Category Archives: Business

What Is Medical Billing?

Medical Billing has turned around in a big way nowadays. There was a time when the patient used to go to doctor, get the treatment for any ailment and pay the doctor’s bill. Until few years back, medical insurance was significantly complicated; it was a rare event, the doctor had to raise the paper bill towards his treatment charges and submit it to the private, Medicare or Medicaid insurance provider. We are much aware of the fact that such paper bills could get lost very easily. Anyways, those days are history now, yet there are a few doctors who still believe in the orthodox procedures and use paper bills for their treatment charges. Most of the doctors have today started using the latest technologies and begun raising electronic Medical Bills to their patients for the treatments provided by them.

Electronic Medical Billing is a paperless billing process; wherein the bill is printed out after making the entries related to the patient’s treatment in the computer system and handed over to the patient by his doctor. Such electronic Medical Billing incorporates all the related information like, the insurance provider’s data, your detailed treatment charges, medicines and other incidental expenses incurred by the clinic while extending your treatments. All these information are essential for claiming the medical expenses incurred by the clinic, from the patient’s medical insurance providers.

The electronic Medical Billing is usually prepared by entering all the necessary data in the computer system with the help of the specialized Medical Billing software program and the fed information is then electronically submitted to the carrier by means of a device called a modem. The modem is such an electronic device that uses the telephone line for transmitting the received information just like that of a fax machine. In the fax machine, a piece of prepared document or the Medical Bill is inserted in the unit. Its copy is electronically prepared and transmitted through the connected telephone line to the remote fax machine held by the insurance provider and prints out the identical copy of the document at that end. But in case of the electronic Medical Billing, there is no requirement of paper at all. The particular information is typed out into the computer system and thereafter the installed software takes those data itself for transmitting them over to the carrier via modem.

Such data are mostly sent in some specific format so that the carrier is able to read the data properly. This sort of typical format is known as NSF format that has been standardized by all such carriers. However, specific computer program is required to be made for each individual carrier as in spite of the standards formats, its not necessary that every carrier uses every field in the format. Due to this when specific fields are transmitted which the carrier is not using, the claim may get rejected by the carrier.

Medical Billing Services: In reality, the Medical Billing Service has to be far more competent and effectual when compared with your own office system. The Medical Billing Services providers should let you and your people highlight on practicing medicines. In Medical Billing Service providing companies like Preferred Health Resources, account executives have the average of 8 years experience in Medical Billing sectors. Due to their knowledge, ability as well as the devoted follow-up, the company has resulted in their adjustment ratios every time as low as merely 12% with the Medicare.

Medical Billing System: There are very few genuinely organized companies providing Medical Billing System service in the United States; like the American Billing Systems. This company in particular is said to have spent hundreds of thousands of dollars for developing and building the latest technology which permits you to process all your medical claims online over the internet through any computers at any time literally 24×7. this is the company holding national license and offers the complete business system to the entrepreneurs. With the help of such license one can really operate his business literally from home offering professional Medical Billing Systems and automated cash-flow management services to the medical providers and general businessmen.

Medical Billing Education: In the common definition, it could be defined that the Medical Billing is the process of sending detailed accounts to the customers or clients for the goods consumed and the medical services provided to him. The document having all such data is better known as the Invoice. The invoices in general describes the accounted amount is receivable or already received by the drawer. Proper education for preparing the Medical Billing is necessary for getting the insurance claim processed well in time.

Medical Billing Companies: There are many companies having specialization in the fields of Medical Billings. Such companies usually offer their valued services for getting you the detailed Medical Billing towards the medical services taken by you during your ailment at a particular clinic or with the doctor. There are some companies like Vision Healthcare who have been serving as much as 38 medical specialties in 40 different states and having expertise in over 15 hospitals as well as Medical Billing systems.

Medical Electronic Billing: The Medical Electronic Billing is widely prepared by entering all the required information to the computer system that has the software program for preparing such Electronic Medical Billings. The latest software developed for such Electronic Medical Billing generally incorporates various features of functions like: tracking the demographics, doctor’s visits and diagnoses of the patients; collecting – transmitting as well as tracking all the billing information and insurance payments; managing the appointment schedules and generating the varieties of detailed reports.

Medical Electronic Specialists: We may find many Medical Electronic Specialists for providing different medical services. The various services offered by such specialists usually include: the fastest reimbursements of your medical claims, billing to the government carriers and inquire for its details, the claims edited for better quality, quality customer services, reduction of the current internal billing costing, complete insurance follow-up, specialty report for doctor’s practice and follow through collection for them who want such services.

There are some more features worth considering in the Medical Billing features like: the Medical Billing Codes, Medical Billing Business and Medical Billing Processes.

Medical Billing Services: Choose the Type That’s Right for Your Practice

Medical billing service providers come in many different shapes and sizes. At one end of the spectrum are large Practice Management Companies, with an extensive network of support but sometimes rigid and expensive. At the other end are small, home-based businesses. With more and more programs offered through local colleges, mail order and online, home-based businesses are popping up everywhere. Somewhere in the middle of these two extremes is what we’ll refer to as Professional Medical Billing Services. When considering your options, it is important to understand what each type of medical billing service provider has to offer and which is best for you. This article discusses these common types of medical billing service providers and some of the services they offer.

Home-Based Medical Billing Businesses vary significantly from one to the next in experience, ability and services offered. Many are small start up businesses with only one or two employees. Some offer extensive experience from previous employment in a doctor’s office, others may have only one or two clients. While these service providers can offer the highest levels of customization, a small, home-based business can sometimes run short of management knowledge and business acumen to be there for the long term. And what happens to practice cash flow when the solo biller decides to take vacation? Most provide the core services of medical billing (discussed later) and many have other personal experience to offer ancillary services.

Practice Management Companies are typically larger firms that may have 100 or more employees. Most true practice management companies take a holistic approach to supporting your practice, in that they seek to handle all facets of managing the business- including medical billing, marketing, staffing, and even patient scheduling. Although some providers might be excited about the opportunity of having a practice management firm take all the “trouble” off their hands, others find it stifling to have someone else running their business. While their offering can be comprehensive, those providers interested in working with a practice management company should read service agreements and contracts carefully to make sure they know exactly how their practices will be “managed.”

Professional Medical Billing Services fall in between the extremes of home-based medical billing businesses and the practice management companies, leveraging the strengths of both and eliminating the weaknesses. With a few dozen employees, Professional Medical Billing Services can offer greater flexibility than a practice management company, but more structure than the home-based service. Clients often find medical billing services have the sustained network of support to eliminate interruptions to cash flow from vacations or unexpected leave time, while simultaneously offering personalized services tailored to meet their needs.

As you consider each type of medical billing company, it’s also important to think about what services you need, which services you can handle in-house, and what expectations you have your medical billing professional. Each of the types mentioned above should be able to offer the following standard services; though service delivery, flexibility and customization can vary widely.

Standard Medical Billing Services
Standard services offered by medical billing companies are generally similar across the range of companies discussed above. There will be variations in the level at which those services are provided. Again, experience and size play a key role in defining where the variations might be. Regardless, the following list identifies the most basic services provided by any well organized medical billing company.

Claim Generation and Submission Claim generation includes entry of patient demographic, insurance and encounter information into medical billing software. Claim submission is the process of sending that data to the carrier, either electronically through a clearinghouse, or via paper submission in the mail. With electronic medical billing, services should apply one or more “scrubbers” to the claims (and manual quality checks to paper claims). Scrubbers are quality assurance checks of diagnosis and procedural codes for errors or mismatches typically integrated into premium medical billing software programs.

Carrier Follow Up Carrier follow-up is an integral part of the medical billing industry- arguably the most important aspect. The quality of a medical billing service is often defined by the level of follow up they apply to claims and will have an enormous effect on reimbursements. Through follow up, medical billing companies are able to isolate those claims that may go unpaid, or partially paid, and work with the provider and carrier to make sure edits and resubmission (if necessary) are clean.

Secondary, Tertiary and Workers’ Comp Claims These special claims usually require special consideration and handling as they often entail additional documentation. Service providers can sometimes get bogged down in the details required for these unique claims if not experienced and prepared.

Practice Reporting and Analysis Reports can be generated through almost any medical billing software, but how often and with what depth will your medical billing service provide these reports? Reports provide critical information about avenues for practice improvement such as directions for growth, cost savings and ways to increase profitability. The importance of reporting cannot be overstated for monitoring the health of the practice. Reports should be provided at least monthly, and experienced medical billing service providers should be able to make recommendations on how the practice can enhance profitability.

Patient Invoicing and Support Patient invoicing is a very detail-oriented process, but if done properly it can significantly enhance practice revenue. Nonetheless, balancing accounts, printing statements, stuffing envelops and applying postage can be very time consuming. And once patient statements are sent, someone will inevitably have a question about their bill. A good medical billing company has the infrastructure to support patient inquiries with customer oriented approach showing they understand their conduct is a reflection of your practice.

Other Services
As most medical billing services are well experienced in the inter-workings of a medical office, other services that may be offered. Some lateral practice services might include the following.

Credentialing Credentialing may be of particular importance to new practices. This process of “signing up” with carriers for the first time can be tedious and overwhelming, especially when just starting out. Credentialing services are also an asset to established practices as another way of growing into new business. Many medical billing companies bring the experience of working with carriers to help make your credentialing painless.

Medical Coding A natural extension of the medical billing service is medical coding. Coding is really the first step of the billing process, preparing the diagnosis and procedural information for entry into the medical billing software.

Transcription With wide experience in the medical practice support field, it is natural for many established medical billing companies to broaden their offering to include transcription services. The familiarity with HIPAA requirements and in-depth knowledge of the insurance industry support this natural addition to practice support services.

HIPAA Compliance The detailed requirements of HIPAA are not limited to healthcare practices, they extend to anyone handling patient information. Medical billing services well versed in the responsibilities outlined by HIPAA often develop programs to assist their clients in maintaining compliance.

Partnership with the right medical billing service is vital to your practice’s success. Just as with finding a good accountant or lawyer to support your practice’s needs, it is imperative you are comfortable with your medical billing service provider- they are the key to your revenue flow. There are many different types of medical billing service providers to choose from, each with its own set of pros and cons. The key is deciding what type of medical billing service provider you are most comfortable with and growing an open working relationship that will help you reach prosperity.

Medical Billing Services: Percentage Vs. Flat Fee Pricing Structures

As the business of running a medical practice becomes more competitive, many practices are turning to a third-party medical billing service for cost effective solutions to maintain maximum profitability. In evaluating any medical billing service agreement there is an array of factors that should be taken into consideration – pricing of services is principal among them. This article compares the two most common pricing approaches offered by medical billing services – Percentage Based Agreements and Flat Fee per Claim – and identifies some of important points to remember when selecting a medical billing service provider.

Percentage Based Agreements:

Probably the most common approach to pricing by medical billing services is the percentage based agreement. In this type of agreement, the medical billing service’s fees to the practice are based on a percentage, usually in one form or another of the following:

Percentage of collections,
Percentage of gross claims submitted by the billing service,
Percentage of total collections for the overall practice.

With the first type above, percentage of collections, the medical billing company charges the practice only on net received for those claims in which it has directly assisted in collections (typically excluding monies collected at the office, such as co-pays, deductibles, etc.). This is the purest example of how a percentage based agreement will tie the medical billing service’s success to the practice while safely limiting it to that which they have some measurable ability to affect. This type of percentage based agreement benefits the practice by its “self-policing” quality- the medical billing service only makes money when the practice makes money.

In our second type, percentage of gross claims submitted by the billing service, the practice is charged a percentage of the total amount submitted to insurance companies and other payers. This can be tricky for two reasons. First, the rate billed to an insurance company is not always the same as the negotiated rate that will be paid. So a seemingly competitive percentage from one medical billing service can be drastically different from another medical billing service depending on where the percentage is applied. Second, some of the incentive mentioned above is removed for follow up on claims as there is no tie-in to the results of medical billing service’s submissions.

With a percentage of the total collections for the overall practice, the billing service charges for the total net received by the practice. It includes co-pays, deductibles, and any other monies collected at the office, not just by the service. This arrangement is most commonly found with full-scale practice management companies who not only handle medical billing but might also administer staffing, scheduling, marketing, fee schedule negotiations, etc. In this arrangement, the medical billing service can be driven by incentive to follow up on claims with payers, but gains some protection to its revenues through the other sources of payment coming into the practice.

Rate Variability within Percentage Agreements:

A medical billing company will consider several variables in defining the rate charged to the practice in a percentage based agreement. Rates can range from as little as 4% to as high as 14% or even 16%! Factors influencing this variability include claim volume and average dollar amount of claims, as well as service considerations like level of follow up performed by the medical billing company, whether or not patient invoices will be sent by the billing company, and many others. Let’s take a look at some examples of how these variables influence medical billing service rates.


Regarding claim volume and dollar amount, let’s consider the example of practice A and practice B. Both are looking for a medical billing service offering claim generation, carrier follow up, patient invoicing and phone support. The average claim for practice A is $1000 and they average of 100 patient encounters per month. Practice B has an average claim of $100 with 1000 encounters per month. While the gross amount billed is the same, the difference is staggering for the billing company who will need to project nearly 10 times the staff hours for practice B to yield the same return as from practice A.


With respect to services offered, let’s consider practice C and practice D. Both practices average around 1000 claims per month, and each claim averages around $100. Now, practice C is looking for a billing service to handle complete claim lifecycle management- carrier follow up, submission to secondary and tertiary insurances, patient invoicing and support, report analysis, etc. Practice D collects patient balances at the office so they don’t require invoicing services, and they plan on doing the carrier follow up themselves. Thus Practice D only requires the medical billing service generate and submit initial claims to carriers, and maybe submit a few secondary claims each month. In this example, the gross claims submitted is roughly the same, but practice C might anticipate a fee significantly higher – potentially double that of practice D – due to the extensive work involved in providing these other support services. (Keep in mind practice D will also need to consider additional staffing to perform these activities in-house, which will most likely not offset the cost of allowing the professional medical billing company to manage the process.)

These two examples clearly demonstrate the basic factors that influence the rates when considering percentage based medical billing services. While there are numerous negotiating points where a practice can save on general costs, they should consider what other costs may arise later to manage the services not provided by the medical billing company.

Pros of Percentage Based Agreements:

Percentage Based Agreements directly tie the success of the billing company to the success of the practice if they based on collections.
Practices can often choose which services they require for potential short term savings.

Cons of Percentage Based Agreements:

Short term savings garnered by keeping some billing activities within the practice can lead to long term costs in additional staffing.
Small claims may not be addressed as vigorously. For example, consider a $5.00 patient invoice with a medical billing service charging 8% on collections. The medical billing service would actually lose money in pursuing the claim. Adding up the cost of postage, envelope and paper, as well as staff time for printing, stuffing and mailing, it would be more than the $0.40 that would ultimately trickle back to the service.

Flat Fee per Claim:

Another common approach to pricing offered by medical billing services is what we’ll call Flat Fee per Claim. With flat fee pricing the medical billing company charges a fixed dollar rate for each claim submitted, regardless of the size of the claim.

Similar to percentage based agreements, flat fee per claim pricing can vary significantly depending on the volume of claims and the extent of services provided. In its most basic form, a fee per claim medical billing service might provide only claim generation and submission services for as little as a dollar or two per claim. In this case it would be the practice’s responsibility to follow up on claims. Of course flat fee per claim pricing can also include other services such as follow up with carriers, patient invoicing, etc. With these additional services, practices might expect costs to increase to $4, $5 or even $7 per claim or more.

Dependent on the practice, the flat fee per claim can be cost effective, but should be considered carefully. Follow up with insurance carriers and the bureaucratic problems should not be overlooked. In some cases, once the medical billing company has submitted a claim, they might make a phone call or two; but they’ve done the submission and the transaction is billable to the practice, regardless of how it’s paid out. Fee per claim pricing doesn’t have the inherent incentive like some types of percentage agreements. Nonetheless, it can be the solution if you have the resources to manage the follow up, or if your familiarity with the medical billing service is strong enough to trust in their follow up.

Pros of Flat Fee per Claim:

Fee per claim pricing has the potential to be more cost effective, particularly on higher priced individual claims.

Cons of Flat Fee per Claim:

If carrier follow up is included with this service, the medical billing company has little incentive once the initial claim has been submitted. Moreover, it can be near impossible to evaluate how rigorously a medical billing service is following up.
If carrier and payer follow up is not included with the service, the practice must manage it in-house. Inevitably, hiring and training new staff or allocating time of existing staff leads to increased overhead, often offsetting the benefits of using a medical billing service in the first place.

Hybrid Approach:

The final example in this discussion is what we’ll call the Hybrid Approach, which takes advantage of percentage based agreements and flat fee per claim approach. Through this pricing method, a medical billing service might apply a percentage to certain insurances and patient balance bills, then apply a fee per claim for others. This approach is usually siloed by carrier or claim type, in that it would use the percentage for all claims to carrier X, and flat fee for all claims to carrier Y.

The hybrid approach has become more common in certain areas of the US over the past several years as some insurances frowned upon percentage based agreements. An example was seen when the state of New York rendered percentage contracts on state Medicaid claims illegal, requiring medical billing services use the flat fee per claim option. The principle concern arises from a few unscrupulous billing services who believe “up-coding”, or submitting false claims for higher priced services, is the easy way to increased profits. While these few services threaten to tarnish the reputation of an entire industry, those bona fide medical billing services seeking long-term growth and profitability clearly realize that small gains won from illegal activities are no way to sustain a successful business.

In short, the hybrid model allows honest billing companies the chance to tie their successes to that of the practice while respecting the concerns of those insurances guided by formal legislation.


When medical providers and practices consider teaming with a medical billing company, they have an array of options. Flat fees per claim may appear more cost effective in the short-term, but the potential for revenue interruption due to poor follow up by the medical billing service provider, or the need to hire and train additional in-house practice staff to handle the follow up on its own, will undermine the initial cost savings to the practice. Agreements based on a percentage of collections are self policing and ensure the medical billing service will pursue reimbursements rigorously.