Reference
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
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.
Reader questions on this
Building a client's fee schedule
I recently obtained my first client. I am new at this so I need all the help I can get. The APN is just starting out and does not know anything about billing (how much to charge for services). How do I get access to the fee schedules, benefits and eligibility from the insurance companies. I your assistance will be greatly appreciated.
Each insurance company has their own fee schedule for what they pay a provider depending on their contract. There are so many and they change so routinely that any links to the major insurance payers would soon be out of date.
You typically have to get it from their website which usually involves creating a provider account. If your provider already has a contract with them, they may already have an account.
Medicare posts their fee schedule on their website (cms.gov). Just go to their website and search for “physician fee schedule” to get the latest. They also have a fee schedule look up tool.
Hope this helps – Thanks!
Charging patients who have no insurance
My office provides a service which we have just become approved to bill for. My office is state run. Some patients are not enrolled in this program and we are providing this service for free. May we bill for services provided to patients that are enrolled in the program while continuing to provide the same service for patients not enrolled for free?
I know the fee for service has to be the same no matter what the financial class is. All patients have to be charged the same for the same service. If not it is discrimination because of financial class.
Thanks
I don’t know if this answers your question but I’ve had providers that billed the same amount for a service – regardless of a patients ability to pay.
But they did “Write-Off” the fee to certain patients who were not able to pay – at the providers discretion.
Like you mentioned your billing does have to be non-discriminatory based on financial class. But I understand the provider does have discretion in offering services for free or “Pro bono”.
Hope this helps. Anyone else have experience with a similar situation please post your comments by clicking on the link below:
Thanks!
Finding the going rate in your area
How do I find out what % I should charge for my area for medical billing, credentialing, and aging claims?
In our area I had a pretty good idea of what billing services were charging because I worked for a billing service. If you know anyone in your area who works in billing – either for a provider or a billing service – I would ask them what the going rate is.
You may also be able to learn what a client has been paying when you first meet with them. Sometimes they will actually tell you voluntarily without you asking.
It also depends on the type of services offered, size and volume of claims, specialty, etc.
We welcome others to share their advice by clicking the “Click here to post comments” link below.
Flat fee per client
Starting a Medical Billing home business. I am currently working at a Therapy business by the hour as an independent contractor but told them I want to do it from home and they agreed. I do not know what to charge as a flat fee per patient they see. Any ideas?
I’ve never charged a client a flat fee per patient – it’s always been either a percentage or hourly for special projects.
One approach would be to determine what it costs you to serve your client. Typical costs would be software and associated maintenance, postage, clearinghouse, misc. supplies, phone/fax line, etc. If you are using their practice management software and existing clearinghouse that certainly reduces your costs substantially. Postage/statement costs would probably be one of your bigger expenses in that case.
You could then estimate how many patients they see and how many hours a week you think it would take to serve them – and what you think would be a reasonable pay for your time – remember as a contractor you don’t get any benefits so you may want to factor that in also. You probably already have a pretty good idea of this since you’ve been doing it a while.
For example if they typically see 50 patients a week and it would take you 10 hours a week to enter, process claims, post payments, follow-up, etc. If it would cost you $100 to bill for those patients and you would expect to make $18 an hour for your time, then I would estimate the cost per patient = ($100 + $18 x 10)/50 = $5.60 per patient.
That would pay you $280 a week for 10 hours of work – minus your expenses. Of course these are just number I pulled out of the air for an example.
There’s also an ebook that discusses more pricing options called Pricing Your Medical Billing Service written by Alice and Michele of Solutions Medical Billing up in New York.
Hope this helps some. My biggest advice is just to make sure you compensate yourself fairly for your time, expenses, and trouble. I know from experience there’s nothing as frustrating as being underpaid for your services – or stuck in a contract that doesn’t pay you fairly. It’s also a good idea to clearly define responsibilities of both parties in a contract to prevent misunderstandings in the future.
Thanks!
Gina
Insurance-pay versus cash-pay clients
I was always told that there can be a minor difference in the fee charged to a cash paying client vs. an insurance paying client. The doctor I work for doesn’t believe me and wants written proof that you cannot charge one client $150 and another $50 (examples)for the same service.
I need guidance on where to find this or for someone to tell me I have lost my mind and there are not guidelines for the fee scale question I have.
It may not be a simple answer. My understanding is that it can depend on the laws in your state and/or the contract(s) your provider has with any insurance companies that he is in network with.
Here’s a good article that discusses the legalities of cash pay pricing while still in network.
Hope this helps answer your question. I encourage comments (click on link below) by any of our visitors who have dealt with this issue.
Thanks!