Is your audiology practice getting the most out of third-party-payer contracts for hearing aid services? Have you determined what it takes to make a profit? Does your team know how to properly itemize clinical services for maximum third-party payments? A few simple steps can mean the difference between optimizing reimbursements for patient services and leaving untold amounts of revenue on the table. With three timely tips from Deb Abel, Au.D., manager of coding and contracting for Audigy, make sure your business receives every single dollar it’s due under third-party agreements.
1. Understand Your Third-Party Contract
Have you slipped into the habit of renewing third-party-payer contracts without reviewing or revisiting the terms and fee schedules? If asked, could you recall the provisions of your third-party-payer agreement?
One of the most important parts of maximizing third-party-payer relationships is understanding what you’re agreeing to and making sure the terms work for your practice.
- Is the fee schedule sustainable for your business? If not, reach out to the insurer to negotiate better rates. If they’re not negotiable or you can’t reach a meeting of the minds, consider moving on from that opportunity, or contact Audigy’s Deb Abel, Au.D., to renegotiate on your behalf.
- Is your contract up for renewal but based on old reimbursement rates? A partnership with a given third-party payer may go back decades, but unfortunately, so might the rates. Before signing to re-up the agreement, make sure the fee schedule is staying in step with market rates rather than staying stuck in time.
- Does the contract allow insurance waivers? Some patients may want to upgrade their hearing technology beyond the allowable insurance benefit, so confirm in advance whether they’re permitted to go beyond a particular benefit. If they are, be sure to have an applicable signed waiver on file.
2. Know Your Hourly Rate
Perhaps you don’t usually charge your services by an hourly rate, but it’s still crucial to know what that rate is. Here’s why:
- The hourly rate accounts for provider time, salaries, benefits, and overhead, helping you determine how much revenue your practice needs in order to clear expenses and make a profit. Your Audigy Strategic Business Unit team can assist with this process.
- Some insurers pay only 50 to 60 percent of the amount billed, but knowing what you can and can’t afford to sustain — according to your data — allows you to make decisions based on facts rather than fear.
- Your hourly rate is an important component of itemization for third-party billing purposes. Ultimately, you’ll assign fees for each professional service procedure based on your rate and profit goal.
Calculating your hourly rate is a cinch. Here’s the formula, with sample numbers for illustration:
- Determine the hours per week of direct patient care: 30
- Determine the number of weeks per year that services are provided: 49
- List the number of providers in the practice: 2
- Multiply the hours, weeks, and number of providers: (49 x 2 = 98) x 30 = 2,940
- Divide annual expenses (salary, benefits, and overhead such as rent, equipment, utilities, and marketing) by the above total to reach the hourly rate: annual expenses ÷ 2940 = hourly rate
- Note that the hourly rate does not include cost of goods — for example, hearing aids, earmolds, batteries, assistive listening devices, and hearing aid accessories
Determine your practice’s break-even hourly rate and the profit margin. The following formulas include the multiplication total from the calculation above as an example:
- Break-even point: total annual expenses – COG ÷ annual contact hours
$XXX.xx – COG ÷ 2940 = YYY.yy
- Profit margin: total annual expenses – COG + desired profit ÷ annual contact hours
$XXX.xx – COG + DP ÷ 2940 = YYY.yy
- Assign fees for each professional service procedure based on your hourly rate and profit goal.
- Load payer allowables into your management system.
- Compare amounts paid with contracted fees, never assuming the payer’s amount is correct.
3. Itemize, Itemize, Itemize
For maximum third-party reimbursement, itemize your services:
- Bundling, which does not distinguish between products and services, combines them into one fee, potentially resulting in leaving money on the table.
- Itemizing, however, separates service fees from product fees, allowing you to list hearing aids, orientation, dispensing, conformity evaluation, earmolds, earmold impressions, batteries, extended warranty packages, and other specific services (as applicable) for optimal reimbursement.
- Some states or third-party-payer programs don’t allow itemization, but many do — even requiring it — so it’s important to know specific requirements and contract provisions in advance.
- It’s not uncommon for hearing care providers to offer itemized billings even in private-pay circumstances, communicating additional transparency to patients.
- Familiarizing yourself with the diverse billing codes available and using them as applicable for every payment-eligible service, procedure, or product you provide helps ensure you don’t miss potential revenue.
Third-party-payer contracts involve several moving parts. Understanding the contracts, knowing your hourly rate, and itemizing your billing go a long way toward ensuring maximum revenue under these agreements.