Essay Sample on Fee Schedules

Introduction

Medicare uses fee schedules to their doctors and other health providers. This schedule is also used for reimbursing a physician or other health providers on a fee-for-service basis. Developing these schedules requires a relative value that is entirely resource-based and that equates the current procedural terminology codes to a relative value set by medical association all around the world. A resource-based relative value scale (RBRVS) provides the relative weighting factor. This analysis explores the method by which fee schedules are created all around the world by looking at factors that impact their development.

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Development of Fee Schedules

When developing fee schedules several major factors are considered; one is a professional component which represents the work done in terms of the amount of time invested, stress, physical effort, technical skills as well as the judgment of health providers on the procedure to be used. Fee schedules also consider the specialty of a health professional where specialist are paid high fees whereas clinicians receive lower amounts. Also, medical centers recognize health providers who put more time and effort into their work, thereby paying them an extra amount of money which may be categorized as overtime pay. This kind of bonuses is put in the fee schedule as a reward mechanism (ASHA, 2018). The second factor is the technical component which represents the practice expenses in terms of overhead cost. The third factor is the professional liability component representing the obligation of the health provider to compensate the patient in case of negligence.

In developing fee schedules in medical practice, there are some aspects that must be put into consideration. They include; whether the health professional has been participating in the practice or not. The one who is participating in the whole Medicare program receives the fee in full, whereas the non-participating professional the fee is deducted and only receives a percentage of the whole amount. The other aspects that influences development of the schedules is the location where medical practice took place, whether in facilities or in non-facility environments.

If the health provider offers his services outside of the health facility, the fee is raised since he would be paying for equipment and overhead cost. Those providers who provide their services in the facility are set to get a lower fee as the facility gets to pay for the equipment/overhead costs. For instance, skilled nurses offering their services in a health facility tend to receive a lower compared to a therapist, who most of the times operate outside the facility, who gets a higher fee. Geographic locations also influence the development of fee schedules. In trying to figure out how much health professional should be getting, health association evaluates the location where each professional is operating in.

Professionals operating in urban areas receive a higher fee when compared to their counterparts in rural areas. This is mainly because, those in urban areas tend to spend more money on basic commodities when compared to the professionals working in a local medical center in a rural area (Director, 2014). The Medicare association uses a certain index known as Geographic Adjustment Factor (GAF) to evaluate the geographic variation in the physician's costs of providing services. The conversion factor is also taken into consideration when generating a fee schedule in medical practice.

Conversion factor represents the number of dollars that is assigned to a relative value unit. It takes the overall state of the economy into account. It also evaluates the number of healthy professional available as well as the amount of money that was previously spent in the prior years. Fee schedules are, therefore, set based on the relative value scale as the fees are paid by third parties which means that physician's labor market is illiquid.

Determining the cost of services provided to the patients may also help smaller medical centers in developing an effective fee schedule. This involves calculating every cost, ranging from paying staff members to procurement cost. In order to ensure maximum effectiveness of the fee schedule, medical centers should always consider other funding channels such as grants which could cover some of the expenses leaving enough money to pay their health professionals. Generally, smaller medical centers aim for the smallest amount that could be charged to pay for the expenses (Mays, 2009). The other thing that would help health centers in coming up with an effective fee schedule is to ensure that they are aware of the standard fee being offered for the same services in the country or region. This way, they are able to pay their professionals a standard fee.

Conclusion

In general, medical centers determine each code's final relative value unit, which they then multiply it by an annual conversion factor to get an average fee in which to pay their health professional. The rates are based on geographic indices are according to the locality of the provider. If the relative values are adopted by payers other than medical centers, the conversion factor to be applied may vary.

References

ASHA, A. (2018). Calculating the Medicare Fee Schedule Rates. Retrieved from https://www.asha.org/Practice/reimbursement/medicare/Calculating-Medicare-Fee-Schedule-Rates/

Mays, C. (2009, June 10). Medical Billing Allowables: How to Set A Practice's Fee Schedules. Retrieved from http://www.claimcare.net/medical-billing-blog/bid/9311/Medical-Billing-Allowables-How-to-Set-A-Practice-s-Fee-Schedules

Director, A. (2014, January 1). Physician Fee Schedule Regulations Title 8, California ... Retrieved from http://www.dir.ca.gov/DWC/FeeSchedules/Physician/PhysicianFeeSchedule/PhysicianFeeSchedule2016/Regulations/Text-of-regulations-Clean.pdf