Medical Billing Forum

Billing => Billing => Topic started by: SnyderKristine on March 03, 2014, 12:50:18 PM

Title: Pricing Strategy
Post by: SnyderKristine on March 03, 2014, 12:50:18 PM
Hi All,

I just had a meeting with a potential client and he came up with lot of questions for me. HOMEWORK...

1. He would be willing to use our software instead of his own?
>> How much would it cost me for a provider, the initial fees and the monthly charges??

2. For a provider collecting $1.5 Million per year, how many people I would need to handle his end-to-end billing? And what would be the best % to bill?

Please help. I need to mail him the pricing model..
Title: Re: Pricing Strategy
Post by: PMRNC on March 03, 2014, 01:57:52 PM
I just had a meeting with a potential client and he came up with lot of questions for me. HOMEWORK...

1. He would be willing to use our software instead of his own?
>> How much would it cost me for a provider, the initial fees and the monthly charges??

That depends on what software or subscription service you use, no way to answer this. If he has a PM solution setup I would have to ask why change? This is one of the things I think today's medical billing company needs to be able to handle to stay competitive.. why make the client switch when you can go in and use their PM solution which allows you to still make money and they save money? Example:  let's say they have Medisoft in their office and they have been using it... then suppose YOUR solution is an online system where it's $199 a month per provider. Right there you need to UP your fees $199 or have the provider pay that fee in order for you to break even. Now if you are experienced and you can work in other systems, it would be in YOUR best interest and their's to continue their PM system, log in and do your thing for now.. later on you can do a cost analysis based on your data and theirs to see if a switch would be in their best interest. JMHO. I've seen so many billing companies starting out turn clients away because they wanted the client to use their software and couldn't be diversified to use the existing PM system in place. Sure it's not ideal in most cases but you have a chance to save them a few bucks, get paid for your time and prove yourself, later you can decide if a switch is in everyone's best interest.

Quote
2. For a provider collecting $1.5 Million per year, how many people I would need to handle his end-to-end billing? And what would be the best % to bill?

Again, no way to answer this either because no one knows your experience level, how much yourself and any staff can handle, volume, specialty, etc. I always do a full practice analysis before I quote a price. You need to know exactly what a practice is doing first before you can tell them how you can do it.

 
Title: Re: Pricing Strategy
Post by: Michele on March 04, 2014, 08:43:00 AM

2. For a provider collecting $1.5 Million per year, how many people I would need to handle his end-to-end billing? And what would be the best % to bill?


Like Linda said, this is hard to answer without more information.  It does depend on the experience level of the worker, the type of billing, specialty of provider etc.  To give you a very big ballpark figure, since we don't have all of that information, I would think it would take two fairly experienced workers to handle an account that size.  This is a very rough guess.
Title: Re: Pricing Strategy
Post by: SnyderKristine on March 04, 2014, 11:24:19 AM
Amm. I am so sorry I missed the details..

Well this is a Internal Medicine Physician..again as stated $1.5 Million annual collections, bills all types of insurances, and wants a complete Medical Billing solutions..

I can handle the Insurance ageing all alone, can also do appointment reminders if required, and can fairly take care of insurance verification myself..

Does that give any idea. I could not ask anything from him, he was asking all the questions ??
Title: Re: Pricing Strategy
Post by: SnyderKristine on March 04, 2014, 11:29:58 AM
Actually plain and blunt I offered him 7% of his revenue for all the services right from Appointment reminder to Patient Collections. Is that feasible?

I have worked only as an employee, so I really don't know how everything worked behind the curtains :(
Title: Re: Pricing Strategy
Post by: PMRNC on March 04, 2014, 11:55:27 AM
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Actually plain and blunt I offered him 7% of his revenue for all the services right from Appointment reminder to Patient Collections. Is that feasible?

I don't like % based billing for many reasons, someone else might be able to weigh in here but I don't there really is a way for anyone to tell you it's a good price model for THIS client. When I am meeting with a potential client I do a full practice analysis so that I can come up with the best pricing model for him. I don't use % based, my fees are based on a flat monthly rate and calculated by my TIME so that I get paid for everything. If you get ONE client with heavy WC or PI, you could really take a hit financially. Likewise a problem client that required a lot of time could cost you money. I go in and analyze everything so that I can give them a pricing structure BEST for them and me.
Title: Re: Pricing Strategy
Post by: SnyderKristine on March 04, 2014, 12:00:45 PM
I personally don't prefer the % based pricing for many reasons. But the client himself went ahead and asked me how many% I will charge him, so I gave him that 7%.

Now considering this same example.
If I and one other resource would work on this account, and I guess would have to spend 4-5 hours everyday to keep things in pace,
What hourly rates should we charge and What should be the monthly flat fee?

I am just trying to get a approx. figure, I will add my own expenses and conditions to that?

But what I am trying to get is a minimum or maximum amount. So that I don't charge him less which would create a problem for me, and at the same time I don't want to loose the client by quoting some extra terrestrial amount..

Will these details help??
Title: Re: Pricing Strategy
Post by: PMRNC on March 04, 2014, 12:16:11 PM
If you do a search here within the forum you will come across a few formula's. I can't tell you about what you should charge as hourly rate because I don't have the proper demographics to do so. I have a formula somewhere on this forum that shows you how to do a monthly flat fee with sliding scale and at same time have provider not even know what your rate is based on in regards to hourly rate. Even if you charged $40 an hour, you can still save the provider a lot of money, but the question is what is your time / experience worth in regards to hourly rate? How long does it take you to do the everyday functions necessary? Volume ? etc.    Unfortunately pricing your services really is a matter of personal preference to you and your business and will vary greatly depending on your experience.
Title: Re: Pricing Strategy
Post by: maxamillion125 on March 04, 2014, 10:52:19 PM
We do the billing for a 1.5 Million dollar provider and charge 7%.  We do anywhere from 30-50 claims each day.  You have to figure in all the time spent calculating and depositing every Insurance and patient payment, denied claims management, patient calls, statements, entering patient demographics and refunds on top of all the obvious services you'll be doing.  Our practice management software costs us $250 per provider so thats another $750 per month on this particular account.  1.5-2 full-time employees for an account this size is about right. 
Title: Re: Pricing Strategy
Post by: Michele on March 05, 2014, 09:58:33 AM
We have billed for an account similar to this, internal medicine, we did all but verify benefits and appt reminders.  And NO CODING.  It took 1 employee full time and another employee that could handle some other stuff as well.  I agree with Linda, no percentage billing.  I prefer a flat monthly fee.  I do not like quoting a provider an hourly fee.  They do not take all of our expenses into consideration.  When you quote a doctor an hourly rate they think they are paying an employee that amount per hour, not a business.
Title: Re: Pricing Strategy
Post by: shanbull on March 05, 2014, 01:19:04 PM
Definitely no percentage billing for claims as old as 2011, there's too much chance you'll spend time on claims that will never get paid. If they want you to work with the old claims anyway, flat fee is crucial. You could even do a flat fee for claims over a year old and percentage for claims under a year old. I just would be wary of getting stuck with a pile of claims that are deadweight with nothing to show for it in the end.

Look at what you need to be making to provide for yourself, at minimum, per year. Include your business and advertising expenses. Break it down into a monthly wage. Add foreseeable monthly expenses for this client. Add a small cushion for emergency expenses. That's your minimum monthly flat fee, if you're expected to work full time on this alone (if not, adjust what portion of your monthly wage would need to be paid by this client/factor in wages for any additional employees you would need to hire for this). Once you are more experienced, give yourself a raise in the first category and recalculate.
Title: Re: Pricing Strategy
Post by: SnyderKristine on March 05, 2014, 04:11:28 PM
We do the billing for a 1.5 Million dollar provider and charge 7%.  We do anywhere from 30-50 claims each day.  You have to figure in all the time spent calculating and depositing every Insurance and patient payment, denied claims management, patient calls, statements, entering patient demographics and refunds on top of all the obvious services you'll be doing.  Our practice management software costs us $250 per provider so thats another $750 per month on this particular account.  1.5-2 full-time employees for an account this size is about right.

Thanks for providing all this info. It gives me a better picture of what we will have to do... Just one more question about this scenario:

"How do you calculate the amount collected for every month, so that you bill 7% of that? Where do you get that data from?"

Newbie...Plz don't mind  ::) ::) ::) ::)
Title: Re: Pricing Strategy
Post by: SnyderKristine on March 05, 2014, 04:14:31 PM
We have billed for an account similar to this, internal medicine, we did all but verify benefits and appt reminders.  And NO CODING.  It took 1 employee full time and another employee that could handle some other stuff as well.  I agree with Linda, no percentage billing.  I prefer a flat monthly fee.  I do not like quoting a provider an hourly fee.  They do not take all of our expenses into consideration.  When you quote a doctor an hourly rate they think they are paying an employee that amount per hour, not a business.

That's what I am planning to do. I will work on this account myself for full time and Will hire a part time employee. Plz don't mind me asking this, but how much flat fee did you charge this particular provider. It will make things more clear for me. A straight forward example..

Thanks in Advance Michelle
Title: Re: Pricing Strategy
Post by: SnyderKristine on March 05, 2014, 04:20:04 PM
Definitely no percentage billing for claims as old as 2011, there's too much chance you'll spend time on claims that will never get paid. If they want you to work with the old claims anyway, flat fee is crucial. You could even do a flat fee for claims over a year old and percentage for claims under a year old. I just would be wary of getting stuck with a pile of claims that are deadweight with nothing to show for it in the end.

Yeah you are right. Percentage model for old pending claims would only put me in problem.. Waste of time and energy...

Look at what you need to be making to provide for yourself, at minimum, per year. Include your business and advertising expenses. Break it down into a monthly wage. Add foreseeable monthly expenses for this client. Add a small cushion for emergency expenses. That's your minimum monthly flat fee, if you're expected to work full time on this alone (if not, adjust what portion of your monthly wage would need to be paid by this client/factor in wages for any additional employees you would need to hire for this). Once you are more experienced, give yourself a raise in the first category and recalculate.


Marketing expenses +
Practice management charge for the client+
Patient statements charge+
Online payment by patient (credit card /debit card) +
Wages of employees working on this account +
Stationary charges +
Phone bill +
Misc (Profit)

Would this formula work ???
Title: Re: Pricing Strategy
Post by: RichardP on March 06, 2014, 01:18:47 AM
"How do you calculate the amount collected for every month, so that you bill 7% of that? Where do you get that data from?"

When payors are billed (Insurance and patients), they will eventually pay ... something.  So - ask yourself this question "from Day First of the month to Day Last of the month, how much money did the doctor receive?"  Add up all this money and multiply by .07.  That is your fee.  You can calculate this figure from the doctor's deposit slips with dates that fall within the target month.  But the more usual way is to print a report from your billing software that totals all payments posted to the software during the target month.
Title: Re: Pricing Strategy
Post by: Michele on March 06, 2014, 08:52:37 AM
We have not billed for that account in several years.  But depending on some variables such as services you would be performing, how billing will be done, will they be entering anything, etc, I would think somewhere in the $7500-9000 per month range would be appropriate. 
Title: Re: Pricing Strategy
Post by: SnyderKristine on March 06, 2014, 12:15:21 PM
Thanks RichardP and Michelle... This gives me a lot of clarity....
Title: Re: Pricing Strategy
Post by: maxamillion125 on March 06, 2014, 03:33:57 PM
We have billed for an account similar to this, internal medicine, we did all but verify benefits and appt reminders.  And NO CODING.  It took 1 employee full time and another employee that could handle some other stuff as well.  I agree with Linda, no percentage billing.  I prefer a flat monthly fee.  I do not like quoting a provider an hourly fee.  They do not take all of our expenses into consideration.  When you quote a doctor an hourly rate they think they are paying an employee that amount per hour, not a business.

That's what I am planning to do. I will work on this account myself for full time and Will hire a part time employee. Plz don't mind me asking this, but how much flat fee did you charge this particular provider. It will make things more clear for me. A straight forward example..

Thanks in Advance Michelle


We pick up deposits from the doctors office 2-3 times a week.  We add up all the patient payments and paper Insurance checks, we also print out a payment report from all the payers we have set up EFT.  We turn in our invoice every 2 weeks.  It might be easier to track the sum of all payments in your PM software but we have to add up all the payments anyway before we post them. 
Title: Re: Pricing Strategy
Post by: Merry on March 06, 2014, 04:53:21 PM
Don't forget if you hire someone, you will have to deal with taxes etc. It is not up to you who determines whether the person is a subcontractor. The IRS determines that. If you need more info about this, just ask. I am very familiar with this.
Title: Re: Pricing Strategy
Post by: SnyderKristine on March 06, 2014, 05:44:46 PM
Hi Merry, at the moment I am not planning to hire anyone because this client is still a prospect.. I am following up on it..

More and more providers I talk with ask about certifications? So that's my major concern. I am experienced in billing, so what do you suggest..

Just can't make up my mind on what to choose. I came across three organizations offering Coding and Billing certifications.

AAPC offers CPC for coding and CPB for billing ($300 exam fee + $1595 course)

AHIMA offers CCA n CCS for coding ($299 exam)

AMBA offers CMRS for billing ($325 exam fee + $199 course fee)

AHIMA certification is clearly affordable, but is it recognized...

Any thoughts? Which one would you guys choose??
Title: Re: Pricing Strategy
Post by: Merry on March 06, 2014, 10:44:56 PM
If you want to become a certified coder, AHIMA or AAPC. No matter what course you take, it is intense. Be prepared to learn anatomy and physiology and know that it will take you months.
I do not recommend AMBA.
I will tell you that you can become certified for Certified Healthcare Reimbursement Specialist and Certified HIPAA Information Specialist through the medicalbillingstudycourse.com,. It is online as we update it constantly. It is not on the website yet and you can contact me privately at merry@nebazone.com for more information if you would like. Prices are less but know this is for billing and not coding.
I have a different philosophy about the certifications as I have been writing them for over 15 years. I developed them so that you learn what you don't know. It is not a matter of just getting a passing grade and a certificate. My feeling that if a person is serious about this business, they need to know in what areas they are lacking so that they can educate themselves further. BTW, there are no study materials which are outdated so quickly. All the answers are on the Internet..open book. the only place where you can find up to date information today.
Title: Re: Pricing Strategy
Post by: SnyderKristine on March 19, 2014, 10:53:45 AM
We pick up deposits from the doctors office 2-3 times a week.  We add up all the patient payments and paper Insurance checks, we also print out a payment report from all the payers we have set up EFT.  We turn in our invoice every 2 weeks.  It might be easier to track the sum of all payments in your PM software but we have to add up all the payments anyway before we post them.

I had this question in my ind from the very beginning, but I was not sure about how this works. What all can we include in the calculating our fees? Can we include all the payments coming to the providers office, no matter what is the source?

We will definitely include:
Payment from Insurance companies
Payment from patients that we called for collections

But can we include:

Co-pays or Deductibles that patient pays during the office visit
Capitation payments (becoz we don't have to follow up on them)

Please advice.. I don't want to sound unjust to the clients :)
Title: Re: Pricing Strategy
Post by: Michele on March 19, 2014, 11:09:35 AM

I had this question in my ind from the very beginning, but I was not sure about how this works. What all can we include in the calculating our fees? Can we include all the payments coming to the providers office, no matter what is the source?

We will definitely include:
Payment from Insurance companies
Payment from patients that we called for collections

But can we include:

Co-pays or Deductibles that patient pays during the office visit
Capitation payments (becoz we don't have to follow up on them)

Please advice.. I don't want to sound unjust to the clients :)


If we are doing insurance only billing we do not include payment such as copays, and patient payments received in the office.  But if we are doing full service billing we include all revenue received.  We are responsible for tracking all revenue, and making sure it comes in.  There is no way to separate revenue that one person collects, or another person, or whether it was in the office or mailed. 
Title: Re: Pricing Strategy
Post by: SnyderKristine on March 19, 2014, 11:57:33 AM
I am planning to handling complete billing, which includes everything except coding. I will get a software, do demographics entry, insurance verification, reminders, claim submission, rejection handling, appeals and denial management, payment posting, Patient collections and statements.

Now can I include everything the doctors collects, except self pay patients. Just confirming, I don't want to be unfair. Thanks Michelle.

And one more thing, do we charge the same % for capitation payments?? because we don't have to follow up on them.
Title: Re: Pricing Strategy
Post by: Merry on March 19, 2014, 12:44:36 PM
If you touch the account you should get paid.  Otherwise there would be two sets of books.  Up to the provider if he/she wants to do that but the IRS will have a temper tantrum.
I am curious why you do not think you ha e ti do work for a capitated acct.  When that monthly check cones in,  you must check that every person had been included,  track withholds etc. 
Title: Re: Pricing Strategy
Post by: PMRNC on March 19, 2014, 01:47:55 PM
 

Quote
Now can I include everything the doctors collects, except self pay patients. Just confirming, I don't want to be unfair. Thanks Michelle.

This depends on the contract. The consensus is, is that if you plan to do a % of collections it's ALL practice collections including patient payments.. why wouldn't you charge? You touch it, you report it, you bill for it.  But again.. HOW this plays out is up to you AND must be spelled out EXACTLY in your contract (another reason I dislike % billing, too many grey areas and loopholes).

Quote
And one more thing, do we charge the same % for capitation payments?? because we don't have to follow up on them.

Again, up to you. With capitation (these will be phasing out over the years as it already has) you are still posting payments, reporting, etc, you should be paid for all services. Again this is why I like the flat fee model, it's based on your time/worth/experience and you get paid for EVERY minute you work. No one can answer these questions w/out knowing what your putting in your contract, as that's extremely important. When you bill on a % you MUST spell everything out so there is NO surprises later. Billing on a flat fee you merely only have to explain the monthly fee and how it's derived from time, work, etc.
Most billers I know are still doing % merely because "everyone else is doing it" or they think that's only option provider wants. I've never had a problem talking a provider out of % based billing once I explain the logistics to him. His accountant, his other service providers don't charge % so it's not too hard to explain to him/her on a more reasonable and less scrutinized method of billing.
Title: Re: Pricing Strategy
Post by: SnyderKristine on March 19, 2014, 03:30:22 PM
Linda, I wish so badly that I could charge this client a flat fee model. But he won't agree. And as this might be my first client, so I will have to take this one up for what ever I get to start.

I don't want you to share the contract, but can anyone share the clause in the contract that makes it clear we will charge say 6% of ALL the revenue coming in the provider's account. Thanks
Title: Re: Pricing Strategy
Post by: PMRNC on March 20, 2014, 10:04:18 AM
Here is what I would tell a provider if he wanted to break out collections in office from my % when I did bill %.  When you have an office that is going to track ONE set of collections and the billing company another, you now have two sets of books. A BIG FAT NO NO.   On the other hand if they let you track those payments they then have ONE nice neat compliant set of books and reports that are true. If the feds come a knocking it won't look good for the billing office to have ONE set and the physicians office another set.  And lf they decide to let you post them, who sends out the statements? That leads back to what Merry says, you track it, you touch it you get paid for it.   Let's suppose THEY want to track them in the same system, then you have more hands in the cookie jar which also makes a mess. That's why it's best to explain this to the provider so that you are getting paid your percentage on ALL revenue. When you are doing your contract you will spell out all of your services and it will be stated that you will receive $XX for all practice revenues brought it. If you are sending a statement to a patient for $200 and later they send the office $200 you've thrown away money because you billled it, your tracking it! I do understand some billing companies will not charge % on what the office collects but again I refer back to what I said that you now have two sets of books/reports and the practice loses out on a true practice picture of their accounts not to mention the mess it would be if you were to go through an audit. 
Title: Re: Pricing Strategy
Post by: RichardP on March 20, 2014, 03:15:27 PM
We charge a percentage.  But we have two tiers.  Regular percent for non-cash.  Half of regular percent for cash.  We process all payments, cash and otherwise - so that a patient's account shows all charges, payments, and write-offs.  But were we can identify a payment as cash, and we did not have to bill for it or otherwise contact the patient, we assign that payment to a Cash Financial Class.  At the end of the month, we can run a report that shows totals for Insurance Payments, Patient Payments in response to Statements sent, and cash payments made in the office.

If we handle it, we get paid for it.  But some handling is less than others, and so we charge a lower fee for that.

Re. double bookkeeping - some clients sell things from their office, like vitamins, etc.  Those sales have nothing to do with the procedures performed on the patient, and so we have no need or desire to track those in-office payments.  The office runs their own books on those misc. sales and payments.