Problem: We recently conducted a billing audit for a hospital-based physician group that purchases the technical component from its hospital when performing outreach work. However, a review of the group’s charges for TC work showed the rates they were contractually obligated to pay back to the hospital (which was the basis for their fee schedule) were significantly lower than what Medicare allowed almost across the board. When totaled, the difference between the charged and the Medicare allowed amounts for these codes accounted for a $57,000 loss of revenue in 2015, money that would have otherwise gone in the physicians’ pockets.
Process: Since the group isn’t in an anti-markup state, we were able to quickly bump their TC fee schedule up to 100 percent of Medicare’s allowable rate. But, because their rates were so much lower than Medicare’s — 22 percent or less in multiple instances — it’s possible the hospital was nearly receiving less than cost for the use of its equipment.
So why wasn’t the fee schedule updated sooner? In this instance, it essentially comes down to a matter of complacency. The group had had always reimbursed its full TC payments to the hospital, which in turn hadn’t updated its fee schedule for quite some time.
While the hospital will now undoubtedly want to raise its reimbursement rate in future contracts, the group will be able to pocket the difference between the two rates in the meantime.
- This serves as a perfect example of why it’s important to regularly compare your fee schedule against Medicare’s to ensure it is up to date and helping you to maximize your revenue.
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