As the activities of running a medical practice becomes more competitive, many practices turn to a third party medical billing service for cost effective solutions maintain maximum profitability. In evaluating any medical billing service agreement there is a number of factors that should be taken into consideration - price of services is the main among them. This article compares the two most common pricing approaches offered by medical billing services - Percentage based agreements and flat fee per claim - and identifies some important points to remember when selecting a medical billing service provider.
Percentage based agreements:
Probably the most common approach to prices by medical billing services is the basic agreement percentage. In this type of arrangement, the expenses of medical billing service to the practice are based on a percentage, usually in some form or other of the following:
- Percentage of collections,
- percentage of gross loans made by the billing service,
- percentage of total collections for the general practice.
In our second type, the percentage of Gross complaints from the billing service, practice is charged a percentage of the total amount subject to insurance companies and other payers. This can be difficult for two reasons. First, the turnover rate at an insurance company is not always equal to the negotiated rate that will be paid. Then, a percentage apparently competitive from a medical billing service can be drastically different from another medical service billing depending on where the percentage is applied. Second, some of the incentives mentioned above is removed to follow up on loans as there is no tie-in to the results of the observations of the medical service billing.
With a percentage of total collections for the overall practice, the billing service costs for the total net received by the practice. It includes co-pays, deductibles, and any other money collected in the office, not only by the service. This provision is most commonly found with practice management companies in real scale that not only handle medical billing, but it could also administer the personnel, planning, marketing, tariff negotiations, etc. In this arrangement, the medical billing service it can be driven by incentive to follow on loans with taxpayers, but gains some protection for its revenues through other sources of payment that come into practice.
variability rate in percentages agreements:
A medical billing company will consider several variables in defining the rate applied to the practice in a basic agreement percentage. Rates may vary from a minimum of 4% to a maximum of 14% or even 16%! Factors influencing this variability include the volume of demand and average dollar amount of claims and service aspects as level of follow-up carried out by the medical billing company, also invoices of the patients will be sent from the billing company, and many others. Let's take a look at some examples of how these variables affect the medical billing services rates.
EXAMPLE 1:
As for the volume of demand and dollar amount, consider the example of A practical and practice B. Both are looking for a service that offers pretense generation medical billing, carrier of follow-up, patient billing and phone support. The average request for file A is $ 1000 and average of 100 patient encounters per month. Practice B has an average credit of $ 100 with 1,000 meetings per month. While the gross invoice amount is the same, the difference is staggering for the company billing you will need to project almost 10 times the hours of work for practice B to produce the same return as from practice A.
EXAMPLE 2:
regarding the services offered, let's consider the practice C and D. Both practicing media practices about 1,000 requests per month, and each supporting an average of about $ 100. Now, C practice is looking for a billing service to handle complete affirmation of the life cycle of the vector Management- follow-up, submission to the secondary and tertiary insurance, patient billing and support, analysis report, etc. practice D collects patient balances at the office so they do not require billing services, and is expected to make the vector of follow-up themselves. So Practice D requires only medical billing service generate and send initial requests to the carriers, and perhaps present a couple of minor requests each month. In this example, requests Gross is roughly the same, but the practice C might anticipate a significantly higher proportion - potentially twice that of practice D - because of the extensive work involved in providing these other support services. (Keep in mind practical D will also need to consider additional staff to perform these activities in-house, you most likely will not offset the cost of allowing the professional medical billing company to handle the process.)
These two examples clearly demonstrate the fundamental factors that influence the rates when considering the percentages based medical billing services. While there are many points of negotiation in which a practice can save on overhead costs, you should consider what that may arise as a result of other costs for the management of services not provided by medical billing companies.
In favor of percentage based agreements:
- Percentage based agreements bind directly to the success of the billing company for the success of the practice if they are based on collections.
- practices can often choose which services they need for potential short-term savings.
- short-term savings obtained by keeping some billing activities within the practice can result in long-term costs additional staff.
- small requests can not be addressed as vigorously. For example, consider a $ 5.00 patient bill with the office of a medical billing service 8% on the collections. The medical billing service would actually lose money in pursuing the claim. Adding the cost of postage, envelope and paper, as well as staff time for printing, stuffing and mailing, it would be more than the $ 0.40 that would ultimately trickle back to the service.
Another common approach to pricing offered by medical billing services is what we call flat fee per claim. With flat rate of medical billing company charges a fixed rate in dollars for each application submitted, regardless of the size of the demand.
Similar to agreements based on percentages, flat rate for affirmation prices can vary greatly depending on the volume of claims and the scope of services provided. In its most basic form, a fee for each request for a medical billing service could provide only complaint generation services and presentation for less than a dollar or two to the left. In this case it would be the responsibility of the practice to follow up on complaints. Of course flat rate for affirmation prices can also include other services such as follow-up with carriers, patient billing, etc. With these additional services, practices could expect costs to increase to $ 4, $ 5 or even $ 7 per claim or more.
Depending on the practice, the flat fee per claim may be convenient, but it should be carefully considered. Follow up with insurance companies and bureaucratic problems should not be overlooked. In some cases, once the medical billing company has submitted an application, you could make a phone call or two; but they made the presentation and the transaction is billable to the practice, regardless of how it is paid. Rate pricing to the statement has no inherent incentives such as specific percentages agreements. However, it may be the solution, if you have the resources to manage the follow-up, or if familiarity with the medical billing service is strong enough to have faith in their follow-up.
In favor of flat fee per claim:
- Rate the complaint pricing has the potential to be more effective, in particular on individual indications affordable more high.
- If vector of follow-up is included in this service, the company medical billing has little incentive once the initial application has been submitted. In addition, it can be nearly impossible to assess how rigorously a medical billing service is following.
- If the carrier and debtor follow-up is not included with the service, the practice must handle it in-house. Inevitably, the hiring and training of new personnel or employment of existing staff assignment leads to an increase in the head, often offset the benefits of using a medical billing service in the first place.
The last example in this discussion is what we call hybrid approach , which it uses percentages based agreements and flat fee for affirmation approach. Through this pricing method, a medical billing service can apply a percentage of certain insurance and bills of balance of the patient, then apply a per incident fee for others. This approach is usually silos by courier or claim type, as it would use the rate for all vector X claims, and flat fee for all vector claims Y.
The hybrid approach has become more common in some parts of the US in recent years as some insurance disapproved percentage based agreements. An example was seen when the state of New York has made percentages contracts on the state Medicaid claims illegal, requiring medical billing services use the flat rate option for each request. The principle concern arises from a couple of billing services without scruples who believe "up-coding", or submitting false claims for services at higher prices, is the easiest way to increased profits. While these few services threaten to tarnish the reputation of an entire industry, medical billing services in good faith to the long-term research of growth and profitability realize clearly that the small gains won from illegal activities are a way to support a successful business.
In short, the hybrid model allows honest billing companies to tie their success to that of the practice, while respecting the concerns of those insurances guided by formal rules.
Summary
When healthcare providers and practices consider collaboration with a medical billing company, have a number of options. fixed fee per incident may appear cheaper in the short term, but the income potential disruption due to poor follow-up on the part of the medical billing service provider, or the need to hire and train additional staff in-house to practice management follow by itself, affect the savings on upfront costs to the practice. The agreements on the basis of a percentage of the collection are police cars and ensure medical billing service will continue rigor repayments.
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