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Medical billing services offer myriad choices for practitioners to pay for their services. Each practice has different requirements and the appropriate option for you is based on the volume, type, and dollar amount of bills. Following is a list of the billing choices available to medical offices, with their pros and cons.

1. Percentage based fee

This is the most widespread type of billing option offered by medical billing services. You pay a proportion of the net amount received or of the total claims submitted to the insurer. Percentage rates vary from four percent to sixteen percent as they depend on the services included in the agreement, claim value and monthly average count of claims. Percentage based contracts fit most healthcare practices, especially if the medical billing service is responsible for all the tasks connected to billing. This method of billing provides an incentive to the billing service to maximize collections – a great benefit for the client. The one downside of percentage based fee is that the billing service may neglect smaller claims as the small amounts do not justify the vigorous follow up needed to collect. You can get over this hurdle by paying a slightly higher percentage for the smaller claims to make them worth the effort.

2. Flat fee per claim

The medical billing service charges a flat rate for each submitted claim. The amount could range from $1 to $8 based on the service. This choice is appropriate for medical practices that process low volume of claims with high payment amounts or claims that are hard to collect (as from a particular payer). The drawback of this agreement is that the billing service is not motivated to pursue the claims aggressively. You should accept this billing preference only if you include follow up in the contract and make the payment after the claim has been paid.

3. Hybrid Billing

Hybrid billing is a great option to get the best of both percentage and flat fee service. In a hybrid agreement, pricing terms are specific to the category of claim and the insurance carriers. This kind of billing contract is perfect for any practice that sees varying claim values and a moderate to high number of claims. This also allows medical practices comply with the flat fee regulations set for Medicaid and Medicare claims in a number of states. The percentage-based fee is used to pay for private insurance claims. The major drawback of hybrid billing is that it introduces billing complexity into practices with low volume of claims.

Before deciding on the price structure you want with the medical billing service, carefully evaluate your claims volume, value of claims, and the kind of patients and insurers. Ask the billing company to forecast results based on your volume, sum of claims and payers so that you can estimate what you would pay under each type of billing contract. Think in terms of the future growth of your practice before you choose the best possible payment contract. There is a perfect medical biller for every type of practice; it is just a matter of educating yourself and making an informed decision in hiring the right service for your practice. Daljeet Sidhu is the author of this article.