After written permission has been obtained from the child's family, and insurance benefits have been verified, services may be rendered.

The provider's Business office will bill the appropriate party. If the child is covered only by a private plan, then the provider will file only to the private plan. If the child is covered by both a private plan and Medicaid or KidCare, bill insurance first. The EI-CBO will reimburse providers as the payer of last resort. Private insurance plans are billed first. Providers may bill the EI-CBO first only for families with no private insurance Medicaid or KidCare only, or in instances where insurance cannot be billed.

Establishing Rate Schedules

The provider must determine a fee for each type of service (procedure) to be filed to the third party. The charges billed across plans should be the same; that is, a fee charged to private insurance should be the same as that charged for the same service to the EI-CBO, IDPA, DSCC, KidCare, etc.

Insurance carriers and HMOs routinely reimburse providers on a standardized U&C (usual and customary) fee-per-procedure code, which is calculated based on the standard fees submitted by providers within the same grouping and geographical area. Some carriers fund for the fee submitted by the provider if the fee is lower than the customary fee. Providers may wish to call other local health care providers to obtain data regarding community standards when developing fee scheduled.

Providers of health care routinely calculate U&C charges based on the costs of providing services. Providers need to consider the following parameters when determining fees for related services:

  • Equipment costs and depreciation
  • Consumable supply costs
  • Indirect department costs - costs associated indirectly with services, (such as typing, office supplies, billing forms, scheduling, etc.)
  • Personnel costs - direct treatment time and preparation time for practitioners administrative costs.
  • Profit margin

In the private sector, a provider's schedule of charges reflects a relation of its costs to provide the service. A private provider might justify its charges as follows: there are fixed costs to recover and variable costs which are incurred in proportion to the volume of services provided. Costs are classified as direct (for example, a therapist's salary) or indirect (for example, assigned overhead). A profit factor and an allowance for estimated unreimbursed charges are added to the estimated costs, resulting in gross revenue requirements. The amounts of projected services to be provided are calculated on a weighted average treatment unit basis. Estimated gross revenue is divided by the projected total treatment units to arrive at the amount charged to the patient per unit of service.

Other options are available for determining rates for related services delivered to children with disabilities. The provider could check the local private market, calculate an average of what private providers are charging for the various services, and then deduct a "profit" factor to arrive at a rate for third parties. Otherwise, if the provider contracts with a particular practitioner to render the majority of a particular type of service, it could use the contractual rate as a proxy of the value of services provided by the provider's employees. For services by practitioners employed by a provider on a full-time basis, the annual contract for salary plus fringe benefits divided into annual hours employed may be used as the basis for determining a unit. A unit equals 15 minutes of service.

Another option to determine usual and customary fees might be to use a fee survey and obtain three fee charges for each service. These figures can be obtained from health care agencies or private practitioners within the local service region. The three figures are used to identify an average fee for each service.

The Insurance Claim Form (HCFA/CMS 1500)

Treatment date and charge information flows from the provider to the third-party payer via the claim form. The standard claim form, adopted by the American Medical Association is the Uniform Health Insurance Claim Form, known as the HCFA/CMS 1500, or Standard Claim Form. It is currently accepted by the majority of private insurance carriers, self-funded plans, and HMOs in the United States. It is important to note that CHAMPUS requires the use of the HCFA/CMS 1500 claim form. In addition, these plans might also require periodic completion by the policyholder of their company-specific claim form to initiate a claim cycle for a particular benefit period.

Providers must use the accepted standard claim forms. These forms are available from a medical supplier, medical bookstore, county medical society, or the American Medical Association in single form, snap out form and continuous forms for use with computer.

Providers may decide to contract with an agent who chooses to use a computer-generated format of the HCFA/CMS-1500 often referred to as a "superbill" or to complete purely "electronic claims." Electronic claims, eliminating the use of paper, provide the billing data from the place of service directly to the insurer's computer system, using a telephone modem. Regardless of which standardized format is used by the provider, it is important to note that claims are paid more frequently and in a more timely manner when standard forms are used.


The HCFA/CMS 1500 Claim Form is separated into two parts. The first part (blocks 1-13) contains information about the patient and the insured. The second part (blocks 14-33) contains information regarding the services provided by the practitioner. Please note that not all sections need to be completed.

The following procedures should be used when completing HCFA/CMS 1500 form. (See copy of the HCFA/CMS 1500 form in this booklet which highlights the required fields for EI-CBO billing.)

NOTE: Requirements for insurance company billing may differ. Providers should obtain the billing requirements from the insurance companies they are billing.