Medical Billing Fees

for your Physicians Billing Service

Medical Billing Fees and Services. Don’t set your fee until you estimate your costs. Typical fees and pricing strategies for you medical billing business. We share a helpful pricing guide we have discovered in pricing your physicians billing service below.

Here we discuss some of the options for setting fees, what to consider, the different options and pricing structures, and offering additional services.

Before offering a price quote for your services, it’s very important to consider your costs, otherwise you could be locked into a business arrangement where you make little or no money. Believe me, I’ve made this mistake before and it can be extremely frustrating.

For one of my early clients, I was so anxious and excited to have a client, I didn’t anticipate the time and costs of offering services in setting my medical billing fees. Because we did a good job, I was able to eventually convince the physician that we were deserving of a higher fee, but I was considering letting the client go if we couldn’t negotiate a better fee because we cleared so little on this practice.

Medical Billing Services
There’s typically two levels of service most billing services offer. Of course there are variations of these:

Full Service

  • Patient eligibility and authorization
  • Entering patient demographics and claim information
  • Submitting claims and printing paper claims
  • Submitting secondary claims
  • Follow-up on unpaid claims and appeals
  • Monthly patient statements
  • Answering patient billing inquires
  • Monthly reporting
  • Posting insurance and patient payments
  • Soft collections

Claim Filing

Submitting claims either electronically or paper CMS-1500. A variation of this would involve follow-up of unpaid claims.

Additional Services

There’s also additional services to be offered such as insurance aging projects from unpaid claims. You would be surprised how many practices have aging that is out of hand. Other services to offer are evaluation of superbills for current codes, office assessment for HIPAA compliance, credentialing, and sending out appointment, birthday, and thank you cards.

If you are knowledgeable and experienced in coding or transcription, there are other services that can be offered for additional cost. Remember to price your services so you will be compensated fairly. These services may be better priced on an hourly or fixed price basis.

Pricing Your Services
Setting medical billing fees for services depend primarily on:

  • Type of practice – some specialties are more time consuming than others
  • Services provided
  • How much of your time is required
  • Competition
  • Specialty
  • Your desire to get a “Foot In The Door”

When setting medical billing fees it’s important to determine how much time you will have to spend servicing the practice or, if you have employees, how much of their time (and your expense) is necessary. I’ve made the mistake of pricing too low before to where I didn’t really clear much after expenses. My biggest costs for a practice are labor, clearinghouse, patient statements, and software.

Medical Billing Fees
There’s three ways to charge your clients – by percentage, per claim, or hourly. This should be specified in the contract you sign with your client.

Percentage involves charging a client based on the monthly revenue collected. The percentage charged depends on what services are performed, location, competition, and type of practice. A practice the sees fewer patients but averages a higher charge per visit may warrant a lower percentage than a family practice who sees several patients daily at a lower cost per visit.

I’ve typically seen medical billing fees from 6 to 10% depending on the area and $3.50 to $5 per claim for claim filing only. Also make sure percentage based billing is legal in your state. For special projects like aging a higher percentage is justified due to the additional time and effort required. I’ve seen fees in the 15% and higher range for working aging.

Per Claim
Per claim charges are more suitable when a biller is only submitting claims with no other services. Some clients who don’t have the time or ability to file claims may request this service.

Per Hour
Charging per hour may be more appropriate when percentage or per claim charges are not feasible. This is usually a better option for clients who don’t see a lot of patients and charging per claim or percentage would not be worth your effort.

I have charged per for special projects when charging per claim was just not worth it or performing more of a consulting role. I started out charging hourly for what is now one of my largest clients so you may consider this a way to get your foot in the door.

Helpful Resources
Alice and Michele of Solutions Medical Billing have written a good eBook titled “Pricing Your Medical Billing Service” about setting your medical billing fees. This eBook along with others you may find helpful are listed on our Medical Billing Business Books page.

Whether you’re just starting a medical billing service or are an established billing service, this is a good resource to help you consider the pros and cons of the four different methods of charging for your services. They make a compelling case for fixed monthly fee pricing verses the more common percentage based pricing.

They make a compelling case for fixed monthly fee pricing verses the more common percentage based pricing.

Whether you’re just starting a medical billing service or are an established billing service, this book will help you consider the pros and cons of the four different methods of charging for your services.

They make a compelling case for fixed monthly fee pricing verses the more common percentage based pricing.

Ask Questions
Before signing a contract, ask a lot of questions of the provider to get a feel for how many patients are seen daily and typical procedures (and charges) per visit. It’s important to know if they have a lot of Medicare or Medicaid patients – they typically don’t pay as much as commercial carriers.

I had a specialty practice with a lot of Medicare patients. It was very high maintenance but didn’t pay much because the insurance write-off were so high. I wish I would have know that when estimating the job!

I was advised by accountant that you should price your services at least 3 times your cost. This covers your time and overhead and allows you to make a profit. This means that if you estimate it costs you $500 per month to serve a client, you would want to set your percentage so you would make at least $1500 per month or more.

This may sound like a lot but when you factor in the cost of doing business, your overhead, this is very reasonable. I keep this in mind when determining what my minimum percentage will be.

A provider who has only 50 claims a month and uses a handful of procedures and diagnosis codes wouldn’t require much time. You want to know up front what your costs and time are going to be. If it cost you $800 a month and 20 hours a week to serve a practice, and you only get paid $1000, it’s hardly worth it.

On the other hand a health general practice can generate $50,000 a month or more. At 8% that’s $4000 a month. If your cost is $1000, you clear $3000 for your labor. For a service with multiple practices you can see how the income potential adds up.

It’s important to remember when establishing your medical billing fees that a good medical billing service is very valuable and can significantly affect the financial health of a practice. For one of my clients we increased revenue over 32% by dedicating the time and effort to billing correctly and following up on claims.

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