A percentage-of-collections fee usually covers the Medical Billing and RCM work a vendor performs to turn submitted charges into collected revenue. The exact scope depends on the contract, so practices should confirm whether coding, claim submission, denials, Payment Posting, A/R follow-up, patient billing, and reporting are included or billed separately.
What Does the Percentage Usually Cover?
In a full-service arrangement, the fee may cover several stages of the revenue cycle:
- Medical Coding and charge review: Applying appropriate CPT and ICD-10 codes based on provider documentation.
- Eligibility Verification: Checking insurance coverage and benefits before services when included in the workflow.
- Claim Submission: Preparing, scrubbing, and electronically submitting claims through the clearinghouse.
- Claim Denials: Investigating rejections and denials, correcting claims, and pursuing appropriate payer follow-up or appeals.
- Payment Posting: Posting insurance and patient payments, contractual adjustments, and other transactions while reconciling remittance information.
- AR Management: Following up on unpaid and underpaid claims and working aging balances.
- Reporting: Providing agreed financial and RCM reports so the practice can monitor collections and outstanding A/R.
For example, an orthopedic practice may expect the percentage fee to cover claim submission, payer follow-up, denial resolution, and A/R work after surgery claims are submitted. However, specialty-specific coding or authorization work may have separate terms.
What Should You Check for Extra Charges?
Do not judge a billing contract solely by its collection percentage. Ask whether the agreement separately charges for:
- Credentialing and payer enrollment
- Startup or data migration
- EHR or clearinghouse costs
- Prior Authorization
- Specialty Medical Coding
- Patient statements or payment processing
- Pre-existing A/R recovery
The contract should also define what counts as a collection, which payer and patient payments are included, and when the vendor’s percentage is calculated.
The Medicator’s can help practices review their medical billing services requirements and establish a transparent RCM scope before outsourcing.
