ED Coding and Reimbursement Alert

Keep Hospitals and Patients Happy:
Pay Attention to ED Professional Fees to Attract Managed Care Contracts

Historically, ED physician groups have set fees using a number of strategies. Sometimes fees are based on what the hospital wants the physicians to charge, sometimes on what the physicians decide the services are worth.

Until a few years ago, Medicare based its payments to physicians on the usual and customary charges for a particular code in a particular region of the country. Many private payers reimburse physicians according to a percentage of charges or an individual contracted amount per service. Consequently, emergency service charges
often vary widely among physician groups and in
different regions.

One hospital contract we acquired, they were charging $500 for a Level 5 [evaluation and management service] and $300 for a Level 3, which I felt was not appropriate, says Jeri Bennett, manager of coding and reimbursement for MedAmerica, Inc., an emergency physician group management company based in Oakland, CA.

Other groups, pressured by the administrators at their hospitals, try to set low fees in order to attract a lot
of patients.

Sometimes you may have a single-department physician group that is employed by the hospital, says Dieter Lehnortt, MA, director of compliance for Southwestern Medical Center in Dallas, TX. The hospital sets the physician fee schedule and their thinking is, We want to keep all of our fees low because we have patients calling to complain about how much we charge and we want people to come here. I know one group that charged $25 for everything, regardless of how much work was involved.

Although a low pricing structure may be pleasing to administrators at contract time, physician groups accepting such arrangements often have had to go back to the hospital for a subsidy to keep the department operating because these fees are too low to cover the actual costs of
emergency services.

On the other hand, groups that have fees that are set too high will find it difficult to attract managed care contracts and will invite disagreements with hospital administrators who receive complaints from patients in sticker shock over the numbers on the bill, says Lehnortt.

Why Does it Matter?

With Medicare and the majority of health plans already on a relative-value based system for setting payments for services, and many private plans basing their payments on a percentage of the Medicare allowable or percentage off the fee schedule, why does it matter what the actual physician charge is?

As one ED physician group coder put it, You can charge whatever you want for a service, but you are still going to get paid the same amount.

Well, there are many answers to that question, [...]