There are three ways a pharmacy pays for software that works on its money, and the choice matters more than most buyers expect. It changes what the vendor is incentivised to show you, how predictable your costs are, and in one case whether your accountant needs to look at a regulation before you sign.
The three models
Flat subscription. A fixed amount per store per month. You know the annual cost on the day you sign. The vendor’s revenue does not move when your recoveries move.
Contingency, or a percentage of what is recovered or collected. The vendor takes a share of money it can attribute to its own work. You pay nothing up front. Your cost rises in exactly the months the product performs best.
Bundled. The capability arrives inside something you already buy: a PSAO membership, a wholesaler agreement, a buying group, or a module inside your pharmacy management system. It looks free. It is priced into the thing that carries it, and you generally cannot unbundle it or take it with you.
None of these is inherently dishonest. They fail in different places.
The arithmetic, done plainly
Take a single store and a vendor charging $199 per month, which is $2,388 a year.
Against a contingency model, the crossover is a division. At a 5 percent contingency rate, the two cost the same when the vendor recovers or attributes $47,760 in a year. Above that, the contingency deal costs more. At 10 percent, the crossover is $23,880.
Those are illustrative numbers using our own published price and two round contingency rates, not a claim about what any other vendor charges or what any pharmacy has recovered. Run the same division with the real quote in front of you. The point is that a contingency arrangement is a flat subscription with an unbounded ceiling, and the ceiling is reached precisely when the tool is working.
For scale on the percentage side generally, outsourced medical billing in the wider healthcare market commonly quotes in a mid single-digit to low double-digit percentage of net collections, often alongside separate setup, credentialing and statement fees. Whatever percentage you are quoted, ask for the fee schedule underneath it.
Where contingency genuinely wins
Be fair about this, because for some pharmacies it is the right answer.
You cannot fund an up-front cost. If cash is the binding constraint, a model that costs nothing until it produces something is not merely cheaper, it is the only one available.
The work is genuinely episodic. Chasing a specific pool of historic underpayments, or defending one audit, is a project with an end. Paying for a project as a share of its outcome is how most recovery work is priced in every industry.
You want someone else to do the work. Contingency vendors usually do the chasing themselves. A subscription analytics tool tells you what to chase and expects your team to chase it. If you have nobody to assign, a queue nobody works is worse value than a service that takes a cut.
If those describe you, take the contingency deal. We would rather say so here than have the conversation in month four.
Where contingency goes wrong
Attribution. The invoice depends on which dollars the vendor claims credit for. If a claim was reprocessed because your technician called the help desk, and the vendor’s report also lists it, who is paid? Get the attribution rule in writing, with an example, and get the right to see the claim-level detail behind every line of the invoice.
The ratchet. Fix the systemic problem and recoveries fall, so the vendor’s revenue falls. Nothing sinister follows from that automatically, but the commercial interest sits with recurring recoverable errors rather than with you never making them again. A flat fee is neutral on that question.
Measured recovery is not profit. A recovery is a gross number. What you actually care about is whether the fill should have been dispensed at all. Those can point in opposite directions, and only one of them appears on the invoice.
Cost scales with your success, not your size. A pharmacy growing its specialty volume can find its analytics bill growing faster than its gross profit, which is a strange thing to have agreed to.
The compliance question your accountant will raise
This is worth raising before your accountant does, because it is real and it is specific to healthcare.
For Medicaid, the rule is explicit. 42 CFR 447.10(f) permits payment to a business agent such as a billing service, but only if the agent’s compensation is “related to the cost of processing the billing”, “not related on a percentage or other basis to the amount that is billed or collected”, and “not dependent upon the collection of the payment”. A vendor acting as your billing agent on Medicaid claims cannot be paid a percentage of what it collects.
More broadly, percentage-of-collections compensation for billing companies attracts scrutiny under state fee-splitting laws, and those laws are not uniform. Reporting on this area notes that New York treats percentage-based agreements with billing companies as impermissible, that California permits such arrangements only on fees actually collected, and that Illinois permits a percentage calculated on fees billed. The federal Anti-Kickback Statute is also implicated in some percentage-of-fee management arrangements, and the OIG has said so in the context of contract management companies paid a share of physician fees.
Two caveats. First, this bites hardest when the vendor is acting as your billing agent and submitting claims on your behalf, which is a different thing from an analytics vendor that only reads data. Second, we are a software company and not your lawyer. The point is not that contingency pricing is unlawful. The point is that it is a question with a real regulatory surface, it varies by state, and it should be asked before signature rather than during an audit.
Where bundled offerings sit
Many independents buy through a PSAO or a buying group, and several wholesalers and pharmacy systems include reconciliation or reporting in what they already sell you. That is often good value, and if the bundled tool answers your question, buy nothing else.
Two things to check. First, whether the bundled reporting is real-time or month-end, because those solve different problems. Second, what happens to the tool if you change PSAO, wholesaler or pharmacy system, since a capability priced into a relationship usually ends with it.
Worth noting too that at least one established reconciliation vendor in this market publishes advice to look for programmes that do not take a percentage of the money recovered. That is a competitor making our argument, which is the most credible form it can take.
Comparison
| Flat per store | Contingency | Bundled | |
|---|---|---|---|
| Cost predictability | High | Low, and worst in good months | High, but not separable |
| Up-front risk | You carry it | Vendor carries it | Neither |
| Who does the chasing | Usually you | Usually the vendor | Varies |
| Incentive on systemic fixes | Neutral | Works against them | Neutral |
| Invoice auditability | Trivial | Requires attribution rules | Not itemised |
| Regulatory surface | Low | Real, and state-specific | Low |
| Portability if you switch PSAO or PMS | Full | Full | Usually lost |
What Attergo charges, and why
$199 per store per month for Margin. $349 per store per month with Audit. $499 per store per month for the full platform. No percentage of your scripts, no percentage of recoveries, no per-claim fee.
The reasoning is that a vendor should be judged on whether the product is worth its flat fee, not trusted on the honesty of its own attribution report. A flat fee also means we have no commercial reason to prefer a pharmacy that keeps making the same recoverable error, and every reason to help it stop.
The tiers map to the platform’s eight products on one event spine: Margin at $199, Margin plus Audit at $349, and the complete platform at $499, all per store per month. Because every product runs on the same connection, moving up a tier is an activation rather than an implementation, and the right tier is a question of which revenue problems you are working this quarter rather than a question of integration appetite.
What to ask, whichever model you choose
- Show me a sample invoice from a very good month.
- What is the attribution rule, and can I see the claim-level detail behind it?
- What increases the price without my signing anything new?
- What is the notice period, and what do I get on exit?
- If I fix the underlying problem and there is nothing left to recover, what do I pay you next year?
The last one is the most revealing question in this category, and it takes about four seconds to ask.