The medical billing outsourcing industry has grown at a steady rate in recent years. Industry analysts project a 12.6% annual increase in medical billing outsourcing each year until 2028. Medical practices are moving to outsourcing as their billing systems become obsolete. Maintaining a trained billing and coding staff adds to medical practice overhead. Doctors who administer a billing department are taking time away from providing medical services. Revenues suffer when doctors focus on oversight of billing staff and resolving billing issues instead of providing billable medical services to patients.
An effective medical billing staff must keep up with changes in Current Procedural Terminology (CPT Codes) and International Classification of Diseases (ICD) codes. Most medical practices do not have a sufficiently large billing staff to justify the expense of in-house training. They must fund continuing education programs that take staff members out of the office. Practices that do not assure that billers and coders have up-to-date training take the risk that staff members will make errors that cause payments to be delayed or denied.
Outsourcing billing helps a medical practice focus on what it does best: serving patients. Outsourcing reduces overhead, minimizes billing errors, and improves cash flow. It isn’t surprising that medical practices are increasingly outsourcing their billing.
As the medical billing outsourcing industry grows, new companies are competing for business. Competition is a valuable means of assuring that practices pay reasonable fees for the services they outsource. At the same time, competition creates a confusing array of choices for medical practices as they search for the right medical billing provider. Here are some important factors that medical practices should consider when they select a medical billing company.
Look For a Company That Matches Your Practice’s Size and Specialty
A billing company that is geared to handle billing for hospitals and large practices with multiple branches might not be the best choice for a practice that employs only a few physicians or that limits its practice area to a particular specialty. It will often become immediately apparent that a particular billing company is not a good “fit” for the practice’s needs.
A medical practice should tell medical billing companies the size of their practice, both in terms of physicians who provide billed services and the dollar volume of billings each year. Practices should look for billing companies that are accustomed to servicing healthcare firms that are similar to their own. The practice should also estimate the cost of its in-house billing services and suggest a smaller amount as the budget it is prepared to pay.
The nature of a medical practice may be another important factor. Most billing companies serve clients who provide a typical range of medical services to patients. They might be less comfortable serving a specialized practice. For example, a medical practice that focuses on mental health care will require coders to be familiar with CPT codes that are unique to that specialty. It is wise to ask about the billing company’s experience with practices in similar fields of medicine.
A practice should identify the insurers that it most frequently bills. Choosing a billing company that has established a working relationship with those insurers will smooth the transition from in-house to outsourced billing.
Identify the Services that a Biller Is Providing
Do the billing company’s services consist only of preparing and submitting bills? What does it do when payment is denied? Some billing companies do nothing. Others identify the issue that caused the denial and work to correct the problem. If a billing company isn’t resubmitting denied claims when there is a basis for doing so, the company is costing the medical practice revenue.
Ask for a Projection of Costs of Services Provided
Medical billing companies bill in a variety of ways. Charging a percentage of net collections is common, but the percentage can vary considerably. Make sure you understand the percentage that will apply to your practice and how the biller’s fee will be calculated. Compare price structures of different billing companies to get a sense of whether a company’s cost projections are reasonable.
Other companies may charge a flat fee. Some charge a flat fee plus a small percentage of collections. A medical practice might want to have its accountant do a ballpark estimate of the fees that the practice will pay under different payment methods.
Determine Software Compatibility
One of the key issues when outsourcing billing is how the biller’s software will interface with the medical practice’s software. The trend is for medical practices to keep medical records online. The billing company will need to access those records to generate billings. The company will also need to access to patient information that may be kept in a separate program.
If a billing company cannot interface with your existing software, it may demand that your practice change its software to accommodate the biller’s needs. That change can be time consuming. Staff members will need to learn the new software and will need to spend time integrating data from the previous software. Any change in data processing is likely to lead to errors that will need to be corrected later.
If a software change is inevitable, ask the billing company whether it will train your staff to use the new software. Some companies provide free training, others train for a fee, and some offer no training at all.
Ask About Compliance
Complying with rules and regulations governing patient confidentiality and billing procedures is essential to a healthy medical practice. A biller’s breach of the rules can expose the practice to liability. Ask for an outline of the company’s compliance procedures and the steps the company takes to assure that their employees follow them.
Research Billing Companies
Similar medical practices that have transitioned successfully to outsourced medical billing may be willing to discuss the pros and cons of the company they hired. Online reviews should always be taken with a grain of salt, but a series of negative reviews about responsiveness or billing errors should be a red flag.