Medical Billing Conversion Factor Cut 4.4 Percent

Medical Billing Conversion Factor Cut 4.4 Percent

Medical billing reimbursements are looking dismal for 2006. Although inflation rises, the Medicare conversion factor will lower from 2005 to 2006. You may need to find other areas in your practice to compensate for medical billing reimbursement loss.

In early November of 2005, the Centers for Medicare and Medicaid services released the 2006 fee schedule for physicians. The Medicare conversion factor, that has a lot to do with payment fee schedules, was slashed by 4.4%. The medical billing conversion factor and relative value units are the two major factors used in the schedule construction. In 2005 the conversion factor was 37.8975. This year, 2006, the medical billing conversion factor is 36.1171.

Perhaps a real life example will illustrate the importance of this slash. The medical billing CPT code 13121 (Repair, complex, scalp, arms, and/or legs) has a relative value unit of 4.32. Using the medical billing conversion factor for 2005, a physician would get medical reimbursement for $163.72. By using the relative value unit 4.32 and the 2006 conversion factor, physician medical billing reimbursement would only be $156.03. Medical billing reimbursement decreases while inflation increases.

Your practice may still have a glimmer of hope. There is a bill going through Congress called the budget reconciliation act. Some advocates think that Congress might reduce the sting of the medical billing reductions in this act. However, legislators have yet to address this issue. For the time being, your practice will have to endure much lower medical reimbursement.

If you need to cut costs somewhere else in your practice, consider hiring a medical billing firm. Eliminating the need for medical billing employees can be a huge money saver. Medical billing firms can get you through the financial rough spots in your practice.

View all Articles by: Kathryn E, CCS-P - Retired