The financial performance of your medical facility is highly impacted by patient accounting, account receivable management, and medical billing. For you to maintain a good-performing practice/business and observe patient confidence, clear records must be maintained. Medical billing services handle accounts receivables functions every day to alleviate your adverse concerns related to payment thereby allowing you to do your work of attending to patients with much ease. Many in-house billing teams are losing thousands of dollars a month for practices/business where they work and many medical billing companies do not operate consistently for their clients.
A successful healthcare practice needs standard reports and metrics to measure performance accurately and make improvements where necessary. Due to the changes that happen in the healthcare industry now and then, many practices end up facing financial problems among other complexities. Despite all the obstacles, your competence will be measured by how well you can stay on top of the game ensuring that collections are optimized.
Some physicians and business owners for this very reason are left wondering if they should outsource or rely on an in-house medical billing staff. Outsourcing is more straightforward if the ‘right’ company is chosen. Super-bills, as well as other documents, are electronically sent to the medical billing service once scanned or the medical billing company is able to pull the superbills and work the claim into their billing systems. Additional data entry is taken care of by the medical billing service, along with the claim submission on behalf of the provider. A lot of billing service providers charges a certain percentage of medical billing collection rates. These companies also pursue delinquent accounts, rejected claims, and also send invoices to patients. Note that an in-house billing can be sloppy, inexperienced and negligent. This can lead to coding errors, un-submitted claims, denied claims, lack of proper follow-up, and under-coding insurance forms. Finding a qualified billing service can dramatically increase your revenue up to 20%.
With billing companies, you will be charged a certain percentage of collection rates of contract amount. Most rates are between 4% and 15%. The rate charged depends on the type of medical billing and the medical specialty. For instance, the rate is higher if the type of billing requires a high percentage of paper claims and that need additional documentation attached for approval. If you look at the incentive of % of collection, it is a major earning incentive that will earn you more money and is a scalable/predictable cost. Unless you get paid, the medical service will not be paid. Beware of the medical billing company that charges a lower rate but does not follow-up on all claims with a detailed system. The average collection rate, for Medical practices, is quoted in different sources to be around 95% of the contract amount. If the billing company charges 4% of collections but only collects at 92% of the contract amount then the net to the practice is 88% of their contract amount. If the billing company charges 7% of collections and collections at the 99% of the contract amount then the net to the practice is 92% of the contract amount. In this example, a 4% difference equals about $40,000 per $1,000,000 in revenue. Additionally, specialized and focused billing companies understand the optimal coding to utilize as well as how to manage the changes in edits from the payers (there are changes every quarter). This amount of knowledge is difficult and not cost effective for a practice to continuously learn is most cases.
If your collections have been dropping with the time to collect increasing, there may be a serious issue with your billing department. Outsourcing decreases the rejected claims rate and also decreases the time taken to receive payments from patients. Now is a good time to rethink your billing plans. The ‘right’ staff is important for a high-performing billing operation. Consider that turnover can occur or that unqualified staff ‘sticks around’ and does not properly follow-up on claims (Is the leader of your billing operations able to identify and remove a poor performing team member?). For your practice, claim processing in the billing sector is the economic backbone.
If you choose to maintain an in-house staff, note that maintaining an in-house billing team will usually require a number of continuous investments in both time and effort. For instance, an investment in purchasing or upgrading practice management software as well as improvements/investments in links between the practice management software, clearinghouse, payers and patient payment systems. For practices that maintain in house billing, their staff will also need to be trained and either the practice owner or practice manager will need to be continuously trained in billing and coding to appropriate monitor and manage the revenue cycle. This usually takes years to achieve an optimal level of training. Given that investing your time on administrative and technology items is an opportunity cost to you and the practice. This means if you spend much time on this type of administrative work, it provides less time to see patients, generate new patients or just have some time off. Additionally, since there are technical issues and software upgrades that need to occur to insure continuous billing, outsourcing will probably be your best choice.
It is crucial to remember that the ‘right’ medical billing company is important to your needs. The medical billing services vary in terms of accuracy and efficiency when processing claims. The ‘right’ billing service can optimize your payments each month, understands your account as well as continuously learns and modifies there approach with payers. If you hire a lax billing service and one that is prone to errors, the complexities involved in billing will only worsen. Beware of software companies and consultants who are always willing to sell you and your business more services, courses, and software but place the cost of these services combined with the people and process burdens on you and your staff. People need to be hired, trained and you as a practice leader will also need to be continuous trained in billing. This usually adds more cost and of course, burden, then outsourcing to an optimal billing team that includes these services in their costs.