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Coding & Billing
Time to Give Yourself a Raise?
Judith English
Publish Date: October 10, 2007   |  Tags:   Financial Management

If you haven't adjusted your fees since you opened your facility, it might be time to do so. Here are some tips for increasing your fee schedule and giving yourself what might be a long-overdue raise.

Audit your fees.
At least once or twice a year, check your most common procedures to see if you're maintaining the profit margin forecast in your budget. Create a spreadsheet showing reimbursement rates from your prominent carriers - some of which will reimburse you a percentage of billed charges - and Medicare, as compared to your fee schedule and your costs (both direct and indirect) for common procedures. Limit personnel allowed to change fees to management - administrator, business office manager or clinical director - to prevent errors and ensure that your fee schedule remains compliant.

Review the complete list of equipment, supplies and implants needed for your most commonly performed procedures. Pick out a costly specialty. Are you hitting your profit margins? If you're not, that might be a sign that you need to bump up your fees. Another wake-up call to review your fee schedule: Do your insurance contract's reimbursement schedules allow more than what you're charging?

Raise your fees (but by how much?).
I recommend a three percent to five percent increase. Some facility managers prefer a 5 percent across-the-board increase each year to keep up with the natural increases in the costs of doing a case. Others increase fees on a specialty-by-specialty basis. Certain fees may not be able to withstand a significant increase because of a competitive market. Whatever you decide, I wouldn't wait more than two years to raise the fees of a specific specialty.

Document changes.
Whether the increases are across the board or specialty specific, document the changes you make to the fee schedule and how you arrived at the changes. Print out the adapted fee schedule, write down the reason for the fee change next to the corresponding CPT codes and stick the document in a notebook to be stored with your policy and procedures.

Include the following in the notes:

  • the original fee schedule;
  • how you treat multiple procedure discounts;
  • the fees your schedule includes (such as labs and EKGs)
  • the fees carved out at a higher percentage or lower percentage;
  • fees for implants (HCPCS II codes and non-specified implants) and
  • an explanation of how you derived the new fee schedule. Are the updated fees a percentage over Medicare reimbursement? A percentage over cost? A combination of the two?

ACROSS-THE-BOARD RAISE
Here's how a fee schedule would look if you raised all your fees by 5 percent.

CPT

GROUP

DESCRIPTION

MEDICARE

FEE 2004

FEE 2005

29806

3

ARTHROSCOPY SHOULDER, CAPSULORRAPHY

510.00

$2,550.00

$2,677.50

29807

3

ARTHROSCOPY REPAIR OF SLAP LESION

510.00

$2,550.00

$2,677.50

29819

3

SHOULDER ARTHROSCOPY/SURGERY

510.00

$2,550.00

$2,677.50

29820

3

SHOULDER ARTHROSCOPY/SURGERY

510.00

$2,550.00

$2,677.50

29821

3

SHOULDER ARTHROSCOPY/SURGERY

510.00

$2,550.00

$2,677.50

29822

3

SHOULDER ARTHROSCOPY/SURGERY

510.00

$2,550.00

$2,677.50

29823

3

SHOULDER ARTHROSCOPY/SURGERY

510.00

$2,550.00

$2,677.50

29824

5

DISTAL CLAVICULECTOMY/DISTAL ARTICULAR SURFACE

510.00

$2,550.00

$2,677.50

29825

3

29825

717.00

$3,585.00

$3,764.25

29826

3

SHOULDER ARTHROSCOPY/SURGERY

510.00

$2,550.00

$2,677.50

29827

5

ARTHROSCOPY/ROTOR CUFF REPAIR

717.00

$3,585.00

$3,764.25

29870

3

KNEE ARTHROSCOPY, DIAGNOSTIC

510.00

$2,550.00

$2,677.50

29871

3

KNEE ARTHROSCOPY/DRAINAGE

510.00

$2,550.00

$2,677.50

29873

3

ARTHROSCOPY KNEE/LATERAL RELEASE

510.00

$2,550.00

$2,677.50

29874

3

KNEE ARTHROSCOPY/SURGERY

510.00

$2,550.00

$2,677.50

29875

4

KNEE ARTHROSCOPY/SURGERY

630.00

$3,150.00

$3,307.50

29876

4

KNEE ARTHROSCOPY/SURGERY

630.00

$3,150.00

$3,307.50

29877

4

KNEE ARTHROSCOPY/SURGERY

630.00

$3,150.00

$3,307.50

29879

3

KNEE ARTHROSCOPY/SURGERY

510.00

$2,550.00

$2,677.50

29880

4

KNEE ARTHROSCOPY/SURGERY

630.00

$3,150.00

$3,307.50

29881

4

KNEE ARTHROSCOPY/SURGERY

630.00

$3,150.00

$3,307.50

29882

3

KNEE ARTHROSCOPY/SURGERY

630.00

$3,150.00

$3,307.50

29883

3

KNEE ARTHROSCOPY/SURGERY

630.00

$3,150.00

$3,307.50

29884

3

KNEE ARTHROSCOPY/SURGERY

630.00

$3,150.00

$3,307.50

29885

3

KNEE ARTHROSCOPY/SURGERY

630.00

$3,150.00

$3,307.50

29886

3

KNEE ARTHROSCOPY/SURGERY

630.00

$3,150.00

$3,307.50

29887

3

KNEE ARTHROSCOPY/SURGERY

630.00

$3,150.00

$3,307.50

29888

3

KNEE ARTHROSCOPY/SURGERY

630.00

$3,150.00

$3,307.50

Be specific when noting the percentage increases and how you calculated them.
It's difficult to remember why you changed your fee schedule, especially if you review it only once a year. Keeping detailed notes also makes sense from a compliance standpoint. Medicare will more tolerant of fee increases when it sees documented proof that the changes are rational and consistent to all payers. Your governing board will also appreciate detailed record keeping; getting a 5 percent bump in, say, ENT cases is a lot easier when you can document that you didn't ask for an increase the year before.

Set a minimum baseline.
Make sure your lowest fee is high enough. Look at your lowest fee, think about the overhead required to keep your ORs running and set a minimum amount you'll charge for such low-cost procedures as colonoscopy. How much does it cost for a patient to walk through your door? You can't simply figure in supply costs; also think about fixed indirect costs and whether you're charging enough to cover the cost of that patient entering your facility. Think about insurance verification, demographic input, pre-op testing, time spent in recovery, educating the patient on the way out the door and the post-op phone call. In most cases, a minimum fee should be at least $1,000.

Audit private insurance contracts.
Do your third-party payers allow more than what you're charging? Here's how to check. List your 10 most common insurance contracts on a spreadsheet. Export your fee schedule onto the spreadsheet, and match up CPT codes with what the carrier reimburses. If you're charging only $1,200 when your contact with the payer calls for $1,500, that's a problem. You'd be lucky if you find only one case of reimbursement discrepancy. For a lot of centers, keeping up with insurance reimbursement rates is reason enough to renovate the fee schedule.

Check with Medicare.
Remember, you're not allowed to charge less for a procedure than Medicare's reimbursement rate for your area. Review additions to Medicare's ASC approved procedure list regularly. Add or change any fees as necessary.

A lot on the line
When you opened your facility, you spent time agonizing over a complete and compliant fee schedule. You looked at Medicare reimbursement, case costing, private carrier reimbursement rates and combined them all into a fair and equitable fee schedule personalized to your center and demographic needs.

After establishing a sound fee schedule, don't forget about it - it's the most critical issue affecting your billing operations. Your decisions regarding it may determine your facility's financial success or failure.

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