Fee Schedule Analysis

Part 6: Identify Opportunities for Improvement

Fee Schedule Analysis

The fee schedule is one of the most important financial tools utilized by the medical office. This file not only reflects the value of the services provided by the physicians but also sets the foundation for profitability. Updating your fee schedule at least once a year, if not more, allows the medical office to keep up with changes in the health care market.

As you analyze your fee schedule, there are three major areas that must be evaluated:

  • Overall Costs
  • Current Fees and Payments
  • UCR Database

Determine Your Costs

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Before making any changes to your current fee schedule, carefully account for every cost incurred by your medical practice including the costs necessary for providing quality products and services to your patients. Determining the true value of your costs is the foundation of a profitable fee schedule. When calculating your costs, factor in:

  • Lease or rental payments
  • Utilities
  • Office Supplies and equipment
  • Medical Supplies and equipment
  • Loan Fees
  • Maintenance Fees
  • Employee Labor
  • Malpractice and/or Liability Insurance
  • Health Insurance and Other Benefit Costs

Compare Insurance Payments with Fee Schedule

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A simple way to determine if your fee schedule needs updating is to compare it the payments you receive from your payers. If your government payers, such as Medicare or Medicaid, are paying your fee for any of your services in full, then you really need to be charging more for your services. Even if that means that your contracted payers will receive deeper discounts, your overall profit and income will be greater.

  • Create a spreadsheet by compiling a list of CPT codes that are most frequently used and the corresponding amount charged for each. See frequently used codes below.
  • Add additional columns for each payer and their average reimbursement per CPT.
  • Once your spreadsheet is complete, compare the payment amounts with the amount charged for each service.
  • You can take it a step further by adding a column to indicate the estimated cost per service based on the total costs of the medical office. Decide if you want to identify your profitability monthly or yearly and adjust your numbers accordingly.

Review the UCR Database

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The UCR (usual, customary and reasonable)Database is a free online tool that allows patients and providers with information on estimated costs of services for medical procedures. The official name is FH Consumer Look Up created by FAIR Health. FAIR Health is a non-profit organization that provides consumer data products and resources for the purpose of "bringing fairness and transparency to health insurance information".

The FH Consumer Cost Look Up provides UCR information for medical and dental services for every zip code in the US with data provided by insurers for out-of-network insurance policies. Although it's purpose is for consumers to make important decisions regarding their health care, it is an excellent tool that providers can use as a guide to establish a fee schedule.

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CPT codes are developed by the American Medical Association to identify codes most often used by physicians rendering services in the medical office. The most frequently used codes are medical Evaluation and Management (E/M) codes.

  1. 99201-05: New Patient Office Visit
  2. 99211-15: Established Patient Office Visit
  3. 99221-23: Initial Hospital Care for New or Established Patient
  4. 99231-23: Subsequent Hospital Care
  5. 99281-85: Emergency Department Visits
  6. 99241-45: Office Consultations

The full range of CPT codes are:

00000-09999: Anesthesia Services
10000-19999: Integumentary System
20000-29999: Musculoskeletal System
30000-39999: Respiratory, Cardiovascular, Hemic, and Lymphatic System
40000-49999: Digestive System
50000-59999: Urinary, Male Genital, Female Genital, Maternity Care, and Delivery System
60000-69999: Endocrine, Nervous, Eye and Ocular Adnexa, Auditory System
70000-79999: Radiology Services
80000-89999: Pathology and Laboratory Services
90000-99999: Evaluation & Management Services

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