What Are the 7 Reasons to Outsource Medical Billing?

Medical billing provides the revenue that keeps a medical practice alive. Like blood flowing through a patient’s body, a healthy revenue flow is essential to the health of a medical practice. When billings fail to generate revenue, a medical practice must borrow money to pay its own bills. Debt can eventually cripple a business.

Some practices have a team of individuals in a billing department who are responsible for preparing billings and interfacing with patients, insurance companies, Medicare, and other payers for medical services. That team might consist of billers and coders or both functions might be combined. A practice manager will generally oversee the billing department while the practice owners oversee the manager. That arrangement might work for some medical practices, but it is not always the most efficient use of professional resources.

The alternative is to outsource medical billing . The growth of the medical billing outsourcing market in recent years reflects the transition from obsolete in-house billing systems to reliance on specialized firms that free doctors from the burden of managing their own billings. Here are 7 reasons why outsourcing is often the preferred means of safeguarding revenues.

Billing software is expensive. Practices that invested in billing software just five years ago are now realizing that their software is outdated and may need to be replaced. Yet new software acquisition imposes new costs on the practice, including the expense of integrating old billing records with new billings and training a billing team to learn how to use the software.

More than a dozen companies market software packages to prepare medical billings and track receivables. Which software is the best? Doctors are trained in medicine, not accounting or internet technology. Medical billing companies do thorough studies of alternative software packages and constantly evaluate the need to upgrade. A medical practice that outsources billing will be relieved of the challenge of purchasing and upgrading billing software and training staff to use it.

An important key to securing prompt payment by insurance companies is the accurate coding of medical billings. Both diagnostic codes and current procedural technology (CPT) codes must be consistent with current standards. Yet the AMA regularly adds new CPT codes, making it difficult for medical practices to stay abreast of the current coding system. Medicare’s HCPCS coding system incorporates CPT codes, making it essential for Medicare service providers to assure that billings reflect accurate codes.

Medical practices that bill in-house generally incur the expense of sending coders to seminars and continuing education programs to learn about changes in CPT codes and to keep their skills fresh. Training costs reduce profits. There is also a risk that new codes will be in effect for months before billing and coding staff learn about them. Medical billing companies provides constant training to their coders, assuring that they have the up-to-the-minute knowledge needed to prepare accurate bills.

Doctors who specialize in a field of medicine become adept at diagnosing and treating patients within their specialty. Medical billing companies offer the same quality of service that results from specialization. They develop the skills necessary to understand medical records, to derive the correct diagnostic codes from those records, and to assign each service or procedure to its correct CPT code.

When medical practices hire new staff for billing departments, they endure a learning curve during which errors are more prevalent. When medical billing companies hire new staff, experienced supervisors review their work to assure that they produce an error-free billing. Employee turnover has no impact on a medical practice that outsources its billings.

Medical practices do not get paid unless they generate accurate medical bills that satisfy insurance and Medicare billing standards. Inaccurate bills result in denials of payment. Correcting the error or appealing a denial may eventually result in payment, but every payment delay puts a strain on cash flow. Medical billing companies improve the likelihood that the medical practice will get the bill right the first time. Improved billing accuracy increases the likelihood that medical practices will receive the revenues they anticipate in a timely fashion.

In addition, in-house billing departments tend to be relatively small. When a biller or coder takes a vacation or an unexpected leave of absence, or when one quits and needs to be replaced, billing may be disrupted. Any delay in submitting bills and addressing billing inquiries delays receipt of revenues. Hiring a medical billing company improves cash flow by guaranteeing that billing duties will be performed on time.

Maintaining a medical billing department requires a practice to hire staff members, to pay their salaries and benefits, to incur the cost of continuing education in medical coding, and to add to the overhead expense of unemployment insurance and workers’ compensation. In addition, every employee creates a risk that a medical practice will be accused of violating employment laws regarding wage payments, discrimination, hostile work environments, denials of mandated leave, and other worker protections.

Outsourcing billing eliminates the overhead and administrative burdens of employing workers to perform services that are collateral to the delivery of medical care. Any reduction of employees who do not deliver care is beneficial to a medical practice’s bottom line.

Maintaining a billing department adds to the administrative burdens of doctors. Hiring, supervising, disciplining, and terminating billing staff takes time away from the professional duties that generate income — spending time with patients and providing quality care.

State and federal regulations, as well as mandates imposed by insurance companies and the Centers for Medicare and Medicaid Services, are always changing. Expecting a billing department to keep up with regulatory changes may be an invitation to disaster.

Medical billing companies routinely obtain legal advice to assure that their billing standards comply with all regulatory requirements. Because billing companies serve a variety of medical practices, they can assure regulatory compliance more cost effectively that individual practices with relatively small billing departments. Billing companies are therefore able to stay on top of billing protocols and to produce billings that will satisfy payers and regulators.