We charge a percent of the total amount the practice brings in or a minimum, whichever is greater
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.
QuotePercentage 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.
Or is it just a cost analysis of how much time you think it will take per week/month?
QuoteOr 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.
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.
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 doubt any doctor would hire her if she told the doctor up front that percentage as her "fee" to do the doctor's billing.
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
* 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
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!
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?
I don't think I did state my fee. and there are NO percentage figures at all in the way I do my fee.
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.
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