Medical Billing Pricing

What the percentage is charged on

Before comparing two percentages, find out what each one is a percentage of. It is one of the easiest things to get wrong when comparing quotes, and it is not always stated up front.

• A percentage of collections is charged on money actually received. If a claim is never paid, no fee is earned on it. This aligns the biller's incentive with yours, because their fee rises and falls with what you actually collect.
• A percentage of charges is charged on what was billed, regardless of what came in. Because gross charges are typically well above what payer contracts actually pay, the same headline number can mean something very different here.
• A percentage of collections including patient payments taken at the front desk can quietly include money the billing company had no part in collecting.

Synergy's percentage model is charged on the insurance and patient payments we help you collect. Ask any company you are comparing to state theirs in the same terms, in writing.

What is included, and what usually is not

A percentage only means something relative to scope. The services below are the ones commonly billed as extras rather than included, and they are the ones that decide whether a low rate is genuinely cheap:

• Insurance eligibility and benefits verification
• Coding and coding review
• Denial management and appeals — not just resubmission
• Patient statements and patient balance follow-up
• Provider credentialing and payer enrollment
• Reporting, and a billing team assigned to your practice

All six services are included in Synergy's revenue cycle management at no additional service fee. For patient statements, the practice pays all printing, postage and statement-vendor charges. Where these are billed separately, the comparison table above shows the typical cost of several of them.

How to compare two billing quotes fairly

Quotes are rarely presented on the same basis, so normalize them before comparing:

1. Write down what each percentage is charged on — collections, charges, or something else.
2. List every service each quote includes, and price the gaps. A rate that excludes coding, statements and credentialing is not comparable to one that includes them.
3. Add the one-off and recurring extras: setup fees, clearinghouse fees, statement and postage charges, minimum monthly commitments, per-provider fees.
4. Check the exit terms. A cancellation penalty or a multi-year commitment is a real cost, even if it never gets paid.
5. Ask what happens to your aged A/R and your data if you leave, and get the answer in writing.
6. Then compare the effective cost against what each partner is likely to collect — a difference in how much gets collected can outweigh a difference in the fee.

The last step is the easiest one to skip. Billing is not a cost center to be minimized in isolation; a cheaper biller that collects less is more expensive. If you are weighing this against keeping billing in-house, the in-house vs. outsourced calculator works the same numbers through both options.

What moves the rate up or down

There is no single published rate for medical billing, because the work is not the same from one practice to the next. The factors that genuinely move a quote are:

• Specialty. Coding complexity, authorization burden and denial patterns differ enormously between, say, a primary care practice and an interventional one.
• Average claim value and monthly volume. The effort per claim is broadly similar whether the claim is small or large, so both figures matter.
• Scope. Full revenue cycle management is a different engagement from charge entry alone or an aged A/R clean-up.
• The condition of the existing A/R. Taking over a well-run book is not the same job as recovering one that has been neglected.
• Your systems. Working inside your existing practice management or EHR system, as we do, avoids a migration; some arrangements do not.

That is why we quote rather than publish a number: a published rate would either be too high for most practices or too low to be honest about the work.

When per-claim or per-FTE beats a percentage

The three models are not ranked; they suit different situations.

• Percentage of collections suits practices that want the whole revenue cycle handled and want the biller's incentive tied to the outcome. It is the model best suited to full-service engagements, because the fee only moves when collections move.
• Per-claim suits a defined, bounded piece of the workflow — where you want a specific task done at a predictable unit cost and your own team retains follow-up. Its weakness is that the fee is earned on submission, so it does not by itself pay anyone to chase the claim.
• Per-FTE suits high, steady volume where you want named, dedicated capacity and predictable monthly cost. Whether it costs more or less than a percentage depends on your volume and collections, which is why it is worth modeling both against your own numbers.

Models can also be combined — a percentage on current claims and a separate arrangement for aged A/R recovery, for example.

What to ask before you sign

• What is the percentage charged on, exactly?
• Which of the six services above are included, and which are extra?
• What is your clean-claim rate on first submission, and how do you measure it?
• How quickly are claims submitted, and how quickly are denials worked?
• Who appeals denials — and do you appeal, or only resubmit?
• Is there a setup fee, a minimum monthly fee, or a per-provider fee?
• Is there a long-term contract or a cancellation penalty?
• Do I own my data, and can I export it?
• What reporting do I get, and how often?

Synergy's answers: no long-term contract — you can cancel with at least 30 days' notice — a 30-day free trial, a 90-day money-back guarantee on full revenue cycle management, a 98% clean-claim rate on first submission, claims out within 24 hours and denials worked within 48 hours, with a monthly Practice Performance Report. A fuller version of this checklist is in how to choose a medical billing company, and the pricing models themselves are explained in how much medical billing services cost.