Medical Billing Training: Calculate Revenue per Procedure


There are extremely simple formulas that will help you to decide exactly what you're receiving per case and per procedure so that you can determine at what point you would make a decision to go out-of-network with a particular payer. Read this expert medical billing training article for more.

This is a quick and easy way for you to have something concrete that you can show to your board or to the physicians who are owners in your facility or your practice in order to show them what the potential would be and any additional than what you're actually receiving when it comes to your payer contract at that time.

Our expert  recommended in a related medical billing conference that a good idea is usually to take, say, your top five payers and then look at your top 10 procedures, your top 10 cases and make a determination based on those. Because whatever revenue you're receiving, most of it is going to be tied up within your top five payers and your top 10 procedures even in a multi-specialty facility.

There are generally going to be 10 procedures that are performed at a much higher percentage than the others. And once you've done that, you'll be able to take this rate and compare it to non-contracted to what you would bill and what you would anticipate receiving if you were to become an out-of-network provider.

So in order to determine your revenue per procedure, all right, do you want to know it again if this is different from revenue per case? If it's revenue per procedure, that might mean that if you have five procedures performed within a particular case, revenue per case is going to be one per one patient. Revenue procedure may be five procedures per one patient.

So an easy way to do this is just to take the revenue for the procedures that you performed for any given month and because procedures are each individually billed, you can also take the number of procedures that were performed within that same month.

So if you billed Aetna, they show here for 150 colonoscopies. And the money you received from Aetna was $52,000. Then just divide that $52,000 into the 150 procedures performed and you'll see that your revenue per procedure was $346.67.

Then you can take that and just divide the cost for the facility for that month and divide that same cost into the number of procedures performed and you know your cost per procedure. So you have a really quick and easy way to determine what your net revenue looks like per procedure for any given month.

Now we're going to look also at revenue per case because sometimes when you're dealing with a payer and you sit down at the table to talk about what your revenue is, there's going to be some arguments that they'll usually begin with in order to help you to see why staying in-network is a benefit.

So let's say they want to talk about revenue per case because as we looked at some of those contracts we saw, there are some instances where you're actually getting a case rate instead of a rate per procedure or you have so many procedures that are not being paid at because you've gone into multiple procedures that it's more reasonable to try to determine a case rate according to the healthcare rules.

So for a case rate, clearly, you should take the number of patients that were seen because each patient is a case. And then you're going to take that same month and divide the number of patients by the revenue you received for any particular payer.

One of the things is that while you may have a particular procedure that seems to be very well reimbursed, that seems almost like overpaid, when you really break a payer down to what they're paying you per patient, you'll get a much clearer picture of what the overall picture looks like because where they may do what you may consider an overpayment on a case you rarely do but that's a high profile because it is such a high dollar case, they may be low balling you on the cases that are really your bread and butter.

So when you look at this, we've got a much clearer picture of where things stood when we looked at an in versus an out-of-network situation.

And then you can determine, once you have your actual net revenue per case, there may be procedures when you look at your cost as well where there may be payers where you make a decision that you're going to stay in-network because the revenue is robust enough, you have enough of a patient base there that is covering your cost and also providing for some of the other incidentals that may come up in a facility, as suggested by our expert in a health system conference.

And if it's a for-profit facility, that it is generating enough in revenue to provide profit for your investors.

But if you have some particular payers where you see that isn't the case, then this will give you an excellent tool to decide, 10.1 particular payer, who's especially low on reimbursement and then go ahead and go out-of-network with that payer and then work your way through as you make determinations on other payers using one payer to start with as an out-of-network will help your staff to get those steps in place that they need to have in place in order to make sure that the transition is flawless and in compliance with the medical billing guidelines.

When you look at this, you can really see that when in it comes to a per case issue, there's a significant difference between what, say, Aetna was paying in this particular case and what CIGNA was paying.

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