Medical Billing At Home – Flat Rate versus Percentage

For those wanting to do medical billing at home, one important thing to consider is how to bill the practice. The two most used methods is flat-fee billing per claim and percentage billing. There are other methods of payment, but for the sake of space, we will discuss just these two in this article.

Medical Billing At Home – Flat Rate versus Percentage

Percentage based agreements usually follow the thought that the biller will get a percentage of what is collected. This is usually the most lucrative way of payment for the medical biller. Percentages can be as low as 4% and as high as 7 to 8%. What a medical biller would want to know going into a percentage arrangement would be how many dollars in outstanding claims are there, and how old are the claims. Remember that that the older a claim, the less likely you will be able to collect on it. So, if a practice had many uncollected 30, 60, and 90 day claims totally say $150,000, then the biller would have  a good chance to make a good deal of money taking on this client for a percentage. They would make approximately $8,000 to $10,000 on it. The idea is to also determine about how much time will it take to do the collections process. Everyone must be called, arrangements made, claims possibly resubmitted, etc.  If most of a practices accounts are over 120 days old, then the percentage method may not be as lucrative because the chances of collection are slim.

Another common approach to payment offered by medical billing services is the flat fee per claim system. This is where the medical billing company charges a fixed dollar rate for each claim submitted, regardless of the size of the claim. Payment can be as low as a dollar or two per claim. In this case it would be the practice’s responsibility to follow up on claims. Of course flat fee per claim pricing can also include other services such as follow up with carriers, patient invoicing, etc. With these additional services, practices might expect costs to increase to $4, $5 or even $7 per claim or more.

By: Dawn Moreno, PhD, CBCS, CMAA, MTC. Lives in the beautiful Southwest United States and has been an instructor for medical coding/billing for the past 7 years. Interested in quality medical billing training?  

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