Reimbursement analysis pays big dividends
Reimbursement analysis pays big dividends
How to determine if you’re getting all you deserve
Poor billing practices can not only trigger a potential audit of your practice’s past claims; they can cost you money if you base fee-for-service charges on improper or outdated codes. To ensure your fee-for-service business is being fully and fairly compensated, you need to analyze your coding practices regularly to find ways to improve them, as well as to update charges.
If you don’t take these two tasks seriously, your practice may wind up short-changing itself. "I know of one physician who lost $800 in charges on one procedure alone because he didn’t know what was acceptable to the insurance carrier," says Ro B. Shattuck, a Raleigh, NC, CPA specializing in health care.
"Doctors’ offices often use improper or obsolete coding. Many of their staff members are not trained to set fees properly, to code correctly for the level of service performed, or to use coding to their advantage. He just didn’t charge enough," Shattuck says.
Build your case before raising your rates
At the same time, you can’t just arbitrarily raise charges across the board and expect to defend them to an insurer successfully. It takes a studied approach to both coding and fee analysis to make your case, notes Don L. Oschwald, MD, FACS, of Raleigh’s Southeastern Plastic and Reconstructive Surgery Associates.
The first step in a reimbursement analysis is to review your CPT and ICD-9 codes from your computer printouts and charge tickets to ensure they are current, noting any rule changes and new codes to be included. This also is the first building block of a comprehensive compliance program. Many consider the period between December and February the best time to schedule this analysis.
Shattuck says the following coding errors are the most common ones he sees physicians make:
• invalid or deleted procedure codes;
• improper code for level of service;
• inaccurate code for services described;
• improper billing for surgical procedures;
• wrong code for particular site of service;
• improper use or no use of modifiers.
If these actions result in undercoding, the practice loses money. However, if Medicare computers detect what looks like a pattern of overbilling, then you could be flagged for an audit.
To avoid the headaches associated with improper coding, Shattuck suggests a two-pronged approach:
• Review your charges.
• Make adjustments on a case-by-case basis.
Once you know you are using the most appropriate codes, take a look at the rates you are charging. As you probably know, there is an unspoken rule among carriers to refuse to disclose the maximum rate they are allowed to pay physicians. But you can use that to your advantage.
Facing down an insurance company
"I know of a physician who challenged a managed care company whose official fee schedule stated that they would only pay a discounted $200 rate for what should be a $500 procedure," Shattuck says. "But when we confronted them with our in-house reimbursement analysis, they finally backed down, saying the low figure was simply a typo."
There are several ways to analyze your current fee schedule to determine if it is what it should be compared to costs. One method is to use the relative value scales provided by several sources, including the Washington, DC-based McGraw Hill Co., and Medicare’s Resource-Based Relative Value Scale.
The second method, called "charge/cost analysis," factors in such considerations as type of specialty, physician location, time in practice, and patient load to establish the fair market value of the physician’s services, Shattuck says.
An admittedly time-intensive but worthwhile task, the analysis studies current costs and charges based on current economic indices such as the Consumer Price Index, as well as urban and rural differentials.
The basic steps in performing a charge/cost analysis:
• Obtain your practice’s current fee schedule.
• Determine your most commonly used CPT codes and their frequency. For best results, do a separate profile for each physician in the practice, and then a practicewide analysis.
• Compare these data to an average collection of Explanations of Benefits (EOBs) for a given time, usually six months.
"This gives you a complete picture of every reimbursed CPT code. By comparing your charges to the EOB, you find out exactly what the payer is paying by CPT code, and if there are variations, you can explore why," says Shattuck. "You may learn, for instance, that the payment rate has changed or a payer prefers a certain code sequence."
• Review the pattern of reimbursement to determine how one payer compares to another by CPT code.
To ensure accuracy, first compare your charges to what actually was paid by documenting payment from the EOBs. Once completed, these data will give you a more accurate picture of how your current charges and payments compare, which will give you a basis to negotiate increases in specific codes and procedures.
Subscribe Now for Access
You have reached your article limit for the month. We hope you found our articles both enjoyable and insightful. For information on new subscriptions, product trials, alternative billing arrangements or group and site discounts please call 800-688-2421. We look forward to having you as a long-term member of the Relias Media community.