4 Things You Need to Know About Fees
When you decided to open your Medical Practice you probably had one thing in mind – a desire to help the people in your community get access to quality medical care in a quick and convenient setting. Somewhere along the way, however, you realized you also had to make money. Unlike selling food in a restaurant where you know what you make on each customer, collecting money for your services in the medical field can be puzzling.
1. Keep It Simple & Updated One of the first things you have to understand is fee schedules. Simply put, fee schedules are a specific dollar amount that will be paid by a payer to a provider for a specific service rendered. Payments are based on:
1. Percent Medicare
2. Percent of billed charges
3. Percent of Usual and Customary
4. The health plans own fee schedule.
Some payers will also pay a global or all-inclusive rate, which is usually one flat payment. Not all payers will pay based on fee schedules, but those who do have the liberty to update your fee schedule weekly, monthly or even daily with notifications. This is stated in your contract. Your billing department should get these notifications and update your system and your front desk staff as needed. To track your accounts receivable (AR), you should keep your fee schedules as simple as possible. If all your codes are set at 175 percent of Medicare, it is easy to look at your AR and understand how much you have out. If some codes, however, are set at 130 and others at 175 percent of Medicare, this becomes much more difficult. The percentage in which your fee schedules are figured based on Medicare is totally up to your practice. When figuring these percentages take into consideration your payers that are going to pay according to your billed charges. Also review your contract and make sure there is a clause in your contract that protects your facility from a decrease of your reimbursement whenever Medicare makes their cuts.
2. Review Your Payments Your billers should check your EOBs as payments are received to verify you are being paid according to the fee schedule negotiated with the payer. If there is a discrepancy in the payment and your fee schedule, you should appeal and reprocess the claim for correct reimbursement. Your software should be loaded with your different fee schedules and when payments are posted your system should adjust your accounts taking your contractual amounts according to the loaded fee schedules. This will reflect in your A/R reports with a more accurate revenue amount. Remember that no matter what an insurance plan is willing to pay for a claim, they will never pay more than you bill them. If a payer is willing to pay $150 for a level 3 office visit but you bill them $125, they will only pay you $125. So, review your payments as they come in, and also make sure to review what you are billing out.
3. Educate Patients Understanding why you bill insurance what you do is something many of your patients will not understand. When a patient sees on their Explanation of Benefits (EOBs) that you charged $1,500 for your office visit, they may view your charges as unreasonable, even when their EOB shows you only received $150. If a patient calls with a complaint, make sure to take the time to explain how fee schedules work.
4. Setting Your Fee Schedules Deciding on what fee schedule to use will vary by your practice. Medical Practices typically use 130 to 175 percent of Medicare. The percentage you select should be a reflection of what other practices in your area are receiving. Before you finalize your fee schedule, make sure none of your contracts with payers have carve outs or allowable that exceed your fees. You should also check all claims you send out on a regular basis. If any of them continually come back at 100 percent of billed charges your charges on that claim are too low. This would indicate a need to reexamine your fee schedules. Payers that usually pay according to fee schedules include Medicare, Blue Cross Blue Shield, Tricare, and Humana.