Practice Management Alert

Are you confident your payers are reimbursing all they possibly can on your practice's charges? If your contract with a payer says you will be reimbursed the lesser of your charges or the insurer's allowable, payment that's 100 percent of your charges may not be the great deal that it seems. In that case, it may be time to evaluate your practice's own fee schedule.
 
"If you think your practice is making enough money, and your fees are fine, you may be leaving money on the table," cautions Ross D. Rohde, MBA, ACSW, practice manager of Neonatology Associates, a 15-physician practice in Atlanta. To avoid getting paid too little, look at your practice's charges for services and how you're reimbursed on them at least once a year.
 
Three signals that the insurer may be able to pay you more are:
 
1. Your payment poster tells you that a particular insurer that used to pay a portion of your charge for a certain code has started paying more, or even all, of your charge for it. Make sure your posters keep the practice informed of such anomalies in payment. That's a clue the insurer has raised its reimbursement, and you need to find out what the insurers will pay on all your charges. Without the correct payment information from the insurer, you have no baseline to compare what you charge to what you're getting paid, or whether what you're being reimbursed covers your costs.
 
"Ideally, a practice should have a fee schedule that represents the costs associated with executing each service associated with each CPT code it performs," says Cam McClellan Teems, MA, CPC, senior consultant with Gates, Moore & Company in Atlanta. "For example, if your practice charges $75 for a level-three established patient office visit, then it should have determined that it costs the practice $50 to perform the services, including the physician's time, ancillary staff time, supplies and overhead, and a markup of 50 percent. When reimbursement drops, the practice can either take a hit on its profits or cut the expenses associated with providing the service."
 
Don't set your charge arbitrarily, Rohde advises. Use some standard method such as the Medicare Relative Value Scale. So you then have a benchmark. If you set your fees based on a percentage of the Medicare Resource-Based Relative Value Scale (RBRVS), you can easily determine and compare payment from an insurer that sets its payment based on a percentage of RBRVS.
 
2. Your explanation of benefits (EOB) consistently shows that the insurer allows, or actually pays, your entire fee. If an insurer is allowing all of your charge, it's likely you are charging fees that are less than other physicians in your area. You don't want your fees at or below allowables because the payer will never increase its reimbursement. If you're getting paid 100 percent of your charges, consider raising your fee and tracking the results. "This will increase your accounts receivable," Rohde says, "but you should be getting paid more, so it will balance out over time."
 
3. No one in your practice has gathered the actual reimbursement from payers or compared what is paid to the practice's existing charges for a long time. Practices usually get a copy of the payer's fee schedule when they sign the contract, and never see another. Contracts may also contain an automatic renewal clause in which the contract continues unless the practice notifies the payer it wants to reopen and renegotiate. While the contract with the insurer keeps running, the payer may have changed its reimbursement without your recognizing it and making appropriate adjustments in your own charges. "Practices get comfortable once payments start coming in from an insurance company, and they may not always have a way to track whether they are being paid the way they agreed to be paid, or look at their own fees that they are charging," Rohde says.
 
Most practice-management computer programs allow you to run a report by payer that tells you what the payer is reimbursing for your most commonly billed codes and compare that to your charges. "If you don't know what the payer is paying, draw up a list of your most common codes, and fax it to the payer asking what their current reimbursement is on them. Then, calculate what the adjustment rate is, meaning the percentage the payer pays of your charge," Teems says. "If that rate is less than 40 percent, that's a sign it's time to look at your charges. If your adjustment rate is 40 percent, that means you're getting paid 60 cents on the dollar charged." The next step is to decide how much per dollar of charges you are willing to accept by determining how much will cover your costs plus a small profit. Then, start renegotiating with payers.
 
If you have a payer that reimburses on a percentage of the Medicare allowable, for example, make sure you are getting what you agreed to in the contract, Teems says. If your contract says you will be paid 180 percent of the Medicare allowable, but your analysis comparing that payer's reimbursement to what Medicare allows for those CPT codes finds you were paid only 160 percent of Medicare, you have negotiating leverage, she says. "I've seen a lot of practices run their reports, pass them over the table to the insurer along with copies of all their EOBs for the year, and say what they actually were paid was not what they were promised, and they want an increase," she says. "If you don't keep track of your reimbursement and don't know whether your costs are covered, you won't have leverage in negotiations with payers."