Many practices may be losing revenue because of outdated fee schedules. With the changing medical reimbursement and payment landscape, it might be a good time to think about resetting your fee schedule.
Setting a Fee Schedule
Consistency in what you charge is important because it helps determine your account receivables. Using many fees that are various multiples of Medicare allowables complicates the AR picture. Another goal to aim for is to minimize any money left on the table. If $200.00 is paid for a service, the full $200.00 and maybe more needs to be billed. However, you don’t want to drive away patients by charging too much for services so it is a balancing act.
To set a schedule, perform some due diligence and find out what Medicare and private payers are reimbursing you and compare that to your charges. Discover what other area providers charge or commission a consultant or in-house cost study.
Another starting point is to use 150% to 200% (300% for specialists) of what Medicare charges but mitigate this with what your best reimbursement contracts allow and what other practices are charging.
Know all of your allowables. This is the maximum amount your insurance contract will allow for reimbursement. If you’re charging less than that, not only might you be leaving money on the table but you might lull yourself into a sense of complacency about receiving full payments when you could be entitled to more.
Revisiting Your Fee Schedule
In an ideal world, you probably want to look at your fee schedule every three months. You should also be receiving your contracted insurance fee schedules each quarter. Compare your fees to these to determine any service fee adjustments. Definitely, at a minimum, perform a thorough review annually. The reason for this is the ever-volatile dynamics of the marketplace, changes in your own costs and fluctuations in patient volume. This makes it essential to collect the revenue you need to stay in business. A tip off that it’s time to review your fee schedule is if you notice that your payers are consistently reimbursing 100% of your charges.
Fee Setting Best Practices
- Stay in line with your market.
- Avoid sudden fee changes. If you have to increase them, do it incrementally.
- Keep the charges uniform for all physicians.
- Charge the same fees for all patients unless you discount for self-payers.
- Review your contracts with your insurers thoroughly.
- When negotiating payer contracts, focus on raising fees at the low end of the spectrum and specialization you may provide that others do not in your geographical market.
Review your fees as a strategy to stay on top of your cash flow.