Margins are tight — every dollar counts in the medical billing industry. According to Tebra's State of the US Medical Billing Industry Report, 26% of medical billing companies expected margins to be above 20% in 2023 — which was a significant drop from the 34% in 2022.
Per claim. Many medical billing companies charge per claim processed, whether it's collected or not. This amount can vary but usually lies between $3 to $10 per claim. The local market often determines rates.
Percentage-Based: The billing company charges a certain percentage of your monthly collections. This fee usually ranges from 4% to 9%, depending on various factors like the volume of claims and the specialty of the medical practice.
As with all billing indicators, performance will be influenced by payer mix and specialty. The level of automation in your practice's billing and collections process also plays a factor. The Medical Group Management Association (MGMA) recommends a net collection of 95% or higher.
The benchmark varies depending on the size and complexity of the organization, as well as the type of services provided. For example, a small physician practice may have a benchmark of 10-15 claims processed per hour, while a large hospital system may have a benchmark of 25-30 claims processed per hour.
What percentage do most medical billing companies charge? Most medical billing companies typically charge a percentage of the total collections received on behalf of a practice. This percentage usually ranges from 5% to 10%, depending on factors such as the complexity of services and the volume of claims processed.
The billing rate is a key indicator that shows what proportion of employees' working hours are spent on billable client work. It is measured in percentage and can be used at the company level, departmental level, and individual level.
Charge amount: Charge amounts are the fees that a healthcare provider charges to its patients for services rendered. They are usually paid in advance and are not refundable, unlike co-pays. Pricing strategy: Healthcare providers use different pricing strategies to determine how they want to price their services.
Hospitals are fast-paced work environments that require medical coders to be efficient and accurate in their coding. According to a study published in the Journal of AHIMA, medical coders in hospital settings can code an average of 60-80 cases per day, depending on their experience and workload.
Case-rate methodology is a reimbursement approach in healthcare RCM where a fixed payment is made for a specific medical condition or procedure, regardless of actual costs incurred.
Medical billing services typically make money by charging a percentage of the money they collect on behalf of their clients.
Owner-operators earn an average of $150k – $250k yearly over the first three years. Business owners who manage a small team of around 5 members can earn up to $500k per year after a few years in operation. You can find more income projections for medical billing services here to help you explore this opportunity.
Calculation: revenue - cost = gross profit ÷ revenue x 100 = margin. For example, if your revenue on a given project is currently $54,000 and your costs are $46,000 your exact margin will be 14.8%. Example calculation: 54,000 - 46,000 = 8,000 ÷ 54,000 x 100 = 14.8%.
Of course, they want to organize medical bills. Medical billing companies make the process of paying for medical services easier. They work as a waypoint between doctor, patient, and an insurance company. According to Grand View Research, Medical billing is a profitable industry for investment.
Some charge a flat fee per claim, often in the range of $4 to $7 per claim. Less commonly, some bill hourly rates, often $20 to $30 per hour for the work. The typical range that most practices can expect to pay medical billing services is between 4% to 10% of total collections.
A book-to-bill ratio greater than 1 is typically considered to be a good sign of high demand in an industry.
The hourly billing rate is the amount you charge to your clients per hour of work put in to complete their projects. To bill your clients by the hour, you need to track every employee's working hour spent on the project, including everyday tasks related to the project's completion.
According to 2023 data, 63 percent of medical records specialists work remotely. Historically, remote coding and billing opportunities were reserved for only the most experienced employees. Before 2020, medical records specialists working remotely held at 30 to 33 percent, according to AAPC's annual salary reports.
Percentage of Collections
The percentage can vary, but it's typically around 4% to 10% of the total amount collected. For example, if a medical practice collects $100,000 in a month, the medical billing company may charge $4,000 to $10,000 as their fee.
The bill rate covers the worker's pay plus taxes, insurance, and administrative expenses. It also includes a markup to make sure the staffing agency makes a profit. To find out how much hiring a contract worker will cost, you simply multiply the bill rate by the number of hours the worker will be on the job.
The general rule is that a single medical biller should be able to complete about 10,000 claims per year. Take for example, one medical doctor will bill $2m in charges annually and collect 50% on average (depending on your fee schedule) which is $1m in actual revenue.
What Are Medical Billing KPIs? Key Performance Indicators, or KPIs, are metrics used to track performance. Medical billing KPIs measure your practice's revenue cycle performance. Tracking medical billing metrics over time can help your practice improve efficiency and increase revenue.