Medical providers may face multiple fee structures if they are considering seeking help with their old AR and denial management clean-up. Two types of fee structures are commonly offered by several medical billing companies, a percentage of what they collect which can be very high 30-35% or fixed fee as a full-time employee (FTE). Which structure is best for your practice?
This can be confusing, but the best solution lies between these two fee structures. One of the chief weakness of a high percentage plan apart from fixed fee plan is that the medical billing house working on the old AR clean-up has no incentive to resolve smaller claims. A medical billing company costs over $20 working on each old claim. Which means claims priced less than $100 are non-profitable for medical billing company working on percentage model and these claims likely be ignored. So, this is a major issue in the percentage model because most of the old AR claims are these smaller claims.
Now the fixed fee model has its own problems. The major problem of this structure is that no incentives to collect from the AR, the medical billing company working on old AR clean-up gets no real incentive on whatever the money they collect. The company gets a flat fee if they can write off any claim they will. It costs the medical billing company less but the medical provider more in lost revenue.
The best solution to all this is a hybrid fee structure of both models fixed fee and a percentage of collection. By this model medical practice can get economical AR clean-up and medical billing companies will resolve smaller claims to collect the incentive for every single claim that can be turned into revenue for the medical practice.
A suitable configuration of incentives between the medical practice and the medical billing company cleaning up the old AR is serious. A great pricing model with the mixture of both fee structure provides the best overall results for the practice.