Medical Billing Services

By Sylvia Rosen

Medical claim billing represents a booming industry for two specific reasons: the population in the US is aging, and medical technology is quickly changing. Furthermore, taking into account professional billing services and temp agencies, medical billing specialists account for 40% of the job opportunities in the healthcare field.

When to consider a medical billing service (and what to watch out for)

Doctors' offices, hospitals, and specialty medical clinics may choose to outsource their medical billing in order to save money on hiring a billing specialist on staff. Instead of paying for an annual salary, a healthcare facility will outsource to a medical billing service or even hire a freelance billing specialist who works from home by contract.

While most providers are legitimate and provide an excellent service to the medical community, there are a couple big things to be aware of when outsourcing your medical billing:

• HIPAA security concerns - Whether intentional or accidental, the unauthorized access of your patients' health information constitutes a violation of HIPAA that could leave you liable for some costly penalties. Be aware of who's handing your patient data, what they have access to, and what security measures are in place to ensure privacy.
• Patient satisfaction and retention - Though far from being the rule, some patients prefer to make payments in person. This gives them the opportunity to engage with office staff, schedule new appointments, and discuss the specifics of their bill with someone they know. Outsourcing removes this personal element to your services. So it's critical to select a medical billing service that reflects (and dare we say exceeds) your work ethic and attention given to customer service.

Average fees for medical billing services

On average, medical billing services will charge a rate ranging from 4% to 16%. Since this percentage rate has a large variation, practices with fewer claims and higher invoice totals will often be charged less than practices with a large amount of claims and smaller invoice totals.

Basically, if a practice has fewer claims to process with bigger customer bills compared to a practice with thousands of claims at a small value, they'll get a cheaper rate since less work is needed.

When a medical billing claims service charges using a percentage, it will be calculated from one of the following totals:

• Amount collected - A medical billing service will charge their client a percentage of all claims that have been collected, excluding deductibles, co-pays, and other payments made in-office. Many practices prefer this payment option since it is directly correlated to the profit earned by a healthcare practitioner.
• Total claims submitted - A billing service may charge based on a percentage of gross claims submitted to insurance providers and other debtors. The slight drawback to this pricing method is that it doesn't offer a monetary incentive for a medical billing provider to follow up on submitted claims in order to earn a higher percentage total - making their commitment to service critical when selecting this option.
• Total collections processed - When a medical billing service charges a percentage of net collections, it will include deductibles, co-pays, claims, and miscellaneous payments. Many holistic practitioners typically use this charging method since it provides a greater incentive for a billing service to follow up on claims.

If a medical billing service doesn't charge based on a percentage, they may charge a fixed fee for each claim submitted, ranging from $1 to $2 per claim. Specialty services could cost as much as $4 to $7 per claim. Using this charging method may save a healthcare office money up front, but it will not create an incentive for a medical billing service to follow up on submitted claims.

Lastly, a hybrid billing approach has grown in popularity that will allow practices to pay a percentage rate for claims submitted on specific patient accounts or to certain insurance providers. Other claims submitted will be charged based on a fixed fee.

Healthcare practitioners should keep in mind that a number of states now deem percentage billing contracts illegal. As a result, many medical billing services are switching to a hybrid pricing structure in order to provide healthcare clinics with flexible, fair payment options.