Practice Management Alert

This month: The first 3 steps of our in-depth 12-step solution

Analyzing and adjusting your fee schedule is no small task, but don't let that scare you away. If you spend a little time and effort delving into the details of your fees, you could increase your reimbursement considerably - and arm yourself with the information to negotiate more aggressively with payers. 
 
Yearly is best: You should review and adjust your charges at least once a year, says Barbara J. Cobuzzi, MBA, CPC, CPC-H, CHBME, president of Cash Flow Solutions Inc. in Brick, N.J. To ensure this isn't an overwhelming task, remember the 80-20 rule: 20 percent of your practice's procedures represent 80 percent of your volume, she says. So a way to make your Fee Schedule adjustment easier might be to focus on the most important 20 percent of the procedures you bill, rather than trying to assess every code you use.

You can start now: Two months ago, we advised you on how to perform a quick and easy fee schedule assessment as a precursor to a more thorough evaluation and adjustment (see "8 Simple Steps Adjust Your Fees for Higher Reimbursement" in our June 2004 issue). Now we offer 12 in-depth fee adjustment steps provided by Frank Cohen, CMPA, senior analyst with Medical Information Technology Solutions in Clearwater, Fla. Due to the length and detail of this fee schedule facelift plan, we'll present the 12 steps to you in monthly installments. You can get started this month on steps 1-3.

While experts could elaborate extensively on every aspect of fee schedule adjustment, the guidance these steps offer should be enough to walk you through a proper fee schedule evaluation, says Cohen, who recently authored a book titled "Mastering RBRVS."
 
1. Have only one fee schedule to make the analytical process much simpler. The main reason practices have more than one fee schedule is that they want to reduce their write-offs. Try to remember that write-offs are irrelevant in terms of your revenue - you'll still recoup the same payment whether you're writing off $100,000 or $500,000.

2. Assemble a spreadsheet that lists each procedure code you bill in the first column, the modifier - if any - in the second column, the fee you charge to commercial or private payers in the third column, and the annual frequency for each code (times per year, or TPY) in the fourth column. Separate your codes into different coding categories: surgery, radiology, pathology, medicine and E/M.

As you continue, you'll want to add a fifth column for the relative value unit (RVU) for each code and a sixth column for each code's conversion factor (Step 4, which we'll show you next month, will offer more information on this topic).

3. Examine your modified procedures and make certain you're billing them appropriately. Modifiers either increase or decrease the reimbursement you are due for a particular code. For example, modifier -50 (Bilateral procedure) will increase reimbursement by 50 percent. The problem is that carriers may not automatically increase the fee on a code with modifier -50 (or any other modifier that should increase reimbursement). Therefore, when you report a code with modifier -50, you should bill a fee that is 50 percent higher than the code's global charge.

The same goes for any other modified code that should bring you increased reimbursement over the code's global fee - bill the increased fee yourself and don't wait for the insurance carrier to do it for you.

Watch out: While payers won't automatically tack on an extra 50 percent to your global fee, they'll certainly take the liberty of subtracting part of the fee if you bill a modifier that reduces reimbursement. For example, modifier -51 (Multiple procedures) usually results in a 50 percent fee reduction over the primary procedure. But if you bill a code with modifier -51 at 50 percent of the global fee, a carrier is likely to take off an additional 50 percent - meaning you'll only collect 25 percent of the global fee, or 50 percent less than you deserve.

The solution: Bill the code's full global fee if you append a modifier that should reduce reimbursement. Leave it up to the insurance carrier to make the appropriate reduction and avoid having your fee reduced twice.

Modifier info: For a spreadsheet listing all the modifiers and their conversion factors (how each modifier affects a code's fee), e-mail our editor, Jennifer Colletti, CPC-A, at jenniferc@eliresearch.com.

Next month: We'll show you how to determine the conversion factor for each of your codes, select your practice's level of competitiveness, and establish a minimum charge threshold. Stay tuned!