Orthopedic billing companies usually charge in one of three ways: a percentage of what they collect, a fee per claim, or a flat monthly fee. Your price depends on surgical volume, payer mix, workers’ comp share, whether you own a surgery center and how much old AR needs work. The best way to compare is total cost against what each vendor collects for you.
What pricing models do orthopedic billing companies use?
Most quotes you receive will use one of these models, or a mix of them.
|
Pricing model |
How it works |
Works best when |
Watch for |
|
Percentage of collections |
Vendor keeps a share of what it collects |
You want the vendor paid only when you are paid |
What counts as “collections” and what is excluded |
|
Per-claim fee |
A set fee for each claim submitted |
Claim volume is steady and predictable |
Extra fees for denials, appeals and resubmissions |
|
Flat monthly fee |
One fixed price each month |
Volume and payer mix are stable |
Caps on claims or providers and overage charges |
|
Hybrid |
A base fee plus a smaller percentage |
You want predictable cost with some incentive |
Two sets of terms to read carefully |
Many orthopedic practices choose percentage pricing because it ties the vendor’s income to your collections. The federal Office of Inspector General has noted a longstanding concern that percentage arrangements can raise the risk of upcoding, in its Compliance Program Guidance for Third-Party Medical Billing Companies. That doesn’t make percentage pricing a bad choice. It does make it fair to ask any vendor how they audit coding and keep claims compliant.
What drives the cost of orthopedic billing?
Two orthopedic practices with the same number of surgeons can get very different quotes. These are the factors that move the price most:
- Surgical volume and complexity. Surgical claims take more coding time and draw more payer review than office visits.
- Payer mix. Workers’ comp and auto claims need more follow-up than most commercial claims, so a practice with heavy comp volume costs more to bill well.
- Surgery center ownership. If your group owns an ASC, facility billing adds a second set of claims, contracts and edits.
- Number of providers and locations. More providers means more credentialing, more enrollment and more claims.
- Existing AR backlog. Cleaning up old AR is real work. Some vendors include it and some charge for it separately.
- Your systems. The EHR and practice management system you use can affect setup time and cost.
What should be included in the price?
A low quote can turn expensive if key services are billed as extras. When you compare quotes, check whether each one includes:
- Coding by certified coders, including surgical and modifier review.
- Charge entry, claim submission and payment posting.
- Denial management and appeals.
- Workers’ comp and auto claim follow-up.
- Surgery center facility billing, if you need it.
- Credentialing and payer enrollment.
- Patient statements and patient billing calls.
- Monthly reporting on denials, AR and collections.
- Work on your existing AR when you switch.
If a service is not in writing, assume it is not included.
The rate is only one line of the contract. Read the rest before you sign:
- Setup or onboarding fees. Some are reasonable. Ask what they cover.
- Minimum monthly fees. These can matter a lot for a new or small practice.
- Old AR fees. Some vendors charge a higher percentage on claims older than a set age.
- Term and termination. Check how long the contract runs, how much notice you must give and who works your AR after you leave.
- Data ownership. Make sure you can get a full export of your claims and reports at any time.
Our guide to 10 ways to reduce your medical billing company costs covers more places where fees add up.
How do you compare the real cost of two billing quotes?
The number to compare is net revenue after the billing fee. A vendor with a lower rate can still cost you more if it collects less.
Here is a simple example with round numbers. Say your practice could collect $500,000 a month. Vendor A charges a lower rate but collects 92% of it, or $460,000. Vendor B charges a slightly higher rate and collects 97%, or $485,000. That five-point difference is $25,000 a month in collections, which is often far larger than the difference between the two fees. Run your own numbers the same way before you decide.
The collection rate matters because it is hard to see from the outside. Ask each vendor for their net collection rate, days in AR and denial rate for orthopedic clients, and ask for references who can confirm them.
Is outsourcing orthopedic billing cheaper than keeping it in-house?
It depends on your size and how well your current team is performing. In-house billing costs include salaries, benefits, training, software, clearinghouse fees and the cost of covering turnover. For orthopedics, it also includes keeping coders current on surgical coding rules and payer edits. Our post on in-house vs. outsourced medical billing walks through the full comparison, and our general guide to what medical billing services cost covers pricing across specialties.
What did better billing change for one orthopedic practice?
Orthopedic Specialists of Massachusetts moved its billing to Medical Healthcare Solutions, Inc. (MHS). Net collection rose from 92% to 97%, standard days in AR dropped from 36 to 29, workers’ comp days in AR fell from 58 to 46, and bad debt fell from 2.5% to 1.9%. The practice added about $113,000 a month in collections. See the full orthopedic practice case study.
How does MHS price orthopedic billing?
MHS, based in Andover, Massachusetts, prices each practice after looking at its actual numbers. We review your AR, denials, payer mix and surgical volume first, then give you a quote that reflects the work involved. You can learn more about our orthopedic medical billing services and how we handle surgical, comp and surgery center claims.
Frequently asked questions
How much does orthopedic billing cost?
It depends on the pricing model and your practice. Most orthopedic billing companies charge a percentage of collections, a fee per claim or a flat monthly fee, and the price moves with surgical volume, payer mix, workers’ comp share, surgery center ownership and AR backlog.
Is percentage-of-collections pricing a good choice for orthopedics?
It can be. It ties the vendor’s pay to what you collect. Ask exactly what counts as collections and how the vendor audits coding.
Why do orthopedic billing quotes vary so much?
Quotes vary because orthopedic practices vary. Surgical volume, workers’ comp and auto claims, surgery center billing, number of providers and old AR all change the amount of work involved.
How do I compare two orthopedic billing quotes?
Compare net revenue after fees, not the rate alone. Ask each vendor for their net collection rate, days in AR and denial rate for orthopedic clients, and confirm what is included in writing.
Want a quote based on your real numbers instead of a guess? Get Pricing & Analysis and MHS will review your claims, AR and payer mix, then send pricing that fits your practice.
