Outsourcing Dilemma Of Electronic Medical Billing Software And Service

Statistics show that both in-house and outsourcedpayments to each individual client continue to
billing services may deliver superior or inadequateshrink because of the increasingly bad follow up.
billing performance. On one hand, only 5.66% ofIn the extreme case, when the electronic billing
"better-performing practices" outsource their billing.software and service provider has no ability to
In other words, the vast majority offollow up at all (for instance, when the service is
"better-performing practices" achieve adequateoffered at excessively low prices, such as 4%),
billing performance in-house. On the other hand,the provider ends up losing twice, first, by paying
less than 83% of payments are paid to ana fee for the automatically paid claims, and then,
average practice within the first four monthsby receiving no service on underpayments and
since the date of service. Worse, 59% ofleaving major part of earned compensation to the
in-house billers do not review explanations ofinsurer. On the other hand, the practice owner
benefits and 55% of billers have never appealed awith in-house billing operation has all of its billing
denied claim. In other words, the average medicalcapacity focused on followup for a single practice
practice delivers almost one fifth of its servicesand so the in-house billing service will necessarily
for free because in-house billing fails to providebring better results than the outsourced service.
adequate payment performance.Counter-argument analysis
Can an outsourced electronic medical billing
software and service improve or expedite1. Upcoding argument is irrelevant for doctors that
payments and reduce costs? This article revisitscode themselves using an electronic or even
key arguments for and against billing outsourcingpaper superbill. Next, if the biller is expected to
in light of increasing complexity and regulatorycode, then the practice owner must ensure that
scrutiny of billing processes.its compliance process protects both the practice
and the billing service. The penalties for
1. Arguments FOR outsourced billing service:noncompliance have been steadily escalating in the
2. Improved billing performance in spite ofrecent decade and today include financial,
continuously reduced fee schedules, growing billinglicensure, and imprisonment aspects. A practice
complexity, frequent audits, and payerwithout a compliance process faces a higher risk
consolidation into larger networksof failing a random post-payment audit and paying
3. Extra time and focus on patient care and/orhigher penalties than a practice with a formal
practice developmentcompliance process in place. Once a
4. Reduced operating costscomprehensive process is implemented fully and
Billing performance improvement is typicallyreliably, the practice owner eliminates major risk
measured in reduced accounts receivable, fasterregardless of having billing service in-house or
median payment, and reduced underpayment andoutsourced.
denial ratios. The practice owner uses the extra2. Measuring billing quality exposes the fallacy of
time for the family, patient care, or practicezero-sum argument. If a medical practice
development. The cost gains are typicallyperforming in-house billing demonstrates lower
measured in salaries and benefits of reduced billingpercent of accounts receivable beyond 120 days
personnel. It is important to keep in mind that athan the national average (17.7%) then its billers
10% improvement in overall billing quality meansdo have better followup performance and the
ten times more to the practice bottom line than acomparative analysis reduces to comparing total
1% reduction in billing fees. Therefore, if anin-house costs to billing office fees. Again, since a
outsourced billing service provider is able to10% improvement in overall billing quality means
significantly improve billing performance, costten times more to the practice bottom line than a
reduction may be marginal in comparison to a1% reduction in billing fees, an outsourced billing
total contribution to the practice bottom line.service provider charging a percentage of total
Arguments AGAINST outsourced billing service:collections has a larger incentive to improve
overall payment performance than to sell the
1. Upcoding riskservice to another medical practice.
2. Deficient follow upRecent progress made by industry leaders in
If the billing service charges a percentage of totalterms of overall billing quality and included services
collections, then, according to the upcodingconfirms this analysis. Aggressive upfront claim
argument, the service has an incentive to code ascrubbing, real-time compliance analysis,
CPT code with a higher return often contradictingautomated denial followup are just a few of
medical notes on hand. As the practice owner isactivities, provided by modern Vericle-type billing
ultimately responsible for the medical claims, suchsoftware to enable continuous improvement of
a billing service exposes the owner to upcodingbilling performance in step with growing scale and
felony charges. On the other hand, the practicenumber of clients. Other important developments
owner with in-house billing operation pays flatinclude billing workflow integration with practice
salaries to the billing personnel eliminating themanagement tools, including patient scheduling,
incentive for upcoding.electronic medical records (EMR) or SOAP notes,
The deficient denial followup argument is aand real-time reporting and alert generation.
variation of a "zero-sum argument." It is based onIn conclusion, abstract arguments for and against
an assumption that billing service provider'soutsourced electronic medical billing are pointless
capacity for a followup process is limited andas both sides can be shown right or wrong
clients must compete for it. A win for one clientdepending on specific and quantitative
must necessarily be a loss for another. By drivingperformance measures. Practice owners must
such followup activity down to zero, the billingestablish objective performance and compliance
service provider wins at the expense of everycriteria and use them systematically and within
one of his clients. The larger is the client base ofindividual practice context when addressing the
the billing service, the more it wins, while thequestion of medical billing outsourcing.