Over the last ten years, the Resource-Based Relative Value Scale (RBRVS) and Medicare’s national fee schedule have limited how medical practices raise their income by changing fees. Most health plans use fixed fee schedules that are often old and not matched with the RBRVS system. Many insurers pay rates below a fair share of Medicare’s set rates, making it hard for providers to cover their expenses well.
Reimbursement rates can differ a lot depending on the payer and procedure. Some practices get payments from 100% up to nearly 180% of Medicare’s rates, leading to unpredictable income. Also, fee schedules may stay the same for long periods, especially if contracts have no automatic yearly increase.
Practice managers need to use a clear process to check their fee schedules, find problems, and try to get better deals with payers when they can.
The first and most important step is to gather exact data on current payments for the services the practice provides. This begins with finding the most often used Current Procedural Terminology (CPT) codes that make up about 75% of the practice’s total services. These common codes bring in most of the money and give good strength in talks with payers.
After choosing these main CPT codes, the practice should collect payment data from its top payers. They should focus on three to four insurance companies that pay the most. By comparing each payer’s fee for chosen CPT codes with the Medicare fee schedule, leaders can spot where payments are far below suggested rates.
It is important to put this information into a clear spreadsheet. The spreadsheet should show each payer’s payment rate as a percent of Medicare’s rate for every service. This clear data helps when talking with payers and shows where payments are unfair, helping the practice make a stronger case.
Practices should set realistic goals based on their analysis. The American Academy of Family Physicians (AAFP) suggests aiming for reimbursement near 120% of Medicare for most services. Some groups go further and make tiered fee schedules. For example, evaluation and management (E/M) services might target about 125% of Medicare, while procedures and extra services might target closer to 150%.
These targets use the relative value units (RVUs) linked to CPT codes. RVUs consider doctor effort, practice costs, and malpractice risk. Matching fee schedules with RVUs helps ensure payment fits the actual value and cost of clinical services.
Good negotiations need a data-based approach. Practices should show payers side-by-side comparisons of their current payments next to Medicare benchmarks and peer averages. Pointing out specific codes with very low payments may make payers rethink their fee schedules.
For example, a hospital-based doctor group in Virginia used to accept payer contracts without much talk. After studying payment data, they showed a payer that their rates for some CPT codes ranged widely—from 100% up to almost 180% of Medicare. This difference led the payer’s manager to raise payments to 128% of Medicare and add a yearly 3% increase for four years.
Practices should know that not all payers will act the same. Some may agree to small increases, while others may say no, especially since healthcare costs are rising across the board. Still, good progress can happen when talks focus on main codes and use clear, solid data.
If talks do not lead to better payment rates, practices can try other options:
Practices should stay flexible and check fee schedules often to keep up with cost changes and payer policies.
Artificial intelligence (AI) and automation are becoming more useful for handling fee checks, payment analysis, and payer talks. Tools like those from Simbo AI show how phone automation and smart answering services can lower office work and improve how practices talk with payers.
AI systems can collect and analyze data automatically by connecting electronic health records (EHR) with billing and coding programs. This reduces mistakes in code use, keeps fee schedules updated in real-time, and quickly shows payment differences between payers. AI can watch trends in denied claims or low payment codes and alert managers to possible income risks.
By automating how CPT code payments from different insurers are gathered, AI tools create live reports to help leaders plan negotiations. These reports can have charts, trend studies, and comparisons with Medicare and peer groups.
Front desk automation improves patient experience and makes insurance verification and preauthorization tasks easier. Automated answering can manage insurance questions, book appointments, and handle follow-ups for authorizations or claims, lowering delays and helping cash flow.
By cutting manual work and raising payment data accuracy and communication, AI tools help practices keep fee schedules current with contracts. Being quick to respond to payer changes is important for financial health in a changing system.
For medical practices in the United States, these steps matter even more because payer systems are many and rules are complex. Providers in states with many managed care plans or special payer groups might see big payment differences. Focusing talks on the few largest payers that pay most of the practice’s income keeps decisions simple and efficient.
Practices in rural or needy areas have special challenges because there may be fewer payers or higher service costs. Careful study of payment compared to costs helps make sure financial choices support both the practice and patient access to care.
Using AI solutions from companies like Simbo AI lets U.S. practices stay efficient and respond quickly to payer changes. Adding these technologies cuts office work and lets providers spend more time on patient care and financial planning.
By using clear data analysis and negotiation plans along with AI-based workflow tools, medical practices can handle payment challenges better. These combined actions help improve financial stability and allow healthcare providers to keep care quality and access for patients across the United States.
The introduction of RBRVS and national fee schedules by Medicare has reduced practices’ ability to increase income via fee hikes, as most health plans now operate on fixed fee schedules with little relation to current Medicare rates.
The first step is to perform a thorough analysis of CPT codes and reimbursement rates, focusing on the codes that account for a significant portion of total practice charges, typically 75%.
Practices should determine their top payers and focus negotiation efforts on the three to four that make up the bulk of their reimbursements.
Solid data on the reimbursement rates for each CPT code from various payers, along with a comparison to Medicare rates, is crucial for establishing a solid negotiation position.
Practices can leverage discrepancies where lower reimbursement is observed for certain codes or under certain plans to negotiate for higher rates.
Organizing data into spreadsheets helps identify inequities in reimbursement rates and target specific codes for negotiation, enhancing overall negotiating power.
Practices can negotiate individual fees, consider dropping plans with low reimbursement rates, or stop accepting new patients covered by those plans.
If initial negotiations do not yield significant improvements, practices may consider maintaining a stance of reevaluating after a set period or adjusting fee structures accordingly.
By presenting a detailed analysis showing the comparison of their fees and the reimbursement rates from payers versus Medicare, practices can support their argument effectively.
Dramatic increases in healthcare costs are likely to face resistance, making it essential for practices to effectively negotiate for fair reimbursement to keep pace with rising costs.
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