Abstract
In healthcare financial management, health insurance contributes in determining the healthcare services. The fee schedule provides a list of charges reimbursed for service providers and suppliers. Center for Medicare services, CMS, uses the fee schedule to determine the facilities and non-facility in healthcare provisions. Physicians, ambulance and medical equipment services among others help in the determination of the fee schedule by Medicare Physician Fee Structure (MPFS). The study focuses on CPT code 99214-office visit as the reference in the service delivery by the center of Medicare services. The Medicare and Medicaid rates are essential in determination the fee schedule.
Account receivables help in healthcare organization management through focusing on reimbursement and health care services delivery. The impact of account receivable depends on duration for payment. These variations have an influence on cash flow and hence affecting the healthcare organization's operations. Changing payer mix requires taking some steps to identify the best practice. Therefore, the paper focuses on providing appropriate healthcare financial management for high services’ health care organization.
Fee Schedule and Center for Medicare Services
A fee schedule consists fee listing by Medicare that is used in paying doctors and other services providers or suppliers. It is comprehensive fee listing indicating the maximum charges that are used in reimbursing physician and providers of services by fee-for-services. Center for Medicare services develops appropriate fee schedules in different categories depending on the services offered. These categories include physicians, ambulance, clinical laboratory, orthotics, and medical equipment services. The center for Medicare services has employed different tactics in setting fee schedule (Krista & Stephen, 2016). The factors that contribute toward the health and human services pricing are physician professional services, diagnostic tests, and radiology services. The services are essential in developing fee schedule also includes the suppliers and providers. The Medicare Physician Fee Structure (MPFS) ensures the institutional providers covering Hospitals, Skilled Nursing Facilities (SNFs) among others are paid according to depending on their institutional type and services offered (Christopher, 2016). Researchable MPFS provides a platform for all professionals in health care, institutional providers, and suppliers to access and find Medicare payment for every code to calculate beneficiary coinsurance amount. Limit charges are provided by MPFS for nonparticipating health care professionals and suppliers. Therefore, the pricing factors vary depending on the services offered that are health care professions such as physicians, providers such as institutions and suppliers.
According to CPT code 99214-office visit, there are different fee schedules provided in the center for Medicare services. The columns are set depending on provider or supplier services in health care. The CPT code 99214 has the following fee schedule explanation as provided by CMS;
(Department of Health and Human Services, 2016).
Modifier; in this column in spreadsheet nothing is displayed. The only services with codes showing professional and technical component will appear in this column.
Proc Stat; It consists of procedure status code “A” where active codes are indicated. This shows that the fee schedule for and depending on the physician services are separately paid.
Carrier Locality; in this column, there is specific code that indicates or represent the certain country. In the last two digits of the codes shows the statewide pricing depending on localities. Therefore, the last two digits change to show different locations in the country being referred by the pricing code.
Non-Facility Price; the column indicates the fee schedules that amounts the services procedurally performed by a physician in a non-facility setting. This includes the therapy procedures of which can be undertaken in a well-furnished facility setting or non-facility setting. MPFS is responsible in determining the price of institutions such as hospitals with the furnished facilities and non-facility settings. Normally, the non-facility rate is higher as the main objective is providing facilities such as staff and supply costs are usually higher. Therefore, higher payments are made in non-facility setting compared to the furnished facility. In this column, CPT code 99214 shows payment of $103.33 that covers for non-facility pricing (Department of Health and Human Services, 2016).
Facility price; this column shows the fee schedule amount that is paid for the services in the fully furnished facility setting. The physician can provide the services in a hospital or Ambulatory Surgical Center showing that the facility setting are furnished and meets all the requirements for health and human services. The CPT code 99214 indicates $76.46 as the pricing in the fee schedule as the facility pricing (Schneider, 2008).
Non-Facility Limiting Charges; in the CPT code 99214 row, the non-facility limiting charges indicates $112.89 (Schneider, 2008). This shows the maximum amount that the beneficially would be charged for the services. It covers nonparticipating professionals in health care, who do not undertake or accept assignments and performing the services in an office setting.
Facility Limiting Charges; CPT code 99214 has $83.53 charges in this column (Schneider, 2008). It indicates the maximum charges that beneficiary pays for the services undertaken by nonparticipating professionals, who never accepts assignments and performed in a facility setting.
Conv. Fact; it is the last column in the fee schedule, and it shows the conversion factor for code 99214
Difference between Indemnity Insurance Rates, Medicare Rates, and Managed Care Rates
Indemnity insurance it is also known as professional liability insurance covering certain and specific professional or service providers especially those offering advice and expertise. The indemnity plan reimburses medical expenses irrespective of a service provider such as physicians. The indemnity rate depends on how much patient receives for medical expenses. The reimbursement of actual charges, insurer, reimburses the actual cost of the specified services in full (Judy, 2016). The percentage of actual changes reimbursement plan, insurer, tend to use percentage in covering the procedures and services. In most cases, the indemnity rate is considered to be 80% of the total cost of services and procedure.
The difference of indemnity insurance and Medicare rates is projected to the income standards and cost effectiveness in the long run. Indemnity insurance plan has higher charges in deductions and co-payments and hence cutting short the benefits of insurance one is entitled in a lifetime (Joseph, 2016). Additionally, indemnity plan has more freedom in choosing service provider than the managed care plan and hence it depends on the personal preference and circumstances. Managed care plan objective is minimizing costs and hence appropriate for low-income earners in the long term. Therefore, it depends on with personal interests and goal in finding maximum flexibility and favorable cost.
Managed care plans involve health maintenance organization for prepaid medical treatment for a member contributing fixed monthly premium. Preferred provider organizations are the preferred service provider that is physician and hospital whereby the member pays for services (Ken, 2016). Under the point of service plan, the healthcare system requires deductible payment and minimal co-payment when using healthcare services.
The differences of indemnity insurance rate to center for Medicare services are based on the premium and targeted payer. These rates are defined on the level of yearly income and individual tax returns. In premium-free Part A, the monthly payment is $411. In every period, one is supposed to pay $1288 (Bonner, 2014). Inpatient deductible and coinsurance depend on with the categories in payment. In Part B premium people are supposed to pay a monthly premium of $104.90 (Bonner, 2014). In this category, 20 percent of the pay is directed to Medicare for most doctor services, outpatient therapy and also offering durable medical equipment. The rates of indemnity insurance support the healthcare services while Medicare rates go further in a sustaining healthcare provider.
Accounts Receivables
Accounts receivable involves direct cash an institution has the right to receive on later dates after providing customers with either goods or services. In most cases, account receivable takes a period of about 30 days to clear. Health care provider organization uses account receivables, especially in insurance payment mode. Patients are treated, and remittances of funds are realized in later dates by insurance. Insurance payment plays a major part in the daily operation of health care organizations, and hence they require instant cash to manage its activities (Kevin & Benjamin, 2016). The account receivables play a major role in the healthcare health organization in improving the working condition. The medical, financial practitioner anticipates the amount to be remitted by insurances. This helps in planning on different health supporting projects from the anticipated account receivable.
Account receivables increase efficiency in the healthcare organization through keeping contracts and records in the electronic system. This helps in elimination manual work that would be used in locating records and seeking for contract details. The healthcare organization and insurance has a common electronic system that has the record of the patient on their payment trends. It is easier to identify the eligible patients for insurance cover to obtain the services under the account receivables platform.
Account receivables enable the healthcare organization to forecast their future collection as the system provides accurate figures of the cash flow. The contract terms from the provider insurance help in account receivables record on the amount of money that would be received and hence help in budgeting decision and process. This is as a result of accurate matching prediction of future collections basing on account receivable. Account receivables help in collecting the payments that health care organization is owed. Through checking on automatic underpayments contracts in the system, the healthcare organization considers collecting the amount owed by health insurance. This ensures that payments are paid in full according to the contracts.
The impacts of account receivables
In the instance where account receivables take an average of 30 to 60 days, the impact of healthcare organization activities would be influenced . This would be in the service delivery, clearing bills and staff salary payments. This would affect the healthcare organization operation in the long run. The same impacts would be realized in the 60 to 90 days period where essential functions of healthcare organization would be adversely affected. This would paralyze the operation as the healthcare would not be in a position of meeting its contracts with other service and care providers. In a period of 90 to 120 days, the health care would not be in a position of running as all service providers would have cut ties with the organization . Lack of essential equipment, development and drugs would greatly influence the healthcare organization. This would make the organization to consider cash flow rather than depending on the insurance programs (Kay, Stephanie, & Isabella, 2016). The healthcare organization would increase on counter payment services whereby it would not accept health insurance plan. The more the account receivables delays, the more the health organization would increase cash flow.
Strategies applied to improve Account Receivables collection process
In improving the collection process, effective account receivable management should be employed to advance and improve in efficiency workflow. The strategies that should use in improving collections process are;
The automated system of work queue for collectors; as it would send the information and assignments through automated list to the system. The lists consist of the account receivables to the health insurance for easier collection process. This would reduce the time for manual sorting of these account receivables as the automated system would work efficiently and quickly.
Advance tracking; having advanced tracking practice would help in identifying all the denials, underpayments, and other claims. This would help in working on the changes required in the system to ensure better organization workflow. The system requires being in a perfect condition to identify this shortcoming that would influence the account receivables during the collection process. The tracking process in advance would provide enough time to assess and identifying denial claims before accounts receivables are denied.
Checking claim status; using the electronic system, it is easier in checking claim status. This helps in identifying the nature of the claim when is expected to be solved, the expectation of payment hence making it easier to follow up (Judy, 2016). The electronic system that healthcare organization should consider is that connects with payers for easier electronic status checks.
Advancing organization; the healthcare organization should have the ability to store and accessing all account receivable data. This would improve in better decisions and collections. Having an advanced system, the organization would consider an electronic system that allows multiple practices and sorting denials by payer, provider, payer type, responsibility party and billing amount among other different categories.
Tracking and standardizing denials; the healthcare organization should consider tracking the expected value of denials under standardized types. It helps in understanding the amount the organization costs by denials and assigning appropriate mechanism to collect these resources or funds. The electronic system would be essential in sorting all denials into different categories depending on the payers (Krista & Stephen, 2016). This would contribute to developing a mechanism that analyzes the reasons for health insurance denying paying and working on measures to minimize these denials in future.
Discussing Payer Mix Changing
In changing payer mix, there some steps that are supposed to undertake. This starts by ensuring appropriate analysis of current player mix from different angles such as reimbursement, productivity as well as profitability. The evaluation of the plan is followed by the next step of developing and implementing strategies with the best financial practice.
The first step consists identification of the practice player mix by charges per payer over a period of last 12 to 18 months. The consideration is done for the payers that represent 80% in total of practice’s charges (Ken, 2016). The reimbursement analysis is performed to identify the top payers and making a comparison with other payers arranging in representation percentage in the total accounts receivable.
In the second step, using the CPT code, the same analysis of top payers is conducted. Location of the CPT codes that generate total changes by 80% in the set period of practice is initiated (Bonner, 2014). This consists of a smaller number of the codes. In this step, it is important to match the payments with the charges and to ensure the payment reflects the same actual amount charged.
The third step involves looking for productivity and profitability. Productivity is indicated by the patient’s numbers taken care for by a physician. The higher the number of patients, the more revenue, is generated. Reviewing the physician appointments schedule indicates and identifies productivity maximization and revenue utilization. These processes are essential in the determination of transition process to the best practices.
References
Bonner, L. (2014). CMS finalizes durable medical equipment fee schedule. Pharmacy Today,
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Christopher, K. (2016). CMS Proposes to Expand Its Overpayment Recoupment Options. Dennis Barry's Reimbursement Advisor, 31(12), 8-10.
Joseph, G. (2016). CMS uses quality metrics to revamp hospital rating system. Healthdatamanagement.com, 3
Judy, V. (2016). (2016). CMS to Providers: Patients Must Be Informed. Receivables Report For America's Health Care Financial Managers, 31(8), 3-9.
Kay, W. S., Stephanie, J., & Isabella, W. (2016). Medicare Parts A and B Overpayment Final
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Ken, P. (2016). Medicaid ACOs: the quietly rising tide of value-based care. Hfm (Healthcare Financial Management), 70(8), 90-91.
Kevin, N & Benjamin, S. (2016). Access and quality of care by insurance type for low-income adults before the affordable care act. American Journal of Public Health, 106(8), 1409–1415.
Krista, H., & Stephen, C. (2016). First Medicare demonstration of concurrent provision of curative and hospice services for end-of-life care. American Journal of Public Health, 106(8), 1405–1408
Schneider, M. (2008). CMS Turns to 2009 Physician Fee Schedule. Caring For The Ages,
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Appendix
http://phpa.dhmh.maryland.gov/cancer/SiteAssets/SitePages/homemos/CCPC14-16_att6_CPEST-ReimbursementRates-AdditionalNotes%20(1).pdf
