How Do You Calculate the True Margin on Your RTM Program?

The true margin on an RTM program is your monthly RTM reimbursement revenue minus all direct and indirect costs of running it — staff time, device costs, software/platform fees, billing overhead, and compliance/audit risk — expressed as a percentage of revenue. Most practices only subtract the software subscription fee, which overstates margin because it ignores the clinical and administrative labor required to hit billing thresholds every month.

Why the "sticker price" margin is misleading

A lot of practices calculate RTM margin as reimbursement minus platform fee, and stop there. That number looks great — often 70–80% — but it isn't the actual margin, because it leaves out the staff hours (whether internal or outsourced) spent reviewing data, documenting the 20 minutes of interactive communication, and chasing patients who haven't hit their 16-day transmission threshold.

The real question isn't "what does the platform cost?" It's "what does it cost to generate one billable unit of each RTM code, all-in?"

What counts as RTM revenue

RTM revenue is the sum of what you actually collect (not what you bill) across the codes your program uses each month:

• 98975 — initial set-up and patient education, billed once per episode of care

• 98985 / 98977 — device supply, per 30-day period

• 98979 - first 10 minutes of RTM treatment management per calendar month

• 98980 — first 20 minutes of RTM treatment management per calendar month

• 98981 — each additional 20 minutes beyond the first

Use collected revenue, not billed charges, since denials and adjustments are part of what separates a healthy margin from a paper one.

What counts as RTM program costs

Costs fall into two buckets, and both belong in the calculation.

Direct costs

• RTM platform/software subscription fees

• How much do I pay each month (if anything) no matter what?

• Device costs

• How much do I pay my software vendor per patient?

• Any per-transaction billing or clearinghouse fees tied to RTM claims

• i.e. your Revenue Cycle fees

Indirect (labor) costs

• Clinical staff time reviewing transmitted data

• Time spent on the required interactive communication with the patient

• Documentation time to support medical necessity and the time-based codes

• Administrative time chasing non-adherent patients to hit the 16-day threshold

Indirect costs are the ones practices most often leave out — and they're usually the largest cost line once you actually time the workflow.

The margin formula

RTM Net Margin (%) = (Total RTM Revenue Collected − Total RTM Program Costs) ÷ Total RTM Revenue Collected × 100

Run this per patient panel per month, not just once a year — reimbursement changes annually, and staff time-per-patient tends to drift as your patient count scales.

Worked example

(Replace bracketed figures with your practice's actual numbers — every practice's staffing model and patient volume will produce a different result. Steven should confirm any reimbursement figures cited publicly.)

Common mistakes that inflate perceived margin

• Ignoring staff time entirely. If a PT or MA is spending 15–20 minutes per patient per month on RTM tasks, that time has a real cost even if no new hire was made.

• Using billed charges instead of collected revenue. RTM claims get denied or downcoded like any other claim; margin should reflect what actually lands.

• Not accounting for patients who never hit the 16-day threshold. Setup and device costs are incurred even for patients who don't generate a billable month — that's a cost with no matching revenue.

• Overlooking outsourced billing fees as a percentage of collections. A flat-fee-sounding vendor contract can quietly erode margin further than in-house billing once patient volume climbs.

How in-house vs. outsourced billing changes the math

Outsourced RTM billing vendors typically charge a percentage of collections, which scales directly against your revenue line — so as volume grows, the dollar cost of outsourcing grows with it, while in-house labor costs tend to grow in steps (you don't need a new FTE for every 10 additional patients). Practices evaluating margin should model both scenarios at their expected patient volume, not just at current volume, since the crossover point where in-house billing becomes cheaper varies by practice size.

Why go through this effort?

Because if you can figure out how much you're actually making and why then you can figure out how to improve it, resulting in more cash flow to do things like pay your staff more (without you taking yet another pay cut to do so), fund Continuing Ed, and so much more!

FAQ

What's a healthy net margin for an RTM program? This varies by practice size, staffing model, and patient volume — there's no single benchmark that applies to every practice. The formula above lets you calculate your own baseline and track it over time. ([VERIFY] whether to cite an industry benchmark figure with Steven.)

Does RTM margin include the cost of the device itself? Yes. Whether devices are purchased, rented, or bundled into a platform fee, that cost should be allocated against RTM revenue to get an accurate margin.

Should I use billed revenue or collected revenue when calculating margin? Collected revenue. Billed charges don't account for denials, downcoding, or timely-filing losses, all of which reduce what actually reaches your practice.

How often should I recalculate my RTM margin? Monthly, at minimum during your first year of running the program, since reimbursement rates and staffing needs both shift as patient volume grows.

Is outsourced RTM billing always more expensive than in-house billing? Not always — it depends on patient volume and your practice's existing administrative capacity. Outsourced fees scale with collections, so the comparison point shifts as volume changes; modeling both at your expected volume is the only reliable way to know.

Want a clearer picture of your own RTM program's margin? https://sarahealth.com/getintouch to see how in-house RTM billing tools can improve visibility into your true program economics.