The Great Medical Billing Debate

Written by on September 1, 2017 in Features - No comments

In-House or Outsourcing?

Second only to treating patients, medical billing is the most important aspect of your practice.  Unfortunately, it is also the most complicated.  Multiple payers, thousands of codes, claim denials, and changing health care laws pose a challenge to practice owners.   Two main options exist for most physician offices: in-house billing or outsourcing with a medical billing company.  Both have their merits, and each practice or group needs to decide which option is most cost-effective for them.

In an in-house billing scenario, the office staff are responsible for all the billing and revenue cycle management.  The office staff is responsible for setting the charges, submitting claims for reimbursement, collecting copays and deductibles, and managing accounts.  This is usually done with the assistance of a billing software.  The alternative option is to outsource.  When an office outsources the billing responsibilities, the physician owner uses a third-party billing service to manage all the billing and revenue cycle management.

In-house billing might be best if you are a financially-savvy physician who wants to retain control or if you have simple billing needs.  Some physicians prefer this method in order to maintain complete control over their finances.  Billers and coders are in the same building as the providers and easily accessible.  A physician does not have to call an outside company to check on the status of a claim or address a patient’s billing issue.  In-house billing is also more cost-effective for offices that have uncomplicated billing or coding needs.   For instance, a medispa with patients that pay cash does not need a billing service.  However, for many practices, in-house billing has significant pitfalls.

First, in-house billing can be expensive.  Offices must pay for medical billers and coders and their salaries, benefits, and ongoing education and training.  Ongoing education is necessary to keep up with the ever-changing healthcare laws.  Startup costs are high with the purchase of computers and medical billing software.  The office must also register with a clearinghouse to assist in processing claims.  In addition to being expensive, in-house billing is time-consuming.   Office staff are responsible for managing denials and appeals, collecting payments, and calculating expected revenues.    Finally, in-house billing can create unwanted liability if office staff do not perform as expected.  Just as under-billing can lead to lost revenue, over-billing can lead to legal action.

Outsourcing, on the other hand, is the best option for practice owners that prefer a hands-off approach as well as physicians that have more complicated billing and coding.  It is usually cheaper, more reliable, and consistent.  Outsourcing avoids the costs associated with in-house billing.  Billers and their associated salaries and benefits are not needed.  The physician pays for the billing service, but does not need expensive billing software and maintenance.  It is consistent as well.  While an in-house biller may quit, become ill, or go on vacation, an outsourced billing company is always available.  Experts will regularly send claims and are contractually required to follow up on all denials and unpaid claims.  Liability is not an issue as the billing company will usually take on full responsibility for errors.

Yet, while outsourcing has its benefits, it does have pitfalls.  As mentioned, some aspect of control is lost when a physician gives up his or her billing to a third party.  One also needs to watch for variable costs and hidden fees.  Most billing companies charge a percentage of what the physician brings in (meaning, the busier the office is, the more they charge).  These variable costs can be difficult to budget for given the changing amounts.  Another potential concern is patient privacy.  It is important for a practice to ensure that the billing company is HIPAA compliant and will keep patient information safe.

The first step an office practice should do is perform a cost analysis of each option.  Typically, for in-house billing, the average office will need 1-2 billers per 1-3 providers.  As alluded to earlier, however, those offices will simple needs will likely require less.  In addition, the office needs to estimate the cost of purchasing a revenue cycle management software system.  Regarding outsourced billing, the fees of the medical billing company should be estimated; most companies charge 5-10% of revenue.

Next, each physician owner needs to decide how much time and energy he or she wants to spend on revenue cycle management.  Although the billers and coders will be doing most the work on this with in-house billing, the physician is responsible for overseeing these issues.  As mentioned, outsourcing requires little to no outside energy.

After analyses, the physician owner needs to research his or her options.  As variation exists among software and billing companies, physicians need to do their homework to ensure that the product or service can meet the office’s needs.  The following are some recommended questions one should ask when evaluating billing software or a medical billing company.

Questions When Evaluating Medical Billing Software

1. How much does it cost?
a. Are there startup or cancellation fees?
b. Maintenance fees?
2. What does the software include?  What doesn’t it include?
3. How easy is it to use?  Can I see a demonstration?
4. Do you provide ongoing support?
a. What happens when we run into a problem?
b. Are you available 24/7?
5. Do you offer cloud-based hosting or am I required to pay for and maintain my own local servers?
6. What specialties is this compatible with?
7. Is this compatible with my existing EMR?
8. Does the software include a patient portal?  What does it include?
a. Can patients fill out paperwork and insurance information online?
b. Is the portal easy to use?
9. Can the software create performance reports and analyses?
10. What type of training do you provide?

Questions to Ask a Potential Medical Billing Company

1. What is the cost?
a. How are you paid?  What percentage of the office revenue do you receive?
b. Does this include co-pays that office staff collect at the appointment?
c. What additional fees are there?
i. Start-up fees?
ii. Cancellation fees?
2. What specific services are included?  What is not included?
a. Do you check claims for errors?
b. Do you follow up with the insurance companies to ensure claims were accepted?
c. Do you provide analysis and performance reports?  Are those included or an extra fee?
d. Do you provide coding?  Do we need our own coders?
e. Do you offer EMR as well?  Do we need our own EMR?  Is our EMR compatible?
3. Can you guarantee someone will always be available?  Who manages my account when my representative is out of the office?
4. Do you have experience with my specialty?  How many years?
5. What happens if an error is made?
6. Are you HIPAA compliant?  How do you ensure patient information remains private?
7. How and in what capacity do you interact with patients?
a. Can you send patients statements directly?
b. Do you take patient phone calls?
c. Do you offer a patient portal?

By Kaci Durbin, MD FACOG

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