What is the Going Rate for Medical Billing Services in 2024?

Medical billing services can significantly help health care providers manage the complex process of submitting and following up on claims with health insurance companies to receive payment for services rendered. They also assist with billing patients, processing payments, and providing detailed reporting.

However, pricing for medical billing services can vary greatly depending on several factors, including the size of your practice, the volume of claims, the complexity of your billing, and the range of services offered by the billing company. As of January 1 2024, the pricing models prevalent in the industry included percentage-based fees, flat fees, and per-claim fees.

Here’s an in-depth guide to help you navigate these options:

1. Percentage-Based Fees:

This is the most common pricing model, where the billing company charges a percentage of your practice’s net collections. The rate typically varies from 4% to 9% of your total collections, depending on the volume and value of claims your practice processes.

Advantages of this model include the incentive for the billing service to maximize collections since their compensation is directly tied to the practice’s revenues. On the downside, high-value services could mean substantial fees, even if the billing process isn’t particularly complex.

2. Flat Fees:

Some billing services charge a flat fee per month. This fee can range from a few hundred to several thousand dollars, depending on the scale and complexity of the services provided.

Flat fee structures provide predictable costs and can be cost-effective for practices with higher revenues. However, the billing service may lack the incentive to maximize collections in this model.

3. Per-Claim Fees:

A few billing services charge a fixed fee for each claim they process, typically ranging from $1.50 to $10. This model can be more affordable for smaller practices, but the costs can add up with a high volume of claims.

When evaluating these options, here are key points to consider:

Service Range: Ensure the billing service covers all aspects of the revenue cycle, from patient registration and insurance verification to coding services, claim submission, payment posting, denial management, and patient billing.

Contract Terms: Look out for long-term contracts or ones with strict termination clauses. It’s crucial to have flexibility in case the service doesn’t meet your expectations.

Billing Software: If the billing service uses its own software, ensure it’s user-friendly, secure, and compatible with your existing systems. If they use yours, check if they’re familiar with it.

Reporting and Transparency: The billing service should provide regular, detailed reports on collections, account receivables, denials, etc., so you can monitor their performance.

Experience and Reputation: The company should have substantial experience in medical billing, ideally in your specialty. Look for references, testimonials, or case studies that demonstrate their capabilities.

Compliance: Ensure the billing service is updated with the latest changes in medical billing regulations, codes, and insurance company requirements. Compliance with HIPAA privacy regulations is also essential.

Support: Check if they provide support during your practice’s office hours and the communication methods they offer (email, phone, chat, etc.).

The ‘going rate’ for medical billing services can vary significantly, and the most cost-effective choice depends on your specific needs and circumstances. It’s crucial to thoroughly evaluate potential services using the above points, to ensure they’re a good fit for your practice and can provide value for the money.

Medical Billing Service – Hidden Fees

When looking for a medical billing service, it’s crucial to understand the full costs involved, as certain services might not be included in the basic fee structure and may result in additional charges. These hidden fees can add significantly to the overall cost of your billing service.

Here are some potential hidden costs you should be aware of:

1. Set-Up Fee: This is a one-time charge for the initial setup of your account, including the integration of the billing service’s software with your existing systems. While some companies waive this fee, others might charge hundreds or even thousands of dollars.

2. Patient Statement Fees: Some companies charge additional fees for preparing and sending patient statements. This could be a per-statement fee or a flat fee, depending on the number of statements.

3. Postage Fees: If the billing service sends paper statements or correspondence to patients, they might charge extra for postage.

4. Clearinghouse Fees: These are fees charged by intermediaries that check claims for errors before they’re sent to the payers. Some billing companies cover these costs, while others pass them on to you.

5. Claims Scrubbing Fees: There might be additional fees for reviewing claims for errors or omissions before they’re submitted, to ensure they’re not denied for avoidable mistakes.

6. Training Fees: If the billing service uses its own software, there might be charges for training your staff on how to use it.

7. Data Conversion or Data Entry Fees: If you’re switching from another billing service, there could be fees for transferring and integrating your existing data into the new system.

8. Extra Support Fees: While basic customer service should be included, some companies might charge extra for after-hours support or dedicated account management.

9. Termination Fees: Some contracts include fees for early termination, or they may require you to pay for a certain number of months of service even if you terminate early.

10. Billing for Non-Covered Services: Some billing services might charge additional fees for handling patient billings for non-covered services or for handling prior authorizations.

When evaluating a medical billing service, ask for a complete list of all fees and potential charges. Request that all costs be clearly spelled out in the contract. Transparency is key in a billing service partner, and the right company should be upfront about all costs from the start.

What Factors Affect the Cost of Medical Billing Services?

The cost of medical billing services can be affected by a wide variety of factors. Here are some of the main ones you should consider:

1. Size of Practice: The number of physicians and volume of patients can significantly influence the cost. Larger practices generally have more claims, which can either increase the cost (in a per-claim model) or decrease the relative cost (in a percentage or flat fee model).

2. Billing Volume: The amount and complexity of claims can impact the cost. More claims or complex billing procedures will take more time and effort, hence the higher cost.

3. Services Included: The range of services provided by the billing company can affect the price. Comprehensive services that include patient registration, insurance verification, coding, claim submission, payment posting, and follow-up will generally be more expensive than just claim submission.

4. Specialization: Billing for certain specialties can be more complex and require more expertise, hence a higher cost. For example, mental health billing or oncology billing can be more involved than primary care billing.

5. Geographic Location: The cost of services might be higher in areas with a high cost of living, although this is less of a factor with online services.

6. Software Use: The cost could be higher if the billing company provides proprietary software for your use, or if it requires extensive integration or training.

7. Experience and Reputation: More experienced and reputable companies might charge higher fees for their proven expertise and reliability.

8. Compliance Requirements: Ensuring compliance with health care regulations, such as HIPAA, can add to the operational costs of a billing company.

9. Contract Terms: Longer contracts might have lower monthly fees but could be more expensive in the long run, especially if they have early termination fees.

When choosing a medical billing service, it’s crucial to weigh these factors against the potential benefits. A low-cost service might not provide the level of service or expertise your practice needs, while a more expensive service might offer valuable features that can increase your collections and efficiency. Be sure to thoroughly review and understand all contract terms before making a decision.

Administrative and Software fees of Medical Billing Service Outsourcing

Medical billing services often come with a variety of fees, including administrative and software fees. These are important to consider when evaluating the total cost of outsourcing your medical billing.

Administrative Fees:

Administrative fees typically cover the cost of services provided by the billing company’s administrative staff. In 2024, the average administrative fees range between $3000 and $6800. This can include various tasks associated with managing your practice’s revenue cycle, such as:

• Patient registration
• Eligibility and benefit verification
• Coding of diagnoses and procedures
• Submission of claims to insurance companies
• Payment posting
• Accounts receivable follow-up
• Handling patient inquiries about bills
• Producing reports for your practice

The administrative fee can be part of a percentage-based, flat fee, or per-claim fee, depending on the billing company’s pricing model. In some cases, there might be separate administrative fees for specific services, such as claims scrubbing or patient statement processing.

Software Fees:

Many medical billing services use specialized software to manage the billing process. This software can offer features like electronic health records (EHR), practice management, and medical billing in a single integrated platform. Medical software can be as little as $8500 and potentially exceed $30,000, depending on your requirements. The software can also offer features for patient scheduling, reporting, and data analysis.

Software fees can vary widely based on the features offered, the number of users, and whether the software is cloud-based or installed on your practice’s servers.

Here are a few types of software fees you might encounter:

• Set-Up Fee: A one-time charge for setting up the software for your practice, including customizing features to meet your needs and integrating the software with your existing systems.
• Monthly or Annual Subscription Fee: An ongoing charge for using the software, typically based on the number of providers in your practice.
• Training Fee: A charge for training your staff on how to use the software.
• Upgrade or Maintenance Fee: A fee for software updates or ongoing maintenance services. This is more common with server-based software, while cloud-based software usually includes updates and maintenance in the subscription fee.
• Data Conversion Fee: If you’re switching from another billing service or software, there might be a fee for transferring your existing data into the new system.

A medical billing service, it’s crucial to ask about all potential administrative and software fees to ensure you understand the total cost. You should also evaluate the benefits and features offered by the service and the software to ensure they meet your practice’s needs and can improve your billing efficiency and revenue collection.

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.