There are many ways to create a fee schedule. A simple way is to do a cash rate fee schedule based on your overhead expenses, how many women you are seeing each month, and your goal for profit margin. For instance, the average monthly cost of running a business, including rent, utilities, malpractice insurance, office supplies, baby supplies, birth assistance, employee salaries, and marketing, is about $20,000. With one midwife, a typical home birth practice will see 6–8 births per month with 2 office days a week.
Most midwives want to make around $5–7k a month to live off of. That would mean profits each month of around $25,000. If there were 8 births, each woman would pay for your services roughly $3,200 each ($25k divided by 8 is $3125).
Hybrid Fee Schedule
More common midwifery practices will have a hybrid cash fee schedule with an insurance fee schedule. Any client who doesn’t have insurance or a plan that doesn’t cover a midwife doing home birth can do a cash rate. The rest of the clients would be billed based on services rendered to their insurance plan.
With my practice, I had three fee schedules: Amish/Mennonite cash rate, English cash rate, and insurance processing plan. It is harder to know what to make of your fee schedule with this business model. When creating the business model, have an idea of your area’s market and what ratio of your patients will be under each fee schedule.
For example, if 90% of your patients are Amish, then most of your fee schedule covering business overhead will come from cash processing. If most of your patients are in insurance processing, research needs to be done on what services your practice will be offering and what typical reimbursement insurance plans give in your area. Are you planning on just doing maternity care coding or gynecological services? There are many codes midwives forget about when billing insurance companies: breastfeeding support, childbirth education, labs, labor support, medications, supplies, birth assistants, and more.
In Network vs. Out Network
Are you planning on being in-network versus out of network? That makes a difference in your fee schedule. When choosing to be in the network, insurance plans have a specific contracted rate you can get for each code billed. For example, the average reimbursement from insurance plans for global maternity care in the Midwest is $2200. Some are higher (BCBS), and some are lower (Medicaid).
Knowing how many patients you will be taking with each insurance plan is important too. Will your plan serve mostly the low-income population on Medicaid or more of a boutique service to the middle-upper class population having private insurance plans?
When you take into account all the extra overhead costs for insurance processing, having a billing service commission, and the possibility of the patient not paying their remaining balance versus getting cash upfront, I would have a goal of $3000 for my cash-paying patients and around $4500 for my insurance-processing patients. I didn’t take much Medicaid and kept my cash population around 20%. I would typically put 10 people on my birth list, knowing people would move or risk out before delivery time. That left my average births per month for 8 ladies.
There are so many things to think about
When I made my fee schedule, there was 20% of the population going to be cash paying, 50% of network plans would get a contracted rate, and 30% of the network plan would be able to charge patients the difference of what the insurance plan wouldn’t pay directly. That left my average reimbursement from clients at $4k each.
Fee schedules are different from the actual amount being reimbursed. The cash fee schedule was directly what I charged, but the insurance fee schedule took time to research what made the most sense in my area. I had to learn my in-network insurance plans contracted rates, comparable providers offering the same services were charging to insurance plans, and my goals of reimbursement to cover expenses and create the profit margin I was looking for.
For example, code 59400 (global maternity care) was billed to insurance plans for around $4500. That didn’t mean that was what I was going to be paid. When billing an in-network insurance plan, I would always get paid their contracted rate, and the difference was written off from business. When the insurance plan was out of network, I would get paid from the insurance plan a set amount and bill the patient the remaining difference from the charged rate.
Some Things to Consider
If you are adding a birth center facility to the mix, there is another dynamic to consider when charging out facility fees. Does your state cover birth centers (are there regulations, and do the birth center and insurance companies recognize that facility code)? What is the average insurance reimbursement in the area for birth centers? Are there other birth centers to compete with, and are they already billing to insurance plans? Most insurance plans didn’t recognize birth centers in my area, and there was a cash fee schedule for those patients. If the insurance plan did cover the birth center facility, it was always out-of-network since there were no birth center regulations in my rate.
Each practice will have very different overhead expenses and goals for midwife salary and profit margins. Please spend some time with our team to create a customized fee schedule that fits your needs. It is very important to charge the right amount. If it is too low, it will be difficult to cover overhead expenses and will lose revenue from insurance companies. If too high, patients will find another midwife in an area that is more affordable.