How To Know If You Should Outsource Your Medical Billing

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Medical billing is one of the most complicated, time-consuming parts of running a practice. A 2018 study published in JAMA found that billing and insurance related activities can take anywhere from 13 minutes for a primary care visit to 100 minutes for an inpatient surgical procedure. Understandably, as practices grow, many providers face a breaking point in which they must take an objective look at their workload and determine whether their medical billing and coding should be done in-house or through an external service.

We spoke with DrChrono medical billing and RCM expert, Mursal Ahmad, to better understand what to look for, whether you’re a new practice or an established provider who wants to ease the burden on staff.

When Should You Outsource Billing?

As a rule of thumb, a provider should consider outsourcing billing when new patient volume and claims volume become unmanageable and work starts spilling out to after hours. According to Ahmad, that means that at the end of the day, there are completed appointments with either charges not entered or claims not billed.

Additionally, practices need to look at their net collections rate to determine whether they can afford a revenue cycle management system. More specifically, practices should review metrics such as the number days in AR, clean claims rate and denials rate.

“If anything is spending 50 days or more in AR, there is a very serious problem worth looking into. A typical benchmark for a practice should be about 30 to 35 days,” said Ahmad.

“If your clean claims rate is below 85% then something is wrong with your practice’s RCM strategy. Similarly, a denials rate over 10% indicates that there’s something wrong with your RCM workflow.”

Though these numbers provide guidance, some practices still might only be comfortable handing off select billing tasks to an outside organization.

“Some customers want to keep coding and patient support in house, while allowing RCM services to manage their claim submission and their receivables,” Ahmad explained.

If a client prefers, they can continue to code their claims and have it reviewed for accuracy. From there, the RCM team can change the codes themselves if the practice allows them to do so. The provider could also receive a note explaining the team’s findings and suggestions, so that the practice can update the codes if they agree.

However, not everyone searching for medical billing companies is an established practice. Providers looking to start an independent practice should also consider these options if they aren’t already properly credentialed with a strong understanding of how to code their claims. A good billing and coding service can serve as a springboard for these early stage practices until they’re more comfortable with the billing process.

Ahmad points out that RCM companies can cover everything from obtaining the NPI number to getting them credentialed with the payers, and especially knowing which CPT codes they can and cannot bill for. This gives practices a lot of space to focus on the care they give and growing as a business.

What to Look For in a Revenue Cycle Management Service

Once a practice is ready to bring on an outside billing service, it’s important to know what to look for in a revenue cycle management (RCM) company. Ahmad recommends starting that process of discovery with some more introspection.

“What are your expectations from an ideal billing service? Those sorts of things need to be thought about from a practice perspective first. What do you want to achieve when outsourcing your RCM?”

After developing some concrete goals, your practice will be able to precisely refine its needs and communicate them to your new billing service. Typically, RCM services will charge a percentage of your total collections rate, or a bare minimum monthly or annual fee, so make sure you have a general understanding of the revenue you expect to generate each month.

Secondly, consider how much support an RCM company offers. If you anticipate having a lot of questions after business hours, particularly as a new practice, you should seek out a service with a ticketing system to accommodate that. It’s also recommended to work with an organization that provides a dedicated account manager for your practice as a main point of contact and an advocate for your practice.

Your practice may want to be able to completely hand off all billing when you look to outsource. Even if that’s the case, transparency is paramount to a productive relationship between a practice and an RCM organization.

“First, we do not want to bother you with any unnecessary billing issues unless we absolutely have to. The only time we will ask you for something is if there was information we cannot obtain from the chart or note ourselves,” says Ahmad.

However, she always makes a point to be very transparent about the work that she does. At any point in time, she can show a provider where their claim is in the revenue cycle process, and they can see the work that she’s doing in order to try to get the claim paid. She wants that information to be very clear to a practitioner, so that if anybody wants to take over the account from the practice’s side, they can do that with just a click of a button.

Billing and coding are difficult but essential functions for every medical office. How you manage them is a defining decision for your practice, and revenue cycle management services can certainly go a long way in simplifying and improving that process in both the short and long term if you do it correctly.