4 ASC Fee Schedule
Best Practices to Know
The following guidance first appeared as a series of Tips on the Serbin Medical Billing website.
With decreasing reimbursement, you may think there is nothing you can do to affect your ASC's cash flow. However, we have evaluated many ASCs and found that some are not collecting all the monies due them. Is it possible that your managed care contracts and/or Medicare reimbursement schedules allow more than what you’re charging? If so, consider that a wake-up call to review your fee schedule.
If you haven’t adjusted your fees in several years or since you opened your facility, it might be time to do so. Here are four best practices that will cover how to increase your fees while remaining compliant and, in the process, give your ASC what might be a long-overdue raise.
ASC Fee Schedule Best Practice #1: Audit Your Fees
Follow these steps:
- At least once or twice a year, check your most common procedures to see if you’re maintaining the profit margin forecast in your budget.
- Create a spreadsheet showing reimbursement rates from your prominent carriers and Medicare as compared to your fee schedule and your cost (both direct and indirect costs) for common procedures.
- Review the complete list of equipment, supplies and implants needed for your most commonly performed procedures. Pick out a costly specialty and determine if you are hitting your profit margins. If you’re not, that might be a sign that you need to bump up your fees.
- Limit personnel allowed to change fees to management (administrator, business office coordinator and/or clinical director) to prevent errors and ensure that your fee schedule remains compliant.
ASC Fee Schedule Best Practice #2: Increase Fees
Assuming your initial fee schedule was based on a pre-determined percentage above reimbursement rates (either by your primary contracted payer or Medicare) at that time, you need to determine whether you are still maintaining that percentage over your center’s current reimbursement rates.
We recommended that you create a spreadsheet showing reimbursement rates from your primary third-party payers and Medicare and compare this to your fee schedule. Using this spreadsheet, this week we are going to determine how much, if any, your fees need to be adjusted.
Your center can choose to:
- maintain original pre-determined percentage above contracted fee allowance by adjusting fees individually as reimbursement change dictates;
- do an across-the-board increase (recommend 3%–5%) annually, or when a new service is added, to keep up with the increased cost of doing a case;
- base increases on a specialty-to-specialty basis; or
- raise rates only on those procedures whose cost has increased dramatically.
Fee schedule increases should be presented to and approved by the center’s governing body. As a reminder, limit personnel allowed to change fees to management (administrator, business office coordinator and/or clinical director) to prevent errors and ensure that your fee schedule remains compliant.
Certain fees may not be able to withstand a significant increase because of a competitive market. However, because of the continuing cost-of-living inflation and increased direct and indirect costs, we recommend performing this review at least every two years, if not more frequently.
ASC Fee Schedule Best Practice #3: Determine Minimum Baseline Fee
We are all aware that private and government payers allocate very low payments for some procedures. In some cases, reimbursement is so low, a percentage above contact fees may not be sufficient. Think about the overhead required to keep your ORs running: How much does it cost for a patient to walk through your door?
To help determine an appropriate baseline fee, start by following these steps:
- Review your lowest contract allowances and the lowest fee you are charging to determine your current baseline. It’s important to remember that Medicare regulations do not allow you to charge less for a procedure than the Medicare reimbursement rate for your area.
- Think about the overhead required to keep your ORs running and then establish a minimum amount you’ll charge for such low-cost procedures as colonoscopies.
Your minimum fee should take the following costs into account:
- Supply costs
- Salary costs for all staff taking care of the patient’s needs (not just clinical and OR staff).
- Direct costs, which are expenses that occur for every patient entering your facility (e.g., insurance verification, demographic input, preoperative testing, patient financial counseling, time spent in preoperative area/OR/recovery, postoperative patient education, postoperative phone calls).
- Fixed indirect costs, which are expenses not directly related to the providing of care (e.g., utilities, maintenance, insurance, property taxes and depreciation).
After considering all the costs involved, our recommendation is a baseline fee of $1,000 to $1,500 as the least amount your facility should charge for any procedure.
Whatever minimum baseline fee you decide on, remember that to remain compliant, your ASC must charge the same fee for each specific procedure to all third-party payers, including state and federal programs such as Medicare and Medicaid.
ASC Fee Schedule Best Practice #4: Document Fee Schedule Changes
Whether you increase your fees across the board or focus on making specialty- or procedure-specific changes, record any changes you make to the fee schedule and how you arrived at the changes. Print out the adapted fee schedule, write down the reason for the fee change next to the corresponding CPT codes and place the document in a notebook to be stored with your policies and procedures.
The following are suggestions of the documentation to maintain when implementing fee schedule changes:
- Original fee schedule
- How you treat multiple procedure discounts
- Items included in your procedure fee (e.g., labs, EKGs)
- Fees carved out at a higher or lower percentage than an across-the-board percentage
- Fees for implants (HCPCS codes and non-specified implants)
- Explanation of how you arrived at the new fee schedule. Are the updated fees a percentage over Medicare reimbursement? A percentage over cost? A combination of the two?
Be specific when noting the percentage increases and how you calculated them. It may be difficult to remember the reasons and mechanisms you used when you changed your fee schedule, especially if it's reviewed only once a year. Your governing board will appreciate detailed recordkeeping when deliberating on increasing fees.
Keeping meticulous notes also makes sense from a compliance standpoint. Medicare will likely be more tolerant of fee increases when it sees documented proof that the changes are rational and consistent to all payers.