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Are Fee Schedules Impacting Your Revenue Potential? - AC3 Health

Written by Kim Woofter | Jul 28, 2021 6:32:50 AM

Fee schedules are a pain point for all practices. There are numerous payers, copious and undefined fee schedules, various methodologies, infinite exceptions, and ongoing updates. There are so many obstacles and no proven methodology in maintaining accurate and up to date fee schedules across different payers.

It’s no wonder why no one has the time to manage fee schedules. But they are critical to the revenue cycle management (RCM) of an oncology practice. Inaccurate fee schedules can mean a great deal of lost revenue for any size healthcare organization. And the system is set up with intention. Payers make it difficult to manage as ambiguity is to their benefit.

It’s essential to build a strong foundation that maximizes revenue. And it starts with oncology practices setting fee schedules as their North Star. Not having that North Star causes practices to quickly wander astray from securing their full revenue potential. Lost revenue from undefined fee schedules is far more significant than many practices realize.

Fee Schedules Leaving Money on the Table?

Do you apply the 80/20 Fee Schedule Rule?

Many oncology practices map payers to a limited number of fee schedules – usually Medicare, Medicaid and one or two of the largest payers. This method was developed due to all the complexities. With Medicare accounting for an average of 50% of patients, and then you add Medicaid plus 1-2 commonly used commercial payers used by patients – this puts a practice at about 80% in terms of accurate fee schedules.

The thought process is that the other 20% of payers are a small percentage. The discrepancy appears negligible when you weigh that amount against the time it takes to organize all of the miscellaneous fee schedules that are included in that small patient group.

On the surface, this seems to be an excellent means to determine fee schedules without getting embroiled in very tedious manual processes that are costly. While it’s not accurate, they are still getting paid, often at the Medicare level at least, and it allows practices to move forward with relative certainty that they are working with solid criteria.

The truth is that the 20% of inaccurate fee schedules account for a great deal of lost revenue.

The Impact

How much could that 20% really be impacting you?

We have found up to $60,000 in underpayments per medical oncologist per month, with an overall average of $17,000 in underpayment per medical oncologist per month. Resulting in millions of missed revenue opportunities for small and large practices.

Make Fee Schedules Your North Star

So how can you protect your practice and reduce underpayment? Fee schedule validation and management is the primary solution.

Yes, we all know this can be intensely manual and time-consuming. But with the right process, I promise you, you won’t regret it…neither will your bottom line.

Save your headaches & put money in your pocket.

Regular Auditing & Analysis:

Practices are guaranteed to be leaving money on the table if they are not conducting regular fee schedule audits and analyses. Diving into the transaction level data is the only way to validate and ensure your practice is designed to optimize revenue integrity. Accurate fee schedules allow a practice to hold payers accountable for their contract and to negotiate new contracts with complete confidence.

Even the little guys can make a big difference. Many practices prioritize expensive services because it would be catastrophic if they didn’t. But those small margin items that seem insignificant can have a bigger impact than you think. When multiplied by every patient using that payer, those small margins can be a difference between making or losing money on certain types of services or drugs.

While getting the additional reimbursement that you were originally under-reimbursed is important, it is critical to “stop the bleeding” as well. Setting up a system to stop these small margin items from slipping through the cracks is key for long-term success.

We often find the less expensive but more common services like routine visits and treatments add up to a large gap between what practices are being paid and what their contracts stipulate. For one practice, we found one payer was incorrectly applying the APP 15% reduction to pharmaceuticals (should apply to E&M but not pharmaceuticals), resulting in $150K in missed revenue.

The Right Expertise:

Experience and focus are invaluable when it comes to effectively navigating the complexities of fee schedule management. Is your team familiar with various fee schedule nuances?

  • CPT/HCPCS Code Driven – E&M, Drugs, Admin AMA reference guide
  • NDC-Driven Fee Schedules – Ability to digest NDC fee schedules and determine appropriate fee schedule to use for a given service and flag payment discrepancies
  • Locality-Driven Fee Schedules – Reimbursement based on the individual location where services are provided, down to the zip code

Understanding various fee schedule methodologies and their financial impact across all oncology service lines – Medical Oncology, Radiation Oncology, Radiology, Surgery, Laboratory – enables efficient teams and simplifies your revenue cycle processes.

Define the Undefined Fee Schedule:

Using the fee schedule audit analysis, build an intelligent fee schedule design by applying business billing rules defined by a model validated with historically matched payment data. This way, you can ensure you’re getting paid accurately in addition to having the ability to forecast revenue clearly.

Map All Fee Schedules:

Ensure fee schedules are correctly mapped in your system to the contracted fee schedules. We often find that clients are shocked at the discrepancies between what they’re using as their fee schedule and the amounts they are actually contracted to be paid. Unaware of the magnitude of the discrepancies, there could be a $200,000 difference between what they’re using in a fee schedule and what they should be using with their contracted fee schedule.

Get The Right Resources:

The right tools (like automation) should increase your revenue and save you countless headaches, not to mention your team will love you. Integrating a tool that not only automates fee schedule processes but also dives deep into transaction level data to identify discrepancies and turn invisible underpayments into recoverable revenue for you is a no brainer. Instead of reviewing thousands of line items, your team can focus on getting faster reimbursements.

Let your fee schedules act as your practice’s North Star for revenue cycle. Our experience tells us that too many practices are leaving more on the table than they anticipate, and with the right platform and tools, the time and expense are never more than the savings.