Practice Management Alert

Question: We have been told it is illegal to bill Medicare for more than 115 percent of its allowed fee. If Medicare allows $100 for a procedure, does that mean we cant charge more than $115?

Ohio Subscriber

 
Answer: If your practice is a nonparticipating Medicare provider, you are allowed up to 115 percent of the Medicare allowable. You can charge your normal charge, but you will be paid 115 percent of the allowable. In your computer billing system, you must discount your charge to 115 percent of the allowable amount if your charge is more than the allowable. You dont have to calculate the 115 percent yourself because Medicare publishes its nonparticipating- provider fee schedule. If your practice is a participating provider with Medicare, you will be reimbursed at 80 percent of the Medicare allowable for the service, with the patient responsible for 20 percent.
 
Some practices charge for procedures based on the Medicare-allowable amount, automatically write off the difference between what they normally charge for the procedure and the Medicare allowable, and bill Medicare the allowable. Then, when Medicare pays its 80 percent of the allowable, the practice can easily determine and record in its billing computer system the 20 percent owed by the patient. Practices do this to avoid billing patients more than their 20 percent of the allowable, which is a violation of Medicare law.
 
The problem with automatically writing off the difference between what you normally charge and the Medicare allowable and billing the allowable amount is that you are, in effect, reducing your charge to Medicare. Dont confuse charges with payment. Your charges should be the same for everyone, regardless of payer. What you charge for a procedure is based on several factors, such as your costs for supplies, personnel, facilities and services, and a small profit. If your other contracted payers discover you charge Medicare less than you charge them for the same services, they will demand the same discount. Having different charges for the same services could increase your chances of an audit by CMS, which runs Medicare. Because your charges are different for the same services, Medicare will check whether you are charging it more than other payers, which Medicare considers fraud and abuse, and whether you are making false claims to the federal government. When you submit the amount of allowable or the amount of expected reimbursement as the charge to Medicare, you are not giving the federal government a true picture of charges for the services. That can affect the level of reimbursement the government decides to pay for Medicare patients.