Refresh Your Fees for 2021
The financial stability of any practice starts with the UCR (usual and customary) fee schedule. All too often, we neglect to review and update our fees each year. Problems arise when our expenses go up each year due to inflation and our fees stay the same. With Covid-19, I can guarantee you that you’ve had an increase in overhead and most doctors will “eat it” rather than consider making adjustments to their fees. Even without Covid-19, when we are seeing the same number of patients each year, our profits begin to diminish, and we are left wondering, “what happened?”
Although due to The Sherman Antitrust Act, I can’t tell you what you should be charging in your practice I can provide you with resources to help you make the right decision for your practice fee schedule. First and foremost, you need to know your cost of doing business. According to a national survey a few years back, overhead in a typical chiropractic practice can average 50%. I would be surprised if that average hasn’t increased, considering the increased cost of addressing compliance mandates, rising overhead, and lower reimbursement models. To calculate your average cost of providing an office visit and the percentage of overhead, use this simple calculator. This number is key to knowing your bottom dollar for maintaining profitability in your practice. While this is not as exact as a formal Profit and Loss Statement, it will give you a great ballpark idea of your costs.
Next, you need to determine the average price for services offered in your area. The Sherman Antitrust act prevents you from reaching out to colleagues in your community and asking what they charge, as this can be seen as price fixing. There are multiple ways you can gather this information, however. You can hire a consultant to collect this information for you or utilize websites such as ChiroCode.com or fairhealthconsumer.org, which calculate fees in your zip code.
Finally, start a spreadsheet and list every code that you use in your practice. Then list the reimbursement rates for each code from Medicare, in-network, and out-of-network insurance companies. Next, add the information you gathered on average fees based on your zip code. Start by comparing the averages in your area to the existing fees in your practice. Are you above or below the average? Then, using your actual fees, determine what you are currently charging per visit, on average. Are you falling above or below your cost per visit? Finally, you will want to compare your cost per visit to your reimbursement rates with provider agreements. Do you have any contracts that pay you less than your cost per visit?
Now that you have all of this information in front of you, what’s next? This is a great time to determine if you need to make any adjustments to your existing fees. Even a small change can have a significant financial impact on your practice. If you have any provider contracts that are not meeting your desired cost per visit, you always can choose to reach out to negotiate your agreement or evaluate your participation. If you are part of a discount medical plan organization (DMPO), like ChiroHealthUSA, don’t forget to evaluate and update those fees too. This process takes a little work, but it will give you an opportunity to strengthen the financial foundation of your practice, plug up any holes where you may be losing money, and start 2021 on the right foot for a profitable practice.