Figuring out a Fee Schedule for Your Midwife Business
There are many ways to create a fee schedule. Simple way is do a cash rate fee schedule based on your overhead expenses, how many women you are seeing each month, and goal for profit margin. For example, monthly business expenses including building, utilities, malpractice insurance, office supplies, birth supplies, birth assistant, staff wages, and marketing is around $20,000 month. With having one midwife, typical home birth practice will see 6-8 births month with 2 days a week office days. Most midwives wants to make around $5-7k month to live off of. That would profits each month to be around $25k. If there were 8 births, each women would pay for your services roughly $3,200 each ($25k divided by 8 is $3125).
More common midwifery practices will have a hybrid of cash fee schedule with insurance fee schedule. Any client doesn’t have insurance or a plan that doesn’t cover a midwife doing home birth can do cash rate. Rest of 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 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 insurance processing, research needs to be done what services your practice will be offering and 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 assistant, and more.
Are you planning on being in network versus out of network? That makes a difference on what you are making your fee schedule. When choosing to be in network, insurance plans have a specific contracted rate you can get for each code billed. For example, average reimbursement from insurance plans for global maternity care in 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 low income population on Medicaid or more of a boutique service to 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 possibility of patient’s not paying their remaining balance versus getting cash up front. I would have 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 with knowing people would move or risk out before delivery time. That left my average births per month 8 ladies.
There are so many things to think about. When I made my fee schedule, there was 20% population going to be cash paying, 50% in network plans getting contracted rate, and 30% out of network plan being able to charge patients the difference of what insurance plan wouldn’t pay directly. That left my average reimbursement from clients at $4k each.
Fee schedules are different that actual amount being reimbursed. Cash fee schedule was directly what I charged, but insurance fee schedule took time to research what made most sense in my area. I had to learn my in network insurance plans contracted rates, comparable providers offering same services were charging to insurance plans, and my goals of reimbursement to cover expenses and create profit margin I was looking for.
For example, code 59400 (global maternity care) was billed to insurance plans 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 difference was written off from business. When insurance plan was out of network, I would get paid from insurance plan a set amount and billed patient remaining difference from charged rate.
If you are adding in a birth center facility to the mix, there is another dynamic to consider when charging out facility fee. Does your state cover birth centers (are there regulations and the birth center and insurance companies recognize that facility code)? What is average insurance reimbursement in area for birth centers? Are there other birth centers to compete with and already billing to insurance plans? Most insurance plans didn’t recognize birth centers in my area and was a cash fee schedule for those patients. If insurance plan did cover birth center facility, it was always an 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 be charging the right amount. If too low, overhead expenses will be hard to cover and lost revenue from insurance companies. If too high, patients will find another midwife in area that is more affordable.