I am new to this forum (actually this is my first forum) so please excuse my wordiness and ignorance and accept my appologies for any code-of-conduct violations. It's great finding a place to discuss medical billing issues.
We have a small licensed massage business in the state of Washington with a single practitioner (my wife). We have a large number of cash clients who pay at different rates, depending on many factors including promotions and how long they have been coming to us, but the average is between $55 to $60 per hour.
We have recently been approved to bill certain private insurance companies. These companies reimburse massage therapy (97124 and 97140) at significantly different rates. The cheapest companies reimburse at about the same rate as we charge most cash clients ($59 per hour for both 97124 and 97140). The most generous companies reimburse at more than double this rate, paying slightly more for 97140 than 97124. The co-pay is subtracted from these reimbursement rates.
I purchased FileMate-1500 software and have used it to create CMS-1500 forms for a number of clients, including some who used to be cash clients. I bill the same rate for 97124 ($115 per hour) regardless of the insurance company. In that way I am always billing more than the most generous company reimburses ($110 per hour) and plan to write-down the difference between the amount billed and the amount reimbursed on our incomce taxes. There have been a few minor glitches while learning the ropes but for the most part we have received the correct reimbursements.
Because it is near the end of the year most of our insurance clients have already met their deductibles so I haven't had to worry about them but in January everything gets reset.
My understanding from the insurance companies is that they will apply the reimbursible amount, minus the co-pay, against the deductible. Until the deductible has been met the client is responsible for the full bill.
So with that said I am finally ready to ask my question: How do I balance the non-insurance, cash client expectations of paying about $60 per hour against the need to meet deductibles before we get reimbursed? I listed a couple of approaches I could think of below.
1) Charge the client the cash rate of $60 per hour and bill the insurance company $60 per hour. The downsides are that it will take longer to satisfy the deductible, it will probably look funny to the insurance company (and IRS?) if we bill at different rates depending on the deductible, and if the deductible gets met by some other medical expense then we will be reimbursed at the lower rate for whatever visits we bill at the lower rate.
2) Charge the client and the insurance company the normal insurance rate ($115 per hour). If they have a low deductible ($150 or so) they could meet it in two visits. The downsides are that it could take much longer if they have a high deductible and in the meantime they are paying about twice what they are used to paying as cash clients.
3) Charge the client at the reduced cash rate of $60 per hour but bill the insurance company at the normal rate of $115 per hour until the deductible has been met at which point the client would just pay the co-pay. There could be a reduced payment for the final visit before the deductible is met but I'm not sure how to figure it out. This seems to have the least number of downsides but I'm not sure what the IRS would think.
There are probably better solutions out there which is why I am posting this topic. Any suggestions or guidance you could give me would be greatly appreciated. Thank you.