How does anyone make any money doing electronic medical billing? Seriously.
Consider. Every claim for insurance reimbursement starts as a piece of paper containing the patient's personal data and the particulars of the insurance company, the diagnosis and the procedures. If it's a paper claim and the piece of paper is a Form 1500 you can just stick it in the mail and wait for payment or rejection. A practice does not really need an outside biller to do that.
But if the claim is to be filed electronically it gets complicated.
The biller needs a computer, Internet connection, access to a clearinghouse and special (and expensive) software. Then each and every claim must be hand typed to transfer all the information on the piece of paper into the computer. This must be done most carefully or the claim will be rejected for one mistype or another, which can be very hard to detect and correct.
The simple act of typing information from a hard copy into a computer for a single claim can easily take five minutes. At that rate, the maximum number of claims that can be filed in an hour is twelve; in eight hours, ninety-six.(That's not far off the number of patients a practice might see in a week.)
That's if the hard copy is absolutely clean, all required information recorded and no ambiguities. But the hard copy is usually handwritten, often missing information, sometimes impossible to decipher and requiring a lot of mucking around to come up with the correct and complete information. This raises havoc with hourly throughput. So do the occasional timeouts of the software and clearing house.
Assume that actual throughput is seventy claims per day. Weekly output is 350 claims. Maximum per person. Time out for lunch, stretching, rubbing eyes, etc. Also have to deal with filing and record keeping, invoices, deadbeats and other chores such as billing patients that the practice asks you to manage.
Assume you are a set fee biller, not a percentage biller. Assume $4 per claim filed. That comes to $1,400 gross weekly income. At least fifty percent of that goes to overhead leaving a net income of $700 or about $33,600 per year. That's not big money. And if you have to hire people to help run the business it gets to be even less money.
A major factor is this: there are no economies of scale. The 350th claim filed is just as much trouble and the same costs as the first claim filed. Which makes me wonder how some billers I have seen manage a graduated pricing model with lower prices for higher numbers.
And of course we are assuming at the start that we actually have five practices each of which generates seventy clean claims a week. Those trouble-free and ample practices are extremely hard to come by.
I would welcome any comment, especially any that shows me to be wrong and why.