ServiceXG Basics

How claims are calculated

This topic explains how claims are calculated and ultimately what determines the check amount.

1. Start with the Billed Amount on the claim.
2. Calculate the Considered Amount The billed amount minus any ineligible expenses..
   • Billed Amount − Ineligible Amount = Considered Amount.
   • The Ineligible Amount consists of any charges not covered by the plan, for example, duplicate charges, services not covered, or coverage not in effect.
3. Calculate the Allowed Amount The lesser of the considered amount and the pricing amount (UCR, fee schedule, etc.).
   • There are a number of pricing methods that can be used. The two most common are: UCR The Usual, Customary, and Reasonable amounts allowed for a procedure. UCR compares the charge for a procedure to the amount other doctors have charged for the procedure. UCR data can be external data obtained from HIAA or MDR by geographic area, or can be compiled internally. The allowed determination can be based on a percentile; for example, the 85th percentile would cover the charges of 85% of the doctors who submitted bills. and relative value units All procedures can have Relative Value Units assigned to them. These units assess the complexity of the procedure. Pricing can be calculated by multiplying a predetermined unit multiplier by the relative value enits to determine the allowed amount or based on a set fee schedule.. The claim schedule identifies the pricing method used. The Cap Detail in Claim Information displays the parameters and amounts used for the calculation.
   • The pricing for the service plus any maximums Maximums limit the plan's liability for a patient's expenses. They may be based on specific benefits or illnesses (e.g. a maximum for psychiatric care) or on all expenses. Most contracts have a lifetime maximum on all expenses. and reversion An accumulated maximum that changes the payment percentage (co-insurance) once it is met. This can increase the payment percentage or decrease the percentage. An Out-of-Pocket reversion is a common feature designed to limit the member's liability. (This is often referred to as "Stop-Loss".) are taken and then this service amount is compared to the Considered Amount. The lesser of the two is the Allowed Amount.
     
4. Calculate the Net Covered Amount Gross covered minus any COB adjustment..
   • (Allowed Amount − Deductible Amounts) x Co-Insurance % = Covered Amount.
   • Covered Amount − COB Adjustments = Net Covered Amount.
     • The COB Adjustment is any amount paid by another insurance or drawn from other coverage savings.
5. Calculate the Check Amount.
   • (Net Covered Amount − Discount) − Prior Paid Amount Amount carried forward from a prior claim as an adjustment to the total amount paid for a claim. The amount could be negative or positive based on over or underpayments on the prior claims. = Check Amount.
   • Provider discounts could be taken from the Billed or Considered Amounts instead of the Net Covered Amount.

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