Is Your Surgical Charge Structure Effective or Are You Missing Out on Surgical Reimbursement?

Profit margins are shrinking for hospitals across the country.  Bundled payment structures are on the rise, making it difficult to determine if reimbursement is accurate.  Healthcare providers cannot afford to miss out on negotiated reimbursement.  Additionally, charge structures and payment for surgical services are not as transparent as other services like radiology.  The cost to perform surgical procedures is among the highest of all services provided in a hospital setting. Hospital finances can suffer, or flourish, based on operating room revenue.

Most reimbursement reports and analytical systems can tell you how your price compares to a fee schedule, or per unit payment.  However, because most providers charge for surgical services on time-based and/or acuity-based structures, it’s difficult to see how the charge master price directly relates to the payment for a procedure.  

Example: Surgical Procedure Charges vs. Payment

Surgical Procedure:                                                         27446  Revision of Knee Joint

Total Procedure Charge:                                               $14,260

Commercial Insurance Negotiated Rate:               $20,544

In this example, it is clear to see that the total procedure charge falls below the negotiated commercial payment which means there is a potential for only receiving payment for billed charges.  Yet, performing this type of review case by case would take an inordinate amount of time and would not provide direction on how to correct the overarching charge issues.  So, how can you effectively determine if your overall charges are covering your operating room costs, the complexity of the surgical services provided, and related contracted reimbursement rates?

An encounter-level analysis of surgical cases is the best way to evaluate the effectiveness of your current surgical charge structure.  Our Surgical Charge Analysis includes a systematic review of surgical encounters, which requires thorough payor contract analysis, reimbursement and surgical encounter modeling, as well as charge systems and process examination.  Through the clarity of these analytics, you can easily see the types of services and specific procedure charges that fall short of reimbursement, in addition to how to adjust prices and structures to create a defensible surgical charge that generates full reimbursement on every case. Taking the time to guarantee alignment of surgical charges and reimbursement can keep your hospital in the black and help avoid pricing transparency pitfalls. The Surgical Charge Analysis includes the following critical elements:

• Reviewing surgical charges and criteria against acuity and reimbursement metrics
• Evaluating 835 payment data to validate payment accuracy with reimbursement contracted terms
• Establishing a defensive acuity level definition and related time increments that accurately reflect actual case complexity and resource utilization
• Establish a defensive pricing strategy based on current costs and acuity factors, while maintaining gross revenue neutrality or achieving facility-specific projected impacts

Contact us today to learn more about establishing a nimble charge structure and defensible pricing strategy for surgical encounters and preparing for ongoing payment changes now and in the future.