What a percentage-of-collections contract actually incentivises
Percentage of collections is a good structure. It is the reason most ABA practices can afford a biller at all, and it means nobody gets paid for work that does not turn into money.
It also quietly tells your biller that speed is optional.
Where the interests line up
Start with what the structure gets right, because it gets most of it right.
Your biller earns nothing on a claim that never pays, so they care about clean claims. They earn nothing on a denial they do not rework, so they care about denials. They earn more when your volume grows, so they care about your growth. All of that is real alignment and it is why the model is everywhere.
If speed were free, there would be no problem.
Where they separate
Speed is not free. It costs the biller attention, and attention is the thing they are rationing across every client they have.
A claim submitted on day 2 and a claim submitted on day 11 pay the same commission. From the biller’s side those two claims are identical. From yours they are nine days of working capital, and on a practice doing $45,000 a week that is about $58,000 of cash sitting in a queue at any given moment.
The same logic runs through everything time-sensitive. A denial worked on day 5 and a denial worked on day 55 pay the same, right up until the appeal window closes — and the appeal window is the one place where the biller does lose money, which is why denials usually do get worked, just late.
And it runs through prioritisation. Given a $2,400 claim and a $180 claim, the commission math says work the big one. That is rational. It is also how a practice ends up with four hundred small aged claims that nobody has ever touched, each one individually not worth the time.
What it costs
Illustrative arithmetic, not a client engagement.
That $45,000 is a one-time release, not recurring revenue. It is still the cheapest capital in the business, because it requires no lender, no rate and no covenant — only a deadline.
What to write instead
Do not change the commission structure. It works. Add terms around it.
A submission standard with a number in it. Claims submitted within two business days of conversion, measured monthly, target 95 percent. Two days is achievable for a competent biller with a clean queue. Most practices have never told their biller what the target is, which makes it hard to be annoyed when it is missed.
A denial-touch standard. First action on a denial within five business days of the remittance. Not resolution — action. Resolution depends on the payer, the first touch does not.
A small-balance rule. Every claim under a threshold gets worked in a monthly sweep rather than by priority. This is the one that actually needs writing down, because it is the one the commission structure argues against.
Reporting you can verify independently. The standards are worthless if the only source for them is a report the biller produces about their own performance. More on that in the next post.
No termination clause tied to the standards. Resist this. A standard that triggers termination becomes a negotiation about measurement instead of a tool for managing. Keep it as a monthly number both sides look at.
The conversation
This is not a confrontation and it should not be framed as one. Most billers will agree to a two-day standard without argument, because most billers already believe they are hitting it and have never been measured.
The measurement is the change. The standard is just what makes the measurement mean something.
Five checks you can run this week
1. Read your billing agreement and find the word “days.” If it does not appear, there is no speed standard, which means the current lag is whatever it happens to be.
2. Calculate your current conversion-to-submission lag from your own system, not from a report. Median, not average — one very old claim will distort the average and let everyone off.
3. Count claims under $200 that are over 90 days old. That is your small-balance pile, and it is a direct product of the commission structure.
4. Check when denials get first touched, measured from remittance date. Anything past ten days is eating appeal window.
5. Multiply one day of billing by your current lag in days. That figure is the cash sitting in the queue, and it is the number to open the conversation with.
The number to actually track
Median days from conversion to submission, against a two-business-day standard at 95 percent.
Pair it with the count of claims under $200 aged past 90 days. That pile is what the commission structure argues against working.
Collection rate says nothing about speed, which is the whole point of this stage.
Where this sits
This is the fifth of eight stages where ABA revenue leaves, and the last one you can fix without a payer on the phone. Everything downstream needs somebody outside your building to act.
The structure is sound. What is usually missing is a number written next to it.
A Leak Map Assessment measures all eight — the reservoir, authorization burn, cancellations, session conversion, conversion to billed, clean claims, rate integrity and recoupments. A claims audit is a different instrument. It starts once a session has been converted and billed, and reconciles the back half of the cycle to cash.
Aimline closes the books, oversees the revenue cycle, and sits in the CFO seat for ABA practices. We run claims audits scoped to a payer book, and Leak Map Assessments that measure the full cycle — three weeks, $7,500 fixed. Either one gives us a verified number to run oversight against, and the report is yours whether or not you engage us to fix what it finds.
