Medical billing services offer multiple options for clients to pay for their services. Every practice has diverse requirements and the right selection for you is dependent on the volume, type, and value of bills. Following is a list of the billing options offered to health care practices, with their benefits and drawbacks.

1. Percentage based fee

This is the most common type of billing option offered by medical billing services. You pay a fraction of the net collections or of the total claims submitted to the payer. Percentage rates range widely (4%-16%) as they are calculated on the type of services provided, claim amount and monthly average number of claims. Percentage based agreements fit almost all medical practices, especially if you turn over the whole process to the medical billing service . This method of billing provides motivation to the billing service to submit and follow up claims rigorously - an excellent advantage for the customer. The one disadvantage of percentage based fee is that the billing service tends to neglect smaller claims as the small payments do not justify the aggressive follow up needed to collect. You can circumvent this hurdle by paying a slightly higher percentage for the smaller claims to make them worth the effort.

2. Flat fee per claim

You pay a fixed rate for every submitted claim. The fee could range from $1 to $8 based on the service. This alternative is suitable for health care practices that see high value but low number of claims or claims that are tough to collect (as from a particular insurer). The drawback of this arrangement is that the billing service does not have much motivation to follow up the claims aggressively. You should accept this billing preference only if you demand follow up in the agreement and release the fees after the claim has been paid.

3. Hybrid Billing

Hybrid billing is a great choice to get the best of both percentage and flat fee service. In a hybrid agreement, pricing provisos are defined based on the type of claim and the insurance carriers. This kind of billing agreement is perfect for any hospital that sees a wide range of claim values and a moderate to high level of claims. This also helps medical practices conform to the flat fee regulations stipulated for Medicaid and Medicare claims in many states. The percentage-based fee structure is applied for private insurance claims. The main problem of hybrid billing is that it introduces billing complexity into practices that do not have a large volume of claims.

Before deciding on the price structure you want with the medical billing service, go over your billing volume, amount of claims, and the type of patients and insurers. Ask the billing service to forecast results based on monthly average volume of claims, sum of claims and payers so that you have some idea of what you would pay under each type of billing option. Think in terms of the future growth of your practice before selecting the best possible payment contract. There is a perfect medical biller for every type of practice; you just need to spend some time understanding how they work before you make a decision.