Costs, Prices and Options for Mental Health Billing
1. First, figure how much money you are spending, and how much money you are losing, by doing
it yourself or paying your own staff.
How much money do you make seeing clients per hour?
How much time do you spend on the phone per month doing insurance related
things that could be done by someone else?
How much time do you spend buying the supplies or maintaining the equipment
or software needed? Buying printer ink? Shredding forms with mistakes, etc?
How much time do you spend reading updates from insurance companies, trying
to keep up with insurance changes related to NPI numbers, HIPAA, etc?
How much time do you spend on hold waiting for insurance company
staff to talk to you?
How much time do you spend training and retraining your own staff?
How much time do you spend on paperwork that could be done by someone
Do you enjoy doing these insurance and billing related
Multiply the hours you are spending by your
rate per hour. This is your cost in lost revenue in terms of your time.
Hourly Rate x Number of Lost Billable Hours per Month = _____________ Lost Revenue
And if you hate doing these tasks and would rather spend two hours doing
therapy than one hour doing them, factor that in, possibly increasing the value of that lost revenue figure by
as much as a multiple of two. If you enjoy doing these tasks, and would rather do them than
therapy, you may choose to reduce the figure above.
2. Second, estimate your lost opportunity cost.
- How many more clients do you estimate you could attract if you spent the time
marketing your practice instead of doing secretarial and billing work?
- How much more networking, public speaking, writing or other activities would you
- Or would you take a walk, meditate, or do other things that would improve your
Consider whether you would have time and energy to market your practice more,
grow your practice more, or create you ideal practice if you didn't have such insurance billing
chores? Nobody can market your practice the way you can, but someone else may well be able to do
insurance billing better than you. And would you have more energy to devote to your practice if you could get
rid of tasks you dislike?
- How many unpaid claims do you have because you have not had the time and
patience to follow-up on them? Be honest with yourself here.
- Are you really spending the time need to follow-up and get the claim paid, or do
you give up because your time is more valuable than the relatively small amount of money you will get to
collect the claim?
- Are you "leaving money on the table?" that a dedicated, detail oriented,
clerical type person who expects to make far less money per hour than you would go after for
- Do your accounts ever get so messed up that it takes you months before you send
a patient a statement, or just write off a balance entirely because you can't figure out how to get it to
- What is your current rate of collections?
Many therapists hate insurance follow-up on rejected claims and avoid doing
it. To them it seems like a small amount of money and not worth the drudgery.
- Do you ever lose money because you fail to keep track of your
Lost Opportunity Cost Estimate = $___________
3. Third, figure your expenses for billing and claim filing.
How much do you pay staff per month, including taxes, worker's comp, etc?
How much do you spend on postage, paper, printer ink, supplies, claim forms, clearinghouse fees, etc?
How much do you spend on software and how much on software maintenance fees?
How much office space and filing space would you gain if you outsourced or used a
telecommuting virtual assistant rather than an in-house employee?
Are there any services you pay for that you would not need if you outsource your billing? Would you be
able to cut back on a phone line or another expense?
Expenses Incurred per Month for billing = $________________
4. Fourth total the three figures
+ Lost Opportunity
+ Expenses incurred
= total cost of billing
5. Get ready to compare prices of outsourcing your billing with what you are currently
doing. When you compare prices you will generally be quoted prices in two ways:
Fee per service or
Percentage of collections
6. Compare prices:
If you do want to take the risk in considering a percentage of collections billing
service, compare prices between fee per service billing companies and percentage of collections billing companies
by first figuring your average month's collections. Then figure how many visits you do in a month, how many
statements you would want a billing company to send out for you, how many visits involve primary insurance, how
many visits involve secondary insurance, and how many new patients you see in a month and what other services you
would want, such as tracking authorizations.
Also pay attention to how a "claim" is defined if it is fee per service. Some
companies count it as a "claim" every time a claim is filed, no matter how many times it is rejected and
refiled. Other companies bill by the "encounter" instead of the claim (i.e. one charge for filing claims for
all the services provided by the provider to the client at one visit.) Some companies allow more than one
code or date of service to be on one claim, others do not.
Pay attention to whether you are billed extra for clearinghouse, postage, or other
services, or whether they are included.
Also pay attention to what set up fees are involved and whether a long term contract
And the most important thing: Follow-up
Follow-up on rejected claims is probably the most important factor to look for in a billing
company. According to Sherry Marchand, billing consultant and trainer for Cross
Country Education's "Coding and Billing for Mental Health Services", lack of follow-up is by far
the most complained about aspect of medical billing, whether it is done in-house or by a billing
service. The quality of follow-up will largely be the factor that determines how much
time and money you will *really* save by using a billing service, and if your rate per hour is
typical of therapists, can make hundreds or thousands of dollars in difference between how much you
really save using a billing service.
Ask your billing service about their policies on follow-up, but beware that there is no really
valid way to compare follow-up until you have tried the service, so be careful about long-term
contracts or high initial set up fees designed to lock you in to remaining with a company with
Percentage of collections type billing companies will often tell you that their follow-up
is better because they get paid based on what you collect. What they don't tell you is that
it is not uncommon for denied claims to cost the company way more to collect on
than what they will earn. The company may have to spend many hours to collect on a $20 claim,
especially when there is a secondary insurance complicating the matter.
The true test of a company's follow-up is their commitment to quality and integrity in following
the policies. Billing companies make their profit on many claims that do not need
follow-up and require little time. The true test of the follow-up of the company is whether
they will follow-up on a claim that will cost them more to follow-up on than they will collect.
Will your biller have a true commitment to follow-up based on their own pride, commitment,
ethics, and caring about you and about quality? Or will they only "go after the low
hanging fruit?" (the money that is easy and most cost effective for them to collect)