Low Fee Schedule

March 1, 2005

My partners insist on keeping our fee schedule at 115 percent of Medicare 2004 — the number at which most of our managed care contracts are set. They don't want to charge more because they don't want to "overcharge" the poor, uninsured patients in the practice. What can I do to show them they are wrong?

Question: My partners insist on keeping our fee schedule at 115 percent of Medicare 2004 - the number at which most of our managed care contracts are set. They don't want to charge more because they don't want to "overcharge" the poor, uninsured patients in the practice. What can I do to show them they are wrong?

Answer: The best way to illustrate the danger of keeping a fee schedule too low is by actually auditing EOBs or running a report that will illustrate money lost when the charged amount was actually less than the allowable. Create an Excel file showing the allowable, what you got paid, and estimate how much was lost on that service over a year. It's very convincing, assuming you are, in some instances, actually charging payers less than they are willing to pay you.

You might also defuse your stalemate by actually offering discounts to poor, self-pay patients, which is a completely legal approach if done correctly. That leaves you free to charge more to those who can afford it, and to avoid undercharging managed care companies.