Author Topic: Deductibles  (Read 1686 times)

fcleme

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Deductibles
« on: November 06, 2008, 06:28:33 PM »
I am new to this forum (actually this is my first forum) so please excuse my wordiness and ignorance and accept my appologies for any code-of-conduct violations. It's great finding a place to discuss medical billing issues.

We have a small licensed massage business in the state of Washington with a single practitioner (my wife). We have a large number of cash clients who pay at different rates, depending on many factors including promotions and how long they have been coming to us, but the average is between $55 to $60 per hour.

We have recently been approved to bill certain private insurance companies.  These companies reimburse massage therapy (97124 and 97140) at significantly different rates. The cheapest companies reimburse at about the same rate as we charge most cash clients ($59 per hour for both 97124 and 97140).  The most generous companies reimburse at more than double this rate, paying slightly more for 97140 than 97124. The co-pay is subtracted from these reimbursement rates.

I purchased FileMate-1500 software and have used it to create CMS-1500 forms for a number of clients, including some who used to be cash clients. I bill the same rate for 97124 ($115 per hour) regardless of the insurance company. In that way I am always billing more than the most generous company reimburses ($110 per hour) and plan to write-down the difference between the amount billed and the amount reimbursed on our incomce taxes. There have been a few minor glitches while learning the ropes but for the most part we have received the correct reimbursements.

Because it is near the end of the year most of our insurance clients have already met their deductibles so I haven't had to worry about them but in January everything gets reset.

My understanding from the insurance companies is that they will apply the reimbursible amount, minus the co-pay, against the deductible. Until the deductible has been met the client is responsible for the full bill.

So with that said I am finally ready to ask my question:  How do I balance the non-insurance, cash client expectations of paying about $60 per hour against the need to meet deductibles before we get reimbursed? I listed a couple of approaches I could think of below.
 
1) Charge the client the cash rate of $60 per hour and bill the insurance company $60 per hour.  The downsides are that it will take longer to satisfy the deductible, it will probably look funny to the insurance company (and IRS?) if we bill at different rates depending on the deductible, and if the deductible gets met by some other medical expense then we will be reimbursed at the lower rate for whatever visits we bill at the lower rate.

2) Charge the client and the insurance company the normal insurance rate ($115 per hour). If they have a low deductible ($150 or so) they could meet it in two visits. The downsides are that it could take much longer if they have a high deductible and in the meantime they are paying about twice what they are used to paying as cash clients.

3) Charge the client at the reduced cash rate of $60 per hour but bill the insurance company at the normal rate of $115 per hour until the deductible has been met at which point the client would just pay the co-pay. There could be a reduced payment for the final visit before the deductible is met but I'm not sure how to figure it out. This seems to have the least number of downsides but I'm not sure what the IRS would think.

There are probably better solutions out there which is why I am posting this topic.  Any suggestions or guidance you could give me would be greatly appreciated.  Thank you.

bdhobbs1

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Re: Deductibles
« Reply #1 on: November 06, 2008, 06:43:49 PM »
I'd bill the normal rate, you can't just change your rates for the deductible issue.  I would have the patient pay in full, up to the allowed amount that you know the insurance is going to apply, until you know they have satisfied their deductible.  Remember the deductible will be all claims submitted for the patient, and it's taken in claim received order.  So it's really impossible to tell when it will be met.  In the meantime, if you get a payment from insurance then you would have a credit on that patient's account.  Eventually, he/she will know the deductible has been met and they will have less to pay.  If they never return for a follow up visit and it's applied to the deductible, then you know your account is paid in full and you won't have to hunt the patient down for the balance.

Michele

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Re: Deductibles
« Reply #2 on: November 06, 2008, 07:45:39 PM »
The situation you describe is actually a common one.  Your 3 approaches are actually accurate. 

In #1, it is correct that it will look funny for you to change your rates once the deductible is met. 

In #2, many will be paying 2x's as much as they would have without insurance. 

And in #3, it isn't legal to bill the patient a different amount than you bill the insurance. 

I cannot think of a way around this one.  Your only real (legal) option is #2, but your patients may not be happy.  All I can suggest is that you let them set up a payment plan where they pay a higher "copay" for remaining services until the deductible has been paid for.  But then you run the risk of them stopping services and your left with a balance.

Maybe someone else will have another suggestion.

Michele
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Pay_My_Claims

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Re: Deductibles
« Reply #3 on: January 20, 2009, 05:35:07 PM »
Most practices give cash clients discounts. If they are 100% cash, no insurance at all we gave them a 15% discount. We LOVE cash clients in the medical field. Even with a 15% discount we made more than we would after some insurance carriers paid.