Are Texas Medicaid Payments Falling Short? How to Use the Texas Medicaid Fee Schedule to Identify and Prevent Underpayments
Use the Texas Medicaid Fee Schedule to uncover payment gaps, review reimbursement rates, and apply proven strategies to reduce costly underpayments.
Not all Texas Medicaid claims will pay health care providers what they expect. A payment may have an incorrectly identified rate or incorrect billing units, a coding mistake, or an adjustment made specific by the payer, or a reimbursement formula the billing team failed to follow. These mismatches can cause revenue lost and add to balance closing efforts.
Texas Medicaid Fee Schedule is a helpful resource for providers to reference when verifying rates and determining discrepancies in payments. When applied wisely, it can provide a solid benchmark for steps taken by billing teams to review payments. But there’s more to finding a rate than you’d think. Before determining that a payment is incorrect, providers are required to also verify the date of service, the billing criteria and reimbursement method.
This guide provides steps to be taken to determine expected reimbursement using the Texas Medicaid Fee Schedule, identifies potential underpayments, investigates root causes of these underreimbursed lines and develops the process to avoid future underreimbursed lines. The target is to integrate rate verification into the regular reimbursement process.
What Is the Texas Medicaid Fee Schedule?
The Texas Medicaid Fee Schedule is a chart that shows the reimbursement rates for services that can be covered by Medicaid. The Texas Medicaid Fee Schedule is a helpful tool for providers to estimate the rate for applicable services before examining the payment detail of claims. Depending on the type of service, and the associated payment structure, providers rely on published rates to calculate a payment that they believe should be received for a procedure, supply or other covered service.
The Texas Health and Human Services Commission (HHSC) is responsible for Texas Medicaid policy development and the determination of Medicaid rates. The Texas Medicaid & Healthcare Partnership (TMHP) supplies Texas Medicaid provider resources such as the Texas Medicaid Provider Procedures Manual, static fee schedules, and the Online Fee Lookup (OFL).
Two possibilities for reimbursement are especially important for providers to be aware of:
Fee-for-service (FFS): Texas Medicaid pays to providers following the state’s payment methodology. Some services provide priced services by making use of rate information published on the Online Price Lookup or a fixed fee schedule.
Managed care: Claims are sent to the member’s Medicaid managed care organization (MCO) or dental plan. A plan’s policies and contracts will determine reimbursement.
The minimum and maximum prices do not necessarily apply in both arrangements. The provider’s responsibility is to verify the reimbursement guidelines to be followed when considering a reimbursement claim. The Texas Medicaid Fee Schedule is a guide and not the best indicator that all claims will be paid at the published rate. Eligibility, benefit restrictions, coding edits and service-specific payment edits also impact reimbursement.
Where to Find and Verify the Correct Texas Medicaid Fee Schedule Rate
Billing staff must know the correct service and date of service prior to calculating the expected reimbursement. Correctly performing Texas Medicaid Fee Schedule begins with matching codes, provider types and the service date. A current rate used to assess a previous claim or choosing a rate for an incorrect provider type may yield an underpayment determination that is not accurate.
Use the Official TMHP Fee Lookup
The first place to check is the official TMHP website and their Online Fee Lookup. This is the main source to check the Texas Medicaid Fee Schedule for services provided for which there are published fee-schedule rates. Providers can use the procedure code to look up possible reimbursement details, and view available fee schedule information. Static fee schedules are also available via TMHP.
Follow these steps:
- Open official fee lookup or relevant static fee schedule.
- Look for the CPT or HCPCS code used on the Claim.
- Verify that the outcome is for the service and provider type.
- Check date of service.
- Be sure to check the listed rate, other Type of Service (TOS), and any modified fee detail information.
- See the applicable provider manual for more requirements to be reimbursed.
Apply the rate if an historical claim is used as the rate is based on the date of service. For an older claim, the Texas Medicaid Fee Schedule needs to be reflecting the fee schedule on the date of the service. For a procedure code, up to 24 months of history is provided by the Online Fee Lookup. If the claim is not within that timeframe, refer to the test schedules from the last year or call the program/payer involved.
Check Rate Updates and Effective Dates
The reimbursement rate may vary following a policy revision or rate change. The inquiry should not be limited to the last printed amount to determine the amount the payer should have allowed for payments for an earlier service. Review the TMHP rate and code changes and provider manual. Document the date for any of the changes that are relevant. For instance, if a claim is submitted for a service provided in June, then it should be submitted under the rules for reimbursement, as they existed in June of the previous year. An earlier claim should not be automatically assumed to be based on a rate which was established in September.
Confirm the Rate Applies to the Claim
A matching to a procedure code does not guarantee the accurate reimbursement. Paying with the Texas Medicaid Fee Schedule is an estimate, you should verify all billing and provider information before use. Review the type of provider, service setting, modifying requirements, billing units and payment restrictions. Additionally, differentiate between published rates and the adjusted fee (if both are listed in the schedule. Some discounts are shown in the “adjust” column, others may be in service specific deductions or restrictions and may need to be reviewed separately. This verification is an authentication of the correct reference which is required for the next step.
How to Calculate Expected Texas Medicaid Reimbursement
After confirming the appropriate rate, the billing team can determine an estimate of what the reimbursement rate is going to be. The Texas Medicaid Fee Schedule provides the rate input value for this calculation if the service has a published fee-schedule method. The calculation is based on the service’s payments method and as appropriate claims level adjustments. When services are rendered based on an applicable fee schedule the basic calculation is from the allowable rate multiplied by the number of payable units. But reimbursement restrictions, limitations and applicable adjustments must be considered, too.
Calculate the Expected Allowed Amount
Use this workflow:
- Determine which rate(codes) match the procedure code and date of service.
- Verify number of Units as to eligibility for payment.
- Use relevant modifiers, provider-type and service-specific rules.
- Deal with health insurance groupings and limits of coverage.
- Compare the amount allowed (computed) to the allowed amount as adjudicated by the payer.
In many instances, for certain services paid for by Texas Medicaid fee for service through the Online Fee Lookup or static fee schedules. Payments will be made at the lesser of billed charges or the applicable published rate of Texas Medicaid, in accordance with certain governing rules. Not all services that are included in the Texas Medicaid Fee Schedule have this rule. Other services incorporate other methods and fees such as cost-based or provider specific reimbursement. Avoid using a fee-schedule formula for services that use another payment method.
Worked Example: Finding a Payment Variance
Let’s assume a case where there is a reimbursement rate of $75 per payable unit. The provider had billed the entire charge as $200, for 2 eligible units. For the appropriate financial regulation, assume unit and no further financial adjustment is acceptable.
| Calculation | Amount |
|---|---|
| Applicable rate per unit | $75 |
| Payable units | 2 |
| Expected allowed amount | $150 |
| Actual allowed amount reported by the payer | $120 |
| Potential payment variance | $30 |
The amount of difference is $30, which is the difference between the actual $ allowed and the expected $ allowed, is the potential variance. A comparison with the Medicaid Fee Schedule in Texas may reveal the difference, but the rules of the payers will determine if it can be recovered. This difference doesn’t necessarily mean that an underpayment has occurred. The lower amount should be explained by the presence of a valid policy, claim adjustment or some other reimbursement rule, which the billing team needs to determine. Variance should be investigated if the entity paid the wrong rate or if there was a variation in processing a bill that was payable but did not have.
Separate the amounts received in expectant and cash payments. Deductibles, other insurance payments, recoupments, and other adjustments might affect the final remittance. Make a logical comparison of equivalent amounts to prevent an innocent adjustment from being a mis payment.
How to Identify Texas Medicaid Underpayments
A payment discrepancy is considered an underpayment if the payment is scheduled in a manner that does not seem to conform to the applicable payment rules. Each population funded by the Medicaid program will have an expected claim payment rate under the fee-schedule methodology, based on the Texas Medicaid Fee Schedule. Its aim is to seek out new claims that require additional examination and to uncover the reasoning for the discrepancies in the amounts.
Reconcile Expected and Actual Payments
Make a comparison between the expected allowed amount and the actual allowed amount in the remittance advice. Only utilize the Texas Medicaid Fee Schedule as the rate when it is applicable to the claim being checked. Then compare the amount that is allowed with the payment transaction to determine what any additional adjustments are.
To create a useful reconciliation report, include the following:
- Claim number and date of service.
- Procedure code, modifier and units.
- Rate of fee or reference from contract applicable.
- Expected allowed amount.
- Actual allowed amount.
- The amount paid and the adjustor’s information.
- Variance/investigation status.
This report can assist the billing staff with identifying any pricing discrepancy from the difference in the provision of allowed and cash funds.
Review Remittance Advice and Adjustment Codes
Remittance Advice contains details about the remitter, the claim number and details of how the claim was processed. Read the adjustment codes and explanations to understand the reasons for reducing or denying any billed dollar amounts, and other adjustment details.
The reduction in payment may be due to a number of reasons including a unit limitation, a bundled service, eligibility, a contract adjustment, etc. The discrepancy could also result from the use of incorrect rates or because the claim has been processed under the wrong charge interaction conditions.
Avoid adding up all pay that is less than anticipated, and consider it to be an underpayment. Don’t think of a variance from the Texas Medicaid Fee Schedule as an excuse or something that proves the payer is wrong and must pay more. It is important to first find out why the variance exists and which is the situation whether it was the action of the payer that violated the policy or not.
Prioritize Discrepancies for Review
Manual audit of every one of the Medicaid claims may not be feasible for a practice with a large volume of claims. Start with discrepancies that have the greatest potential financial impact. Focus on claims that show differences in payments made repeatedly, significant differences in the amounts, an unexpected zero payment, or a trend on multiple patients or procedure codes. Report results within categories for each of the following: payer, provider, code and date of service. A discrepancy that occurs frequently should be investigated first before an isolated difference since it may suggest a larger discrepancy in configuration or processing.
Common Causes of Texas Medicaid Underpayments
The majority of payment discrepancies are recurring issues. These patterns can be compared to the appropriate Texas Medicaid Fee Schedule to determine if a problem resulted from using an old rate reference or a code set up was incorrect. Determining the root cause allows the billing team to apply the right solution without having to pursue the same solution over and over again.
Coding and Claim Submission Errors
A claim may end up being adjudicated differently if a procedure code, modifier or billing sequence is incorrect. If a provider identifier or a classification of services is incorrect, this can also impact payment. For instance, if the number of units is submitted incorrectly, it may result in a reduced allowed unit count even if the service that was done was performed appropriately. Review the claim submitted with the clinical documentation and coding guidelines.
Outdated Rates or Incorrect Reimbursement References
Using out-of-date rates in a billing system could lead staff to use outdated information. The same issue arises when a team uses a rate that does not have the correct date. Keep up-to-date rate references (with version control), and notes of when they go into effect. Use the version or effective date of the Texas Medicaid fee schedule for each billing period that is applicable. If there is a discrepancy, double check the date of service prior to the final determination that the payer has paid the incorrect rate.
Provider Classification and Payment Methodology Errors
There can be variation between providers in regard to type, services and payments. This can expect unrealistic results because it is not a correct rate for the other provider classification. Some use a methodology which is specific to the service provider, based upon the cost, or manually priced methodology instead of a fixed fee based upon procedure. In these instances, it is important to review the Texas Medicaid fee schedule and the expected payment is not determined solely by the fee schedule. Don’t use a general fee schedule, refer to the provider manual and payment rules.
Authorization, Documentation, and Benefit Restrictions
A claim may be denied or vastly reduced due to a failure of the service to meet some of the services’ applicable authorization, documentation, eligibility or benefit specifications. Not all of these cases are a price mistake. Check the payer’s explanation and the claim record to see if the requirement was met and determine if the services were reimbursable.
Managed Care Contract Differences and Payment Adjustments
A managed care plan may make reimbursement as per their contract, rather than State fee-for-service reimbursement. An underpayment finding may only occur when an MCO payment is compared to an unrelated rate from the state, not to another MCO payment. The other differences could be due to adjustments to the claims based on valid claims, payment offsets, or bundling rules. Identify which payer arrangement (PP or PPM) is in effect and the expected adjustment, and then determine whether the payment needs to be disputed.
How to Prevent Texas Medicaid Underpayments Before Claim Submission
Prevention emphasizes avoiding errors that can be prevented before they get to the payer. To ensure that billing references accurately reflect the applicable rate information, regular checks are implemented against the Texas Medicaid Fee Schedule. A standardized validation allows rework to be minimized and the billing staff to apply coding and reimbursement references for claims submission with ease.
Maintain Accurate Billing References
Develop policy and contract responsibility for provider information, billing policies, and maintaining current fee schedules with payers. However, staff must double-check the Texas Medicaid Fee Schedule reference with the date of the date of service and not assume that the reference was saved for an undated document. Make sure to have effective dates and to have staff using the effective date. Review codes and workflows in case of rate or policy changes. Make changes to necessary system settings and inform the team accordingly.
Validate Claims Before Submission
Develop a pre-submission checklist to aid in the billing transaction. If the Texas Medicaid Fee Schedule rate and effective date correspond to the claim, include a check that such information is correct. For all the above services, check:
- Patient eligibility/coverages.
- Providers enrollment and identifiers.
- CPT/HCPCS codes and modifiers, and units.
- Conditions for authorization and documentation.
- Accurate inadvertently missing payer and reimbursement setting.
- Able to use the appropriate rate/dates of service.
- Billing edits and payment restrictions for services.
Exceptions and unusual claims should be checked by staff, automated edits provide some help to identify inconsistencies. Ensure that claims are submitted accurately to minimize unnecessary delays but not necessarily claim all claims as directed.
Monitor Recurring Billing Errors
Identify reasons for denials, coding errors, and revisiting claim edits. From that identify gaps in the process and give focused staff training. For instance, if several claims have the same modifier error, adjust the billing process, not individual claims and save the time spent fixing each claim. If this is due to an old rate table, please update the rate table and check other claims that may have been impacted.
How to Audit, Appeal, and Recover Underpaid Texas Medicaid Claims
Recovery of payment is about claims which are already processed. These procedures can be facilitated with the Texas Medicaid Fee Schedule if a procedure’s reimbursement method has a rate that is published in the fee schedule. The aim is to establish if the rules of reimbursement have been applied correctly, identify any remediation required and pursue through until resolution.
Conduct a Targeted Payment Audit
From this sample of paid claims choose a sample of claims based on the criteria: risk, volume and financial impact. If a Medicaid service is listed in the fee schedule, then use the adjudicated amount to compare against the Texas Medicaid Fee Schedule and payment rules applicable to the claim. Verify the adjudicated amount of each claim against the expected amount per applicable fee schedule, contract and payment policy.
Record the causes of all the positive deviations. Distinguish valid and appropriate adjustments, coding errors and claims that require further documentation from genuine underpayments. If multiple recurring patterns are found, continue to investigate other similar claims. This supports the assessment of the extent of the problem and whether this is global to one claim, to a specific code or to more payments.
Choose the Appropriate Corrective Action
Next, it will depend on the justification for the difference.
- Correct and re-submit a claim in case any claim has been sent in error and it is allowed to be re-submitted.
- Seek a reconsideration if the claim appears to have been adjudicated wrongfully and the process the claim was through is appropriate for reconsideration.
- Appeal, if the dispute falls under the appeal process relevant.
Show supporting documents if asked by the payer for further review and reconsideration. Use the required instructions and filing deadlines only for those involved in this payment type/claim. Retain original claim, remittance advice, appropriate rate reference, supporting records, and all correspondence.
Track Recovery Outcomes
Record at a minimum the claim, discrepancy, root cause, action taken, deadline and end result in a recovery log. If the rate in the Texas Medicaid Fee Schedule is used as part of the rate for a review, record the Texas Medicaid Fee Schedule rate. Record the amounts recovered, amounts found and non recoverable cases. These actions assist the practice to gauge the financial impact of payment variations and uncover pattern problems. They further indicate whether or not corrective actions have been successful in lowering the number of similar errors over time.
How Medical Billing Services Help Reduce Texas Medicaid Underpayments
To manage Medicaid reimbursements there need to be the settling of accurate billing references, consistent validation, careful payment reconciliation, the following up of timelines. A documented process for examining the Texas Medicaid Fee Schedule can be used to support these activities. For practices supported by scant administrative resources, these processes may be difficult to sustain in addition to regular business workflows. Professional medical billing support services can ensure that this aspect is the one that is handled and structured accordingly and that they can make their revenues’ cycle more visible.
Fee Schedule and Claim Validation
A billing team can assist to determine which reimbursement references apply, to review the coding and claim details for consistency, and make sure there are no discrepancies prior to billing submission. This is especially relevant if the service is reimbursed via a published rate on the Texas Medicaid Fee Schedule. This helps make more accurate claims and helps eliminate unnecessary claims rework.
Payment Posting and Underpayment Follow-Up
Payment posting accuracy ensures that practices are able to match what they are expecting to receive from reimbursements (from the payer) with actual payments. If there are discrepancies, the billing team can follow up on adjustments, document the incident and follow it up accordingly.
Denial Management and Appeals
A structured denial management process allows teams to determine the cause of denials or adjustment, collect supporting documentation, and be prepared to chase the denial/correction or appeal. When there is a known recurrence of issues this assists avoiding future issues from impacting the same claims.
Revenue Cycle Reporting
Payment variance reports will provide practices with an improved payment pattern view. If appropriate, teams can utilize the Texas Medicaid Fee Schedule as one resource in researching those disparities. Follow-up and trouble-shooting of repeated billing issues are assisted by reports grouped by payer, procedure code and by root cause.
Improve Texas Medicaid Billing and Reimbursement with Billing Care Solutions
Claims processing and the payment process for Texas Medicaid requires accuracy in billing practices, correct coding, timely submission, and payment monitoring. Billing Care Solutions helps healthcare providers to handle their medical billing and revenue cycle processes from claim preparation to payment posting, claim denial management and roll follow-up.
A well-designed system of managing claims will enable your practice to understand what types of claims are being denied, how claims might be denied and how this can be resolved and how any persistent reimbursement problems can be resolved. Billing Care Solutions can help you ensure accurate claims, minimize claim issues that can be avoided, and optimize your maintenance of the Texas Medicaid revenue cycle.
For medical billing and medical reimbursing management assistance support, call Billing Care Solutions and talk with them about your medical billing needs.
