medical insurance billing specialist

Health-related Billing Services: Percentage And Flat Fee Pricing Structures

As the business of running a health practice becomes more reasonably competitive, many practices are hiring a third-party medical billing provider for cost-effective solutions to retain maximum profitability. In studying any medical billing provider agreement there is an array of components that should be taken into consideration – rates of services are a law among them. Receive the Best information about medical insurance billing specialist.

This article compares the 2 main most common pricing approaches which are available from medical billing services instructions Percentage Based Agreements in addition to Flat Fee per Claim instructions and identifies some of the critical points to remember when choosing the medical billing service provider.

Number Based Agreements:

Probably the most widespread approach to pricing by health billing services is the number-based agreement. In this style of agreement, the medical payments service’s fees to the train are based on a percentage, usually within a form or another of the adhering to:

  • Percentage of collections,
  • Percentage of gross claims downloaded by the billing service,
  • Percentage of total collections for that overall practice.

With the 1st type above, percentage regarding collections, the medical charging company charges the training only on net received for anyone claims in which it has immediately assisted in collections (typically excluding monies collected at your workplace, such as co-pays, deductibles, and so on ).

This is the purest sort of how a percentage-based arrangement will tie the health-related billing service’s success for the practice while safely constraining it to that which they incorporate some measurable ability to affect. This sort of percentage-based agreement rewards the practice by it is “self-policing” quality- the health-related billing service only makes money when the practice makes money.

Inside our second type, percentage regarding gross claims submitted from the billing service, the training is charged a percentage in the total amount submitted to be able to insurance companies and other payers. This could be tricky for two reasons. 1st, the rate billed to an insurance carrier is not always the same as the bargained with rate that will be paid.

Thus a seemingly competitive portion from one medical billing services can be drastically different from one more medical billing service according to where the percentage is utilized. Second, some of the incentive stated earlier is removed for follow-up on claims as there is not any tie-in to the results of health-related billing service submissions.

Using a percentage of the total collection agencies for the overall practice, often the billing service charges for any total net received by the practice. It includes co-pays, deductibles, and any other monies compiled at the office, not just by the provider.

This arrangement is most normally found with full-scale train management companies not only handle medical billing but might also administer staffing, preparation, marketing, fee schedule transactions, etc. In this arrangement, often the medical billing service is usually driven by the incentive to go up on claims with payers but gains some safeguard to its revenues over the other sources of payment moving into the practice.

Rate Variability within Percentage Agreements:

A new medical billing company may consider several variables inside defining the rate charged for the practice in a percentage centered agreement. Rates can range coming from as little as 4% to of up to 14% or even 16%! Elements influencing this variability contain claim volume and regular dollar amount of claims, and also service considerations like the amount of follow-up performed by the health-related billing company, whether or not affected person invoices will be sent from the billing company, and many others. Why don’t take a look at some examples of how these kinds of variables influence medical charging service rates.


Regarding claim volume and also dollar amount, let’s consider the sort of practice A and training B. Both are looking for a health-related billing service offering declare generation, carrier follow up, affected person invoicing and phone help. The average claim for training A is $1000 and they also average 100 affected person encounters per month.

Practice C has an average claim connected with $100 with 1000 relationships per month. While the gross total billed is the same, this is staggering for the payments company which will need to undertake nearly 10 times the staff a long time for practice B to help yield the same return seeing that from practice A.


Concerning the services available, let’s consider practice C, in addition, to practice D. Both techniques average around 1000 days per month, and each claim lasts around $100. Now, train C is looking for a payments service to handle complete promise lifecycle management- carrier post-disaster, submission to secondary in addition to tertiary insurances, patient invoicing and support, report study, etc.

Practice D records patient balances at the office to make sure they don’t require invoicing services, and in addition they plan on doing the carrier post disaster themselves. Thus Practice Deborah only requires the health billing service generate in addition to submit initial claims to insurers, and maybe submit a few second claims each month.

In this case in point, the gross claims downloaded is roughly the same, although practice C might be expecting a fee significantly higher instructions potentially double that of train D – due to the comprehensive work involved in providing the other support services. (Keep planned practice D will also ought to consider additional staffing to accomplish these activities in-house, which could most likely not offset the cost of allowing for the professional medical billing corporation to manage the process. )

These examples demonstrate the essential factors that influence quotes when considering percentage-based health-related billing services. While there a variety of negotiating points where a training can save on general fees, they should consider what other fees may arise later to control the services not provided by the particular medical billing company.

Advantages of Percentage-Based Negotiating:

  • Percentage Based Agreements immediately tie the success in the billing company to the accomplishment of the practice if they according to collections.
  • Practices can often pick which services they require regarding potential short-term savings.

Disadvantages of Percentage-Based Negotiating:

  • Short term savings garnered keeping some billing activities in the practice can lead to long term fees in additional staffing.
  • Tiny claims may not be addressed since vigorously. For example , consider a $5. 00 patient invoice using a medical billing service asking 8% on collections. The particular medical billing service would certainly actually lose money in following a claim. Adding up the cost of nearly all, envelopes and paper, and also staff time for printing, padding, and mailing, it would be more than $0. 40 that would eventually trickle back to the assistance.

Flat Fee per Claim:

Yet another common approach to pricing made available from medical billing services are what we’ll call Flat Fee each Claim. With flat fee charges the medical billing firm charges a fixed dollar pace for each claim submitted, regardless of size of the claim.

Comparable to percentage-based agreements, flat rate per claim pricing may differ significantly depending on the volume of states and the extent of companies provided. In its most basic application form, a fee per claim health care billing service might present only claim generation along with submission services for as few as a dollar or two for each claim.

In this case it would be typically the practice’s responsibility to follow through to claims. Of course, flat fees for each claim pricing can also incorporate other services such as phone carriers, patient invoicing, and so forth With these additional services, routines might expect costs to enhance to $4, $5, or maybe $7 per claim or higher.

Dependent on the practice, typically the flat fee per claim might be cost-effective, but should be considered thoroughly. Follow up with insurance carriers plus the bureaucratic problems should not be unnoticed. In some cases, once the medical payment company has submitted some sort of claim, they might make a mobile call or two; but they’ve accomplished the submission and the purchase is billable to the process, regardless of how it’s paid out.

Cost per claim pricing doesn’t always have the inherent incentive similar to some types of percentage documents. Nonetheless, it can be the solution has got the resources to manage the follow-up, or if your familiarity with the actual medical billing service is strong enough to rely upon their follow-up.

Pros associated with Flat Fee per Claim:

  • Charge per claim pricing has got the potential to be more cost-effective, especially on higher priced individual statements.

Cons of Flat Fee for each Claim:

  • If carrier follow-up is included with this service, the actual medical billing company offers little incentive once the initial state has been submitted. Moreover, it may be near impossible to evaluate exactly how rigorously a medical invoicing service is following upward.
  • If carrier and paying customer follow up is not included with the actual service, the practice have to manage it in-house. Unavoidably, hiring and training brand-new staff or allocating time period of existing staff contributes to increased overhead, often offsetting the benefits of using a medical payment service in the first place.

Hybrid Technique:

The final example in this debate is what we’ll call typically the Hybrid Approach, which usually takes advantage of percentage-based documents and a flat fee per assert approach. Through this charges method, a medical payment service might apply a share to certain insurances along with patient balance bills, and subsequently, gently apply a fee per asset for others. This approach is usually siloed by carrier or assert type, in that it would utilize percentage for all claims to transporter X, and flat fee for all those claims to carrier Y.

Typically the hybrid approach has become more widespread in certain areas of the US during the last several years as some insurance coverages frowned upon percentage based documents. An example was seen as soon as the state of New York performed percentage contracts on point out Medicaid claims illegal, necessitating medical billing services make use of the flat fee per claim choice.

The principal concern arises from several unscrupulous billing services who else believe “up-coding”, or publishing false claims for more expensive services, is the easy method to increase profits. While these types of few services threaten in order to tarnish the reputation of a whole industry, those bona fide healthcare billing services seeking extensive growth and profitability obviously realize that small gains received from illegal activities are not any way to sustain a successful company.

In short, the hybrid product allows honest billing businesses the chance to tie their achievements to that of the practice whilst respecting the concerns of those insurance policies guided by formal laws.


When medical companies and practices consider teaming with a medical billing organization, they have an array of options. Toned fees per claim may seem more cost-effective in the short-term, however the potential for revenue interruption because of poor follow up by the healthcare billing service provider, or the have to hire and train extra in-house practice staff to deal with the follow up on its own, will certainly undermine the initial cost savings towards the practice. Agreements based on a portion of collections are personal policing and ensure the healthcare billing service will go after reimbursements rigorously.

Read also: Correcting American Healthcare – Here’s what Needs to Be Done