Question

Dr. Hilldale has asked you to set up a fee schedule for the office. Some physician practice will bill at rates from 100% of medicare to 500% of Medicare. Both rates have their disadvantages regarding profitability.

1, what do you think the most appropriate range should be when setting your in-office fees and why?

2, How is the conversation factor for the fee schedule determine and why is this important?

3, in your opinion, why would billing at 100% or 50% of the Medicare rate be unfavorable?

Answer 1

A updated fee schedule is very important as this will direcltly impact the pfrofitablity of the office. If this fees schedule is outdated there is a chance that you are charging very less from your clients or charging excess as compared to the other practiseners in your area.

Both the case of charging less and charging high are not suitable when it comes to profitability. Charging less leads to the fact that you have very less money left on the table and charging high will reduce the count of patients that visists you.

1. In my opinion this is important that the range should be considered after considering what is happening around. This must be seen that what other are charging, especially in your area.

The range of fees should be such that neither have you had very less profitability nor it waves off your patients.

The fees should be considered based on

• Whether you are a family doctor
• Whether you are specialized doctor for certain ailments
• Trend of fees in your area
• What are the prescribed limits of the Medicare
• What is the insurance company payment rate?

All the above factors should be considered and then the range should be determined.

1. To explain the conversational factors in the easiest form, these CF are the value that is used to convert a measurement into a unit of charge.

Suppose if a doctor spent 2 hrs. On a surgery hence these 2 hours are multiplied by the CF to calculate the Fees. Hence CF is the unit that is used to convert RUV into fees.

There are various factors that are considered in calculating the CF, CF is declared by the Medicare every year.

• Inflation rate
• Cost of medicines increased
• Availability of certain treatments
• Availability of certain Specialist.

CF is important as this will give an idea to the doctor to know what the min. fees that can be charged is. This is important as they know what time they put and what they earn out of the procedure.

1. In my opinion charging 50% and charging 100% are both unfavorable as explained below.

• Charging 50%

If 50 % of the Medicare is charged then this will lead to the fact that the profitability will reduce and even loss can be incurred, this will lead to the fact that you have patients but you will not have much profit on table as you are charging less than what you put in as a cost.

• Charging 100%

In this case you would be able to recover the cost but you would not have much in the profit. This will have a favorable impact on the patient’s counts but still you would not have much in the profits.

If you are charging 100% of the prescribed amount then this means that you are just recovering the cost and not making much profits.