Decoding the Healthcare Claim

In this article, we'll break down the structure of a claim submitted by a healthcare provider to an insurer for reimbursement. We aim for a clear data structure suitable for understanding and for those who are technically versed to adapt for API design.

Note that the format of a claim may change depending on the insurer it is submitted to — for simplicity's sake, we'll constrain this study to the most general case: a claim submitted to Medicare.

From a high level, each claim originates from a single patient encounter. We'll assume that you already have background info about the patient and the provider(s). From there, the structure of a specific claim (remembering one encounter might generate multiple claims) depends on these key elements:

1. Where Did the Encounter Happen? (setting)

This fundamental question dictates much of the billing process:

• Inpatient: The patient was formally admitted to a facility (usually a hospital).
• Outpatient: The patient received ambulatory services without formal admission (e.g., clinic visit, ER, ambulatory surgery).

This choice impacts almost all further claim forms, coding, and payment rules.

2. Who is Paying? (payer)

Identifying the primary insurer sets the rules of engagement:

• Government: Medicare, Medicaid (Each has specific regulations).
• Commercial/Private: Employer-sponsored or private insurance plans.

Payer rules (like Medicare's) dictate required codes, formats, and reimbursement logic. We focus on Medicare.

3. What Type of Claim is This? (claim_type)

This clarifies who is billing for what aspect of the care during the encounter. A single encounter often generates both types of claims.

• Facility Claim (Submitted on: CMS-1450 / UB-04)
  • Bills for the use of the institution's resources (building, non-physician staff, equipment, supplies, drugs administered).
• Professional Claim (Submitted on: CMS-1500)
  • Bills for the cognitive and procedural services performed by physicians and other qualified healthcare professionals.

This distinction is vital as it determines the specific codes used for services and how payment is calculated.

4. What Diagnoses Justify the Care? (diagnoses)

This field focuses only on the "why" – the patient's conditions that establish medical necessity for the entire claim (and often the encounter).

• Reported using ICD-10-CM codes (International Classification of Diseases, 10th Revision, Clinical Modification).
• Includes Principal, Admitting, and Secondary diagnoses as appropriate for the claim type and setting.

5. What Specific Services/Procedures Were Rendered on this Claim? (services_rendered)

This new, crucial field details the "what" – the specific line items being billed on this particular claim. The content and coding depend heavily on the claim_type and setting:

• If the claim_type is professional:

  • Line items primarily use CPT/HCPCS codes representing the practitioner's work.
  • Each line typically includes: Procedure Code (CPT/HCPCS), Modifiers, Units, Charge Amount.
  • Crucially includes a diagnosis_pointer linking this specific service line back to the diagnoses list (e.g., pointers [1, 2] means this service was justified by the 1st and 2nd diagnosis in the list).

• If the claim_type is facility:

  • Outpatient Setting:
    • Line items typically use CPT/HCPCS codes representing the facility resources used for procedures/services.
    • Often associated with Revenue Codes (indicating department/cost center).
    • Each line typically includes: Revenue Code, Procedure Code (CPT/HCPCS), Modifiers, Units, Charge Amount. Diagnosis linking is often implicit via the header diagnoses, but specific pointers might be used by some payers.
  • Inpatient Setting:
    • The claim justifies the overall stay. It includes:
      • A list of ICD-10-PCS codes detailing significant procedures performed during the stay. These are critical for MS-DRG assignment but aren't usually individual line item charges.
      • Revenue Codes summarizing resources used by department (room & board, pharmacy, OR time), often with associated Units and Charges.
    • Payment (Medicare): Primarily via a single MS-DRG (Medicare Severity Diagnosis-Related Group), which is a bundled payment for the entire inpatient facility stay. This MS-DRG is determined based on the principal/secondary diagnoses (ICD-10-CM) and significant procedures performed (ICD-10-PCS). MS-DRGs cover facility costs only; professional fees for physicians managing the inpatient are billed separately on Professional claims.

Regarding Bundles (APC/MS-DRG)

These are payment methodologies applied mostly to Facility Claims:

• APC (Ambulatory Payment Classification): Bundles facility resources for significant outpatient procedures/visits (Medicare Outpatient Prospective Payment System - OPPS).
• MS-DRG (Medicare Severity Diagnosis-Related Group): Bundles facility resources for an entire inpatient stay (Medicare Inpatient Prospective Payment System - IPPS).

They represent the payment calculation based on the services/diagnoses reported, not a distinct claim type itself. They primarily bundle facility costs.