A Beginner’s Guide to different types of Medical Billing 

Touseef Riaz

September 29, 2022

types of medical billing

When you’re looking to start a medical billing practice, it can be challenging to know where to begin. You’ve probably heard of different types of medical billing and may even have an idea of what each one entails, but how do you know which is suitable for your needs? In this guide, we’ll cover the most common types of billing, including fee-for-service (FFS), capitation, and pay-for-performance (PFP). 

types of medical billing

Choosing the Right Type of Billing:

Choosing a billing type can be overwhelming, but you must choose the right one for your practice. If you don’t know what type of billing is best for your practice, then it might be best to leave this decision until after we’ve finished discussing it. There are different types of billing.

Fee-for-Service:

Fee-for-service billing is the most common form of medical billing, and it’s also the simplest. You’re paid a set fee for each service you perform, so you don’t have to worry about how much time it takes or whether your patient will follow up with another appointment.

The downside of these types of medical billing is that some patients may be reluctant to pay their bills because they don’t recognize themselves as “customers.” Instead, they may think of their doctor as more like an employee than someone who should be paid directly by their medical insurer.

Retainer or per-visit:

It is the other common form of direct billing. In this type of billing, you’re paid a set amount each month, which allows you to perform any number of services at your discretion. The downside is that it’s hard for patients to predict how much they’ll pay and how often they’ll need to see you for follow-up consultations.

Private pay or cash-only: 

It is a standard type of medical billing, especially for dentists and other medical professionals who want to be paid directly by their patients. However, most insurers won’t reimburse you for services provided under this arrangement unless there’s some emergency that requires immediate attention.

Capitation:

Capitation is a billing method in which a third-party payer pays for the care of its patients. It’s typically used when there are no costs associated with providing care, so you’re reimbursed for each visit as if it were an independent patient.

Moreover, medical billing services work best for large group practices or health systems with many providers working together on one case (or “panel”). This makes it easier to manage your expenses because all of your services are tracked through one system and billed using the same rate at which they were performed. So, if you want to offer capitation services but don’t currently have any hospital staff members who qualify as “physicians,” consider partnering with someone who does. 

Pay for Performance:

Pay for Performance differs from other types because it focuses on quantity and quality. So it’s not just about checking off the right boxes but also ensuring that your care is high quality. The idea behind P4P is that if you’re rewarded for getting things right, you’ll be more likely to do so and less likely to cut corners or overlook minor problems. In short, its goal is to motivate physicians, hospitals, and other providers to improve the quality of healthcare services they provide. Moreover, it has been found that P4P programs have led to significant reductions in Medicare as they help in improving patient safety and clinical outcomes.

Combination billing:

Combination billing is another form of medical billing. It is a combination of fee-for-service types of medical billing and capitation. It’s an option for practices with a mix of patients who pay out of pocket and are on insurance and those who don’t charge fees.

The upside to this model is you’re likely to receive payment from both sources: your patient (who pays) and their insurer (who pays). The downside? It can be challenging to anticipate what kind of payment you’ll receive because it depends on many factors. For instance, how much the patient owes? Similarly, how many procedures they visit each month, etc. Therefore, it’s essential to look at one number and consider other factors when deciding whether or not this type of billing might work for you.

How to choose the right type of billing? 

The right type of billing highly depends on the kind of practice you have. For instance: 

  • If there are many patients in your practice, then insurance carriers will be more likely to reimburse for services provided by an in-house medical billing company.
  • If your practice is small and doesn’t accept insurance, it may be better to outsource all or part of your medical billing duties to an outside service provider.

In short, it may be better to outsource your medical coding services duties if you’re a physician just starting. However, if you’re in the middle of building a practice and don’t have time to get up to speed on medical billing, then it makes sense to hire an outside firm. So, they will help you to handle your billing needs.

Here are further benefits of hiring these types of medical billing services from a professional billing company. For instance: 

  • Creating and updating accounts receivable records.
  • Creating and updating accounts payable records.
  • Preparing invoices for clients using software or manual systems.
  • Invoicing clients for services rendered based on approved codes from third-party vendors.
  • Processing claims from clients for payment by insurance companies.

How do medical billing companies work?


Medical billing companies are very different from typical billers. They specialize in coding and auditing and offer additional services such as claim processing or analytics. So, these companies work with physicians, hospitals, and other healthcare providers to help collect payment for services rendered. They also help organizations meet the federal and state regulations that govern medicine.

The trend of these companies has become more diverse with new technologies such as electronic health records (EHRs). So, these records allow physicians and other healthcare professionals to record patient information electronically instead of paper records which can take up valuable space in hospitals and other facilities where they are stored. Additionally, these companies offer a wide range of services, including:

  • Medical coding and coding software
  • Healthcare consulting
  • Medical billing services

Conclusion:

If you’re just starting medical billing, it can be hard to decide what billing is suitable for your practice. Many options are available when choosing the right type of medical billing and paying for services. You must understand these before deciding which type of billing you want to use in your practice. As you know, medical billing services are not the same. Therefore, you need to consider the cost, the pricing, and how qualified the medical billing company is in assisting you with medical billing. Moreover, you also need to look at their reputation and what other clients of theirs say about them. However, you will not get the best billing service for your money if you do not know what features and traits do an excellent medical service. 

In addition, if you are the owner, you must consider all possible variables when deciding upon an appropriate billing structure because this affects you significantly. For instance, how much money was generated through patient transactions, influencing overall profitability levels over time? 

So, if you seek an excellent company that can provide you with services to control your medical billing. In that case, U Control billing is the company to call for hiring different types of medical billing. The services they offer are simple to comprehend and comprehensive. Moreover, they provide exceptional customer service, and their representatives are always willing to help. 


Frequently Asked Questions (FAQs)

  • What is medical billing?

Medical billing is the practice of preparing and submitting insurance claims to payers. It is an integral part of the healthcare industry but requires specialized knowledge and skills. Moreover, it also involves collecting fees from patients for services and supplies provided by physicians, hospitals, and other healthcare providers. So, before taking its services, you should always pick the right type for yourself. 

  • How does medical billing work?

The complicated procedure of medical billing requires many different steps. The steps include in various types of medical billing:

1) Determining what services were performed on the patient

2) Verifying that all of the necessary information is available for billing purposes

3) Preparing an invoice or claim form detailing what was done and how much it cost

4) Filing claims online with your insurance company, Medicare, Medicaid, or another third-party payer (such as an employer)

5) Receiving payment from your insurance company, Medicare, Medicaid, or other third-party payers (such as an employer).

  • What comes under medical billing?

Under the medical billing process, several steps are involved. For instance, it includes coding and billing, collecting payments, reporting to insurance companies, and communicating with patients. Moreover, several different types of medical billing are available; choose the one that goes with your practice. In short, this is complicated because it requires knowledge of both medical terminology and coding systems.

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