Answers on Medical Billing Company Fees
Fee Structures for Medical Billing Companies Vary Broadly
The fee structure for Medical Billing Companies vary broadly, as does the value proposition that they offer to Physicians and Medical Practices in outsourcing medical billing. In the past twenty years, outsourcing medical billing has increased in popularity as Physicians have realized that they can save money by outsourcing to companies that (a) specialize in medical billing to assist with compliance and capturing earned revenue and (b) have economies of scale that result in cost savings.
That said, many Medical Billing Services charge different fee structures and the purpose of this article is to assist Medial Practice in understanding their options of whether to keep medical billing ‘in-house’ or to ‘outsource to a medical billing and collection specialist’.
Answers on Medical Billing Company Fees
Understanding the Costs Associated with Medical Billing
It is first,most important that Medical Practices outline the revenue opportunity and costs associated with Medical Billing.
The primary revenue opportunity and costs are:
1. Procedure Productivity: the driver of a medical practice’s revenue and is a function of performing & billing for eligible procedures. In many cases, physicians and medical practices without the proper counsel, will either not fully bill for eligible procedures or conversely, take misinformed risks in billing for procedures that will get them in trouble.
As an example, for Family Medicine physicians, the median revenue is $450,000. The industry best practice benchmark for Family Medicine practitioners is $600,00.
Graph of Physicians Revenue Productivity for Family Practioners
2. Accounts Receivable: measures how quickly your A/R is captured determines your cash flow & profitability.
The median or average medical practice collects 42% of their revenue within 30 days. The industry best practice is to collect 69% of revenue within 30 days.
You should assess how long it is taking your medical practice to collect its accounts receivable. As an example, +PysiciansBillingService collects 75% of our clients A/R within 30 days.
Graph of Accounts Receivable for Family Medicine Providers
3. Medical Billing Costs: medical billing costs are comprised of Salary, Benefits, Overhead & Software.
For the purposes of benchmarking the median costs for a medical biller are $55,000 for salary, $8,250 in overhead and general administration costs, and $3,000 in software.
In contrast, the industry best practices notes that the costs for a medical biller should be $50,000 for salary, $7,500 in overhead and general administration costs and $2,500 for software. This equates to a difference of $6,250 from the median for a savings of 9.4%.
As an additional benchmark example, Physicians Billing Service employs medical billers for a salary of $50,000 and incurs $7,500 of overhead and general administration costs. This equates to a difference of $8,750 from the median, and a substantial savings of 13.2%.
Graph of Medical Billing Costs for Medical Practices and Physicians
What Types of Fees to Medical Billing Services Charge?
The fees that medical billing companies charge can vary vastly from complex to vary simple. Below are highlights of a range of billing options:
Simple Medical Billing
As an example, Physicians Billing Service does not charge set-up fees, start-up fees or charge for any superfluous fees (like postage, claims submissions, etc.). Our Medical Billing Service charges a flat percentage of collected revenue based on a sliding scale of volume from 5% to 8%. Our clients appreciate our no hassle approach to outsourcing medical billing. We only get paid when our Physician clients get paid. We find that this type of payment alignment results in more honest and transparent relationships. Our work speaks for itself, and the Physician can rely that our interest are completely aligned.
Complex Medical Billing
Per Claim Charges:
Many medical billing companies send claims to collections are charge per claim (in most cases a flat rate), and pass along postage charges, follow-up time and other time. Per claim ranges between $1 to $5 per claim and depends upon the specialty and may or may not include follow-up work. If they have to resubmit many times, these types of medical billing services charge for each time.
Physicians Billing Service does not charge per claim charges.
Ancillary charges could include postage, phone charges , and charges for excessive time spent on the account due to office negligence.
Older Accounts Receivable Collections:
Many medical billing services charge higher rates for collecting older A/R (accounts receivable) for medical billing claims.
Physicians Billing Service does not charge ancillary charges.
Some billing services will not send out patient statements unless the statement is at least $15 to $20.
Physicians Billing Service does not charge minimum charges.
Mailing and Credit Card Fees:
Some billing services also charge a return mail fee for unrecognized addresses. Processing fees for credit cards, returned checks, etc.
Physicians Billing Service does not charge mailing and credit card fees.
Most medical billing services charge a start-up fee, and have an iron-clad contract that does not let Medical Practices out until 1 month or 3 months prior to the anniversary date.
Physicians Billing Service does not charge start-up charges or set-up fees.
How Long are Most Medical Billing Contracts?
Most medical billing contracts are for one or two years.
Physicians Billing Services charges a flat fee based on the percentage of collected revenue. We charge no set-up fees, no ‘leaving’ fees, no start-up fees, no add-ons and no-nothing!
The Benefits of Outsourcing to Physicians Billing Service
Most Physicians that come to PBS can lower their costs by 15% or more. In today’s environment of substantial medical industry change (e.g. Affordable Care Act, Training for ICD-10 – albeit postponed until 2015, and Electronic Health Medical Records and Practice Management Software), outsourcing to a specialist can increase a Physicians cash flow, reduce their medical practices expenses, and lower the risk of medical billing compliance in an increasingly hostile regulatory environment.
Final Thoughts on Choosing a Reputable Medical Billing Service
In many cases, a reputable medical billing company can be an important safety net for your medical practice If a medical biller at your Medical Practice walks out, your business is vulnerable to the extent that your medical billing and collections will be delayed . By outsourcing to a highly regarded medical billing company, Physicians never have to worry about having their medical billings go out or having collections being follow-up on. If a Physician takes a holiday, everything stays in motion. There are many benefits to outsourcing to consider.
Finally, before you select a medical billing company, ask for a detailed list of references of their clients and go meet with them. If your medical practice is worn-out by empty promises, hot-air & lower cash flow? Let Physicians Billing Service restore your confidence & cash flow.
Call (703) 978-0756 to speak with Michelle Stahl to receive a confidential quote for outsourced medical billing. We proudly support leading medical practices from coast to coast.