Healthcare Administration Interview Questions
Common Questions and Answers
Q: Walk me through the revenue cycle.
A: The revenue cycle starts at scheduling and registration, where patient demographics and insurance are verified and pre-authorization is obtained. The clinical encounter is documented by providers. Coders assign ICD-10-CM diagnosis codes and CPT/HCPCS procedure codes. Claims are submitted electronically to payers (CMS-1500 for professional, UB-04 for facility). Payers adjudicate and remit payment via ERA (835 transaction). Denials are worked and appealed. Patient balances are billed after insurance. Key metrics include days in AR, clean claim rate, denial rate, and net collection rate.
Q: What is a DRG and how does it affect hospital reimbursement?
A: A DRG (Diagnosis Related Group) is Medicare's inpatient payment methodology. Instead of paying for each service, Medicare pays a fixed amount based on the patient's MS-DRG, which is determined by the principal diagnosis, procedures, and presence of complications or comorbidities (CC/MCC). Higher complexity DRGs have higher payment weights. The hospital receives the DRG payment regardless of actual costs, creating incentive to be efficient. Outlier payments exist for extremely costly cases.
Q: What is the difference between an NCD and an LCD?
A: An NCD (National Coverage Determination) is a CMS policy that applies nationwide and determines whether Medicare covers a specific item or service. An LCD (Local Coverage Determination) is issued by a Medicare Administrative Contractor (MAC) for its geographic jurisdiction when there is no NCD. LCDs specify the ICD-10-CM codes that support medical necessity for the item or service.
Q: What are the four components of MIPS?
A: MIPS (Merit-based Incentive Payment System) has four performance categories: Quality (measures clinical care outcomes and processes), Promoting Interoperability (measures meaningful use of EHR technology), Improvement Activities (measures participation in care coordination and beneficiary engagement), and Cost (compares episode costs to peers). The composite score affects Medicare physician payments up to +/- 9%.
Q: How would you handle a situation where your denial rate is rising?
A: I would first analyze denial data by reason code, payer, and department to identify patterns. Common causes include authorization issues (prevented by strengthening pre-auth process), coding errors (addressed through coder education and audits), eligibility issues (resolved by improving verification at point of registration), or medical necessity documentation (addressed through CDI program). I would establish a denial prevention team with representation from front-end, coding, and billing, track metrics weekly, and set reduction targets.
Q: What is HIPAA minimum necessary standard?
A: The minimum necessary standard requires that covered entities limit the use and disclosure of PHI to the minimum amount necessary to accomplish the intended purpose. For example, a billing department only needs the diagnosis and procedure codes — not the entire medical record. Exceptions include treatment purposes (providers may share freely among themselves), patient-requested disclosures, and legally required disclosures.
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