How to Set a Fee Schedule for Medical Practice?

1. How to Set a Fee Schedule for Medical Practice? Are you following an outdated fee schedule for medical practice and missing out on revenue? It is observed that many practices are suffering revenue losses because of their existing fee schedule and not knowing that fact that updating fee schedule for medical practice would improve their bottom line. After reading this blog you can easily set a fee schedule for a medical practice to collect every penny of your practice. Let’s start with a basic understanding about the fee schedule: What is the fee schedule? A fee schedule is a list of the maximum rate a payer will allow for services, with the definition of services based on code sets such as CPT (Current Procedural Terminology) in the United States. Typically, the payment is the lower of the provider’s actual charge or the fee schedule allowance. www.medicalbillersandcoders.com Copyright ©-2021 MBC. All Rights Reserved Call now 888-357-3226 (Toll Free) info@medicalbillersandcoders.com 1

2. Most payers determine fee schedules first by establishing relative weights (also referred to as relative value units) for the list of service codes and then by using a dollar conversion factor to establish the fee schedule. In this blog, I will be focusing only on setting the overall fee schedule for the practice once you know your allowables. Knowing your allowables At least you should know what Medicare allowables are. If you have charged less than what Medicare allows, you may develop a false sense of prosperity since you’re collecting 100% of what your billing commercial payers, many of whose allowables are higher than Medicare’s. While, if you’re charging a payer less than the allowable, you have no sure way of knowing how much you should have billed out. You should periodically update the fee schedule for your practice to ensure that your billed charge is higher than the allowed amount hence you should opt for the following steps when setting a fee schedule. Consistency One key element of a fee schedule is keeping consistency. Once you maintain consistency while setting up your fee schedule, it helps to calculate yield with help of simple calculations and this yield can be easily applied to AR to gain an estimate of what you should collect. If you allow inconsistencies in how the fees were set, then it is hard to understand the true value of your AR at any point in time. For example, it becomes difficult to look at your AR and quickly understand how much it should yield in terms of your collections. If some codes are set at 300 percent of Medicare and others are set at 150 percent of Medicare and still others are legacy fees that are a random www.medicalbillersandcoders.com Copyright ©-2021 MBC. All Rights Reserved Call now 888-357-3226 (Toll Free) info@medicalbillersandcoders.com 2

3. multiple of Medicare. Collect all money As a physician, you have experienced that payer allowables can change throughout the year hence you need to set your fee schedule high enough that you never bill a contracted payer less than they are willing to pay. Moreover, you can take full advantage of plans that pay a percentage of billed charges. For example: If your payer is willing to pay $180 for a level 3 office visit but you bill them $130, they will only pay you $130 In addition, some plans pay a percentage of billed charges. Not many do this and typically they represent a small percentage of the practice’s charges. On the other hand, if you are charging the payer $150 (from our previous example) and at some point, the allowable goes up to $200, you will only receive $150 unless you increase your fees. Finally, you should keep in mind that no matter what an insurance plan is willing to pay for a claim, they will never pay more than you bill them. Don’t be greedy While considering the above principle, you should not simply charge 10 times Medicare and okay with it because it seems for patients that your practice is greedy and unreasonable. Moreover, many self-pay patients (or those with high deductible insurance plans) call the doctor’s office to know about the charge for an office visit or procedure. If the patient hears that your office visit costs a lot, they will likely move on to the next practice. Finally knowing the above principle, you should set fee schedule consistently high so that you can collect legitimate money and reduce the risk of alienating patients when they receive an www.medicalbillersandcoders.com Copyright ©-2021 MBC. All Rights Reserved Call now 888-357-3226 (Toll Free) info@medicalbillersandcoders.com 3

4. EOB or are told the charges for the day. You can easily achieve this balance by setting up the fees at a reasonable percentage of Medicare. Are looking for help in setting up a Fee schedule for medical practice? We can definitely help you. www.medicalbillersandcoders.com Copyright ©-2021 MBC. All Rights Reserved Call now 888-357-3226 (Toll Free) info@medicalbillersandcoders.com 4