Medical Billing Service - Picking The Optimal Fees Agreement

By Author: Daljeet Sidhu
Total Articles: 4762
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Medical billing services offer myriad alternatives for practitioners to pay for their services. Each practice has varying requirements and the correct alternative for you depends on the volume, type, and value of bills. Following is a list of the billing alternatives offered to medical practices, 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 collections or of the total claims submitted to the payer. Percentage rates vary from four percent to sixteen percent as they are calculated on the type of services provided, claim amount and monthly average count of claims. Percentage based contracts are appropriate for most medical practices, especially if you turn over the complete operation to the medical billing service. Such a compensation model provides motivation to the billing service to maximize collections - an excellent benefit for the customer. The only problem of percentage based pricing is that the billing service could possibly neglect smaller claims as the small sums do not justify ...
... the vigorous follow up required to collect. A good alternative is to pay a marginally higher percentage for the smaller claims to make them worth the effort.

2. Flat fee per claim

You pay a predetermined rate for every submitted claim. The fee could range from $1 to $8 based on the service. This choice works well for medical practices that see high value but low number of claims or claims that are difficult to collect (as from a particular insurer). The disadvantage of this agreement is that the billing service does not have much motivation to pursue the claims aggressively. You should accept this alternative only if you demand follow up in the contract and release the fees after the claim has been paid.

3. Hybrid Billing

Hybrid billing is a great choice to get the best of both percentage and flat fee service. In a hybrid agreement, pricing provisos are specific to the category of claim and the insurance carriers. This sort of billing agreement is fitting for any hospital that sees a wide range of claim amounts and a moderate to high level of claims. This also helps medical practices conform to 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 problem of hybrid billing is that it introduces billing complexity into practices with low volume of claims.

Before deciding on the billing option you want with the medical billing service, go over your claims volume, amount of claims, and the type of patients and insurers. Ask the billing company to forecast results based on monthly average volume of claims, sum of claims and payers so that you can estimate the amount you would pay under every category of billing agreement. Think in terms of the potential growth of your practice before selecting the optimal payment contract. There is a perfect medical biller for each type of practice; it is just a matter of educating yourself and making an informed decision in hiring the right service for your practice.
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Daljeet Sidhu. Medical Billing Services blog. Medical Billing quote. Buy Business leads.