What Percentage Are You Charging or Paying?

Whether you are a billing service or a provider there is a lot to consider when agreeing to charge or pay a percentage of the income.  There are several ways for billing services to charge their providers but percentage billing seems to be the most common.  Percentage billing is illegal in some states.  Other options are per claim, flat fee, or hourly.  Most providers that we have met want to pay a percentage so they have something to compare the cost to.  Either they have been paying a percentage previously or have gotten proposals from others charging a percentage.  Percentages can vary from as low as 5% to as much as 15%.  But the big question is really, whether it is a percentage, a per claim or a flat fee, what is the real cost.

There are several things to look at when comparing how billing services charge.  Here are some things to consider.

What services is the billing service providing?  It is important to identify what the actual duties of the billing service are.  Will the billing service be tracking the claims as well as submitting them?  An example is when a doctor is approached by an EMR company that states they can now do your billing for a very small percentage.  What they often don’t explain fully is that a person is still required in the medical office to check the clearinghouse reports and track the claims.  Anyone who has done medical billing knows that checking the reports and tracking claims is much more work than submitting the claims.  Will the billing service be sending regular patient statements?  Will the billing service run regular aging reports to find unpaid claims and act on them?  Will the billing service be submitting secondary and tertiary claims.  ( I know this sounds obvious, but we know of a provider who asked his billing service if she was sending secondary claims and she admitted she wasn’t.  She was strictly going after low hanging fruit.)

So rather than just comparing the percentage or the flat fee or per claim fee, a provider should always make sure he or she knows exactly what the service is that is being provided.  In our situation we have been told that we are just a little higher than another service but usually the provider is happy to pay it because their bottom line is what is important to them.  We explain that we can’t do as good a job for a lower fee.

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