4 Key Elements to Establish Effective Surgical Charges
Charge Setting in the Operating Room
Perhaps one of the most enigmatic locations in the hospital for setting charges is the Operating Room (OR). The same procedure can vary in cost greatly depending on the patient or surgeon. The supplies selected can influence the price of a case by thousands of dollars. Payment structures differ from fee schedule to Grouper to APC. Creating an accurate charge that matches the patient's acuity and incites adequate reimbursement can be daunting. Consider the following key elements to improve accuracy and avoid revenue leakage.
Keys to Establishing Effective Surgical Charges
1) Understand Case Acuity
What types of cases are you performing? Does your charge structure depict its severity or simplicity, or do they all receive the same assignment? Accurate surgical charging begins with correct acuity assignments. Some hospitals use Major and Minor to identify procedures; others use several levels. Depending on the types of cases performed, charge distribution should resemble a bell curve, with moderate acuity cases making up most of the volume and the highest and lowest severity owning smaller shares. A typical OR's depth and breadth of procedures performed cannot adequately fit into a category of only Major or Minor.
Still, institutions with several levels fail to tie the appropriate surgery to its representing level resulting in the majority of cases falling to one classification, most often "Level 2".
Designing a dynamic construct that represents surgical acuity in the charge is a critical first step to building charge accuracy.
2) Analyze Reimbursement
By measuring surgical charges against reimbursement rates, hospitals can uncover where overcharging and undercharging are occurring. Not all OR encounters should cost the same. Defensible price restructuring often results in a reduction for simple cases and price increases for more complex procedures.
Additionally, failing to submit adequate charges for commercial insurance can result in a loss of payment due to the "lesser of" payment clause. Payers will reimburse at the "lesser of" either billed or negotiated rates. Comparing high and low acuity cases against expected reimbursement will guide price setting to ensure complete insurance payments for all encounters.
3) Identify Case Length
In addition to complexity and reimbursement, understanding case length provides insight into how to structure your CDM charges and at what level to establish prices. Creating charge flexibility through the Initial and Each additional increment ensures that fees accumulate during prolonged cases. An initial charge that incorporates the room setup and extra effort included at the case's onset is critical to capturing time for shorter procedures.
4) Measure Results
To measure the success of your adjustments, measure progress against projections. Before implementation, understand the impacts of the updated price and structure. If outcomes do not match predictions, investigate to determine the source of the deviations. Corrections may require updates to implementation or charge capture education. Sometimes, a volume or case-mix shift will require adjustments to level requirements and pricing.
Creating a dynamic and precise charge structure in the Operating Room is critical to the success of a surgical program. Taking the time to guarantee alignment of surgical charges and reimbursement can keep your hospital in the black and help avoid pricing transparency nightmares.
About MedCom Solutions
MedCom Solutions specializes in Operating Room Charge Analysis to help hospitals establish defensible charging structures and improve the bottom line. MedCom Solutions creates patented technology and state-of-the-art software to help medical service providers meet rapidly escalating and changing medical billing demands. Our Chargemaster, Pricing, and Compliance solutions have yielded hundreds of millions in net revenue for healthcare providers nationwide.
Learn more about our solutions or visit our homepage or contact us today!