Setting the right fee schedule for your rehab therapy clinic is an essential element of running your business. Your pricing structure indicates to both your patients and other stakeholders, like third-party payers and referral sources, how you value your services. And it’s crucial to hit on the right dollar figures for your services; the appearance of either over or under-billing is equally bad, for different reasons. To thread that needle, you must use a rational, repeatable way to value your services. Here are a few important considerations for your practice when constructing your third-party payer and cash services fee schedules.
Setting Third-Party Payer Fee Schedules for Your Rehab Therapy Clinic
In setting a fee schedule for your rehab therapy clinic, you can either do it the old-school way—by calculating your cost per visit and adding your desired profit to it—or you can use a recognized fee schedule standard that the industry accepts. Using the Center for Medicare and Medicaid Services (CMS) Medicare Physician Fee Schedule as the basis for your fee schedule offers a couple of benefits: it provides you with a disciplined methodology in determining the resources needed to provide your services, and it allows you to keep your average charge per visit relatively in line with what other practices are charging.
You can also craft a resource-based fee schedule for your rehab therapy clinic based on the CMS/AMA Resource-Based Relative Value Fee Schedule (RBRVS). RBRVS is based on the extensive work of the American Medical Association’s Relative Value Update Committee (RUC). The RUC uses an extensive database of the costs to provide services and uses this data in formulas to estimate the price of a procedure (represented by a CPT code). The work values are divided into Provider Work to perform the treatment, Practice Expense to deliver the treatment, and Professional Liability Insurance costs.
Having a resource-based fee schedule, especially one based on RBRVS, makes sense for a few different reasons:
- RBRVS helps you determine reasonable guardrails that would be appropriate to the third-party payer world.
- RBRVS is the methodology used by nearly all of the preferred provider contracts in setting up their own payment fee schedules;
- It will help you analyze your key performance indicators (KPIs) of average charge-per-visit and payment-per-visit compared to industry benchmarks; and
- RBRVS is based on actual, current expenses.
Setting Third-Party Payer Reimbursement Rates
You’ll want to have a practice fee schedule amount that nicely fits the KPIs for outpatient rehab, which is between 30% and 45% above the Medicare Part B fee schedule. To calculate fees that fall within that range, follow the following steps:
- Download/print your Part B Fee Schedule from your Medicare Administrative Contractor (MAC); if you’re not familiar, your MAC is where your payments come from.
- Use the “non-facility” column, look up each CPT code in your fee schedule, and record it in your spreadsheet.
- Multiply the dollar amount of each CPT code by 1.30–1.45 and round to the nearest dollar. That will give you your third-party fee schedule amount for each CPT code.
If you follow that methodology, you should come up with an average charge per visit roughly in the $160-$250 range, depending on the number of CPT codes and the number of units you bill for each. Obviously, you can make adjustments as you see fit, but a per-visit return in that range should help boost your reimbursement rates.
Creating Your Cash Fee Schedule
If you’re building a cash-based fee schedule for your rehab therapy clinic, you’ll likely want it to be less than your third-party fee schedule. There are several considerations to keep in mind:
- Therapists generally prefer to use flat rates for 15-minute increments or flat pricing of increasing amounts for 30-minute, 45-minute, and 60-minute treatments.
- Some therapists have a different flat rate for evaluations versus treatments.
- Many providers offer discounts for buying several treatments in advance.
- Cash patients often need a superbill to file for reimbursement from insurance, health savings/flex spending accounts, or another third party.
Determining Cash-Pay Reimbursement Rates
To come up with your cash-based fee schedule and pricing structure, you can use the same methodology as we covered for the third-party payer fee schedule; in this instance, you would use a lower percentage than the 30-45% recommended for third-party payers to get in the range you want for every 15 minutes of service (for the timed codes) and your preferred pricing on your untimed codes like evaluations.
If you want to use CPT codes (recommended for superbills), you can set your fees per CPT code, total the minutes per code, and apply the CPT minute rule to arrive at the charges for the day. In the case of superbills, if you want to sell pre-paid treatments and give an additional discount, you will still need to provide them with a superbill for each treatment to reflect what was done and paid for by the patient. If the patient does not need a superbill, a simple receipt for payment is all that’s required.
Using Superbills with Cash-Pay Patients
For providers offering superbills to their cash-pay patients, there are a few things you need to keep in mind for compliance. If you’re using the CPT codes as identifiers for the interventions provided, you also need to adhere to the rules associated with those codes. That means you need to meet any one-on-one stipulations, as well as the guidelines for time-based codes, whether that’s the midpoint rule or the rule of 8’s. Remember, payers receiving these superbills from patients seeking reimbursement will expect your use of CPT codes to be accurate; failing to do so will affect those patients’ reimbursements. .
To help your patients get the maximum reimbursement, be sure your superbill has everything needed for them to submit to a third-party payer. Your superbill must have all the info that would have been on a bill if you submitted it to the payer directly, including:
- ICD-10 codes;
- CPT codes with charges and modifiers;
- Amount paid by the patient; and
- Practice Tax ID number.
If you want to make it easy, you can check out this blog on creating a superbill, as well as our free superbill template download to help you get started.
Establishing a fee schedule can be a challenging exercise. But having the right fee schedule for your rehab therapy clinic is essential to your practice and affects patients’ and stakeholders’ opinions of your operations. Take the time to get it right!