Medical billing services offer a myriad of options to compensate them for their services. Every practice is different and the right choice for you depends on the volume, type, and dollar amount of claims. Following is a list of billing services options available and some their advantages and disadvantages.
1. Percentage Based Fee
This is the most common type of medical billing service. You pay a percentage of the net collections or of gross claims submitted to the payer. Percentage rates vary from four percent to sixteen percent and depend on the services provided, amount of claims and volume. Percentage based agreements are suitable for almost all medical practices, especially if you turn over the whole operation to the billing service. Such compensation model provides an incentive to the billing service to maximize collections - a great benefit for the client. Only drawback of percentage based pricing is that the billing service may neglect smaller claims since the small payment may not justify the aggressive follow up required to collect. A good alternative is to pay a slightly higher percentage on the smaller claims to incentivize the service to collect on them.
2. Flat Fee per Claim
You pay a flat rate on each claim filed. The fee could range from $1 to $8 depending on the service. This option is suitable for medical practices that process low volume of claims, high payment claims or claims that are difficult to collect from a particular payer. Drawback of flat fee arrangement is that the billing service does not have much incentive to pursue the claims aggressively. This service is only useful if you demand follow up in the contract and release the fees only after the claim has been paid.
3. Hybrid Billing
Hybrid billing could be a good choice to get the best of both percentage and flat fee service. In a hybrid agreement, pricing terms are defined based on the type of claim and the insurance carriers. This sort of billing arrangement is suitable for any practice that has wide range of claim amounts and a moderate to high volume of claims. This also allows medical practices to comply with the flat fee regulations stipulated for Medicaid and Medicare claims in some states. The percentage-based fee is paid for the private insurance claims. The main drawback of hybrid billing is that it introduces billing complexity into practices that do not have a large volume of claims.
1. Percentage Based Fee
This is the most common type of medical billing service. You pay a percentage of the net collections or of gross claims submitted to the payer. Percentage rates vary from four percent to sixteen percent and depend on the services provided, amount of claims and volume. Percentage based agreements are suitable for almost all medical practices, especially if you turn over the whole operation to the billing service. Such compensation model provides an incentive to the billing service to maximize collections - a great benefit for the client. Only drawback of percentage based pricing is that the billing service may neglect smaller claims since the small payment may not justify the aggressive follow up required to collect. A good alternative is to pay a slightly higher percentage on the smaller claims to incentivize the service to collect on them.
2. Flat Fee per Claim
You pay a flat rate on each claim filed. The fee could range from $1 to $8 depending on the service. This option is suitable for medical practices that process low volume of claims, high payment claims or claims that are difficult to collect from a particular payer. Drawback of flat fee arrangement is that the billing service does not have much incentive to pursue the claims aggressively. This service is only useful if you demand follow up in the contract and release the fees only after the claim has been paid.
3. Hybrid Billing
Hybrid billing could be a good choice to get the best of both percentage and flat fee service. In a hybrid agreement, pricing terms are defined based on the type of claim and the insurance carriers. This sort of billing arrangement is suitable for any practice that has wide range of claim amounts and a moderate to high volume of claims. This also allows medical practices to comply with the flat fee regulations stipulated for Medicaid and Medicare claims in some states. The percentage-based fee is paid for the private insurance claims. The main drawback of hybrid billing is that it introduces billing complexity into practices that do not have a large volume of claims.
As you decide on the type of price structure with the billing service, carefully evaluate your billing volume, amount of claims and the type of payers. Ask the billing company to model your volume, amount of claims and payers so that you can estimate the amount you would pay under each type of billing contract. Consider your future growth before you choose the optimal payment contract. There is a billing service out there for every type of practice; it is just a matter of educating yourself and making an informed decision to hire the right service for your practice.
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