#187 How to Set Your Fee Schedule and When to Raise It
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. 30-Day Revenue Recovery Plan (free): eligibility.natrevmd.com/nrc/-30day-revenue-recovery-plan Book a free 30-minute call: calendly.com/heather-natrevmd Practice Revenue Leak Scorecard (free): eligibility.natrevmd.com/nrm-revenue-scorecard-v3 Payment Posting Audit Checklist (tertiary): eligibility.natrevmd.com/payment-posting-checklist CMS Medicare Physician Fee Schedule: cms.gov (updated annually each November)
