Medical billing services offer a number of alternatives to compensate them for their services. Each practice has varying requirements and the correct option for you depends on the volume, type, and value of claims. Following are some of the billing choices available to medical offices, with their benefits and drawbacks.
1. Percentage based fee
This is the most common type of billing option offered by medical billing services. You pay a fraction of the net amount received or of the gross claims submitted to the covering agency. Percentage rates range widely (4%-16%) as they are calculated on the services included in the agreement, claim value and monthly average count of claims. Percentage based contracts are suitable for most healthcare practices, especially if you turn over the entire operation to the medical billing service . This method of charging provides an incentive to the billing service to submit and follow up claims rigorously - an excellent advantage for the client. The one problem of percentage based fee is that the billing service could possibly pay less attention to smaller claims as the small sums do not justify the aggressive follow up necessary to collect. A good alternative is to pay 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 flat rate for each filed claim. The amount could range from $1 to $8 depending on the service. This option works well for health care practices that see high value but low number of claims or claims that are tough to collect (as from a particular payer). The drawback of this agreement is that the billing service does not have much incentive to follow up the claims aggressively. This service is useful only if you specify follow up in the contract and make the payment after the claim has been paid.
3. Hybrid Billing
Hybrid billing is a good choice to get the best of both percentage and flat fee service. In a hybrid agreement, pricing stipulations are defined based on the type of claim and the insurance carriers. This type of billing agreement is appropriate for any practice that has varying claim amounts and a moderate to high level of claims. This also allows medical practices comply with the fixed fee rules stipulated for Medicaid and Medicare claims in a number of states. The percentage-based fee structure is applied for private insurance claims. The main problem of hybrid billing is that it introduces billing complexity into practices that do not have a large volume of claims.
Before deciding on the price structure you want with the medical billing service, assess your claims volume, value of claims, and the kind of payers. Ask the billing corporation to forecast results based on monthly average volume of claims, amount of claims and payers so that you can estimate the amount you would pay under each category of billing contract. Consider the future growth of your practice before you choose the optimal payment contract. There is a medical billing service out there for every type of practice; you just need to spend some time understanding how they work before you make your selection.