The Importance of Payor Mix and Fee Schedule Examination | PGM

Apr 25, 2011 - Preventive medicine is an important part of good healthcare. The old saying of an ounce of prevention is worth a pound of cure really does contain truth. Not only should patients be encouraged to follow a good preventive health schedule but it is also important for the practice to follow some sound preventive measures for maintaining financial stability. A healthy practice should routinely have a pay mix and fee schedule examination as can be provided by medical billing service companies.

Payor mix should be carefully considered when starting up a practice. Payor mix changes are difficult to accomplish once patients are established. A healthy payor mix will be one that optimizes payment while servicing patients with a variety of payors. Private insurance payors that pay 100% of billed charges would be great for the entire practice but more than likely there are not enough of these types of patients in your service area to sustain a full time practice. Variety in payor mix provides the best opportunity for a full practice and will also assure that all payor classes in the community have access to healthcare. A Medical billing company can assist you in making the best payor mix determinations for the practice.

The fee schedule should be reviewed on a semi annual or annual basis at minimum. Medical billing service companies with experience in fee schedule reviews can provide assistance in establishing the appropriate fee schedule for the practice. A good rule of thumb to use in determining an appropriate fee schedule is to establish each level of service fee to be the same as the amount allowed by the highest payor to prevent that payor from reducing their allowable fee. This review can easily be completed using the explanation of benefits received for each claim submitted. Basing your fee schedule on your highest payor will create a high amount of adjustments for the lower paying payors. Your goal is to optimize your reimbursement and prevent the higher payors from reducing their allowable fees. Reviewing the fee schedule on a regular basis will take some time but can prove to be financially rewarding for the practice.


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