Before discounts can be considered, realize that it’s only one portion of a compliant and viable fee system that must include overall compliance measures
When a practice decides to implement changes to its fee system, often the first thought is to define discounted fees. For that reason, many turn to Discount Medical Plan Organizations (DMPO) to install the necessary components of a compliant, yet simple system. However, while this action is a critical step in the process, before discounts can be considered, realize that it’s only one portion of a compliant and viable fee “system” — and every step must be reviewed in the process.
The elements of your fee system that must be reviewed include:
- Your actual fees
- All discounts including contracted, professional courtesy and hardship fees
- Regulated fees
- The written compliance policy that governs the entire fee system
Attempting to address any one of these items, without considering the entire system, can put your practice at risk from a compliance standpoint, and can negatively affect your bottom line. Have you defined all the following components in your fee system?
The “actual” fee schedule of a practice is also known as the Charge Master. This is the pre-defined, master price set for each service and code you provide in the office. Often, it’s recognized as the fee that is billed out for all services when sending charges to a third-party payer.
Setting your actual fee should be a thoughtful, research-based process that includes looking at many factors, such as your community, a National Fee Analyzer-type schedule published for your region, your participation in various third-party contracts with their fee schedule limitations, and your practice demographics.
Discounted fee system for uninsured, under insured, partially insured
Annual surveys conducted about reimbursement in the profession often reveal layers of discounts typically offered to cash-paying patients, those with poor insurance coverage, and other situations. An uninformed practice may unknowingly be committing violations of state and federal laws or provider agreements when charging one fee to an insured patient and another to a cash payer.
Under the guise of a “time of service discount,” many practices claim to have a discount if you “pay right now,” versus having the office submit to an insurance carrier. However, this “deal” tends only to be offered to those without insurance. Most states have no direct guidance about the rules for discounting, but the feds gave a strong opinion. It’s expected that the amount of discount offered at the time of service is based on the savings that the office will reap by not submitting to a third-party payer. The guidance clarified that 5-15% seemed reasonable for a time of service discount, but it should be quantified in your compliance policy as to how you arrived at the level of discount offered.
Commercial payers and Medicare have rules too. Because Medicare patients have partial insurance, meaning coverage for the medically necessary adjustments, but nothing else, they become cash-paying individuals in your office for the statutorily excluded services. Tread carefully when offering discounts here. The rules are clear.
Although health care is one of the most highly regulated professions out there, as a business owner you still have the right to offer certain discretionary discounts or accommodations at will. The challenge most practices deal with is the lack of written policy about to whom or how they will offer these discounts.
A great example is the very common practice of offering free chiropractic care to the staff of the office, and even sometimes to the staff’s immediate family. Fellow chiropractors, their family members, clergy, the doctor’s family, military, or even friends like medical doctors may be offered free or discounted care in the office. However, without considering the rules before randomly offering these discounts to groups such as these you cross the road into unintended violations.
For example, perhaps your discretionary discount policy includes treating office staff at no charge. What happens when that team member is in a car accident, and now has auto med-pay available to pay the bill? Does the “free” care go out the window? And what if the doctor’s family member has insurance? Does your office bill the carrier, but waive deductible and copayments? These are the types of situations that cause problems when not clarified in your office policy.
The government has provided for the fact that financial hardship is very real, and with medical bills being the number one cause of bankruptcies in the United States, it’s easy to see why. Recent statistics show that more than 2 million bankruptcies were filed due to unpaid medical bills.
Patients often need assistance with their medical bills for one reason or another. Your office has every right to have a hardship or indigence policy. As a business owner, that is a decision that you can make and customize that fee schedule according to the needs of your practice demographics. The mistake most often made is simply stating, “Yes, you have hardship, so you get a (insert the number that pops into your head that day) discount.”
Without written policy, including how that hardship will be verified, any discount given in the name of hardship may just be a random, non-compliant discount. The good news is, it’s easy to set and follow hardship policy in your office. But don’t get caught in the snare of ambiguous hardship policy. Get the policy and your procedure for following it written down immediately.
There are certain fees within the practice fee system that are regulated by outside entities. These include fees set annually for the three spinal chiropractic manipulative treatment codes by Medicare. You may also have regulated fees within your Worker’s Compensation system or Personal Injury System within your state.
These regulated fees are your required fee schedule for patients in this category. You must take that fee schedule, according to the regulations, thus the name “regulated fee.” While this is an important component of your fee system to be aware of, often practices fail to look at the regulated fee in the same context as other fees in the office. For example, if your state’s Worker’s Compensation regulated fee schedule is higher than other fees in your system, like the actual fee, it doesn’t mean you can charge this higher fee (another reason to properly evaluate your actual fee!).
Remember, regulated fees are often controlled by governmental agencies, requiring that you adhere to them when treating that classification of patient. Don’t run afoul of the rules here.
Governing policies for your fee system
Once you have reviewed your entire fee system, setting actual fees based on the realities of your practice, installing simple and legal discounted fees, and quantifying your hardship policy, now it’s time to make it official with your written policy that is followed in the practice. As with all types of compliance policy, it’s vital to first set the policies, then to write them, and train all the practice team members on them. Written policy about each type of fee and how it’s managed in the practice will outline your reasoning for how it’s administered in your office.
Once that is accomplished, write procedure for each fee classification that outlines the exact steps necessary to ensure that policy is followed. For example, for your hardship policy, what types of hardship are recognized, and how each is verified, should be a part of that procedure. These written policies and written standard operating procedure help ensure that the guiding principles you’ve put into place will be followed.
An outside entity reviewing your compliance for any reason would easily be able to tell that you strive to “do it correctly” and that you have made fee schedule compliance an important tenet of your health care practice. Recognizing how your fee system controls the day-to-day operations of your business is critical. It’s a required element of your compliance policy not to be trifled with.
KATHY MILLS CHANG, MCS-P, CCPC, CCCA, has been since 1983 providing chiropractors with reimbursement and compliance training, advice, and tools to improve the financial performance of their practices. She leads a team of 30 at KMC University and is known as a foremost expert on Medicare, documentation and CA development. She or any of her team members can be reached at (855) 832-6562 or info@KMCUniversity.com or kmcuniversity.com.