| Should a physician outsource medical billing | | | | accounts enabling your office manager to properly |
| services? | | | | send the information to a collection agency of |
| This is a very difficult decision for any physician | | | | your choice. In my opinion billing services that own |
| and partially boils down to this or her own | | | | collection agencies or establish close affiliate |
| personal ideology and comfort level. Hospital-based | | | | relationships with them are unethical and should be |
| physicians will almost always be better off | | | | avoided at all cost. Even though it is nearly |
| outsourcing because of the office related | | | | impossible to find a collection agency that does |
| expenses that they would not otherwise incur. As | | | | not have relationships with medical billing services |
| the owner of medical billing service you may think | | | | the point I'm trying to make is to be sure that |
| I'm naturally biased towards outsourcing. I can | | | | your billing service is independent and you have |
| assure you that this is not the case. Physicians | | | | the freedom to select a collection agency of your |
| who are overly controlling, uncomfortable or | | | | choice. This relationship presents a scenario |
| mis-trusting toward billing services are nearly | | | | whereby the billing service can simply go after the |
| impossible to administer. I don't want anything to | | | | easy to collect accounts and allow the more |
| do with those types of physicians but I | | | | difficult but still collectible ones to slip into the |
| completely respect and understand their point of | | | | hands of a collection agency who obviously charge |
| view. Setting all ideology aside I would like to | | | | a much higher percentage of collections. Again, it's |
| delve into the pros and cons of this difficult and | | | | easy to see how a billing service can facilitate or |
| complicated decision. | | | | erode your sense of control. The most reputable |
| 1. I am a physician who is very interested in the | | | | collection agency I've dealt with is a company |
| business aspect of medicine and I do not mind | | | | called Collection Information Bureau (CIB). I've |
| spending my valuable time managing the medical | | | | been doing business with them for years and |
| billing aspect of my practice. | | | | they have never attempted to establish an |
| Clearly, the best way to do your billing is to do it | | | | affiliate relationship with my company. CIB can be |
| personally. Obviously, doing it yourself is probably | | | | reached at 1-800-231-3514, contact sandy Lopez. |
| not an option but if you're willing to spend the | | | | Different types of billing services |
| time and have the interest I would recommend | | | | There are three different types of billing services. |
| that you do your own billing. Keep in mind that | | | | Fee per claim |
| most billing service owners and certainly our | | | | 50/50 |
| employees have limited medical backgrounds. | | | | Full service |
| Physicians who study CPT, regularly attend billing | | | | Fee per claim billing services charge a flat rate per |
| seminars and keep up to date on industry | | | | claim. The fees generally range between $1.25 to |
| changes are the ultimate medical billing gurus in | | | | $5.00 per claim depending upon the services |
| my view. | | | | provided. |
| 2. I am a physician who has absolutely no time or | | | | Advantages: |
| interest in the medical billing aspect of my | | | | · May be helpful to a brand-new practice who is |
| practice. I am completely reliant upon my office | | | | not fully implemented a computer system or is |
| manager and billing staff. | | | | still trying to decide whether to outsource. |
| Unfortunately, most physicians are in this position. | | | | · Practices with old or outdated computer |
| Even if they were interested in keeping up with all | | | | systems |
| the changes and elements of medical billing the | | | | · Relatively inexpensive cost per claim |
| practical reality is that there is absolutely no time. | | | | · Excellent for practices who have a problem |
| Let's face it; time is your most valuable asset. It's | | | | with only one particular payer group such as |
| sort of like mowing your own lawn. You'd be way | | | | Medicare or payers that require electronic claims |
| better off financially seeing patients for three | | | | submission |
| hours on Saturday morning. I believe the following | | | | · Physicians planning to retire within one year |
| information will dramatically help with your decision | | | | · Highly flexible |
| to outsource your billing or continue to do it | | | | · Low-volume practices |
| yourself and with future decisions in the | | | | · less employees |
| ever-changing business aspect of medicine. | | | | Disadvantages: |
| The pros and cons of outsourcing your medical | | | | Expensive for high-volume practices |
| billing services. | | | | Poor integrity of accounts receivable |
| I would like to preface this article with a couple of | | | | Lack of information systems |
| obvious but important points. If you have a | | | | Lack of control |
| system of controls, keep an open mind about the | | | | 50/50 |
| competence of your office manager, you've got | | | | 50/50 billing services install computer terminal |
| an excellent computer system, proper information | | | | terminals in your office. The billing service |
| systems and your office is doing a superb job at | | | | performs part of the billing process while your |
| collecting your money, then by all means do not | | | | office performs the other. As you can probably |
| make any changes. Conversely if you're planning | | | | tell from my list of disadvantages this is in my |
| to outsource your billing make sure you hire | | | | opinion the least desirable type of billing service. |
| quality firm. I'll spend some time at the end of this | | | | Advantages: |
| article discussing this further. | | | | · Less expensive than full-service billing services |
| Most leading experts agree that it costs about | | | | · Avoid the purchase of practice management |
| 4.5% of net collections to perform the billing | | | | software |
| function within a physician's office. Incidentally, this | | | | · Creates a system of checks and balances |
| is close to my actual cost as well. | | | | · less employees |
| Theoretically, a billing service should be able collect | | | | Disadvantages: |
| more money than a physician's office because it | | | | High set up fees |
| is our core competency. The question is how | | | | Low accountability from the billing service |
| much more? This is why I focus on how to | | | | Lack of control |
| choose a billing service at the end of this article. | | | | Communication Problems(all collection problems will |
| The numbers | | | | be blamed upon your office) |
| A. Lets just do the math in a theoretical model. | | | | Your staff will still probably wind up doing most of |
| We'll base our numbers on a practice whose total | | | | the work |
| gross receivables are $100,000 per month. | | | | Completely reliant upon the Internet |
| Obviously, this is an overly simplistic model | | | | Loss of data |
| designed to quantify the aggregate cost and or | | | | HIPPA issues |
| opportunity cost of the medical billing component | | | | Full-service |
| only. | | | | Advantages: |
| Current Aggregate Billing Expenses | | | | · completely remove the billing process from |
| In-house expense | | | | your office |
| Total gross revenue $100,000 | | | | · symbiotic relationship |
| Current billing expense $4,500 | | | | · avoid expensive computer system |
| (4.5%) --------------- | | | | · system of checks and balances |
| Net Revenue $95,500 | | | | · less employees |
| Outsourced Billing Expense | | | | Disadvantages: |
| Total gross revenue $100.000 | | | | · expensive |
| Current billing service exp. $7,000 | | | | · loss of control |
| (7.0% net collections) --------------- | | | | · patient relations |
| Net Revenue $93,000 | | | | · collection agency relationships |
| Net cost increase with outsourcing = $2,500.00 | | | | Should I outsource my billing checklist: If you |
| As you can see in this," all things being equal" | | | | answer yes to most of the following questions |
| theoretical model your practice would incur a | | | | then you should probably consider outsourcing? |
| $2,500 decrease in net revenue with the | | | | · Is your overall collection rate declining? |
| implementation of a billing outsource strategy. | | | | · Is your accounts receivable too high? |
| Keep in mind that this model does not address | | | | · Are you experiencing an increased number of |
| other less tangible issues such as your reduced | | | | denied claims? |
| payroll, computer expenses, ect. In reality the net | | | | · Is your overall frustration level regarding your |
| cost could be substantially less than $2,500. Many | | | | billing/business office very high? |
| physicians will perceive this as a small price to pay | | | | · Are you facing a major capital investment in |
| while others will consider it to be cost prohibitive. | | | | new hardware or software? |
| 5% theoretical increase in gross revenue with | | | | · Are your computer support fees to high? |
| outsourced billing | | | | · Are you having a difficult time keeping or hiring |
| Total gross revenue $105,000 (5% increase) | | | | experienced billing staff? |
| Billing service expense $7,350 | | | | · Are you spending too much time on the |
| (7% net collections) ---------------- | | | | business aspect of medicine? |
| Net revenue $97,650 | | | | · Are you concerned that your staff or office |
| $95,500 - $97,650 = $2,150.00 increase in net | | | | manager has knowledge of your income? |
| revenue. | | | | · Are you completely reliant upon your office |
| As you can see from this model with a 5% | | | | manager? |
| increase in collections your net revenue will | | | | · Are you planning to expand your practice? |
| increase $2,150.00 with the added expense of the | | | | · Do you believe that your practices cost |
| billing service. Keep in mind that a 5% increase in | | | | structure is too high? |
| gross collections is actually quite conservative and | | | | · Do you have several employees performing |
| should easily be obtainable by quality billing service. | | | | tasks that could be handled by a single more |
| Intangibles | | | | experienced manager? |
| B. A billing service should be able to provide you | | | | · Is your computer system obsolete? |
| with a substantial reduction in your day-to-day | | | | · Are hardware, software, and information |
| aggravations such as practice management | | | | technology disrupting the operation of your |
| software issues, fewer employees, hassle of | | | | practice? |
| hiring competent employees, less health insurance, | | | | How do I select a billing service? |
| less training, ECT..ect. Conversely you will however | | | | The service should fit or complement the size of |
| lose some control over your practice. If the billing | | | | your actual practice. Try to get a basic idea of |
| service does not collect more money your | | | | the size of the firm. A solo practice will most likely |
| expenses will increase. It's up to you to determine | | | | have greater success with a small to |
| whether or not the increased expense is offset | | | | medium-sized billing firm. Obviously, a solo family |
| by decreased aggravation.security | | | | practitioner would probably not be very well |
| C. A billing service should be able to increase your | | | | served by a publicly traded firm. |
| security levels by creating a system of checks | | | | Avoid long-term binding contracts. You should be |
| and balances. As a former police officer I can | | | | free to terminate your agreement any time |
| assure you that crime statistics indicate most | | | | within 30 days written notice. The agreement |
| embezzlement/fraud/theft occurs from within. | | | | should clearly specify what each side will do for |
| During an investigation a store manager for Sears | | | | the other. Make sure the agreement assures that |
| and Roebuck Co. once told me," our customers | | | | upon termination you'll receive a highly detailed |
| take it out piecemeal but our employees take it | | | | account receivable report [listed by individual |
| out in wheel barrels" This logic also applies to a | | | | patient] . |
| doctor's office. A billing service can provide an | | | | Ask for references and call the other providers! |
| extra layer of protection because there is a | | | | Inquire/investigate the actual owner of the |
| system of independent checks and balances. | | | | company. Ask to speak with the owner directly. |
| Typically billing services are fairly large businesses | | | | Avoid firms who offer too many different types |
| with strict internal controls. My organization | | | | of service. Medical billing is a very highly specialized |
| Medi-Bill Inc. Operates internally similar to a banking | | | | field. Companies who offer, collection agency |
| institution with the way we handle funds. It is | | | | services, payroll, financial consulting, tax consulting, |
| highly unlikely that the ownership of a reputable | | | | malpractice insurance, marketing services etc. etc. |
| medical billing firm would risk the consequences of | | | | are not in my view focused enough on what |
| committing fraud against a client. | | | | they're there to do. Collect your money! |
| Conversely, the issue once again boils down to | | | | Ask other physicians. Keep open mind about this |
| control. Many physicians are understandably quite | | | | one because physicians who are happy with their |
| unsettled at having their checks and | | | | billing company do not necessarily want them to |
| correspondence mailed directly to the billing | | | | grow and generally like to keep a low profile on |
| service. Further compounding this dilemma is," | | | | this issue. |
| what will happen to the checks and | | | | Is the billing service for sale? Try to ascertain |
| correspondence after the billing service agreement | | | | whether or not the firm has recently been sold. In |
| is terminated?"(Again, we will discuss alternatives | | | | your contract/agreement you should request to |
| to this at the end of the article) | | | | be notified within 30 days of the pending sale. In |
| Technology | | | | my experience billing services are constantly being |
| D. State-of-the-art practice management | | | | bought and sold. Sometimes the acquisition is a |
| software is an extremely expensive investment. | | | | positive thing but quite often the merger |
| If you've already invested in a high quality | | | | acquisition can be very detrimental. You should at |
| computer system I do not believe outsourcing | | | | least be notified and given ample time to make a |
| your billing would make much sense financially | | | | proper decision on whether you'll stay with the |
| unless your computer vendor is charging | | | | new firm or select another. |
| outrageous support fees. If you're considering | | | | Where will your checks and correspondence be |
| purchasing a computer system or a medical | | | | mailed? This delicate and important issue need not |
| record management system my favorite vendor | | | | be as complicated as it appears. Many physicians |
| who we've been working with for over 15 years | | | | for obvious reasons are reluctant to allow checks |
| is Office Management Solutions (OMS) based in | | | | and correspondence to be forwarded directly to |
| Tampa Florida. The owner's name is John Peake | | | | their billing service. Some reputable, high-quality |
| and he is by far the most honest and reputable | | | | billing services will not even provide services to |
| computer vendor I have ever worked with. OMS | | | | clients who insist upon having the checks and |
| can be reached at 813-963-5582 or | | | | correspondence mailed to them directly. I'd like to |
| If you need to update your system, purchase a | | | | spend a few moments on this important issue |
| new system or your support fees are getting out | | | | and explain the ramifications of exactly where |
| of hand this may be an opportune time to | | | | your checks and correspondence will be mailed. |
| consider outsourcing your medical billing services. | | | | Maintaining the integrity of your accounts |
| Financial security | | | | receivable is crucial! If your office routinely fails to |
| F. Many physicians, for obvious reasons do not | | | | properly mail copies of checks and |
| want their office managers/staffers to have any | | | | correspondence to your billing company your |
| in-depth knowledge of how much money the | | | | practice could be in grave danger of losing control |
| practice is making. A reputable and properly run | | | | of the accounts receivable. If your account |
| billing service can create this level of financial | | | | receivable is to maintain any semblance of financial |
| security. The best case scenario is for your | | | | integrity it is crucial that billing service employees |
| staffers to only see your expenses and have | | | | do not spend valuable time and effort following up |
| only a limited understanding of the revenue being | | | | on claims that have already paid and not properly |
| generated. This can also be accomplished internally | | | | forwarded to them. Understandably, your service |
| by making and recording your own deposits. If | | | | may even look upon this as an intentional effort |
| you're going to do your own billing I must | | | | to reduce their commissions. Again, bank lock |
| emphasize the importance of financial security. | | | | boxes provide a sound alternative to this dilemma. |
| You must create a system of financial security. If | | | | Some practices solve this problem by directing all |
| you don't have the time to personally open your | | | | checks and correspondence to a P.O. Box keeping |
| mail and make the deposits you are definitely a | | | | EOB's separate from other corporate mail. The |
| candidate for outsourcing. Many banks offer a | | | | checks and correspondence are mailed to the |
| "lockbox" where you can direct your checks and | | | | billing service," unopened" biweekly. This is an |
| correspondence. Bank lockbox services are | | | | excellent compromise and creates a system of |
| generally quite pricey. They usually charge about | | | | control. There are many other possible options |
| .25 per copy. You may also opt to take out your | | | | but the important point to remember is that ONE |
| own P.O. Box located adjacent to your billing | | | | entity must be completely responsible for the |
| company. This way you still maintain control of | | | | validity and integrity of your EOB's. |
| your checks and correspondence. | | | | Make sure all checks and correspondence are |
| Collection agencies | | | | issued under your tax identification number and |
| G. Many billing services own or have affiliate | | | | made payable to you! Make sure your contract |
| relationships with collection agencies. You'll most | | | | agreement specifies that the billing service will not |
| definitely want to avoid this situation. Make sure | | | | countersign or attempt to countersign your |
| your billing service provides you with a monthly | | | | checks and correspondence. |
| report containing proper information on delinquent | | | | |