How Do Medical Billers Make Money?

Medical Billers and Their Fee Structure

Most medical billing services make their money based on a percentage of net collections that a medical practice brings in. But not always. Medical billing companies have learned to get creative with their fee structure. Some providers throw in extra fees for set-up or practice management. Others will charge per claim or a percentage of the total number claims submitted (whether or not they are denied doesn’t matter!). Whatever the case, it’s important that you read the fine print, do the numbers and choose a company that would increase your revenue.

money changing hands

5 most common fee structures:

  1. Amount collected – In this case, the medical biller charges a percentage of claims that have been collected on. This does not include deductibles, co-pays, and other in-office payments. Pros: the medical biller can only collect on the work they have brought in (not office payments). This is a popular choice with medical practices, as it directly correlates to the profit earned by the healthcare practitioner.
  2. Total claims submitted – When a medical billing company uses this structure, they charge a percentage of gross claims submitted to insurance providers and other debtors. The downside: there is no monetary incentive for the medical biller to be aggressive in follow-up on denied claims.
  3. Total collections processed – This is when a medical biller charges a percentage of net collections. A net collection includes deductibles, co-pays, claims, and other in-office payments. Holistic practitioners often choose this method because it provides an incentive for the medical biller to follow up on claims.
  4. Fixed Fee – Medical billers that charge a fixed fee are usually more affordable upfront. They usually charge per claim, which can range from $1-$2 per general claim. But specialty services can cost as much as $4 to $7 per claim. Note: there is little incentive for the medical biller to follow up on submitted claims.
  5. Hybrid – This means that sometimes the medical biller will charge a percentage based on the number of claims submitted, but in other cases, they charge a fixed fee. Depending on the type of claims your office submits, this may or may not be advantageous to your practice.

Read the fine print. Do the numbers. If it’s a win-win for both parties, it’s worth your money. If not, find a medical biller with a different fee structure.

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Have more questions about medical billing? Read our Medical Billing Buyer’s Guide.

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