Deciding to take insurance has been a big step for me. I was idealistically against it while I was in school and then I was administratively against it after hearing about the headache that the paperwork could be. Yet the reality of earning a living at acupuncture and the challenge of figuring it out became pretty attractive after a while. In addition, the new health insurance laws have created a situation in which many patients are only wanting to see me if I can take their insurance.
Being a mama, I can tend to over-prepare and over-research for trips and as you can see, I’ve spent many months applying this energy towards the logistics of making all of this run smoothly in my business. I’ve looked at a number of cloud-based Practice Management solutions and accounting software, I’ve been reading everything I can get my hands on and I’ve been emailing, talking with and meeting up with colleagues and mentors to figure out how best to go about laying the groundwork for my success. I understand that if I can’t be successful in this business stuff, then my dream of offering healthcare to the folks in my community just isn’t going to happen. It’s a big motivator for me. I really believe in this medicine and it is requiring me to believe in myself and make this work.
As I’m taking insurance, and particular, being in-network with medicaid, gone are the days when I could charge whatever I wanted to whomever I wanted. Everything has to be setup in a consistent fee schedule. Over the last few months, I have realized that the fee schedule and the discounts that we’d like to give within it, are highly controversial. If I ask 20 different people the same question about offering discounts (whether student, hardship, time-of-service, senior, etc) I get 20 different answers and many of those answers directly contradict one another. Yikes! Much of the reasoning behind this has to do with the basic idea that this medicine is an art, every single part of it, and we are all working our own niche in the scene. And, thankfully so!
Since the fee schedule has been a bit of a headache and a bit of a fun challenge for me, I’m going to write out the process that I used to come up with my fee schedule. As I learned this year, price fixing is a very serious charge and so practitioners avoid talking about their actual fees (which I am going to do here as well.) Yet, in all of the literature and power points and emails and forums – I didn’t find anything that detailed the process for me, other than using multiples of the Medicare Physician Fee Schedule. This all seemed very arbitrary and not based in the reality of what I need to charge in order to pay my bills and make sure that patients can afford my treatments.
I’ve used two pretty great books to get some idea of what to do here. The first, Playing the Game: A Step-by-Step Approach to Accepting Insurance as an Acupuncturist has been really helpful to me in setting everything up. They’ve got a great website with tons of resources there to help. The second, Making Acupuncture Pay, was recommended to me by the awesome guys at Shift Wellness PDX when I went to look at a space in their clinic. Prior to reading Making Acupuncture Pay, I was starting to define my fees pretty arbitrarily on what I was seeing around me and on what I have been charged for acupuncture in the past. But, in his Chapter 5, “Establishing Your Fees,” Matthew Bauer really breaks it down and reminds us that it’s about choosing a fee that will support you while also taking into account what the market in your area can support. And, most importantly:
If you charge higher rates, you greatly compound the stress to produce results that your patients feel are worth the costs unless you are servicing a rich clientele who expect to pay inflated prices. The higher your rates, the more valuable each treatment will need to be. If you charge $120 per treatment, will you be able to make your treatments at least three times more valuable than the acupuncturist across town who charges $40 per treatment? Are you ready to take on this extra pressure?
[...] If you charge on the upper end of your markets norm, you put yourself under greater stress to produce more results with fewer treatments. Think of it like going to a restaurant. If you go to a small Mom and Pop restaurant and they serve pretty good food at reasonable prices, you tend to be happy with the experience even if everything was not perfect. Go to a swank, high-priced restaurant and even if the food is great you might come away disappointed if the waiter didn’t keep your water glass filled fast enough.
Bauer is working in California and his rates are much, much lower than what I’ve seen in this area. He goes through an equation for getting at a certain gross income level and you can always check out his book if you want to read more about that. Ultimately, he says that making acupuncture pay is more about squeezing the most benefit out of the least number of treatments. I guess we could just say that in a different way: Be good at what you do.
So, on that note, I sat myself down with pencil and paper and went to work figuring out some equations so that I could set my fee schedule. Maybe this was a whack way to go about it…but I just couldn’t justify the arbitrary drawing of a number out of a hat based on what everybody else around me is charging. Here’s how I did it:
1) Monthly Expenditures
I listed out all my monthly expenditures. To make this work, I had to get all my licensing fees, get an average CEU cost per month (I just went with 15 CEUs/year), etc. These are not startup costs for a business, these are the monthly expenditures (overhead) that I have to pay (or be saving) every month to keep my head above water.
- Professional Fees and Licensure (State licensure, NCCAOM certification, Continuing education credits, CPR class)
- General administrative (EMR/Practice management software, electronic filing fees, accounting software, fax, files, paper, stamps, etc)
- Marketing costs (rack cards, brochures, cross-promotional materials, social media, website, signs, etc.)
- Malpractice insurance
- Rent and utilities
- Needles and other supplies
- Childcare costs
- My share of the living expenses (I took a percentage of this based on the percentage of work I’m doing since I am only able to work part-time right now with my kids)
- Amount I would like to pay on my student loans each month
- Miscellaneous other costs
Add all of these monthly costs up. Make them equal to A.
2) Cover monthly expenditures after taxes
Where I live, I need to save at least 30% for taxes. A is the amount that I need to bring home each month….which means that A is going to be 70% of what I am actually grossing (let’s call that gross amount B).
B = A/.70
3) Minimum hourly wage
Now, I looked at my schedule to figure out how many hours I’m able to work each week and then multiplied by 4. (Technically, it should be multiplied by 4.3, but I’m not doing that because using a bit of a lower number for hours gives me a little cushion.) I’m calling this hours (I know, it’s almost too clever, right?)
Now divide B by hours. This is the absolute minimum hourly wage that I need to make to break even. I’m going to call it D (my lowest hourly wage.) I rounded this up by a couple of bucks to make it a multiple of 5 and also because I always worry that I’ve forgotten something in my monthly costs, or maybe I’ll have a sick kid one day and have to cancel an appointment while I figure out care, or what if, or what if, or what if.
4) Define the cost of an adult and child visit
At this point, I’m going to define my fees based on this hourly wage. But, I’m also going to take a little bit of advice from Michael Bower about offering free, half hour consults for people who are new to acupuncture, or even just new to me. I know that most of the EAM practitioners in my area offer a 1.5 hr initial visit/consult and then a 1 hour follow-up appointment. That initial visit tends to cost quite a bit more and it’s something I feel has caused issues for prospective patients in my community because they don’t want to spend more money to jump into something that they don’t even know is the right fit for them.
Since I already offer a free half hour consult for new patients, I’m just going to go ahead and build that into the initial treatment and charge my follow-up rate. If a patient came for the free consult, then I would allow them to schedule a follow-up at a later time. Because of this, it doesn’t make much sense for me to charge a patient for the consult if they book them together as an initial appointment (which actually saves me some time over the previous scenario.) If it really bothers me, I can write these half hour visits off as “marketing” because that’s essentially what it is, and then limit them to a certain amount of my practice each month. This also keeps it really simple for me because I just have a few visit fees:
An adult visit = 100% of an hour
A child visit = 75% of an hour
D is my absolute lowest hourly wage and so I’m letting that wage define the 40% discount that I give for hardship. I’ve decided not to use hardship paperwork myself, but to use medicare or for SNAP benefits as my qualifier. That way, I just have to get a copy of the patients medicare or SNAP card on file and I let the state do the work of determining that they are a low-income patient. My Discounted hourly wage is equal to 60% of my actual hourly wage (W).
W = H/.6
The fee for an adult visit = W.
The fee for a child visit = .75 x W = C
5) Define the CPT codes to make this happen
My main codes are going to be 97810 and 97811 and I’m going to make my regular, adult visit equate to a unit of 97810 and two units of 97811. A child visit is going to equate to one unit of each or, with no needles, to two units of 97410.
I need to use two equations to solve for these values. I’m going to say that 97810 = X while 97811 = Y.
X + 2Y = W
X + Y = C = .75W
Going through and solving these equations gives the figures for both 97810 and 97811. I will tell you that my figures are both lower than anything I’ve been hearing or seeing (to make a rate that is 40% more than what I need to pay all my monthly expenses and living expenses) – but they are pretty spot on to what Making Acupuncture Pay gives as examples of practice fees. Granted, they also require that I fill my visits, which requires that I do a really good job…or, like Bauer says, treat the patient’s issue in the least amount of visits so that they are referring their friends.
I went ahead and did similar things to this with the rest of my codes so that I set up a consistent situation for my fees and I’m giving a 40% discount for hardship and a 20% discount for students, etc. I coded 99202/99203 at a reasonable rate so that if I bill insurance for spending that extra time with a patient, it is a reasonable thing to do.
I’m just learning at this stuff – so if anybody has any other advice to throw in here for me (or something I may be seriously over looking) please share!