Fiscal Intermediary’s are not obligated to reimburse you the legal Medicare rate if you bill them less.
Between now and the end of the year it is critical that you adjust your billing rates and re-evaluate your contractual allowances.
MVI encourages all Hospices to bill a “normal and customary” rate well above the amount set by Medicare. Legally, your Financial Intermediaries are not required to pay the Medicare Hospice reimbursement rate if you bill them for less than that rate. So when you bill above the legal rate you protect your organization from inadvertently billing for less than the legal rate and shortchanging your Hospice.
When Two-Tier kicks in this January some Hospices will do just that. They will leave dollars on the table because they historically bill at the Medicare rate. To the penny.
Contractual allowances allow you to standardize the charge for Hospice. With one routine rate you have room to negotiate with private entities based on what your organization’s services are worth.
You need to set your contractual allowances above the higher of the Two-Tier reimbursement by the first of the year. Yes, your contractual allowance accounts will be greater than you’re used to seeing as you bill for patients over the 60 day threshold. But in Multi-View reporting those allowances are always netted against revenue. Your financial reports will change little.
For accountants only: If you haven’t used contractual allowances in the past, you’ll find it’s not much more work. You’ll set your billing rates and contractual allowances in your patient management system. When revenue is imported to the GL from the patient management system you’ll have credit for revenue and debits to both accounts receivable and contractual allowances. Then, after each month’s deposits, you’ll get another report from your patient management system that provides values for the entry that debits cash and credits accounts receivable. Any over payment or under payments go to contractual allowances to balance the entry.