Has your revenue cycle team examined the charge capture processes for your surgical services, including supply management? Just as your ancillary charge master is managed and maintained on a regular basis, the clinical surgery suite’s charge processes should be evaluated and monitored to ensure you are appropriately capturing revenue for services and supplies; particularly in today’s environment of shrinking reimbursement and profit margins. Critical points that should be considered include the following:
- What does your surgical charge structure look like: How is a surgical charge derived and based on what factors (staffing complement, case complexity, procedure-based, time-based, a combination of factors)?
- Does the charge structure vary by service area: Operating Room, Ambulatory Surgery, Gastrointestinal Lab, Lithotripsy?
- Do you have a mechanism in place to account for the cost of state-of-the-art technologies utilized?
- Is the surgical charge structure defensible?
- Have you updated and streamlined inventory and trended supply utilization to differentiate chargeable versus non-chargeable supplies?
- Is your current charge structure covering the cost of supplies factored into surgical overhead (i.e., non-chargeable supplies, technology, and instrumentation/equipment)?
- Do you have a concise and complete tracking and documentation mechanism for chargeable supplies (are they HCPCS coded, clearly documented, and accounted for case-by-case?)
- Do you track and periodically monitor the overall costs associated with your surgical cases by service line? What does the Cost-to-Charge Ratio (CCR) for Operating Room (OR), Supplies, and Implants look like and has there been variability over the years?
- Who is monitoring your payor contracts and any changes in contract terms that could impact your surgical case payment rates?
- Do your payor contracts stipulate payment on lessor of charge or surgical case rates? Do you have carveout provisions that reimburse separately for certain supply devices/implants and/or drugs?
- Are your surgical charges reevaluated when payor multipliers and related rates change year after year?
- Where does your facility stand relative to market competitors from a pricing perspective and are you making the best use of publicly available information to compile a real-time, current market comparison?
- Do you have internal controls in place to ensure all viable charges are captured as associated with each OR encounter – surgical services charge, chargeable supplies, implants, anesthesia, recovery?
- Do you have reliable linkages between all the systematic processes that support accurate charge capture? Are they tested and retested on an ongoing basis to confirm accuracy?
So, where do you begin to evaluate these critical factors?
- One of the first telling points is taking a look at your OR/Surgical Services Revenue & Usage (R&U) distribution.
- Are you seeing emerging patterns? For example, in an OR Levels 1-5 system, are 90% of R&U falling to Level 2 and the rest scattered in other levels? In a procedure-based charge structure, are CPT or CPT grouping patterns seen? Are all of your cystoscopies falling to 1 or 2 CPT codes when numerous service charges are available represented by various cystoscopy CPT codes?
- This can be a sign that something has gone awry in the charge capture process, or your surgical case complexity or other factors have changed and need examined. The overall charge structure may need restructured for optimal effectiveness.
- Baseline charge structure to payor fee schedules/rates
- Have you done a baseline test against Medicare OPPS Addendum A or B National Payment Rates by APC or CPT/HCPCS, respectively. Many payors are migrating to payment structures based on a percentage multiplier of CMS OPPS.
- 835/Remittance Payment Review
- Are you finding full charges being paid? That could be a sign of lessor of charge or payment rate provisions kicking in. Are you getting paid what you’ve contracted for.
- Is your CDM strategically priced or is just an across the board % increase applied yearly?
- Look at your Supply Inventory and associated Supply CDM R&U
- What percentage is associated with HCPCS coded CDM lines?
- What is the portion of lines with R&U and a low hospital price (e.g., <$20-$30)? If it is high, it could signal numerous non-chargeable, low-cost minor supplies being separately charged.
- In reviewing the Supply CDM, are you seeing R&U associated with line items represented by common surgical supplies or instrumentation like drills, bits, burs, forceps, knives, scissors, etc.?
- Are your chargeable supplies easily identifiable in EHR documentation?
- Have you seen an uptick in claims rejections, denials or write-offs or payor audits associated with surgical cases or supply-related charges?
- Particularly in the supply arena, third-party payors have been flagging and denying certain supply-related charges; many commercial payors have supply policies and payment policies that should be referenced relative to your supply charge structure.
- Payors have been scrutinizing supply and other service charges through post-payment audits.
The MedCom Solution:
MedCom Solutions, Inc. can help you navigate and evaluate all avenues contributing to the Surgical Services Revenue Cycle. We have a comprehensive Surgical Charge Analysis that evaluates your surgical case population at the encounter level and can incorporate any or all facets of analysis including strategic pricing, supply evaluation and reallocation, 835 analyses, as well as post-implementation metrics and ongoing surgical procedure dictionary leveling support.
About MedCom Solutions:
We provide a unique combination of clinical expertise and proprietary technology to help medical service providers meet rapidly escalating and changing medical billing demands.
For nearly 40 years our Chargemaster, Pricing, and Compliance solutions have yielded hundreds of millions in net revenue for healthcare providers across the country.
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