Moving from Percentage Fee to Flat Fee

[bsmedbilling]

Hello Everyone,

I have a client in which I started with a percentage fee last year. However, I am going to change to flat fee because I realize that I am not getting paid for any of my time. The client is a small practice but the work is that of a mid sized practice and also 95% of the claims are submitted to Medicare.  I'm just a little confused on the flat fee amount, I want to be fair to myself and the provider.

Has anyone had a client leave once they changed the rate from percentage to flat fee?

Thanks for any feedback?

Bsmedbilling

[PMRNC]

I went from % to flat fee a few years ago, not only because I moved to a state where it was prohibited for doctors to enter into percentage based contracts, but also because of the economy and it was just time to get paid for my time and effort's across the board.

The flat fee model depends on what you want to make per hour.  Here's an example of a flat fee model based on an hourly rate of $40.00. Since, in my example I will be  transitioning this client from % to flat fee I already knew how much time I needed for this client's account each week. let's say approximately 18 -20 hours per week.  So that's $800.00  Then I added my costs for that client such as postage, envelopes, claim forms, clearinghouse etc, so let's say that's $250.  The flat fee would be $1000   When I give that client my flat fee, they are not told the hourly rate, there's no reason to tell them. If they ask, I simply say the fee is based on my time and my costs. I look at it this way, our cable companies and our doctors and accountants don't explain how they arrive at their fees, no reason for me to do that either. Even if the hourly base amount is more than the rate they would pay someone in-house, they are still getting a deal because they are not paying overhead, insurance costs, or taxes and they also get to write-off my services on their taxes.   I also have clients in which I do consulting with as well so the hourly rate is substantially higher, might include training, even travel, expenses.

For new billing companies just starting out, it's going to be a little more difficult to come to that fee at that hourly rate so that rate should be adjusted accordingly.  Some things you NEVER want to include in costs on a per claim basis include any costs that it takes to do business, such as, attorney, coding books, association fees, software training, ongoing/continued education, accounting, etc. Believe me I've seen billers try to work those costs in and it's not right nor fair.   

I'm glad I moved to flat fee, I now get reimbursed for all my work which I think is how it should be!

[PMRNC]

Sorry, I forgot to mention how I create the sliding fee scale to account for growing practices.  Using the same example, of 20 hours a week. I then computed how long it takes me to enter and submit how many claims in one hour. Let's say I can do 7 in an hour. The flat monthly fee would go up by $40 for every 7 new patients.  Let's say one month they give you 4 new patients, their monthly fee would not go up. The following month they send you 3 more patients, and then the monthly rate would be increased by $40.00

[bsmedbilling]

Thanks Linda for your awesome expertise, you explained that very well

I gave the client the new rate and she came back with this story of how she couldn't afford to pay payroll and that Medicare is not paying her like they should (which they are) and then basically she asked if I could give her some time to hire someone to do her billing. She said she had someone in mind but they were finishing up their training. Wow! Good luck with that a non experienced biller doing that work. They can have it, it's not worth it to me, I was actually losing money on this client.

I really enjoyed doing the billing for her but I provide a service not charity.

Thanks again Linda, I have definitely learned my lesson for going forward with these providers.

Thanks much,
Bsmedbilling

[Michele]

I am amazed at what some providers will ask us to do.  We had a provider call us recently and he just wanted us to do his claims till he got his software and his girl was ready.  We said minimum 6 months.  He agreed.  Now after working with him and his 'girl' we know there is NO WAY she can handle it.  NO WAY with the emphasis on NO WAY!  She actually asked us "when we get ready to do this ourselves will you teach me how?"

Uhhhhmmmmm.................No.

[PMRNC]

It doesn't surprise me really. Usually I get the provider wanting to "negotiate" and I simply ask them if their mortgage company or utility companies negotiate their rates/fees, usually that ends it and if not, I walk away knowing I prevented a major headache. I have heard a lot of doctors sob stories..none of them amaze me. The oldest and most widely used one is the "I'm in the middle of a divorce and my wife did the billing" I run fast from those. LOL

[ruthie72]

This is the best, most informative, forum ever!!! Thanks