Medical billing is full of contradictions, being at times procedurally simple, yet full of complex pitfalls. Unlike with most back-office functions, revenue lost to mistakes and mismanagement involving billing and collections can easily eclipse the budget for the function itself. This, combined with the constant need to stay on top of insurance and regulatory changes, has led to the explosive growth of the outsourced medical billing market.
If you’ve already determined that outsourcing your billing operations is right for you, the next step is deciding which of the many companies you should select as your partner. This guide is designed to assist with that process.
Key Factors to Consider
Industry-Specific Expertise
For many industries and provider types, billing knowledge and skills are easily transferable. Others, such as home health and applied behavior analysis (ABA), have many idiosyncrasies that create steep learning curves. A benefit to choosing a company that has a history of servicing providers in your industry is that many issues you’re facing they will have previously encountered, meaning they’re less likely to be “learning on your dollar”.
For example, an outsourced billing company primarily focused on hospitals and physician providers may have a limited number of billers with experience in specialized provider types. The small number of specialized accounts may end up being used to train staff and expand the company’s experience base. This can lead to increased denials for you, hampering cashflow and generating unnecessary write-offs.
Another benefit to working with specialized billing companies is the wealth of knowledge offered on topics affecting the entire revenue cycle of that provider type. Specialized billing companies are more likely to be able to identify the root cause of denials and suggest process changes that result in a win-win for all parties.
The Size and Needs of Your Office
Different billing companies specialize in different account sizes. Some of the biggest operations target large health systems and physician groups, with small-to-midsize providers being an afterthought.
One way to look at this is to ask yourself the question: “How far off am I from this company’s ideal customer?” The better the alignment, the higher the level of customer service and proximity to upper management that can be expected. Providers targeting customers your size are also more likely to fight for your business when exceptional difficulties and challenges arise.
If you’re a smaller provider, consider your plans for growth, as well. Most mid-size operations will have scalability built into their service model, but with smaller companies there may be limits. Always aim to choose partners that will help you get to the next phase of your journey.
Transparency and Accountability
Denial management traditionally doesn’t involve transparency in claim follow-up. Some companies may record the actions and information found during this process, but that information is seldom shared with providers. This leaves the monitoring of metrics as the only way to gauge the efficacy of collection efforts.
Now, consider that the majority of outsourced billing contracts are based on a percentage of collections. If the cost to follow-up on a denied claim is greater than what the billing company would receive, the company is incentivized to send the claim back to the provider or recommend write-off. This will be true for all but the most straightforward denials
For example, on a $1000 claim, a billing company may only collect $30. If the labor expense to collect the claim exceeds this amount, the billing company will lose money by attempting.
For you, the provider, that claim is still worth the full $1000. This often leads to providers either hiring out to collect the claims that fall into this gap or forfeiting the difference through write-offs.
When evaluating outsourced billing vendors, be sure to ask what level of transparency they offer. Even if they don’t have a system to log the details of every follow-up on every claim, you may find that detailed explanations are offered on request for specific groupings of denied claims. At the end of the day, you should always feel confident that uncollectible claims are truly uncollectible.
Communication and Collaboration
How experienced is the person managing your account? How frequently are they willing to meet with your team? Are they responsive to complex questions or requests should the need arise? These questions are critical to understanding the limitations on communication with an outsourced billing partner.
In general, you want to avoid setups where your account is being managed by an entry-level biller with little to no oversight. Challenges will inevitably arise, perhaps with new payers or expansions to new states. The last thing you want in these situations is to move on autopilot and clean up the mistakes after the fact. Having experienced account managers reduces the likelihood of this happening.
Another widely varying trait of billing vendors is the frequency of routine meetings. There are two fundamental considerations here: the level of time/commitment your team has to offer, and the amount of coordination and collaboration your vendor is prepared to bring to the table.
If your team has little time to dedicate to actively managing and monitoring the performance of a billing vendor, the additional time offered by some vendors may be less important. However, if your team can afford to be more hands-on, the right vendor can play a pivotal role in not just billing, but your entire revenue cycle.
This traditionally is a benefit attributed to in-house billing staff. As such, many providers who outsource will assume that an outsourced billing vendor will never take point in obtaining follow-up items/actions from different departments or team members. With the right vendor, using the right tools, this collaboration across the revenue cycle can be outsourced, as well.
Questions to Ask Service Providers
How much experience will the team working my account have?
Most important here are the actual billers, collectors, and payment posters. Account managers at many vendors are thinly spread across several accounts, leaving them little opportunity to get involved with your account.
What is your fee structure or pricing?
Don’t forget to inquire about any onboarding, termination, data conversion fees, etc. A trustworthy firm will be upfront with everything in their proposal.
Some vendors may not charge fees in these circumstances but have stipulations in their contracts to cut losses. For example, you may be required to provide notice of cancellation months in advance, or a minimum charge may be hidden in otherwise low pricing. Be certain you know what you’re walking into.
What’s your policy for repeat follow-up on denied claims?
If a claim denies, how many attempts will be made to resolve the denial? Are the claims sent back to you at some point, and if so, how much internal collections capacity do you need to retain to chase these problematic claims?
What systems/tools do you use to manage billing and claims follow-up?
The standard usage of your practice management system combined with clearinghouse tools is extremely limiting. These limitations can be overcome, but indicate a low-information, high-trust environment.
Be sure to ask what reporting or tools will be provided to you to aid in accountability. Even if custom systems aren’t in place the right vendor will still provide details and explanations on request.
How often will you meet with my team?
You get what you pay for, and with many vendors that does not include routine meetings or quick responses to escalated issues.
Take into consideration the management style of your team and ask this question when interviewing companies to find the right fit.
Do you use offshore labor, and if so, for what functions?
Medical billing companies of all sizes outsource aspects of their own operations to offshore companies to reduce overhead costs. This practice is extremely common, and it’s important to understand how it impacts your practice – and your patient experience.
Some aspects of billing & collections are straightforward and well-suited to outsourcing. Others are heavier on communication & collaboration, which can present challenges when language and cultural boundaries are crossed.
