Reflecting Worth and Reality
By Dr. David Edward Marcinko; MBA, CMP™
Despite changes in insurance models, a healthcare provider’s fees should reflect what the doctor feels his or her services or procedures are worth. The type of insurance that the patient has should not play an influencing factor in either the fee determination or services rendered.
Additionally, fees should not vary based on the patient’s insurance type, or what the patient’s managed care contract determines is the maximum payable allowance.
Deterring Factors
Determining a professional fee for a given service takes into account many factors including the professional work performed, non-clinical work performed, unusual skills required, time for service, practice expenses (e.g., staff salaries and benefits, disposable items, rent, utilities, etc.), risk, as well as direct (surgical global care) and indirect (communicating with other health professionals, laboratory finding evaluation, review of x-rays, etc.) follow-up care.
Provider Determined
In establishing professional fees, the operative phrase is “provider determined.” While the input from knowledgeable experienced staff is certainly desirous, the ultimate responsibility for determining fees rests on the shoulders of the healthcare professional providing the service. Of course, the medical treatment administered, and for which reimbursement is sought, is assumed to be performed on the basis of medical necessity and effectiveness.
The Import
So why are reasonable fees and reimbursement for services important?
Well, medicine is a business whether physicians like to admit it or not. Businesses that are not profitable do not remain businesses for long. Today, most healthcare professionals will admit they are working harder, more hours, seeing more patients to maintain practice revenues. Even so, in many cases, expense increases are outpacing revenue increases. In an age of managed care, even Marcus Welby, MD would have to work harder.
Getting Started
Actually reviewing the annual Medicare rules and regulations found in the year ending Federal Register is a good place to start. That issue printed between November 1 and December 15 of each year lists all the CPT® codes and their Centers for Medicare and Medicaid Services (CMS) (formally Health Care Financing Administration-HCFA) determined relative value units (RVUs). The RVUs are procedure comparable.
Case Example:
You can assume if, for example, a free muscle flap procedure using microvascular techniques is valued at 68.65 total RVUs, it would be relatively more complicated procedure than a simple repair of a small laceration at a total 4.34 RVUs. You would price your procedure fees accordingly.
Generally, if a managed care allowance exceeds what you have billed; your fee is unreasonably low. The true test of reasonableness is your comfort (emotional as well as economic) level in charging the cash patient the same fee. If you feel it is in the “reasonable” range, and you are not consistently writing off 98% of your charges, it probably is reasonable. Under a managed care fee schedule, the service billed amount generally only has significance when the fee charged is less than the contract allowance.
Assessment
In that case, the MCO allowance is reduced to the lesser amount billed. The physician’s fees should not be lower than the highest contractual reimbursement rate.
Conclusion
Your informed opinions and comments are appreciated. How do you determine professional medical provider fees?
Practice Management: http://www.springerpub.com/prod.aspx?prod_id=23759
Physician Financial Planning: http://www.jbpub.com/catalog/0763745790
Medical Risk Management: http://www.jbpub.com/catalog/9780763733421
Healthcare Organizations: www.HealthcareFinancials.com
Health Administration Terms: www.HealthDictionarySeries.com
Physician Advisors: www.CertifiedMedicalPlanner.com
Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com or Bio: www.stpub.com/pubs/authors/MARCINKO.htm
Subscribe Now: Did you like this Executive-Post, or find it helpful, interesting and informative? Want to get the latest E-Ps delivered to your email box each morning? Just subscribe using the link below. You can unsubscribe at any time. Security is assured.
Link: http://feeds.feedburner.com/HealthcareFinancialsthePostForcxos
Copyright 2008 iMBA Inc: All rights reserved, USA, unless otherwise noted. Use is restricted to Executive-Post subscribers only. No redistribution is allowed. To avoid violation of iMBA Inc copyright restrictions and redistribution policy, please register for your own free Executive-Post membership. Detailed information and registration links are available at:
Link: http://feeds.feedburner.com/HealthcareFinancialsthePostForcxos
Referrals: Thank you in advance for your electronic referrals to the Executive-Post
Filed under: Health Economics, Health Insurance, Healthcare Finance, Practice Management, Practice Worth | Tagged: medical fees | 1 Comment »