What is Pricing Center
One of the principle factors in selecting a third party medical billing firm is price. The two most common pricing approaches include percentage based pricing and flat fee pricing.
Percentage Based Pricing
This is probably the most common pricing practice. The price is either a percentage of collections, a percentage of gross claims submitted or a percent of total collections. The differences in these are as follows:
Percentage of Collections- The percentage is taken only on the net of the claims received that the billing services had a hand in submitting. This typically excludes money collected at the office such as co-pays or deductibles. The effect of this is that the billing service makes money only when the practice makes money.
Percentage of Gross Claims Submitted- The method charges a percentage of the total amount submitted to insurance companies and other payers. This can get complicated because the rate submitted is not always the same as the negotiated rate that will be paid. So, not only is the percentage rate important, where it’s applied becomes just as critical.
Percentage of Total Collections- This method uses a percentage of the net of all of the money received by the practice including co-pays, deductibles and any other money collected at the office. It also includes collections on delinquent accounts. This gives an incentive for the billing service to pursue delinquencies.
This payment method is most commonly found where the medical billing company provides an array of services including electronic medical records, staffing, scheduling etc.
Variables impacting percentage methods include claim volume, average amount per claim, billing services used and other factors.
The main advantages of a percentage method are that the billing company is incentivized since their remuneration is tied into the amount collected.
Flat Fee per Claim
A flat fee per claim means the medical billing company charges a fixed dollar amount for each claim submitted no matter what the claim size.
The amount depends not only on claim submissions and average claim amount, but the extent of the services of the medical billing firm provides. For example, the charge per claim could be as little as a dollar or two. However, all follow up would be the responsibility of the practice.
On the other hand, if invoicing or follow up were included, the charge might go to four or six dollars per claim.
A flat fee per claim has the potential to be more cost effective, especially on higher priced individual claims.
Some companies also offer a combination of a flat fee and percentage approach.
So, choosing what a medical billing service will cost a practice requires careful thought and consideration on the trends of the practice’s claim submissions.
