If you’re considering outsourcing your practice’s insurance claims to a medical billing service, this article is for you.
While some physicians swear by their outsourced billing service and would never consider bringing this costly and burdensome function back in-house, others feel that engaging the services of a medical billing company would deprive them of vital control over cash flow placing critical processes into the hands of strangers. Regardless of where you are on the spectrum, it is imperative that a billing expert (whether inside or out) be responsible for your entire patient-to-pay revenue cycle. There are four clear signs that you should strongly consider looking at the advantages that a top tier physician billing service can deliver.
1. You’re Struggling To Find A Qualified Biller
Finding and retaining experienced staff is difficult under the best of circumstances, and things are far from ideal at the moment. Many parts of the country are still recovering from the ‘toxic asset’ great recession, leading to high turnover as individuals and couples changed jobs to seek better opportunities in other cities and states. Rural areas and areas hit particularly hard by the housing downturn are seeing a shortage of skilled labor all around including qualified medical billers, leading to increased demand and higher pay for the remaining talent pool. Other physician offices experience high turnover rates due to difficult managers, office politics, or other hard-to-resolve issues. In her book “Make More Money by Making Your Employees Happy,” Dr. Noelle Nelson cites a survey by recruitment agency 24 Seven that “unsatisfied employees are 11 times more likely to move to a new organization, and that 90% of all employees are willing to consider changing jobs”. (Keeping Your Best Employees). But even if you are the lucky one fortunate enough to have a loyal and skilled medical biller, according to the MGMA, over the last decade the cost of operating a practice has increased by 50% and good billers are not only scarce, but costly.
2. Your accounts receivable (AR) levels are too high.
Unfortunately, your receivables can go from being under control to unacceptably high in a very short time. Defective software can contribute to mounting insurance A/R, as can an inexperienced biller. It may be the case that your entire patient-to-pay revenue cycle process needs revamping, or that your office is so short staffed that no one is able to follow up on claim errors and denials. Any of these factors, or a combination, can quickly result in AR levels skyrocketing. Furthermore, patient pay is on the rise, and according to the AMA it’s now averaging 24% of which half is typically collected at the point-of-service—further driving up A/R, collections cost, and iffy collections success rates resulting in unnecessary write-offs, administrative waste and loss of bottom line profit.
3. You Lack Insight and Control of the Claims Process
Your main focus is on patients, so unless someone else in your office is carefully monitoring front office payments and insurance billing, revenue can quickly get off track. Routinely, practices only resubmit 40% of denied claims, and determining why the claims were rejected in the first place then following up with payers is time-consuming work that many practice managers don’t budget time and resources for. Since staff are rarely incented to go the extra mile in rebilling, it’s natural for orphaned claims to drift to the bottom of everyone’s to-do list.
4. You’re Simply Not Making Enough Money
You may be seeing 30 patients a day and charging $125 per patient encounter but only netting $65. The question becomes where’s the other $60? It may well be the case that your front office or billing department is not finely tuned but without well-defined processes and the proper technology to create checks and balances and track every aspect of the revenue cycle, it’s impossible to say definitively where the leakage may be occurring. It could be from lack of benefit verification, failure to accurately calculate and collect patient pay, poor contract management, employee theft, lack of underpayment identification, low paying payers, faulty denial management, or incorrect superbill reconciliation. If the situation is bad enough, you may even have claims that never got submitted to the payer.
Let’s say you’re seeing one (or more) of these issues in your practice. Will outsourcing your billing really solve the problem? In a word, no—as not every medical billing service is an expert in Practice Management, Revenue Cycle Management, claim adjudication, or automatically have the exact coding skills or payer knowledge that your circumstances necessitate. Without a thorough self-assessment, it will be difficult to tell whether any billing service would meet your needs.
But, provided you have a thorough vetting process and the necessary insight to choose the right billing company you should expect to benefit from many advantages that a top tier physician billing service can offer.
Advantages & Disadvantages of Hiring a Medical Billing Company
One disadvantage that you should expect upfront is to pay a top quality billing service $25,000 per physician per year on average, but then you have the advantage of no longer having to recruit and hire a reliable biller, or onboard and train a new employee, or pay for their learning curve, pay health and other benefits and withholdings, deal with absenteeism — in short all the liabilities that come with employee responsibility —and then watch them walk out the door for $2 more an hour or move across country as their spouse gets relocated or finds a better job.
Another very real disadvantage to outsourcing your billing is that not every medical billing service will deal with your accounts receivable. You’ll find that anyone will gladly take over your new insurance claims going forward, but few will show interest in properly reworking your backlog.
The rare billing service will help immediately reduce your accounts receivable by refiling claims, diligently staying on top of errors, and appealing all denials; and if you go with a service that uses state-of-the-art cloud-based software, you’ll have instant access to every part of the billing process from any computer or device with an Internet connection—in fact, you’ll have more visibility and better control over the claims process than you did when you could walk to your biller’s desk and look over her shoulder.
Another advantage of holding out for the right medical billing company is that of the quality of coder/biller you’ll inherit: The average $18/hr biller making $36,000 a year has 2-3 years’ experience in one or two practices handling a limited number of payers. But in a top-notch billing company, most of the billers you’ll be working with have +5 years’ experience, are certified coders, have billed for many specialties –and possess a wide range of knowledge regarding payer rules. Whereas an in-house biller may bill an average of 2-3 hours a day and try to avoid the heavy lifting, outsourced billers work full time doing the hard stuff day in and day out. Just like you might seek out a surgeon who has performed a high volume of procedures, practice owners should short-list those physician billing companies that offer both depth and breadth of expertise and coders with a high volume of billing experience.
The EHR Advantage
Some billing services offer EHR software that gives billing staff instant access to the patient encounter notes; you’ll notice that claims are not only coded correctly, but to the highest level of specificity—and done so without you having to get on the phone to answer questions about the encounter.
Last, but not least, there’s one last important disadvantage of in-house billing verses letting highly qualified experts handle your medical billing: that of fiduciary responsibility. When a doctor has his receptionist entering insurance claims, (very often the case in a small practice), when she leaves at night, the doc’s finances are the doc’s problem. But hiring the right billing service can be like bringing a fractional CFO into your practice.
Whereas your office staff are rarely incentivized to go hard after collections, billing services are only paid on what they collect and so are highly motivated to maximize every penny per encounter. Also, the best services work 24/7 tending tirelessly to your claims –they never sleep.