The Compliance Questions Percentage-Based Billing Raises

Percentage of collections is how most billing companies charge, including us in most states. It is worth being direct about what it raises.

The state layer

Several states restrict or prohibit compensating a billing company as a percentage of collections, under fee-splitting provisions. A few attach criminal penalties. Others permit it subject to conditions. And some address Medicaid dollars specifically.

This is why a national billing company quoting one rate everywhere has either not looked or is relying on you not to.

The incentive question

The sharper issue is what happens when the same party assigns the codes and is paid a share of what those codes collect. The incentive to lean toward the better-paying interpretation is structural rather than hypothetical, and it does not depend on anyone behaving badly.

The honest responses are procedural rather than reassuring:

• A documented query process, so ambiguous documentation goes back to the provider rather than being resolved by the coder.
• Coding priced separately from the percentage, which removes the link entirely.
• No copy anywhere promising a revenue outcome — because a promise like that is the incentive stated out loud.
• Coding distribution reviewed against peers, by the practice, periodically.

What to ask any vendor

Does your fee change with what you collect, and do you also assign the codes? If both are yes, what stops the second from serving the first? A vendor without a concrete answer has not thought about it, and the absence of an answer is itself informative.

We take the questions seriously because we are on the wrong side of them by default — we code, and we are usually paid a percentage. The safeguards are the point.