How to Find GOLD in Coding and Billing

How to Find GOLD in Coding and Billing

Homestead, Alan

Are you leaving money on the insurance reimbursement table? Find out how to get the most out of medical billing.

The expansion of optometric practice into medical eye care has been exciting. Aside from being challenging, fun and necessary for the growth of our profession, medical eye care can be quite profitable. Optometric continuing education is replete with wonderful courses explaining the clinical side of eye care. What sometimes is missing is the final step – how to get paid. I’ll use this article to help you with some of the fundamentals of medical billing and coding.

Noticing recurring themes

After presenting several medical coding seminars, a few things have become apparent.

* Doctors and their staffs are interested in learning proper medical billing and coding.

* Many doctors feel that they’re leaving a ton of money on the reimbursement table.

* Many doctors feel intimidated by the process of medical billing and coding and therefore tend to under-bill for their work.

The following sections of this article will address these issues in greater depth.

O.D.s want to know

If you have any influence on your state association’s continuing education agenda, then please consider yearly coverage of billing and coding topics.

A good role model for billing and coding information is the American Academy of Ophthalmology (AAO). Besides publishing a regular newsletter and sponsoring an Internet chat room devoted to billing issues, the AAO coordinates a yearly national lecture tour called CodeQuest, which is a full day packed with essential information on medical billing issues. Yes, they discuss what is new for the season, but they also review the basics every year because new staff and returning staff need to hear some things regularly. The AAO has responded to their members’ needs for regular billing and coding information.

Revealing a common fear

From what I’ve heard, many doctors around the country are afraid that they’re leaving money on the insurance reimbursement table. And after hearing samples of their fee schedules, I’m afraid they’re correct. For example, let’s say that you’re a Medicare provider and that your fee for 92004 (new comprehensive exam) is $65. The average maximum Medicare payment for 92004 is $123.60. Therefore, each time you bill Medicare for 92004, you’re leaving $58.60 on the insurance table.

Insurances put together what’s called the insurance maximum allowable payment schedule. The maximum allowables are what insurance has determined to be a fair and reasonable payment for medical procedures.

When giving a billing and coding talk, I show attendees their local insurance maximum allowables. The typical reaction is surprise and concern over the huge disparity between their fees and the insurance maximum allowables. Not that optometric physicians are overcharging – they’re actually undercharging terribly. Think of it this way: Insurances put the amount of money that they think your services are worth onto the reimbursement table. But all too often we say, “Oh, no, I’m not worth nearly that much.” Ideally we should say, “Thanks for the payment, but I’m worth more than that and will look forward to a raise next year.”

In at least two instances of which I’m aware, the medical plan has actually decreased its payment schedule after receiving billings that were significantly lower than what it calculated. Understandably, why would an insurance continue to offer more money than what most doctors want? To avoid the risk of insurances lowering their payment schedule, charge at least what they offer to pay.

Take the suggestion from the folks at AAO’s CodeQuest: If you’re being paid what you’re billing, then you’re not billing enough.

Learn the trade secrets

Hopefully by now you realize that it’s in your best interest to:

* learn the insurance maximum allowable payment schedule

* charge at least as much as the insurance offers.

What if our fees are higher than the maximum allowables? Then great! That means that you’ll be sure to collect 100% of whatever the insurance is offering. According to your insurance contract, you must write off any amount over the maximum allowable. Further, your patients won’t be aware of your change in fees because their co-pay remains the same no matter what the fee. Yes, some insurances have the patient co-pay a percentage of the total allowable, yet a change of that small of a percentage typically goes unnoticed.

Now we have to find out what the insurance maximum allowables are for medical eye procedures. We also need a clear understanding of how Medicare calculates payments.

Meet the RBRVS system

Resource-Based Relative Value Scale(s) (RBRVS) is the foundation of medical insurance payment. With the help of the Harvard School of Public Health, the federal government created the RBRVS in the late 1980s, in part to apply a scientific methodology to calculating Medicare payments to physicians. Most insurances (e.x., Blue Cross-Blue Shield, Aetna, Medicaid [in most states], state workmen’s insurance, etc.) have adopted the RBRVS to calculate physician payment.

The RBRVS system assigns a value to every procedure a doctor might perform. These values are called Relative Value Units (RVUs), which are numbers that place a relative value on each procedure as compared to other procedures.

For example, the RVU of refraction is 1.89 and the RVU of cataract surgery is 18.36. The risk, work and overhead of providing a refraction is less than that for performing cataract surgery.

The federal government updates the RVUs every year and publishes the new values in the Federal Register on November 1. RVUs are also available at

Wondering how all of this relates to getting the insurance maximum allowable?

Plugging in the numbers

You can use a “conversion factor” (CF) to convert the RVU into a dollar value. The formula to figure out a payment for any procedure is:

CF x RVU = $ maximum allowable

In 2003, Medicare has used a conversion factor of 36.7856. So using the 92004 (new patient comprehensive exam) RVU of 3.36 and Medicare’s CF, the maximum allowable for 92004 is: 36.7856 x 3.36 = $123.60. Medicare believes that this is fair and reasonable for just the eye health exam, not including refraction. Some doctors charge much less than this – and include refraction!

This system contains two slight twists: the Geographic Practice Cost Index (GPCI) factor and the changing RBRVS.

* Twist #1. The GPCI is an economic factor that slightly adjusts the maximum allowable value up or down according to the local economy.

For example, the GPCI allows the maximum allowable to increase for doctors practicing in downtown Manhattan, and decrease for doctors practicing in Humptulips, Wash. The GPCI values are published in a table accompanying the RBRVS. The Federal Register explains the correct way to apply the GPCI factor.

Medicare always uses the GPCI to accurately figure the maximum allowables, but not all other insurances use GPCIs, so ask to find out.

* Twist #2. As I already mentioned, the federal government updates and changes the RBRVS values every year and Medicare adopts the new year’s RBRVS on January 1 of each year. Medicare always uses the current year RBRVS for calculating maximum allowables.

However, non-Medicare commercial insurances may use the 2003 or 2002 or 2001 or 2000 RBRVS. Once you find out which year’s RBRVS a particular insurance is using you can obtain the values from the Medicare Web site, which archives past years of RBRVS.

Getting the maximum

So how do you find out the insurance maximum allowables? Call the insurance and ask the following questions:

* What is your conversion factor?

* What year RBRVS do you use?

* Do you use GPCIs?

Medicare publishes its maximum allowables for each economic locality and all Medicare providers receive a copy, so you don’t need to perform any calculations. Commercial insurances rarely publish their list of maximum allowables, but now you can calculate them yourself.

Using RBRVS will create logical (usually improved) scientific office fees and will therefore help you to increase the payments you receive from plans that base their reimbursements on practitioners’ customary and regular fees. The bottom line is this:

billing higher = higher payments

billing lower = lower payments.

If all this sounds like a bit more time and work than you’d like to invest, consider purchasing reimbursement software. Look for software that catalogs all the years of RBRVS and GPCIs and reduces the mass of 10,000 procedure codes to only those used in eye care.

Master one skill at a time

Now that you know how much to charge for medical services, it’s imperative to know what CPT procedure, EM, modifier or diagnosis code to use in your bill. The consequences of incorrect coding are:

* underpayment for services rendered

* increased risk of rejected claim.

Either one means loss of money on your services. We can only speculate over how much money we lose by billing and coding incorrectly. I’ve heard some doctors estimate many thousands of dollars.

Another estimate might come from a comparison of income for medical services of ophthalmologists (the pros at medical billing and coding) to us. With “equal pay for equal work” state laws and a high level of optometric medical privileges in many states, the medical eyecare income for O.D.s and M.D.s should theoretically be similar.

Knowing which code to use can prove challenging, as it’s interwoven with clinical know-how, but if you attend classes on medical billing, where plenty of questions and answers are encouraged, then you’ll surely get a better handle on the issue. Here are some other suggestions:

* Meet with the billing clerk of an M.D.’s office in your area. She can answer questions pertinent to the insurances in your region. Arrive with a list of topics to discuss.

* Spend a day at an eyecare referral center to observe how they record billing and coding from the time of patient arrival to the time of mailing the claim. You’ll see the medical model of eye care in action.

* Become expert at understanding risk factors for eye disease.

* Purchase the Coding Companion for Ophthalmology, and yearly CPT and ICD manuals.

* Insist to your state association that it regularly bring in medical billing and coding education or attend a seminar on your own.

It’s not impossible

Eventually, with persistence, you’ll find success. And with more doctors calling for information, insurances will make this information easier for everyone to obtain. The industry standard for calculation of medical payment is the RBRVS. From what I’ve seen of doctors’ fees recently, many have started to use the Medicare fee schedule as a basis for their office fees, which is a step in the right direction. But by switching from Medicare to private insurance as the basis for office fees, you might expect a 20% to 25% increase in collections for medical procedures.

Once I learned to calculate all insurance maximum allowables and figure out where my fees should be, I collected 100% of the money on the insurance reimbursement table. That increased my collections by 39%. I wish you all the same success.


Seattle, Wash.

Dr. Homestead has taught numerous medical billing and coding classes to optometric physicians across the nation. He is creator of the reimbursement software AccuFee. You can reach him at his Seattle office by calling (206) 767-4737 or at

Copyright Boucher Communications, Inc. Dec 2003

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