How Much Does a Medical Billing Service Cost in 2021?
Finding a great medical billing service at the best price can be overwhelming at times. Here is a breakdown of the cost and what you should expect in 2021.
According to the Healthcare Information and Management Systems Society, Inc. (HIMSS), it costs $250 billion to process the 30 billion healthcare transactions that are completed every year?
If you run a medical office, then you may be considering hiring a medical billing service so that you don’t have to lose all this money processing your medical bills yourself. You may be asking yourself questions such as:
“How does a medical billing service save me money?”
“How does a medical billing service company work?”
“What types of fees do I have to pay when using a medical billing service?”
If you don’t have the answers to these questions, you may be unsure about whether using medical billing services is right for you. You might also be stressed if the choice feels like it’s one you have to make soon, with the medical bills piling up around you.
That’s why we’ve put together this article. Once you know how much medical billing services cost, you can decide if using one is right for you. Finally, you’ll be able to save money and time.
How a Medical Billing Service Saves You Money
To understand whether a medical billing service is worth paying for, you first need to know how a medical billing service saves you money. So, let’s take a look at the steps taken when filing medical bills and why this can cost you so much money if you don’t outsource medical billing services.
When you’re going through the medical billing service, the first step occurs when your patient visits your office. When they come up to pay, the person behind the desk will let them know what’s covered by insurance.
This requires putting in specific codes so that the insurance company can register everything on their end. Usually, by the time you’ve provided services, you know what the codes are.
However, these codes can be confusing. If done incorrectly, this can waste both time and money. Additionally, these codes will come up again if any claims are denied.
Some medical offices hire full-time staff to manage this coding.
The full-time office staff will also manage filing bills, following up with patients, and following up with denied claims.
If you don’t have a full-time office staff managing your medical office’s bills, then chances are you’re drowning in paperwork. If this happens, and you fall behind on your medical billing, then this can cost you money.
Additionally, having a full-time office staff costs you money. Whether you find that your administrative costs are already high, or hiring new administrative staff would be expensive, it’s going to cost you.
This is why a medical billing service is a great option. You’ll be able to streamline processing your medical bills without having to employ your staff full-time.
Billing Services Available
The cost billing services you hire to help you with your medical bills depends on what services you’re having them do for you. These services include coding, following up with patients, following up with denied claims, and filing bills. Additionally, billing services can help you come up with better filling processes for your specific practice.
The cost of your billing services will also depend on the type of practice you have and its size. This is because these factors have an impact on the fees. Let’s review all this now in detail.
The Cost of Medical Billing Service
You can calculate how much the billing services you’re considering using will cost by thinking about billing fees, administrative fees, and set-up fees. As mentioned, these are impacted by what practice you’re running and by its size. It’s also impacted by how many claims you’re filing.
Billing Fees Explained
The main cost that you’re paying for when hiring a medical billing service is the billing fees. This is how much they’re charging for processing the bills themselves. There are several ways they charge you. These ways are with hourly fees, flat fees, percentage-based fees, and hybrid fees.
Let’s review each of these in detail so you can decide which one is best for your medical office.
If your office is on the smaller side, then you could benefit from paying for billing fees at an hourly rate. If you usually spend a few hours a week on filing and managing your bills, then you would pay the medical billing service to do this for you for the same amount of hours.
If your medical bills are expensive and don’t take a long time to file, this is a great alternative to percentage-based fees, which we’ll cover in a moment.
If your office is medium-sized, then we recommend that you go with a billing service that charges flat fees. Costs are usually between $4 and $6 for each claim. This is the going rate for medical billing services, though this can vary.
One of the best things about the flat fee payment type is that the billing service will continue to work on filing the claim even if it comes back denied by the insurance company.
If you run a larger office and have many bills you have to get sent off and filed, then you should go for the percentage-based fee model. This makes your life much easier if you often get denied claims from insurance companies.
Because the medical billing service only makes money if the claim goes through, they’ll fight to get it through no matter how much the insurance company is pushing back. Usually, the percentage they make is somewhere between 5% and 10% of the amount of the collection.
They determine what percentage they’ll charge you by calculating the cost of services, after which they’ll divide it by how much they’ll make in each period.
Finally, there’s the hybrid fee type of billing fee. This fee is a hybrid of any of the other types covered above. Depending on what your needs are, this might be the best fit for you. If you have times when you have more clients and other times when your office is virtually empty, you might benefit from hybrid fees.
For example, if you’re a nutritionist, then you’re likely to have many more clients visiting your office right after the new year, and you won’t have as many coming in during the fall months.
In addition to the billing fees, you’ll have to pay for administrative fees. All medical billing services, including national medical billing services, will have an administrative fee. This makes it possible for them to pay their staff and for the software required for what they do.
You have to pay this cost upfront every year. Administrative fees range between $3,000 and $6,000. The cost will be higher if your medical office is larger or if you see many patients.
When you hire a medical billing service, you might also have to pay set-up fees. Not all of them will make you pay this fee. Others, however, will charge this fee, in which case the administrative costs might be lower. Depending on your budget, you can decide if a medical billing service with higher set-up fees or administrative fees is best for you.
Usually, a set-up fee is based on the number of physicians working at your practice. If you’re the only physician at your practice, you’ll have to pay around $300. If there are many doctors at your medical office, then you might be charged a flat set-up fee.
This is usually around $1,000.
Other Fees to Be Aware Of
When you’re choosing the right medical billing service for you, there are additional fees you should be aware of. That way, you won’t end up being charged for services that you didn’t plan to pay for in the first place.
The fees that we’ve covered above, such as billing fees, administrative fees, and set-up fees, are all the usual fees that you have to pay when hiring a medical billing service. However, if you find that there are additional fees, be careful about hiring this medical billing service. If they’re charging you for customer service fees or anything like that, don’t hire them.
You don’t want to pay for hidden fees.
Some medical billing service companies will charge you for clearinghouse fees. Don’t hire a medical billing services company that does this. You should only be paying for the claims filed, not for anything else.
Medical billing service companies also sometimes require monthly minimums. While they may offer lower prices on a larger amount of claims this way, this won’t be useful to you if you’re running a small office that doesn’t file many claims.
Think carefully about going with a company that has monthly minimums. Otherwise, you’ll end up paying for claims that weren’t even processed at all.
Cost Examples From Medical Billing Services
While medical billing services vary significantly and vary even more so because of the different billing fee types they use, we thought it would be helpful to give some cost examples from medical billing services. Here are some examples:
- Medical Billing Star charges between 5 and 7 percent per claim, and they can also do only coding, which is 99 cents a claim
- Kareo charges a flat fee of $300 a month
- Capture Billing charges between 7.9 and 10.9 percent per claim, and they have a $999 minimum monthly fee
- NueMD charges between $149 and $249 a month
- ADP AdvancedMD charges between 4 and 8 percent per claim, which comes to around $1.42 for every claim
This information can give you an idea of which type of billing fee might work best for your medical office. Additionally, you now have an idea of how much percentage-based fees usually work out.
When you’re choosing the right medical billing service for you and what pricing plan is best for you, it’s important to be aware of what type of codes you usually use. If you have one office in one state, then chances are you’re using the same codes over and over, which keeps your billing services costs down.
However, if you have many offices in many states, this means you have to submit many types of codes. This adds complexity to your processes, which will drive up the cost of hiring an external billing service.
Additionally, if any of your clients receive Medicare/Medicaid, then the costs of claims will be lower. This will drive down your costs.
Finally, some billing services might be more expensive for a reason. Perhaps they offer more services. When speaking with a representative at a pricier medical billing services company, ask about these additional services.
Need More Information?
Now that you know about the cost of a medical billing service in 2021, you might need more information. Maybe you want help finding the right medical billing service for you. Or maybe, you want assistance calculating exactly how much everything is going to cost.
Whatever information you need, we’re here to help. At Medical Billing Service Review, we’re experts when it comes to medical billing services. We can give you all the information you need regarding pricing, and we also have billing reviews and buying guides. To learn more about how we can help you, contact us here.
Author: Mike Cynar
Mike Cynar brings buyers and sellers together by producing reviews and creating non biased webpages allowing users to share their experiences on various products and services. He and his staff write informative articles related to the medical field, legal, and other small business industries.