Author Topic: Insurance payments  (Read 3988 times)

maxamillion125

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Insurance payments
« on: October 23, 2013, 08:59:06 AM »
I have a few questions.  We're a new Medical Billing company and looking for ways to increase productivity and improve workflow.  We started our business just over a year ago and we recently hit a MAJOR growth spurt.  We were doing fine managing our 2 clients but thanks to some effective marketing, doctors referrals and some good luck we signed 4 NEW clients within a couple weeks.  Needless to say we're kind of struggling right now with all the time it takes to transfer patient demographics and insurance, set up a workstation to remote log in, learn new EMR/PM systems and re-submit a years worth of claims for one of the new clients. 

We charge a percent of the total amount the practice brings in or a minimum, whichever is greater.  I know a lot of people say to stay away from charging a %, but it seems to work for us.  Except in the initial month or two because the accounts require a lot of clean up, credentialing, and time to set everything up and learn the new EMR/PM system if the client doesn't want to use ours.  Anyway, one of my main problems is posting Insurance/patient payments.  We probably spend 3-4 hours a day posting payments.  Do most of you use ERA and if so do you still receive a paper EOB and check?  We would like to receive a paper EOB and check for our records but have the payment auto-post. 

Thanks in advance!!!


« Last Edit: October 23, 2013, 09:03:46 AM by maxamillion125 »

PMRNC

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Re: Insurance payments
« Reply #1 on: October 23, 2013, 12:42:27 PM »

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We charge a percent of the total amount the practice brings in or a minimum, whichever is greater

I answered this in another thread..but YIKES on this method..     % or minimum??? I imagine it's a great marketing tool and assuming you are in state that does not prohibit percentage based billing. . but I have to ask.. are you being reimbursed for your time.. because that method surely wouldn't get me reimbursed for my time.   J M H O
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maxamillion125

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Re: Insurance payments
« Reply #2 on: October 23, 2013, 01:31:43 PM »
Percentage based billing is legal in MT.  The minimum is really just to help us cover start up costs and PM software the first month or two before we start getting insurance/patient payments coming in.  We are doing OK, charging 7%.  What do you generally charge per claim?  I can crunch some numbers and see if that method would be better for us in the future. 
Thanks.

PMRNC

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Re: Insurance payments
« Reply #3 on: October 23, 2013, 02:19:18 PM »
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Percentage based billing is legal in MT.  The minimum is really just to help us cover start up costs and PM software the first month or two before we start getting insurance/patient payments coming in.  We are doing OK, charging 7%.  What do you generally charge per claim?  I can crunch some numbers and see if that method would be better for us in the future. 

I don't do a per claim. My fee is based on a flat rate with sliding scale to accommodate growth of the practice. Basically means I'm getting paid for every single thing I do. I AM in a state that prohibits it..however BEFORE I changed over and came her to NY state. I ran reports and analysis and I'm getting paid 60% MORE than what I was with % based contract. My clients even are NOT seeing much of a difference either. Still a big time savings for them. Again,... this is JMHO. I do feel in the future we will all be prohibited from charging a percentage as it's too much of an incentive for fraud.   

You have to analyze the AMOUNT of work done PER client as well as the time/cost per employee on that time worked per account. Those charging on a % of collections are indeed losing money, whether they want to admit it or not. THE only benefit is their ability to market "we don't get paid until you get paid" which is old and tired. A billing company charging a % of collections is NOT being reimbursed on time, experience or any other means.. but simply on the bottom collection line which doesn't begin to depict the time spend.
Linda Walker
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maxamillion125

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Re: Insurance payments
« Reply #4 on: October 23, 2013, 11:10:20 PM »
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Percentage based billing is legal in MT.  The minimum is really just to help us cover start up costs and PM software the first month or two before we start getting insurance/patient payments coming in.  We are doing OK, charging 7%.  What do you generally charge per claim?  I can crunch some numbers and see if that method would be better for us in the future. 

I don't do a per claim. My fee is based on a flat rate with sliding scale to accommodate growth of the practice. Basically means I'm getting paid for every single thing I do. I AM in a state that prohibits it..however BEFORE I changed over and came her to NY state. I ran reports and analysis and I'm getting paid 60% MORE than what I was with % based contract. My clients even are NOT seeing much of a difference either. Still a big time savings for them. Again,... this is JMHO. I do feel in the future we will all be prohibited from charging a percentage as it's too much of an incentive for fraud.   

You have to analyze the AMOUNT of work done PER client as well as the time/cost per employee on that time worked per account. Those charging on a % of collections are indeed losing money, whether they want to admit it or not. THE only benefit is their ability to market "we don't get paid until you get paid" which is old and tired. A billing company charging a % of collections is NOT being reimbursed on time, experience or any other means.. but simply on the bottom collection line which doesn't begin to depict the time spend.

Wow 60% increase over % based contract, that's amazing.  Is your sliding scale based on how many claims you submit or how many patients they see per month?  Or is it just a cost analysis of how much time you think it will take per week/month? 

We have a minimum charge per month for each provider.  And its based on the what we expect it will cost us in employee wages, software, statements and other expenses + a 10% net profit.  We haven't really tested this method yet because we just signed these new providers within the last couple weeks.  But either way we won't be loosing money in the beginning and once payments start coming in then our 7% of the clients revenue should exceed the minimum rate. 
I'm interested to hear about your flat rate, sliding scale fee. 
Thanks

PMRNC

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Re: Insurance payments
« Reply #5 on: October 24, 2013, 10:07:13 AM »
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Or is it just a cost analysis of how much time you think it will take per week/month? 

That's exactly how it's done :) It's hard for a new billing company to set this up. When I switched I had current clients so I could perform time/cost analysis using a year average.   The base rate is based on MY hourly salary which the client really never knows. No reason for them to know that. Either way it's still cheaper than all the costs associated with in-house employee so there is still incentive to outsource.
Linda Walker
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RichardP

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Re: Insurance payments
« Reply #6 on: October 24, 2013, 10:55:07 AM »
maxamillion125 - Linda and I have had a vigorous debate on the subject of percent vs. flat fee.  I won't rehash that conversation here, except to make a few points for your benefit.

* if you charge a flat fee, and the doctor's business stays fairly constant over time, that flat fee divided by revenue collected actually is a percentage of revenue collected (e.g., divide your fee by, say, $350,000 average collection-per-year  for three years = a percentage of collections).  In one of our converstations on this issue, Linda stated her fee, as a percent of the stable revenue of her clients.  That percent was quite high, and I doubt any doctor would hire her if she told the doctor up front that percentage as her "fee" to do the doctor's billing.

* we charge our clients a fee of $2,000 up front when we take them on, to cover set-up costs.  We allow that payment to be amortized over 12 months.  If, at the end of 6 months, both us and them are satisfied with the arrangement, we cancel the remaining $1,000.

* I don't see how billing a 7% fee for all monies collected won't cover your costs and leave something for profit.  I'm sure there are exceptions - but the fewer patients the client sees, the less of your time you spend on that billing, so your own expenses go down as the income collected from that client goes down.  The reverse is also true:  as the number of patients your client sees increases, the time you spend on his billing increases, your costs increase, but so does your income.
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If you do electronic billing, my understanding is you will get an electronic EOB - which is what you need for automated posting.  You should be able to print that electronic EOB before you post it.  But this technology still has a ways to go before it is fool-proof.  A number of folks we know tried electronic posting and eventually went back to manual posting.  Fixing all the errors created in electronic posting made the time spent posting not that much different from the time required for manual posting.  You will need to experiment to find the right balance for yourselves.

maxamillion125

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Re: Insurance payments
« Reply #7 on: October 24, 2013, 09:55:25 PM »
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Or is it just a cost analysis of how much time you think it will take per week/month? 

That's exactly how it's done :) It's hard for a new billing company to set this up. When I switched I had current clients so I could perform time/cost analysis using a year average.   The base rate is based on MY hourly salary which the client really never knows. No reason for them to know that. Either way it's still cheaper than all the costs associated with in-house employee so there is still incentive to outsource.

One of the major issues I see from switching from percentage based billing to a flat fee is when our yearly contracts expire our clients will know exactly how much they've been paying us monthly compared to how much they're taking in.  If we've been averaging around $2500 a month for a client and his practice is fairly consistent how do we convince him that we're now going to charge him $3500 flat rate fee for the exact same job we've been doing? 

maxamillion125

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Re: Insurance payments
« Reply #8 on: October 24, 2013, 10:07:32 PM »
maxamillion125 - Linda and I have had a vigorous debate on the subject of percent vs. flat fee.  I won't rehash that conversation here, except to make a few points for your benefit.

* if you charge a flat fee, and the doctor's business stays fairly constant over time, that flat fee divided by revenue collected actually is a percentage of revenue collected (e.g., divide your fee by, say, $350,000 average collection-per-year  for three years = a percentage of collections).  In one of our converstations on this issue, Linda stated her fee, as a percent of the stable revenue of her clients.  That percent was quite high, and I doubt any doctor would hire her if she told the doctor up front that percentage as her "fee" to do the doctor's billing.

* we charge our clients a fee of $2,000 up front when we take them on, to cover set-up costs.  We allow that payment to be amortized over 12 months.  If, at the end of 6 months, both us and them are satisfied with the arrangement, we cancel the remaining $1,000.

* I don't see how billing a 7% fee for all monies collected won't cover your costs and leave something for profit.  I'm sure there are exceptions - but the fewer patients the client sees, the less of your time you spend on that billing, so your own expenses go down as the income collected from that client goes down.  The reverse is also true:  as the number of patients your client sees increases, the time you spend on his billing increases, your costs increase, but so does your income.
--------------

If you do electronic billing, my understanding is you will get an electronic EOB - which is what you need for automated posting.  You should be able to print that electronic EOB before you post it.  But this technology still has a ways to go before it is fool-proof.  A number of folks we know tried electronic posting and eventually went back to manual posting.  Fixing all the errors created in electronic posting made the time spent posting not that much different from the time required for manual posting.  You will need to experiment to find the right balance for yourselves.

Thanks for the info regarding flat rate vs percentage billing, I see where your coming from.
Regarding the electronic billing this is how I believe it works.  Feel free to correct me if I'm wrong.  When you submit a claim whether it be electronic or paper you will receive a paper EOB and paper check by default.  Your payer has to have the option for EFT (electronic funds transfer) and ERA (electronic remittance advice) and you have to sign up for it separately to to get EFT and ERA (most payers offer it now.)  You can have EFT without ERA.  Ideally, I would like to have EFT, ERA and still receive a paper EOB for our records, but many payers are trying to reduce costs, so if you sign up for ERA you won't receive paper EOB's anymore.  The main benefit of EFT is your client will be paid quicker and you don't have to manually deposit checks.  The main benefit of ERA is your insurance payments will auto post but it's not a perfect system, like you said. 

dekenn

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Re: Insurance payments
« Reply #9 on: October 25, 2013, 08:03:37 AM »
One of the other things to consider about percentage billing is the fact that physician's fees are constantly being lowered.  Since the physicians are taking a 2% cut in their Medicare pay, so will you!

PMRNC

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Re: Insurance payments
« Reply #10 on: October 25, 2013, 09:05:33 AM »
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In one of our converstations on this issue, Linda stated her fee, as a percent of the stable revenue of her clients.  That percent was quite high, and I doubt any doctor would hire her if she told the doctor up front that percentage as her "fee" to do the doctor's billing.

I don't think I did state my fee. and there are NO percentage figures at all in the way I do my fee. It's not at all based on revenue as in NY state you can't even perceive a percentage of revenue. Maybe I had given an example comparing. The fee per month is based on MY hourly rate PLUS expenses. A thorough analysis was done before switching over to this method.   ___ hours a month x $__  hourly rate, add expenses. When switching over I knew how long, from doing a thorough analysis of time per client, how long it took me to perform each task, so if I was able to process 5 new patients an hour then 5 patients X $__ hourly rate would be added for every 5 new patients (this number and time could vary with experience, specialty, etc)   I admit to do this type of billing you need to have a good handle on your time and efficiency. I don't have employees to pay and hardly any overhead at all except for standard charges such as supplies, claim forms, envelopes and the normal costs of doing business.  All clients were given new contracts with the flat fee estimate so there were no surprises.

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I doubt any doctor would hire her if she told the doctor up front that percentage as her "fee" to do the doctor's billing.

Awfully assumptive of you don't you think?  Again, I do NOT just do billing.  I maintain my clients par contracts, office and financial policies, policies / procedures, etc., I.E. PRACTICE MANAGEMENT. I don't' think I've done billing only since I started my business.

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if you charge a flat fee, and the doctor's business stays fairly constant over time, that flat fee divided by revenue collected actually is a percentage of revenue collected

MAYBE.. but generally it doesn't work out that way or you have multiple % rates. LEGALLY SPEAKING my attorney told me the method cannot be BASED or PERCEIVED to be on a %.

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* I don't see how billing a 7% fee for all monies collected won't cover your costs and leave something for profit.  I'm sure there are exceptions - but the fewer patients the client sees, the less of your time you spend on that billing, so your own expenses go down as the income collected from that client goes down.  The reverse is also true:  as the number of patients your client sees increases, the time you spend on his billing increases, your costs increase, but so does your income
.

I can't see how any one can make that assumption not knowing more about the company, (employees, time spent, office space, overhead, etc)  Every company is different, I have seen billing companies with a few employees charge 7% and LOSE money. Chop up that piece of the pie and pay rent, overhead and expenses and absolutely you eat money and your not being compensated on your time.

MY overhead is LOW.. I do not pay any software fees, clearinghouse fees etc. I'm able to work on any PM system the client has in place, I can set them up with a PM system if they need one. That's one of reasons my clients are happy. I am completely flexible because my profits are based on my time and I can get what I'm worth at the same time as paying minimal overhead.


Whenever this comes up, it seems people just give an argument based on what is best for the provider w/out thought to their OWN business.  IN ALL of my clients if you add cost of employee's into their costs my fees are still an incentive to them.   When was the last time you called up your accountant or tax guy, mortgage company, phone company and haggled with them over their prices?? LOL   YOU don't.. why would OUR business be any different.

I'm not saying not to charge %, I'm saying that it's YOUR business and the old tried and true "We don't get paid until you get paid"  MAY not cut it anymore for YOU.. always works for them, but not you. I've NEVER met a provider once I explained my fees and how it works argue with common sense. I deserve to be compensated for my experience, work and commitment. It's NO different from any other business. If I opened a pizza shop, I wouldn't pay my employees a %, if I hired a delivery driver to deliver pizza, I'm not going to pay him a % of what I bring in, I'm going to pay him for his time and expenses (gas, mileage). 

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One of the other things to consider about percentage billing is the fact that physician's fees are constantly being lowered.  Since the physicians are taking a 2% cut in their Medicare pay, so will you!

EXACTLY

I also DO not just do billing. I maintain my clients par contracts, office and financial policies, policies / procedures, etc. If I charged a % of revenue I'd do all that work for free.

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One of the major issues I see from switching from percentage based billing to a flat fee is when our yearly contracts expire our clients will know exactly how much they've been paying us monthly compared to how much they're taking in.  If we've been averaging around $2500 a month for a client and his practice is fairly consistent how do we convince him that we're now going to charge him $3500 flat rate fee for the exact same job we've been doing? 

This is hard to answer w/out specifics on how you work, employees, overhead and more importantly the practice revenues.  BUT.... bottom line is why wouldn't fees increase? A lot of things happen in a year, cost of living, etc. I'ts NO different from any other business or an employee getting a raise. Jumping $1000 a month is rather high if you were not doing a sliding scale to accommodate the growth of the practice all year long then yes, this could be feasible..   Again, not here to argue with anyone, what you charge and how you charge is your business, I'm only saying that in ANY business your there to make money, there are not many service driven businesses like us charging a % .. are we just too focused on the provider's thoughts only? Sounds one sided to me.
Linda Walker
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One Stop Resources, Education and Networking for Medical Billers
www.billerswebsite.com

RichardP

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Re: Insurance payments
« Reply #11 on: October 25, 2013, 01:50:08 PM »
I don't think I did state my fee. and there are NO percentage figures at all in the way I do my fee.

Yes Linda, you did not state your fee (flat fee).  And I did not intend to give the impression that you use any percentage figures at all in the way you do your fee.

I was making a mathematical point now, as I did in our previous conversations.  That point is this:  when anyone divides their flat fee for the period by the client's income for the period - you get a percentage.  If the client's income stays relatively stable over time, and one's flat fee stays stable over time, that percentage will stay stable over time.  In a previous conversation, you did this calculation and stated the percentage you came up with.

When you do this type of calculation, it becomes easier to see that, no matter what one calls it, one actually does get paid a percentage when doing billing, flat fee or no.  Again, this is a mathematical point, not a legislative one.
« Last Edit: October 25, 2013, 01:52:35 PM by RichardP »

DMK

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Re: Insurance payments
« Reply #12 on: October 25, 2013, 04:01:36 PM »
One point I would like to make is that if one of your clients was largely a Worker's Comp. practice, you'll starve before you get paid and you'll put in 10 times the amount of work to get paid on just ONE claim.  So a % base isn't good for many practices.  It will depend largely on how easy or difficult it is to get claims paid.

What if your doctor is lazy and doesn't complete documentation, so you can't even file the claim until all the ducks are in a row, what's your time worth to keep following up to send a CLEAN claim?

I've been reading these threads for a long time and I'm fascinated at how strongly people hold onto the % based service.  We, as professionals, should be paid for the time we spend.  PI, and Work Comp takes more work.  If we were all just doing data input and just collecting the easy money there wouldn't be this discussion.  I get told daily how much the doctor appreciates that I track down the old claims and find out what's holding up payment.  That's not just data entry, that's my know how, and it's worth something.

The analogy that Linda keeps giving about what you pay your accountant (and how it's not negotiable) is great.  I'm paying for his expertise, I'm paying him to know the laws and for his advice on doing things correctly.  And his payment includes when he screws up and has to talk to the IRS!  When we screw up we're on the hook too!

PMRNC

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Re: Insurance payments
« Reply #13 on: October 26, 2013, 08:54:51 AM »
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I've been reading these threads for a long time and I'm fascinated at how strongly people hold onto the % based service.  We, as professionals, should be paid for the time we spend.  PI, and Work Comp takes more work.  If we were all just doing data input and just collecting the easy money there wouldn't be this discussion.  I get told daily how much the doctor appreciates that I track down the old claims and find out what's holding up payment.  That's not just data entry, that's my know how, and it's worth something.

The WC was actually ONE of the reasons I had had enough of billing %.. I had a client heavy workers comp because he specialized in sexual harassment, some of those cases went on for years and even given LOP's which promised HIM money, I was still working for that payday in the future. Ridiculous. Actually when I introduced flat fee he was the first to say he completely understood.  I don't get why chiro billers even THINK of a percentage!

I think because this is such a tough market people think that telling doctors they won't get paid until they get paid is their incentive.. and for a long time it was, it would at least get a raised eyebrow in a tough market.  It would be very difficult for a new billing or PM company to start off with flat fee. I think If I was starting out I'd do it with ONE year contract and then you have a year of data analysis to move to the flat fee or any other pricing.  Since NY State is SO cut and dry about fee splitting, I know many billing companies here, who charge differently, some on a per claim, per service, some on flat fee per patient, some on hourly rate, etc. There are so many ways to do it.   

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I was making a mathematical point now, as I did in our previous conversations.  That point is this:  when anyone divides their flat fee for the period by the client's income for the period - you get a percentage.  If the client's income stays relatively stable over time, and one's flat fee stays stable over time, that percentage will stay stable over time.  In a previous conversation, you did this calculation and stated the percentage you came up with

That's a Lot of If's..   The flat fee should change with growth of the practice, stable income? Not sure I'd say the providers I deal with are stable, my mental health clients have WC cases that drag on for years, I have one that does court testimony, another who does prison visits.  All those circumstances require a lot of work (separate contracts for them with state, some with attorney's, etc)   Same would go for a chiropractor for example, I think they would raise an eyebrow at the idea of "stable".   The flat fee accommodates the WORK I do and the GROWTH of the practice. SOME months it will seem like I'm getting a lot but then when they collect those older settled WC claims, their checks from the prisons and state every so many months it all evens out.   



 
Linda Walker
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