How to Tell if Your Therapy Company Thinks You're Gullible

I recently had someone contact me and show me a bill from a therapy company. This person was analyzing the bill and noticed that the daily rate for an ultra-high RUG was ever-so-slightly higher than the number the salesperson and facility had agreed upon. It wasn't so high that you'd easily spot it, but was high enough that over the course of the contract it was significant. How does this happen?

Normally SNFs and therapy companies negotiate rates for Part A therapy in dollars per minute. In fact many SNFs are very fixated on that number: $0.98/min, $1.00/min, $1.02/min, etc. But billing is done by the day and importantly, the contract usually list rates by day NOT minute

That means that the person who writes the contract has to convert dollars per minute into dollars per day. I suspect the person who negotiated the contract on the SNF side typically doesn't go back and check that number because sometimes "mistakes" are made.

Here's an example: (We're only looking at ultra-high for simplicity.)

Agreed upon price: $1.02/per minute

UH Minutes per 7 days:

CodeCogsEqn.gif

UH Minutes per day: 

UH Minutes per day * Agreed upon rate: 

So your daily rate for an ultra-high should be $104.91, right? Easy. Except the bill showed $105.38 per UH day. Where did that come from?

If you take the $105.38 and calculate the actual dollars per minute, you get $1.024528, which some people would look at and say "That's a $1.02 per minute, plus some rounding error." But hold on a moment. Why would there be a "rounding error" here? The math to convert from dollars per minute to dollars per UH day is simple. Note too that if the "error" had been any greater, the result would have rounded to $1.03, which might have been noticed.

For this mid-sized building, this "rounding error" only cost around $2,000 per year. If your facility is part of a chain, then the expense can add up. (This is not a small therapy provider either. You know this name if you're in the business.)

Admittedly, this isn't break-the-bank type money, but it is an indicator or trustworthiness. If your vendor is willing to trick you into paying an extra 2 grand per year, what else are they willing to do?

 

Want to do some simple math together? If so, contact me today!