Finding new ways to optimize your revenue stream doesn’t have to be an exercise in frustration. Looking at small tweaks to tighten up gaps can be an easy way to give your revenue numbers a boost, and it can be done whether you’re just at the beginning stages of evaluating your revenue lifecycle management or if you have a robust system in place.
Our clients are often astounded at how much loss they could prevent by a few simple checks of their physician fee schedule. We recently worked with a family medicine practice in which a few small tweaks netted several thousand dollars monthly in additional revenue that it had been losing simply by not paying close enough attention to its insurance payers’ explanation of benefits (EOB) documents. Taking a moment on a regular basis to optimize your physician fee schedule can yield previously “hidden” revenue more often than many physician practices realize.
Check Your EOBs Against Your Payments and Adjust Your Fee Schedule
Physician fee schedules are often not treated as living documents as they should be. We often find our clients have their front office calculate coinsurance and deductible amounts based on contracted rates with different insurance plans. Then, they continue to use those coinsurance and deductible amounts long past the point when they should have checked them against a possibly updated EOB for an allowed fee schedule.1
Payers adjust EOBs often. Is your physician practice is recalculating coinsurance or deductibles whenever your payer makes a change? Sometimes it can hardly seem worth the effort or not even occur to a practice to do so, but even the smallest change could yield a surprising amount of otherwise lost revenue.
Think of a commonly used code, a small code that you code without blinking. Let’s say that you are reimbursed at $55, and you code it approximately 1,000 times a year, or two or three times a day. At that rate, you should be getting paid $55,000.
Now imagine that you’re only getting paid $28 for that code because you never checked an updated EOB or recalculated in all the time you’ve had your payer contract. Suddenly, you’ve lost $27,000 in a year by doing nothing more than going about business as usual. That’s just one example with one imaginary code.
If there’s even a chance that you have one, five, 10 or 20 codes for which you’re underpaid, it’s absolutely worth taking a look. Ideally, the contracted amounts should be loaded in the practice management system and tracked with pre-calculated adjustments that match the EOBs. If that’s not an option ask your revenue cycle management partner or your billing department to run reports to check your payment vouchers and EOB documents to ensure your payments are accurate. If it’s too burdensome to check every payer’s EOB, prioritize your top 10 by total payment amount.
Remember that the burden of challenging inaccurate payments is on you, the provider, not on your payer. Always ensure you have an up-to-date copy of your agreement and audit it regularly. Some contracts may even specify that physicians have a specific period in which to challenge an inaccurate payment.
At the same time, make sure that your organization isn’t the one under-charging for procedures. It is your responsibility to ensure your physician fee schedule covers the allotted amounts in the contract. If the agreement allows for a particular rate, the fee schedule your front office is using should charge that amount. You’ll need to run reports on payment vouchers and your physician fee schedule to ensure that you’re not taking losses with every claim.2
Pay Attention to Your Contracts
Because the burden of spotting inaccuracies and inconsistencies falls on the physician practice, it’s crucial that you understand your contract structures and exactly what all the provisions mean. This will determine how you set your physician fee schedule and how much you see on your pay vouchers.
Payers change their rates. As all healthcare organizations feel pressure to get leaner and operate on ever-narrowing margins, rates will change more often. Payers must inform providers of any rate changes, but if your front office isn’t trained to pay attention to seemingly innocuous registered mail from payers—in which a 30 percent rate decrease could be couched in terms like “adjustments made for transparent and consistent compensation”—then you may not have an opportunity to challenge the rate adjustment.3
Ensure that training and checks are in place so that all rate adjustments from payers make their way to your revenue leadership team. These changes affect all areas of the practice, especially your physician fee schedule, which must be adjusted to ensure that there are no shortfalls. The easiest way to lose revenue without lifting a finger is to charge less for a procedure than you are owed based on your payer agreement.
Many practices simply continue without wanting to look too closely at payer agreements or adjust their physician fee schedule, preferring to focus on providing patient care. We can certainly understand the impulse to bury your proverbial head in the sand in the face of today’s increasingly complex world of shifting contracts, rates, and data. If your practice is on the wrong end of unfavorable contracts and losing revenue, it can feel like trying to plug a dozen holes below the waterline with your fingers.
But it doesn’t have to be that way. Begin with your existing contracts, and work with a revenue management consultant to audit them and close any gaps. Shore up your physician fee schedule to ensure that you’re not giving revenue away. Then, turn your focus to establishing systems so that your practice doesn’t end up on the wrong end of an unfavorable contract or unknowingly taking a loss with every payment.
These small fixes can yield huge gains. We’ve witnessed clients go from having a dozen unfavorable contracts in which they were underpaid by more than 60 percent to an optimized revenue cycle that drives strong growth and allows them to provide the best possible patient care, without having to worry about losses and poor staff retention from running a porous organization. Reimbursements may be declining, but that’s no reason your organization needs to be giving them away. Talk to a revenue expert today about how tightening up your physician fee schedule and contracts can pay off.
Physician Revenue Navigators is a leading healthcare revenue cycle management partner, supporting healthcare organizations of all different practice types in all aspects of a healthy revenue lifecycle, including coding, billing, contractual adjustments, collections, HIPAA compliance and more. Contact us to learn more about how we can assist your organization.
- P.J. Cloud-Moulds, “Finding Hidden Revenue in Your Fee Schedule,” Physician’s Practice, June 20, 2015, http://www.physicianspractice.com/blog/finding-hidden-revenue-your-fee-schedule. ↩
- Kaitlyn Houseman, “5 Hidden Ways Your Medical Practice is Losing Revenue,” GroupOne Health Source Blog, June 17, 2015, http://www.grouponehealthsource.com/blog/bid/73942/5-Hidden-Ways-Your-Medical-Practice-is-Losing-Revenue. ↩
- Rob Saunders, “Revenues Down? Examine Your Contract Prices,” accessed February 1, 2016, http://www.mckesson.com/uploadedfiles/mckessoncom/content/providers/_body_components/_right_rails/examine%20your%20payer%20contracts.pdf. ↩