, I learned from other people, like how do you do the podcast set up? Like I could have dinked around with it and figured it out or I can just like watch a couple of videos and learn from an expert. [JEREMY]: Yes. Well, and that’s exactly right. And so, if you’re listening to the podcast or, if you’re listening now and you’re stressed about like, what if I collect the wrong amount for my patient, let’s go back to that concept of the explanation of benefits. So, let’s say you charge your patient 20 bucks for a copay. That flat rate, but they already have a co-insurance. When you get that explanation of benefits or that electronic remittance advice, they’re going to tell you what the patient should owe to the penny. So, you can always rely on that document to tell you what the patient should owe. So, it’s not — [JOE]: Can you get most of that information ahead of time before that first session? [JEREMY]: So that’s a really good question. Typically, you can, but eligibility and benefit checks, and this is really important, are accurate 70% of the time. And that’s a bad number. So, one out of every three of your eligibility checks will be incorrect because of the insurance company error. But they know that, which is why they always caveat every eligibility check with, “This is a quote of benefits. It does not guarantee payment,” because they know that, especially with mental health, mental health benefits are different. They’re wrong one out of every three times. So, you want to keep that in mind and lean on the EOB when that comes back. But you know, two out of every three times you can get that information accurately the first time. [JOE]: So as a rule, and I know this is outside of the kind of the terms, is it usually better to collect the full negotiated rate and then look at having a balance or do you want to just shoot for trying to be accurate the first time or, I mean what are [inaudible 00:15:29], a lot of screw up. [JEREMY]: It’s a lot of screw up and we see that all the time. So that’s a really good question Joe. I’ve seen folks do that. So, there are three main processes that I run into a lot as a biller. The first is to collect the full allowed amount, that a hundred bucks. Just doesn’t matter your first session bucks and if I need to credit you moving forward or refund, at least I have the money to do that. The second way is to try and be accurate every time, and then the third time is not to bill the patient anything, but wait for those claims to process so that I get that EOB and then moving forward, that’s where I’m going to charge my patient because that’s what the insurance company says I should charge them. [JOE]: Okay. [JEREMY]: Those three options depending on, and that third option is very risky because what if the patient doesn’t come back and you didn’t get a credit card, yada yada yada? [JOE]: Yes. [JEREMY]: So really depends on your risk tolerance. [JOE]: So, in the last few minutes, what are other terms we got to hit on? [JEREMY].: So, the last term that I’d love to hit on is a, and that relates to the verification of benefits is the stop-loss or out-of-pocket maximum amount. That number is sort of the third tier in a verification of benefits because it’s the maximum that your patient should pay for healthcare services in the given term of the policy. So, let’s say they have a calendar year plan, their out-of-pocket maximum or their stop loss is two grands. So, let’s say they got stitches, had a baby, and then saw you as the therapist twice and they met that number. They now owe $0 moving forward for your services. So, we’re entering the time of the year where that becomes very applicable. So, most of the time folks meet their out-of-pocket in September, October, November and December. And you will see sessions skyrocket during that time because people don’t owe anything. So, you want to know that number so you don’t overcharge your patients. [JOE]: Awesome. So, the kind of people, Jeremy, that you work with, you said this kind of in the first one, people that want to start getting credentialed, people that want to do the DIY billing, but then also larger organizations. So, we’re talking six, seven, eight figure practices that want to either outsource billing or train it in-house, and so if you want to chat with Jeremy had an over to practiceofthepractice.com/Jeremy. You can schedule one of those sessions with him, read a little bit more about the consulting services. But we have a webinar coming up on November 6th 2019 at three o’clock Eastern, two o’clock central, one o’clock mountain and noon Pacific. Head on over to practiceofthepractice.com/billingwebinar if you want to check that out. And, we will talk to you guys tomorrow all about fraud audits and not screwing over your business. So, we’ll talk tomorrow.
This podcast is designed to provide accurate and authoritative information in regard to the subject matter covered. It is given with the understanding that neither the host, the publisher or the guests are rendering legal, accounting, clinical or other professional information. If you need a professional, you should find one. And thanks to the bad Silence is Sexy for your intro music. We love it.

 

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