Outpatient Physical and Occupational Therapy are both paid either on a fee schedule or as a percent of charges. This means that if you are missing charges, you are missing out on net revenue opportunities.
It is important to have an effective charge capture program to make sure your organization is not losing out on potential revenue, staying compliant with government regulations, and ensuring patient satisfaction. So, what are the outpatient therapy charge opportunities?
How Medicare’s 8-Minute Rule Impacts Charge Capture
In 1998, Medicare imposed the Medicare 8-minute rule, which basically states that a therapist must provide 8 minutes of treatment directly to a patient for a time-based code to get paid by Medicare. It is important to note that there is a difference between timed-codes and service codes.
The 8-minutes rule has created a pattern of “under-charging” for services. This rule can be difficult to understand and follow, leading most healthcare providers to be safe rather than sorry. I often use this scenario to make the point about under-charging.
The therapist has just finished therapy on patient A and the therapist knows patient B is waiting. The therapist knows he did 4 things that meet the definition of 4 distinct CPT codes but, he knows there are Medicare rules and will ask himself whether he charges 3 or 4 CPT codes. If the therapist doesn’t have 100% confidence in his choice, he will choose 3 over 4 every time.
What if the Payer is Not Medicare?
Most insurance companies do not require the use of the Medicare 8-minute rule to determine the charges for their insured individuals. When looking at most insurance companies’ billing manuals, many do not have any input on charge capture methodology, meaning there is opportunity to increase your net revenue here.
The methodology for most commercial insurances to convert the skilled minutes doesn’t have the same constraints as the Medicare 8 minute rule. Thus, there is sometimes opportunity to capture additional legitimate charges.
Therapy providers should have defined polices for how they convert their skilled minutes to billable procedures. For Medicare, the Medicare 8-minute rule is the standard.
If the provider chooses to impose the Medicare 8-minute rule across the board (to all payers), that is a legitimate choice. It is, however, conservative and will likely result in less revenue if the provider has a commercial mix of patients.
Contact Blue about Outpatient Therapy Charge Capture Opportunities
Could your organization have a 10-12% (or more) charge capture opportunity? Take your last 12 months of net revenue and add 10-12% to it. Is that worth looking at?
Our Outpatient Therapy Business Advisory Services provides both Assessment and Implementation Guidance to help hospitals understand their revenue and growth opportunities and facilitate changes in processes and behaviors to achieve them.
These engagements are not about FTE reduction. Contact John Britt or your local Blue & Co. advisor to learn more about Outpatient Therapy Charge Capture.
John Britt, Senior Manager