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This Adobe Acrobat file contains an article written by Frank Cohen on Fee Schedule Analysis. This article was published in the October 2007 issue of The Journal of Medical Practice Management, posted here with permission of the publisher. Please do no redistribute this article to anyone else as it is posted here for individual use only. 

This is a probe analysis that was conducted on eight medical practices to determine the effects of denials on practices after implementation of EMR systems. The results show that denials due to medical necessity increased, likely due to an increase in the ease of documentation and level of procedure code compared to diagnoses codes. 

A study was performed by a trio of researchers from the Department of Family Medicine, Northwestern University Medical School in Chicago, IL, comparing the E/M coding patterns of approximately 205 family physicians with that of a group of designated expert coders. They found that, for the most part, the sample physicians tended to over code on new office visits and under code on established office visits. This study used the information from the Northwestern study to quantify the financial impact such coding variances would have when applied to the Medicare database of all office visits by family physicians nationwide. This study used the CY 1999 Medicare claims database made available by CMS and the new and established office visits were extracted, filtered for appropriateness and the absolute utilization numbers calculated to develop a distribution model. The Medicare fee amount was weighted for distribution of facility and non-facility charges and relational models were established. The results indicated that it was the family physicians, not the payers, who suffered a financial burden. In this study, the physicians showed an overall under payment of approximately $50 million when extrapolated for the national family practice physician database published by Medicare. Further studies such as this are needed for more specialties in order to get a better picture on the impact such coding errors can have and should motivate physicians to seek out and invest in education and training for E/M coding to increase accuracy and assist them in optimizing their revenue through proper coding. 

This article delves into the calculation of The Acuity Factor.  Whether used in total or broken down into its component parts, this factor plays a useful role in the medical practice. As the payer side continues to move towards total business integration, applying these types of methodologies and techniques to determine fee schedule amounts and to design provider contracts, the medical practice must be able to respond in kind. And not only respond, but be proactive in their ability to accurately benchmark critical markers in their practice against external data sets. While the process may initially seem overwhelming, being able to produce efficient and usable reports from the practice management software can substantially reduce the resource overhead required to calculate the values necessary to conduct this type of study. In the absence of standardized and timely data, acuity factors provide for the practice a decision support model of sorts, contributing to the ability to monitor productivity, analyze for profitability and compliance, conduct meaningful comparative analyses and ensure parity with the payer side.