Medical billing services offer a number of options for practitioners to pay for their services. Each practice has different requirements and the appropriate option for you depends on the volume, kind, and value of bills. Following are some of the billing options available to medical practices, with their minus and plus points.
1. Percentage based fee
This is the most frequent type of billing option offered by medical billing services. You pay a fraction of the net amount received or of the total claims submitted to the insurer. Percentage rates vary from four percent to sixteen percent as they depend on the services included in the contract, claim value and monthly average number of claims. Percentage based agreements work well for most medical practices, especially if the medical billing service is responsible for all the tasks connected to billing. Such a compensation model provides motivation to the billing service to submit and follow up claims rigorously – an excellent advantage for the customer. The only downside of percentage based fee is that the billing service could possibly neglect smaller claims as the small amounts do not justify the vigorous follow up necessary to collect. You can overcome this problem by paying a marginally higher percentage for the smaller claims to motivate the service to collect on them.
2. Flat fee per claim
The medical billing service charges a predetermined rate for every submitted claim. The fee could range from $1 to $8 based on the service. This alternative is suitable for medical practices that process low volume of claims with high payment amounts or claims that are hard to collect (as from a particular payer). The disadvantage of this arrangement is that the billing service is not motivated to follow up the claims aggressively. You should accept this alternative only if you stipulate follow up in the contract and release the fees after the claim has been collected.
3. Hybrid Billing
Hybrid billing is a good combination of percentage and flat fee service. In a hybrid billing option, pricing terms are defined based on the category of claim and the insurance carriers. This sort of billing arrangement is suitable for any practice that sees a wide range of claim values and a moderate to high level of claims. This also allows health care practices comply with the fixed fee regulations set for Medicaid and Medicare claims in a number of states. The percentage-based fee is used to pay for 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.
Before selecting the billing option you want with the medical billing service, carefully evaluate your billing volume, value of claims, and the type of patients and insurers. Ask the billing company to forecast results based on monthly average volume of claims, amount of claims and payers so that you have some idea of what you would pay under every category of billing agreement. Consider the future growth of your practice before selecting the best payment agreement. There is a medical billing service out there for each type of practice; you just need to spend some time understanding how they work before you make a decision. Daljeet Sidhu is the author of this article.