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Whether you operate a physician practice or clinic, imaging center, ambulatory surgery center (ASC), acute care hospital, or all of the above, it is important to understand how your billed charges compare to the charges of other providers in your area when you set your own charges. In this blog we discuss five reasons why you need to know how your charges compare to other providers and to standard benchmarks.
Research & Planning Consultants (RPC) has experience analyzing and establishing chargemasters for physician practices, ASCs, freestanding emergency centers, acute care inpatient hospitals, and outpatient hospital departments. We can calculate the usual, customary, and reasonable (UCR) charge for the line items on your chargemaster and help you make proactive adjustments to your charges to better meet your business objectives.
1. Balance Billing Laws
Thirty-three states[1] have laws limiting providers’ ability to “balance bill” the patient for any outstanding amount above the allowed amount paid by an insurer for out-of-network services in some or all circumstances. Part of the December 2020 No Surprises Act established federal limits on balance billing, which took effect in 2022.[2] Many state laws set UCR limits on the amounts insurers and patients must pay for out-of-network services. By knowing how your charges compare to UCR benchmarks, your medical practice or facility can receive more timely payments with fewer disputed charges.
2. State and Federal Independent Dispute Resolution for Out-of-Network Bills
When health plans and patients disagree with medical providers about fair payment for out-of-network medical bills, some states mandate a binding independent dispute resolution (IDR) process. These laws often instruct independent arbiters to determine a fair payment based on UCR charges in the market, sometimes along with other metrics. As a provider, you need to understand how your charges compare to UCR benchmarks to know what offers to make or accept to resolve disputes.
3. Personal Injury Protection Laws
Many states either require or have optional Personal Injury Protection (PIP) coverage as part of automobile insurance.[3] These policies cover the insured party’s injuries regardless of who is at fault in an accident. Unlike health insurance, few providers are in network for PIP plans. Most care is by out-of-network providers, and payment is based on the automobile insurer’s payment policies and dispute resolution processes. UCR benchmarks are frequently the basis of these policies and processes. As a provider, you should know how your charges compare to these benchmarks to ensure you receive maximum payment according to policy rules and you know when you need to pursue dispute resolution or litigation.
4. Price Transparency Laws
On October 29, 2020, the Centers for Medicare and Medicaid Services issued a final rule requiring many insurers to provide price and cost-sharing data to plan participants. This rule forced health plans to publish their negotiated rates. With greater price transparency, you can see how your charges compare to your competitors’ and can make adjustments accordingly.
5. Revenue Maximization
Finally, your practice should engage in regular analysis of and updates to your chargemaster to maximize your practice revenue. Health plans that base allowed amounts on UCR benchmarks (e.g., 80th percentile) will pay the lesser of the billed charges or the UCR benchmark. If your charges are below the UCR benchmark, you will be paid less than the health plan was willing to pay. Not knowing how your charge for each service compares to UCR benchmarks may result in you leaving money on the table.
Visit RPC’s website for more information on our data sources and methods. Contact us today to discuss our chargemaster analysis services and how we can help your practice maximize payments with minimal delays, difficulties, or litigation.
[1] “State Balance-Billing Protections,” The Commonwealth Fund, https://www.commonwealthfund.org/node/27021.
[2] Julie Appleby, NPR, “Congress Acts to Spare Consumers from Costly Surprise Medical Bills,” December 22, 2020, https://www.npr.org/sections/health-shots/2020/12/22/949047358/congress-acts-to-spare-consumers-from-costly-surprise-medical-bills.
[3] “Personal Injury Protection (PIP) Insurance (AKA No Fault Insurance),” Allstate, updated August 2022, https://www.allstate.com/tr/car-insurance/personal-injury-protection-coverage.aspx.
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