How Much Does Medical Billing Cost for a Healthcare Practice?
If you have made an attempt to receive comprehensive explanations regarding prices for medical billing, you have surely noticed that it is a tough task. One provider tells you an amount as a percentage, another one tells you a fixed price, while the third one states that “it depends”. And they actually seem to be all telling the truth.Medical billing charges differ substantially from company to company, but conditional analysis reveals certain trends that make at least some predictions based on previous data possible.
Short Answer
Typically, companies charging for outsourcing medical billing services charge between 4 and 10% of the amount collected monthly. In case the practice operates as a smaller entity or a company specializing in a complicated field, it usually offers higher prices compared to other businesses. Especially, those practices with a larger volume of work are likely to offer the lowest rates.If you opt for doing your billing in-house, be aware that it is likely to be more expensive than you think, as it may involve total staffing costs, software expenses, etc.
Various Models for Pricing in Medical Billing
Percentage of collections. This is the most typical model in use by organizations. This means that Flat-rate pricing per claim. There are some companies that will charge a predetermined fee for every claim filed, which usually ranges from 2-10, depending on complexity. This type of pricing works well for businesses that have established processes. However, if there are a lot of low-dollar claims, the costs can accumulate quickly. Hourly billing. This type of billing is less common; however, it can be beneficial in projects such as cleaning up accounts receivable or addressing the backlog. Rates can vary greatly depending on the individual performing the work.Monthly flat-rate fees. This involves paying a fixed fee on a monthly basis regardless of the claim volume. This makes it easier to plan budgets, but you need to ensure that you know what you are paying for.
In-House Billing vs. Outsourcing Billing.
While hiring your own biller seems straightforward, costs start to accumulate rapidly. For example, an in-house billing professional in the U.S. earns between 40,000-60,000 annually, although this does not factor in benefits, payroll taxes, or vacation time. You’ll also need to think about billing software, yearly clearinghouse fees, learning costs for billing, etc. In addition, in case of turnover in your businesses staff.Hidden Costs Worth Inquiring About A proposal’s percentage doesn’t tell the entire tale. Ask the following before making any commitments:
– Onboarding fees
– Fees for EHR interfacing software
– Additional charges for credentialing, statements, or appeals
– Base monthly fee
– Duration and cancellation terms of contract
None of these points are automatic red flags. However, they should be clarified upfront so there will be no nasty surprises further down the line.
How to Tell Whether You Are Getting Good Value
The reality is that the cheapest option may not be the best choice. A firm charging 4% but neglecting to collect all due revenue may end up being costlier than one charging 7% but collecting any outstanding dues.What’s really important are the metrics: denial rate, days sales outstanding, and clean claim ratio, and a good firm should be able to provide both the current situation and projections for the future. If a firm cannot do this, it is telling you something.
It would also make sense to ask for references from companies similar to yours. It’s better to receive fair pricing from an expert than to receive a bargain-basement deal from a rookie.
Frequently Asked Questions
Is it cheaper to outsource medical billing or do it in-house?
For most small to mid-sized practices, outsourcing tends to cost less overall. When you do it in-house, you’re paying for salary, benefits, software, training, and the risk of turnover. With outsourcing, you pay a percentage or fee that’s usually lower than a full-time hire, and you get a team instead of one person. Larger practices with high volume sometimes find in-house makes sense, but it’s worth running the numbers both ways.
Do medical billing companies charge setup fees?
Some do, and some don’t. Setup or onboarding fees typically cover things like connecting to your EHR, loading payer information, and getting your account up and running. Plenty of companies waive them entirely, so it’s always worth asking. Just make sure any fees are written into your agreement before you move forward.