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In-House or Outsource?

According to numerous surveys, doctors and hospital executives claim that payment collection for services rendered is one of the most important issues they face today. An overly complex system of rules, regulations and participants has forced many medical practitioners to invest considerable time and resources to billing and payment collection.

Managing the vast amount of paperwork, while staying abreast of the complicated rules, statutes and protocols related to medical billing and following up on unpaid claims from insurance companies and patients has become one of the most distressing and time-consuming aspects of a physician’s daily routine. The medical billing revenue cycle takes too much valuable time away from patient care.

There are two ways to manage the medical billing process:

1. In-house, using internal staff and medical billing software
2. Outsource to a third party billing service

Making the correct decision on which option to use, In-house or Outsource, is one of the most important decisions a medical practice can make, because managing billing and collections is the core of a practices cash flow. Many medical practices provide great patient care, but suffer financially or go out of business because they neglect to manage their billing and collections effectively.

Which method is the best for your practice, In-house or Out-source? The information below provides guidelines for each of these options

The reasons a practice would chose In-house are:

 They have internal staff with medical coding expertise, preferably a CPC.
 Internal staff can accurately input and submit charges in a timely manner.
 The staff has the ability to effectively follow up on denials or underpayments.
 Their claims denial rate is below 8%.
 They have the ability and desire to manage patient billing and collections.
 Their accounts receivables balance is less than twice their average monthly collections.
 They have low staff turnover.
 They have a good medical billing software system.
 They have good IT equipment and communications systems and the ability to manage and maintain them.
 They have a good Clearinghouse and can manage that relationship.

If your practice cannot say “yes” to most of the points listed above, or if you do not know the answer, you should explore what outsourcing your billing could do for your practice, especially if your claims denial rate is above 10% and your accounts receivable balance is higher than twice your monthly collections.

Outsourced billing can be an attractive alternative given the strong incentive to perform, as most outsourced billing companies are compensated as a percentage of your collections. A performance based fee schedule motivates the vendor to maximize reimbursement for the practice, which is why most practices realize a 10 to 20% increase in collections (some as high as 50%!) when they switch from In-house to Outsource billing. And since the vendor does not get paid until after the practice is paid, there is a high level of motivation to speed up the billing/reimbursement cycle, which of course, improves cash flow. Billing services tend to have much more knowledgeable and experienced billing staff than a typical practice would employ. They are dedicated to medical billing and keep current with government and insurance carrier rules and requirements, which mitigates audit exposure and gives medical practices peace of mind.
The reasons most practices chose to outsource are:

 Simplify the billing and collections process
 Save staff time and headaches
 Eliminate staff turnover concerns
 Focus more on patient care
 Eliminate the potential for under or over coding
 Process claims faster and cleaner
 Prompt follow up on denied or underpaid claims
 Increase revenue
 Improve cash flow
 Reduce audit exposure
 Peace of mind

Outsourcing your medical billing to an outside professional medical service provider is for many practices the simplest, most cost effective and highest income generating choice. With claim submission and payment collection in the hands of a well qualified vendor, physician practices have more time and resources to focus on patient care and business growth.