·E187

#187 How to Set Your Fee Schedule and When to Raise It

June 16

16 mins

Episode Description

Show Notes

Your fee schedule is a revenue ceiling. And for most independent practices doing over $3 million a year, that ceiling is set too low in ways that never generate a denial and never appear on a standard report.

EP186 covers the five gaps that are quietly capping your revenue, the exact fix for each one, and three actions to run this week.

Gap 1 — Billing Below Your Own Allowables:

You negotiate a better payer contract. The billing system does not get updated. The payer pays what you billed, not what you are owed. A practice with 20 high-volume CPT codes averaging a $10 billing gap across 800 monthly claims is losing $8,000 a month, $96,000 a year, from a contract they already won.

Gap 2 — Inconsistent Fee Schedules Across Locations:

A secondary location runs on its legacy fee schedule from before acquisition. Location A bills $210 for a procedure. Location B bills $165 for the same code. A site doing 400 visits a month with a $35 average billing gap is under-billing $14,000 a month, $168,000 a year.

Gap 3 — No Medicare Multiplier Anchor:

Fees set by instinct drift downward every year while costs move in the opposite direction. The fix: anchor to 200–300% of the current Medicare allowable and recalculate every November when CMS publishes updated rates.

Gap 4 — Suppressing Global Fees for Self-Pay Patients:

A practice protecting 15% self-pay volume by keeping fees low inadvertently discounts 100% of encounters. 850 commercial patients billed $40 below the correct rate: $34,000 a month, $408,000 a year. The fix: raise the global fee schedule and implement a separate documented sliding fee scale for uninsured patients.

Gap 5 — No Annual Fee Schedule Review:

A fee schedule that is right in year one becomes the revenue leak of year five. A $4 million practice drifting 3% below where it should be loses $120,000 a year in collectible revenue. Over five years: $600,000.

The Five Fee Schedule Gaps at a Glance:

Billing below allowable → Payer pays billed charge, no alert → up to $8K/month
Location fee inconsistency → Lower site appears compliant on reports → $3K–$15K/month
No Medicare multiplier anchor → Fees drift, no logical update trigger → Compounds annually
Artificially low global fee → Self-pay policy masks commercial discount loss → $5K–$20K/month
No annual review → Costs rise, billed charges flat → 3–5% margin erosion per year

Three actions this week:

Run the top-20 CPT code comparison — billed charge vs. highest commercial contract allowable
Anchor your fee schedule to the Medicare multiplier — recalculate for this year
Put the annual fee schedule review on the Q4 calendar today — first week of November, billing manager named as owner

Episode breakdown:

00:00 The fee schedule is a revenue ceiling

02:30 Why silence in billing costs more than denials

05:00 Gap 1: Billing below your own allowables

09:00 Gap 2: Inconsistent fee schedules across locations

13:00 Gap 3: No Medicare multiplier anchor

17:00 Gap 4: Suppressing global fees for self-pay patients

21:30 Gap 5: No annual fee schedule review

25:00 Three actions this week

29:00 Free resource + EP187 tease

Resources Mentioned

NEW LEAD MAGNET Primary resource this episode: 30-Day Revenue Recovery Plan. Payment Posting Audit Checklist is tertiary.