Types of Payer Contracts’ Fee Schedules: What to look for and how to avoid landmines!
This weeks’ payer contracts’ tips focus on payer contracts’ fee schedules. When you are presented with a fee schedule from a payer, there are several structures you may encounter. A few of the popular ones are the “lesser of billed charges payer proprietary fee schedule”, “The Percentage of Medicare” fee schedule and the “Calculated fee schedule based on RBRVS”. If you would like more information about fee schedules and advice about negotiating your contracts email us, any time, to email@example.com, enroll in our free consultation at https://healthcents.com/free-consultation/ or phone us at 1-800-497-4970.
For a limited time, Healthcents is also offering its recently published e-book about payer contracts’ negotiations’ tips at no charge to providers who request it at: Healthcents E-Book 2017
Lesser of Billed Charges vs. Payer’s Proprietary Fee Schedule
When presented with the lesser of billed charges vs. contracted rate type of fee schedule, the first item to check for is to be sure that your billed charges exceed contracted rates for all codes and services. Otherwise, you end up inadvertently causing your company or practice to get less than contracted rates. The rule of thumb is that billed charges should be set at UCR levels, typically 250%-300% of local Medicare. This should be sufficient to assure that you do not price your chargemaster below the contracted rates that you have agreed to.
The “Percentage of Medicare Fee Schedule”
This kind of fee schedule would seemingly be desirable if you can derive a high enough percentage of local Medicare rates for your codes / services. However, there are a few things to look out for. First, does the payer group codes together into general categories such as outpatient surgeries, lithotripsies, labs etc. and assign rates across these code groupings? If so, then you may end up losing out on reimbursement or miscalculating reimbursement if you are not completely accurate about assigning the correct codes to the correct code group. Further, if possible, try to tie this percentage to a specific year’s Medicare rates so that the reimbursement is predictable for the duration of the contract. With MIPS and MACRA in place, there should be less variability in Medicare rates each year but, as we all know, the healthcare laws and regulations are constantly changing.
Calculated fee schedule based on RBRVS
This type of fee schedule often ties the calculation of rates to proprietary payer algorithms. The advice when presented with the calculated fee schedule based on RBRVS is to provide the payer with a list of your top revenue producing codes and get the exact reimbursement rates. Doing so will assure that you know exactly what to expect and eliminates human error in calculating incorrect rates and potentially misunderstanding the calculations.
This article was written by Steve Selbst, CEO and Co-Owner of Healthcents Inc. You may contact Steve, at any time by reaching out to him at 831-455-2174 or emailing him at firstname.lastname@example.org. For more information about Healthcents Inc., its products and services go to www.healthcents.com.