Contracts Between Providers and Medical Billing Companies

Anyone starting a medical billing business often looks for a sample contract online to use as they market their first clients.  They really don’t know where to start and feel that a sample will help them figure it out.  The problem with this is that there are so many things to consider when writing a contract that they can’t all be covered by looking at sample contracts.

Our first contract was one page that basically said that we would complete the work within a reasonable time frame and how much we would get paid.  We felt that if a relationship with a provider wasn’t working out we didn’t want to be working for them anyway.  As we grew and gained experience, we saw the need for much more to be included in our contract and we understood why it was important to be very clear with the terms of the contract.

Why do you even need a contract?  Can you just start doing the billing for a provider without a contract?  That would be very unwise.  Contracts spell out exactly what is expected of each party and what the consequences are if these expectations are not met.

What are some of the things that need to be included in the contract?   It needs to be very clear as to what services the biller is providing.  Are you offering full services?  What is included in that?  Are you simply submitting the claims or are you tracking them and resubmitting problem claims and filing appeals when necessary?  Do you charge a set up fee?  Will you be helping the provider with their credentialing needs, coding, patient billing, working aging reports and negotiating contracts?  These are just examples of a few of the services that need to be considered.

What are you charging the provider for your services?  How is the provider going to pay you?  Are they paying you a flat fee, a per claim fee, or a percentage.  If you are charging a percentage, what is the percentage based on and is it legal to charge a percentage in your state.  When is the payment due and what are the consequences if not paid on time?

What is the length of time a contract is in effect?  What happens when that time frame expires?  Can the contract be broken prior to the the length of time designated in the contract?  What reasons would constitute the breaking of the contract?

Confidentiality must be covered.  Patient information must be kept confidential as required by HIPAA and this should be covered in the contract.

This list does not cover all the things that must be covered in a contract but I hope it gives you an idea of how important it is to really spend some time developing a good contract that will hold up in court if necessary.  Unfortunately this sometimes happens even in the most well intended relationships and it is best to have it all fully explained.  If you need more help with your contract, we recommend our ebook “How to Write a Kick Butt Contract for Your Medical Billing Business”


PQRS Gets More Complicated


We are hearing that many providers are receiving letters stating that they are being penalized for not meeting the requirements of PQRS even though they thought they were reporting correctly. These providers report that they have been using claim based reporting all year on all Medicare claims but are now told they do not qualify.

It seems that the PQRS reporting rules are more difficult, and in some cases even impossible, to follow. For example, we have several LCSWs who report on depression screening and elder abuse. They report on every Medicare patient they see so they are definitely over the 50% mark. However they only report on those two measures since those are the only two applicable ones for their situation.

They too received notice that they did not meet the PQRS reporting requirements. We contacted the PQRS help desk and we were advised that the codes used by the LCSWs, 90791, 90834 & 90837, are eligible for reporting 8 measures and that all 8 measures must be reported. One of the eight measures is body mass index. Most LCSWs are not qualified to discuss BMI with a patient since their BMI may be affected by other medical health issues and/or medications they may be taking for health issues and the LCSW would not be qualified to discuss that with the patient.

Another one of the eight measures is blood pressure. Again, LCSWs are not trained to take and/or monitor blood pressure on patients. Most patients who see LCSWs go there to discuss issues in their life, not to have the LCSW discuss their blood pressure, medications, or BMI. The only recourse is to file an informal appeal. We have done that on behalf of several providers stating that the requirements are not within their scope of practice. It is unfair that LCSWs are going to be penalized for not reporting on measurements that are not within their scope of practice.

The eight measures that must be reported by a LCSW are Body mass index, Hypertension, Alcohol, Tobacco, Pain Assessment, Medications, and Elder Abuse.

While most therapists are likely to discuss depression and possibly elder abuse we have to wonder what hypertension, body mass index, tobacco, etc have to do with the therapy for a patient who is suffering from anxiety. And how is a social worker going to assess the medication needs of a patient they are counseling for problems at work. And yet all eight screenings are required in order to meet the PQRS requirements. Does it make sense? We are closely watching to see how MACRA ends up working out.


Over the 24 years we have been in business we have learned many things and found various ways to improve our business. A few of these lessons have made a huge difference in the success and direction of our business.  There was no handbook available (nor is there now) on how to run and grow your medical billing business.  We learned by trial and error.  But many of our lessons came as a complete surprise.  Things happened that we thought would make a huge difference to us and it turned out the opposite.  Small things that happened turned out to be huge.

We find our readers love to hear about issues we have gone through, how we handled them, and how they turned out.  So we decided to write about the three things that have happened to us that really turned our business around.  This month we will tell you how getting rid of our office manager made us much more profitable and
turned our business around.

Michele and I are very easy going.  We don’t like confrontation.  We had gotten to a point where we didn’t want to handle all the issues that come up with hiring three employees so we hired an office manager thinking it was going to end all our problems and allow us to get back to the job of running the business.  Unfortunately we kept this office manager long after we knew we she needed to be gone.  You aren’t going to believe this but we had to hire an executive assistant to get rid of the office manager.

When we brought in the assistant she assessed everything that was going on in the entire office and saw that the office manager was the problem.  She just kept confronting her on what she was actually doing – what work was she accomplishing.  We didn’t realize that the office manager was really doing almost nothing except causing problems.  When she realized this was discovered she called our largest account and made a deal with them and turned in her notice to us.  She went to work for our largest account and within a few months they left us to let our former office manager handle the billing in their office.   Many lessons learned here.

Michele was quite worried over the workload that she would have to take over with no office manager any longer.  It was a very pleasant surprise to find that there was no work load to take over.  The new assistant took care of the employee issues and we took back over the end of month billing and everything went much smoother.  Our phones stopped ringing as much with problems from our providers.  The fires we were always putting out stopped.  We couldn’t believe how much difference this made.  Life was much better.  We also figured out that we did need an office manager, we just had the wrong one.  Hiring the right people for the job is huge.

Next month we will tell you about what else happened as a result of this situation that made our business even better.



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.

Facility Billing

Billing for facilities is much different than professional billing, or billing for individual doctors or groups of doctors.  Facilities include drug and alcohol rehab, eating disorder clinics, and much more. Billing for facilities is usually done on UB04 forms rather than CMS 1500 forms.  UB04 forms are entirely different than CMS 1500 forms and require different information than CMS forms.

UB04 forms require REV codes, type of bill, source of admission, condition codes and more.  If you are currently billing for primary care doctors and for specialties like physical therapy or mental health, you will have a lot to learn in order to bill for a facility.  UB04 forms in themselves can be a bear to complete properly, but besides that, individual insurance carriers will often insist that claims to their company be billed differently.

They may require a different REV code than the norm.  They may require that services be billed as HCPCs codes on a CMS 1500 form instead of as REV codes on a UB04.  Each carrier may have a completely different set of billing guidelines.  Because of this facility billing tends to be a lot more involved than professional billing.  The important thing is to develop communication with each insurance carrier, find out their requirements and be diligent to get the claims filed in the manner that is required.

The Business of Medical Billing

This industry is such a balancing act in many respects.  When we are first starting our businesses we can’t find enough providers who hire us.  As we grow, we find we have more work than we can get done and we need to hire and train someone.  Once you start hiring and training people it can be difficult to know when you need to hire the next person.  Is there enough work to justify another person?  Is there enough income to cover the additional costs of hiring another person?  Who will train the next person and how will that affect their work load?  We find we are often questioning if we are ready to hire another person.  Is this just a busy time frame due to a few projects or do we need another full time person?

Last month we tried something new.  We hired a person to fill a position we had never hired for previously.  We found that as we grew we found new needs.  We bill for over 50 offices.  We assign certain accounts to each worker.  We also cross train all accounts so if someone is out or they leave someone else can take over that account.  Then we also have one person who continuously works aging reports so each provider’s aging is completed every 4 – 6 weeks.

Over the years as we added accounts and insurance carriers offered ERAs or electronic remittance advice we found that it was taking a lot of time just to download all these ERAs and take care of the denials on the reports.  We tried having one person do the reports on Monday and Wednesday and another on Tuesday and Thursday and a third person on Friday.  This worked, but it entailed problems too.  We found we had to keep rearranging who could do which accounts because so much time was being spent on the ERA downloads.

Last month we had someone approach us asking if we were hiring.  We were not looking for someone, but thought what if this person could learn just the ERA downloads.  She wanted to work only part time as she has a special needs child.  The downloads took a little less than 4 hours most days.  It was a difficult job for her to learn, but now 4 weeks later it is working great.  It has freed up three other workers to spend more time on their own accounts and take on a little more work.  We filled a position that we were not aware was a need.  Keep your eyes open to such possibilities.  Sometimes we are so used to doing things one way we are unable to see a better way.

Update on 59 Modifier

Barbara Griswold researched and wrote an article about the new CPT code changes for mental health effective January 1, 2017 and graciously allowed us to reprint her article which you can read here.

Since then a kind reader sent us more information on her experience with using the 59 modifier.  She states that they have had good experience getting paid using the modifier XE in place of the 59 modifier when billing the CPT code 90847 along with 90832, 90833, 90834, 90836, and 90837 and 90838.

I checked back with Barbara and she researched further and sent me the following information.

The 59 hasn’t been deleted but I found that some codes that have come out that should be used instead since they are more specific, most notably XE in the case we are talking about when a therapist does a couples and individual session in the same day.  I’m not sure if this is just Medicare, or if private plans will accept this,  but a few websites seemed to verify this.  Here is one of them that explains it well.

Thanks for clarification Barbara

Author of Navigating the Insurance Maze: The Therapist’s Complete Guide to Working with Insurance — And Whether You Should”