Medical Billing

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psychotherapy billing services

How Much Should I Charge For Psychotherapy Billing Services?

Providing billing services in healthcare is easy until you have to decide your charges. In this competitive landscape, other billing providers have varied rates. It becomes even more difficult to find a balancing yet profitable rate for your psychotherapy billing services.

But today we are going to solve your biggest confusion regarding how much charges you should offer for your services. 

We will list all the services with the cost you will have to bear so that you can analyze how much more to charge to have some return as well. 

Read our guide till the end to offer the most perfect therapist billing services charges.

Understanding the Healthcare Billing Market

a stethoscope

Before working on your charges, it is a good idea to observe what market rate has been going on. This will help you offer a minimal cost while not being too expensive. 

Since the healthcare business you will get is based on how many clients you attract, you must design a pricing structure that fits best to all-sized psychotherapy facilities. 

Let’s see what current psychotherapy billing services are offering to the healthcare institutions:

Percentage of Collections

Many service providers prefer to charge a certain percentage of the total revenue generated. This can range from 5% to 10% of the revenue coming from both patients and insurance companies. 

Monthly Fee

Some providers also charge a fixed fee per month. Normal therapist billing services fees range from $500 to $1500, depending on the facility’s size and the number of claims filed.

Per-claim Fee

One last common pricing structure is fees per claim. Many service providers charge fees per every claim that is processed but a few also charge only for the paid claims. Charges may range from $3 to $5 per claim.

Analyzing Costs for Each Therapist Billing Services

money and stethoscope

After having a look at what your competitors are charging, you must analyze each billing service individually. Through this assessment, you will realize how much each service gets your resources. This will guide your fee structures for psychotherapy billing services.

Software and Technology Costs

  • Billing Software

All your operations are based on billing software, which will help in processing claims, tracking payments, and managing patient accounts.

Subscription fees for any billing software range from $100 to $500 per month, depending on the users and features.

  • EHR Systems

If you want to offer electronic health record systems too in your package, it should cost typically between $200 to $700 per provider per month.

  • Data Security

One thing you must implement while providing psychotherapy billing services is patient data security. Handling crucial patient data is an essential offering because if you don’t comply with HIPAA security laws, you will have to face legal consequences.

Total costs for data security measures and complying with regulations can range from $50 to $200 per month.

As a Service Provider You Must be Aware of Crucial Billing Operations

Labor Costs

  • Salaries for Billing Specialist

You will surely have a staff handling therapist billing services operations. So depending on their experience and your geographical location, an individual billing specialist’s average earning ranges from $35,000 to $60,000 per year.

  • Training and Development

Billing staff needs ongoing training to stay updated with the latest coding updates and techniques for effective billing handling. You must conduct an annual training program which will cost between $500 to $2,000 per year per employee.

Office and Administrative Expenses

  • Office Space

Most of the psychotherapy billing services run their operations through a physical office, so you must pay rent and other utility bills. These costs may vary depending on the physical location, but they may range anywhere between $500 to $2,500.

  • Office Supplies and Equipment

Computer, printer, telephone, and other general office item costs should also be considered. It will usually range from $1,000 to $5,000 per year.

How Much To Charge For Psychotherapy Billing Services: Calculating Your Rate

person calculating cost

Now after having an estimate of every single item that you will utilize to provide your billing services, let’s do a detailed calculation to give you an idea of how much to charge for your services.

Though we are doing these calculations based on the average costs at hand, your costs can be a little divergent but close to what we count.

Step 1: Identify Your Costs

First, select the elements that come under direct costs. Some of you might not include 2-3 options like if you don’t want an office then you might deduct that cost. List all the costs in yearly format to see total expenses per year.

Step 2: Calculate Monthly Costs

For each, divide the yearly costs by 12 to find out the average monthly costs. I.e:

  • Billing Software: $300 per month
  • EHR Systems: $450 per month
  • Data Security: $125 per month
  • Billing Specialists’ Salaries: $47,500 per year ($3,958 per month)
  • Training and Development: $1,250 per year ($104 per month)
  • Office Space: $1,500 per month
  • Office Supplies and Equipment: $3,000 per year ($250 per month)

Let’s add them all:

300 + 450 + 125 + 3958 + 104 + 1500 + 250 = 6687

Thus, your total monthly costs are around $6,687 if you consider all these aspects.

Step 3: Determine The Number Of Clients

Here you must identify a maximum number of clients or psychotherapy billing practices you can cater to easily. Don’t be greedy otherwise work overflow will result in declined performance only. So you must find out how much you can handle in a span of a month.

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    Step 4: Calculate The Cost Per Client

    Now divide the total monthly psychotherapy billing services costs by the number of clients to find out the average cost per client:

    Let’s say you are managing 10 clients at a time:

    6687 ÷ 10 = 668.70

    So your billing services cost per client per month would be approx $669.

    Step 5: Add A Profit Margin

    You would surely want to earn a substantial profit, so you must add a reasonable margin to the monthly cost per client.

    In the service industry, the usual profit margin rate ranges from 20% to 30%. Let’s use an average 25% margin for our calculation:

    669 × 1.25 = 836.25

    Final charges: Therefore after the entire calculation, you should charge for therapist billing services a direct cost of $836 per client per month.

    Your Billing Service Blueprint

    If you are up to providing psychotherapy billing services, this guide will serve as a starting point. From having the average expenses of your services at hand to calculating the final charges, we have made your work easier.

    Since you know the methods of how to count billing service costs, modify our costs and calculations based on what expenses you have to bear and get a quick estimate for your offerings.