14 Steps How To Calculate Medical Billing Costs

(doylc.com) How to Calculate Medical Billing Costs - Medical billing can be a complicated and expensive process. Calculating the cost of your medical billing requires a thorough knowledge of your doctor's office, its revenue, employee payroll, equipment costs, and other factors. However, if you can accurately calculate your medical billing costs, you can determine how efficient your practice is, how you can improve it, and whether or not using a third-party billing service would be beneficial.

• How to calculation of billing costs

1. Consider the factors that contribute to your billing costs. To truly understand all of the factors that contribute to your medical billing expenses, you need to examine all of the components and steps involved in billing. Create a list of these components and costs using a spreadsheet, database, or other method.

2. Use a billing calculator to help. If you're trying to calculate your medical billing expenses quickly, or don't have staff support to help you, you can use one or more online billing calculators. Here you can enter values ​​for preset billing cost categories (e.g. monthly sales, software costs, etc.) and then sum them up.

The benefit of billing calculators is that they can give you a quick estimate of your medical billing expenses. However, you may not have entries for all expense categories relevant to your medical billing. For the most accurate cost estimate possible, you should check the calculations yourself.

3. Enter the number of doctors in your practice. While this isn't a cost per se, consider how many people are involved in creating and receiving invoices. This information can help you create more efficient billing practices after reviewing your costs.

Determine your yearly or monthly exercise needs. That's the amount your practice charges each year or month - what it would ideally charge for services. The decision to look at this amount monthly or annually depends on your preferences and accounting practices.

4. Check the revenue your practice is making per month or year. This is the actual amount collected from paid invoices in a given period, which may be equal to or less than the amount due.

5. Compare these values. Express the income received as a percentage of practice requirements. This gives you a useful number to consider when calculating your billing costs. For example, if your practice has a claim amount of $1,000,000 in one month, but revenue for the same time is $800,000, the revenue received is 80% of the claim ($800,000 is 80% of $1,000. 000 US dollars).

6. Learn how payroll employees are compensated. One of the main costs in medical billing is the amount paid to employees who work on billing and processing claims.

Multiply the hourly rate paid to billing employees by their annual (or monthly) hours worked. This number is essentially your billing staff salaries, which likely make up a large portion of your medical billing expenses.

If your payroll clerks aren't paid by the hour, find out the total salaries paid.

Determine the cost of the services. Many employers contribute to the cost of social benefits (health, dental, life insurance, etc.). While these contributions aren't necessarily part of salary, you should still factor them into the total cost of employee compensation.

Do not forget to take into account the taxes paid for employees.

7. Calculate the cost of training and sales. Training new employees in the medical billing processes and training existing employees requires time and financial resources. Because of this, you can factor training into your overall medical billing costs.

Also consider the time spent on mentoring, coaching, training, supervision, etc. Since this is a use of the employee's paid time, this should be considered medical billing.

8. Determine the software and equipment costs. Depending on your system, you can use computers, software, technical support, etc. for medical billing. The amount spent on initial purchases, maintenance, and support for these resources should be considered when calculating your medical billing costs.

9. Estimate other costs. Don't forget to factor in the often overlooked but necessary costs of billing procedures. This can include costs for postage, stationery, telephone etc.

10. Include the cost of contracted services to facilitate billing. If you use a billing service or other contractor to assist in all or part of your billing, you must take this into account when calculating your billing costs. If you already use a service to handle your medical bills for you, this will likely be your main expense.

11. Find out the total monthly billing costs. Once you have identified all of the factors involved in your medical billing processes, add up their costs. If you list the monthly costs of these factors, the sum equals your monthly medical bill costs. When listing the annual cost of the factors, simply divide by 12 to get the monthly cost. For example:

Your monthly invoice demands are $1,000,000.

Her practice has sales of $800,000 per month (80% of accounts receivable).

Your billing workers will be paid a total of $160,000 per month, including benefits.

They spend an estimated $10,000 a month on training and supervision.

When you factor in the initial cost and service/maintenance, you spend an estimated $5,000 a month on computers, software, and other equipment.

Your other expenses average $1000 per month.

The total monthly cost of your medical bill is $176,000 ($160,000 + $10,000 + $5,000 + $1000 = $176,000).

The remainder of your monthly income is $624,000 ($800,000 - $176,000 = $624,000).

• Reassessment of costs

12. Compare the cost of doing your own billing versus using a billing service. There are a number of third party services that will handle medical billing for you. This can streamline the process and, in many cases, make it less costly. To determine if using a billing service would be cost effective, contact one for a quote. Compare this quote to the medical billing estimate you have calculated to determine if it is more or less expensive to use a billing service rather than managing your own billing. For example:

If your medical billing expenses are $176,000 per month and a service charges you a monthly billing fee of $120,000, then it is more financially beneficial to use the service.

If you're able to reduce your expenses (e.g., by finding a cheaper Benefits plan) and your total medical billing expenses fall below $120,000, it's more financially beneficial to do the billing in-house.

If your medical billing expenses are $176,000 per month and a service charges you a monthly billing fee of $180,000, you're better off financially if your practice handles the billing itself.

13. Consider other situations where using a billing service might be beneficial. While cost may be your primary concern when deciding whether or not to use a billing service, there are less tangible factors to consider. Consider:

Is your billing process efficient? Billing services can sometimes generate revenue faster than internal billing, but not always. You may also be able to find ways to improve the efficiency of your internal billing.

Do you have a high staff turnover? The time spent training employees can be significant, and if you frequently need to train new employees, a billing service can save you some headaches.

Are you technically savvy? Modern billing practices rely on complex technology. If using billing software and other necessities isn't your forte, there may be benefits to using a billing service. Alternatively, you can hire someone with technical support, information technology, or medical informatics training as an in-house specialist.

Are you a new provider? If you are just getting your practice off the ground, hiring a service to handle billing can be helpful. This gives you more time and energy to grow your practice and later switch to in-house billing when it becomes more cost-effective.

What are your priorities? Some doctors prefer to focus on working with patients rather than billing, so hiring a service can be a good idea. On the other hand, some want to know exactly how their practice works and therefore prefer to do their own accounting.

14. Check whether a different fee system would be cheaper. Sometimes medical bill costs can be reduced by using a different fee system. Billing services charge fees in a variety of ways; Some contractors offer more than one plan. You may also be able to negotiate fees with the billing service provider. Common fee systems are:

A percentage fee system. Billing Services are paid at a percentage of the amount collected once it has been collected.

A flat rate system. A standard fee is charged for every claim, regardless of its size.

Combination prices. Certain claims are billed as a lump sum, others as a percentage. The nature of the fee for each claim depends on factors such as the individual insurer or patient.

A sliding scale. Receivables are charged different fees depending on the amount collected. For example, a flat or low fee may be charged for smaller claims, while a higher fee may be charged for larger claims.