Your bottom line is a function of the money you receive and the money you spend. This article is the first of a two-part series that focuses on one facet of how your payer mix impacts your revenue. Before we discuss the importance of payer mix, let’s review some revenue math.
A dollar charged is not a dollar earned because the dollar just doesn’t go that far in a medical practice. You get the sum of the co-pay, the deductible and what the patient’s insurance pays, but that rarely equals the amount you charged. That’s part of revenue math, where the focus is on how much of that billed amount you actually receive.
A day in the life
Here are four examples of a day in which a physician sees 25 established patients in the clinic. The same CPT code, 99213, is used on all patients. The only difference is the payer mix.
|Patient insurance||Monday patients||Tuesday patients||Wednesday patients||Thursday patients||99213 Reimbursement|
In each example, the same number of patients are seen. The total charges are the same. The same resources are used. The time spent is similar. These four days differ only in payer mix, and consequently so does revenue.
|Pataient Insurance||Monday patients||Tuesday patients||Wednesday patients||Thursday patients||99213 Reimbursement|
|Daily Revenue||$1,835||$1,675||$1,990||$1,900||$79 Avg.|
The only difference between Monday and Tuesday is the number of patients seen who have either Payer V or Payer W insurance. The physician has a higher number of patients with Payer V, which pays better than Payer W, on Monday, meaning the physician earns $160 (9.6 percent) more than on Tuesday.
Similarly, Wednesday and Thursday differ only in the number of patients seen who have either Payer X or Z. Wednesday includes more patients with the better-paying Payer X and thus produces more revenue $90 (4.7 percent) than Thursday.