Patients, doctors, hospitals and others spend approximately $425 billion every year on administrative waste and redundant medical care, says Avisena CEO and founder Albert Santalo.

That translates to 25 percent of annual health care spending amounting to $1.7 trillion. Doctors and insurance companies spend an additional $100 billion each year on paperwork, he calculates.

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While Santalo does not think all of that money is wasted, he does believe that his company’s software can cut those numbers down. Miami-based Avisena makes software that handles the appointment and billing processes, among other things, for doctors’ offices, letting staff concentrate on medical work and outsource administrative tasks.

“We founded this company to improve the picture of the health care industry, to help the provider, the doctor, in his or her struggle to get paid,” Santalo says. “Our staff goes after what the doctors are owed so they can practice medicine.”
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Avisena offers comprehensive practice and revenue management services, such as claims submission, payment posting and insurance collections, as part of back-office management. All are accessed through Web-based platforms.

The company also offers Web-based systems for appointment schedulers, front desk management, payment processing and patient registration. It also offers its clients consulting services on provider licensing, managed care contract negotiations and assistance with government program applications.

Avisena works with small and large practices, with a large portion of its clients being specialists. Among them is Cosme Gomez, a Miami urologist, who has been an Avisena client for about seven months.

Avisena’s Web-based software platforms helped Gomez and 13 urologists form a practice under one tax ID number as well as streamline their billing.

“To describe them as a billing company would not do them justice,” Gomez says. “They provided us with an excellent practice management and billing software. But more importantly, they have been our backbone for business logistics and operations.”

Santalo says the company, which was founded in 2001 and has about 90 employees, is growing at a fast clip, with 300 percent to 400 percent revenue growth in its first year, and about 100 percent in growth each year since. He expects to hire more people for the back-office operation as well as customer service.

“We are increasing our accounts on a national scale. We plan to be a big company,” Santalo says. “At the end of the day, we want the providers to practice medicine, not be bill collectors.”

Integrated with Professional Charge Capture and Charge Data Master, Technical Charge Capture provides management and reconciliation of point-of-care technical charges, such as materials and medications, facilities charges, and technical procedures. Cross Reconciliation Engine(TM) provides data cross analysis between professional and technical sides to locate missed charge opportunities. Software also includes real-time dashboard view of all entered and outstanding charges.

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Lahey Clinic Medical Center Signed as Beta Site

BOSTON, Dec. 19 / — MedAptus[R] today announced the launch of the latest addition to its family of revenue cycle solutions, Technical Charge Capture. The solution provides for comprehensive management and reconciliation of point-of-care technical charges, including facilities charges, technical procedures, materials and medications. The company additionally announced that the prestigious Lahey Clinic Medical Center, based in Burlington, Massachusetts and a MedAptus customer since 2001, has agreed to serve as a beta site.

MedAptus’ Technical Charge Capture is seamlessly integrated with its Professional Charge Capture, which supports physician coding and compliance at the point-of-care. The two products utilize the MedAptus Cross Reconciliation Engine(TM), a powerful tool capable of driving revenue improvements through data cross analysis between the professional and technical sides to locate missed charge opportunities. In addition, common data elements auto-populate between the systems greatly reducing administrative burden and improving compliance.

Medical billing services cover a wide range of activities but the main goal of any medical biller is to process physician super-bills (treatment description) and file claims with insurance companies to ensure that their clients are paid the proper amount in a timely fashion.

A typical medical billing business, working independently from a hospital or clinic, uses medical billing software to input clients’ new billing data and send it to the appropriate insurer, while also adhering to all the appropriate laws and standards. Medical billing services also include answering patient and insurance company questions and concerns, and follow-up in the case of overdue payments. Using the medical billing software at their disposal, medical billing companies often generate reports for their clients so they can see a cash flow analysis and discover what insurance contracts are making them money and which ones are not.

Medical billing services combine the skills of interpersonal communication, bookkeeping, office and computer skills, with basic medical knowledge to provide clients with an accurate and efficient method to be reimbursed for their services.

Other medical billing services can be to provide information to a client on how to more effectively manage their practice. Physicians and hospital/clinic staff often find themselves at odds with one another over billing issues, especially when it comes to how to process billing information. Medical billing businesses sometimes offer training to teach hospital and clinic employees how to more efficiently and correctly process claims and follow-up on collections.

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Medical billing is an increasingly popular office or home-based small business opportunity that involves using skills and knowledge in medical terminology, insurance claims, and customer service to ensure that physicians and clinics receive payment from patients and insurance companies.

Whether working from home based small-businesses or at large hospitals, every medical biller utilizes medical billing software. Though still referred to as medical billing software, today’s electronic medical billing software is also more accurately called medical practice management software and covers many functions. Up-to-date medical billing software will generate a variety of reports based on data, manage appointments, as well as collect, transmit, and track billing information and payments. Current medical billing software will also make sure that records are kept in compliance with the Health Insurance Portability and Accountability Act security standards. When deciding on software to buy, compliance with this act is an important consideration and will help you steer clear of some of the software scam artists out there.

When considering software for a medical billing business, here are some things to ask yourself or potential suppliers:

• Does the software include the ability to manage several different accounts?
• Can the software handle multiple doctors or multiple offices?
• Does the software recognize current procedure and diagnosis codes and it is updatable for the future (very important!)

Many vendors will allow a trial use of their program to see if it fits your needs. You will also be able to address whether the supplier answers questions in a timely fashion and if the are helpful in a trouble-shooting situation. Remember that a good medical billing software suite will cost at least $500 so don’t be fooled by people trying to sell $50 products that don’t even function.

Though electronic billing is still mainstream, there is a movement towards online billing where a subscription is setup on the web allowing a paperless entry of patient information, claims, and more. This service will cost more than $200 per month so you have to research and weigh the benefits of a one time investment for electronic medical billing software that is local or the online web-based software that can be used from any web-connected computer or device.

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A growing number of professional, experienced health consultants and medical claim processors are needed in the country today. Healthcare is such a large and technologically driven industry that knowledge and procedures used today are likely to be seen as far outdated only a few years from now. To keep pace with all the various procedures, techniques, and technologies available and distinguish one from the other in a clear manner, definitions are made and coded for every kind of surgical procedure, diagnosis, and complaint. These definitions and codes help doctors ensure that they are compensated accurately for their services by the health insurance companies.

Medical billing is the process by which the needed data for completion of all the necessary forms (insurance cards, patient info, encounter forms, diagnosis, treatment, etc) is collected and processed for payment. This data is then entered into one of a variety of competing medical billing/patient accounting software programs. Medical billers are also responsible for following up using effective paperwork and time-management skills. Having been trained to understand an insurer’s EOB (explanation of benefits), the medical biller must review all claims for errors. If not all of a patient’s balance is covered by insurance, the medical biller has to decide if the balance will be written off or billed to the patient. The main job of the medical biller is to ensure that the physician or facility receives optimal reimbursement for services rendered. Weekly, bi-weekly, and monthly reports are often generated by the accounting software to show the client (physician, facility) whether they are losing or making money on various insurance contracts.

Besides the above main responsibilities, a medical biller must have or develop the following skills:
• Understand and be able to explain insurance terms and benefits to clients and patients
• Accurately read and complete claim forms
• Perform bookkeeping activities
• Bill insurance companies and patients promptly and accurately
• Handle everyday medical billing procedures
• Document all activities using the correct terminology
• Schedule appointments
• Follow-up with insurance companies and patients on unpaid bills

Medical billing is a growing opportunity to the ever-expanding health industry and many people are finding satisfying and well-paying careers working both at hospitals or small clinics and from home running their own medical billing small business.

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Medical billing software reviews are one of the easiest ways to find out important facts regarding the function and use of certain types of medical billing software, as well as their limitations.

One software package that regularly garners superlative reviews is Lytec medical billing software. Computer experts and users alike agree that Lytec software has many positives, including a clear interface and a simple approach to the medical billing process. The Lytec software suite tracks claims management, patient billing, insurance, and scheduling in a single package. The result is a workspace with a seamless quality in which a group of diverse functions, from electronic medical records to healthcare forms, behave in an integrated and coherent way.

A busy medical practice of any size can be a volatile environment, and a system that breaks down under heavy use is a real liability in this business. Lytec medical software is secure, auditable and completely expandable to your specific needs. More importantly it’s simple enough to configure yourself.

NueMD is a medical practice management software created specifically for medical offices that also has received positive reviews. Comments have ranged from “NueMD is a functional and no-nonsense practice management solution transported over the Internet,” to ”NueMD allows online eligibility verification done by the client, claims submission, reporting, and analysis. This software is first-rate and is priced less than most systems of its kind.” Other reviews have indicated that the software is a success in small solo medical practices as well as large-scale operations, owing to its reasonable price and ease of use. The ease of use came up often, especially in terms of even a novice being able to pick it up quickly.

eClinicalWorks, another popular medical billing software provider, also earns a mention. It is considered one of the leading providers of integrated uninterrupted ambulatory EMR (Electronic Medical Records) and PM (Practice Management) systems for multiple-local medical practices that include diverse specialties. eClinicalWorks is an award-winning company focused on customer care and satisfaction. KLAS a research and consulting firm dedicated to improving the performance of healthcare information technology providers recognized eClinicalWorks, with its distinguished “Best in Klas Award” 2004. This accolade is considered one of the most important honors in the field.

Any of these three types of software are likely to provide the clarity, ease of use, and technological sophistication you require.

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Every healthcare provider, including dentists, surgeons, doctors, or chiropractors, is entitled to receive money for their services. Medical billing companies are setup to make it easier for them to wade through the murky waters or regulation and insurance company code to ensure proper and timely reimbursement.

Employees trained by medical billing companies are trained to understand health insurance and the healthcare industry in all its complexity. Their individual responsibilities are then to bill patients and insurance companies based on the proper codes according to their superbill (treatment record). Then, they have to follow up on claims and answer any questions regarding billing. In addition, medical billers must submit reports and help their clients to understand the positive and negative aspects of their cash flow.

There are many large medical billing companies to choose from and they all offer a range of services. Any full-service medical billing company should be able to offer the following:

• Expedite the claim/reimbursement process using advanced software and expertise
• Follow up on unpaid bills with both patients and insurance companies
• Provide accurate and timely feedback on their client’s practice in the form of reports
• Stay up to date on all new regulations

Good medical billing companies help clients to increase their revenue by getting claims reimbursed quickly and accurately.

Besides the many large medical billing companies, there are also many small one or two-person businesses that operate from homes across the nation. These small-business medical billing operations have the advantage of more personal attention to their client’s needs. Anyone with sufficient training and expertise can run an effective home-based medical billing company if they dedicate themselves.

When looking for medical billing companies, it is important to shop around. Larger companies may let you have a trial period so you can see if you like the way they handle your billing issues. Whether you decide to try a small or a large medical billing company, be sure to ask for references and address any concerns you have upfront so you can make sure the arrangement is positive on both ends.

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As the business of running a medical practice becomes more competitive, many practices are turning to a third-party medical billing service for cost effective solutions to maintain maximum profitability. In evaluating any medical billing service agreement there is an array of factors that should be taken into consideration - pricing of services is principal among them. This article compares the two most common pricing approaches offered by medical billing services – Percentage Based Agreements and Flat Fee per Claim – and identifies some of important points to remember when selecting a medical billing service provider.

Percentage Based Agreements:

Probably the most common approach to pricing by medical billing services is the percentage based agreement. In this type of agreement, the medical billing service’s fees to the practice are based on a percentage, usually in one form or another of the following:

• Percentage of collections,
• Percentage of gross claims submitted by the billing service,
• Percentage of total collections for the overall practice.

With the first type above, percentage of collections, the medical billing company charges the practice only on net received for those claims in which it has directly assisted in collections (typically excluding monies collected at the office, such as co-pays, deductibles, etc.). This is the purest example of how a percentage based agreement will tie the medical billing service’s success to the practice while safely limiting it to that which they have some measurable ability to affect. This type of percentage based agreement benefits the practice by its “self-policing” quality- the medical billing service only makes money when the practice makes money.In our second type, percentage of gross claims submitted by the billing service, the practice is charged a percentage of the total amount submitted to insurance companies and other payers. This can be tricky for two reasons. First, the rate billed to an insurance company is not always the same as the negotiated rate that will be paid. So a seemingly competitive percentage from one medical billing service can be drastically different from another medical billing service depending on where the percentage is applied. Second, some of the incentive mentioned above is removed for follow up on claims as there is no tie-in to the results of medical billing service’s submissions.

With a percentage of the total collections for the overall practice, the billing service charges for the total net received by the practice. It includes co-pays, deductibles, and any other monies collected at the office, not just by the service. This arrangement is most commonly found with full-scale practice management companies who not only handle medical billing but might also administer staffing, scheduling, marketing, fee schedule negotiations, etc. In this arrangement, the medical billing service can be driven by incentive to follow up on claims with payers, but gains some protection to its revenues through the other sources of payment coming into the practice.

Rate Variability within Percentage Agreements:

A medical billing company will consider several variables in defining the rate charged to the practice in a percentage based agreement. Rates can range from as little as 4% to as high as 14% or even 16%! Factors influencing this variability include claim volume and average dollar amount of claims, as well as service considerations like level of follow up performed by the medical billing company, whether or not patient invoices will be sent by the billing company, and many others. Let’s take a look at some examples of how these variables influence medical billing service rates.

EXAMPLE 1:
Regarding claim volume and dollar amount, let’s consider the example of practice A and practice B. Both are looking for a medical billing service offering claim generation, carrier follow up, patient invoicing and phone support. The average claim for practice A is $1000 and they average of 100 patient encounters per month. Practice B has an average claim of $100 with 1000 encounters per month. While the gross amount billed is the same, the difference is staggering for the billing company who will need to project nearly 10 times the staff hours for practice B to yield the same return as from practice A.

EXAMPLE 2:
With respect to services offered, let’s consider practice C and practice D. Both practices average around 1000 claims per month, and each claim averages around $100. Now, practice C is looking for a billing service to handle complete claim lifecycle management- carrier follow up, submission to secondary and tertiary insurances, patient invoicing and support, report analysis, etc. Practice D collects patient balances at the office so they don’t require invoicing services, and they plan on doing the carrier follow up themselves. Thus Practice D only requires the medical billing service generate and submit initial claims to carriers, and maybe submit a few secondary claims each month. In this example, the gross claims submitted is roughly the same, but practice C might anticipate a fee significantly higher - potentially double that of practice D - due to the extensive work involved in providing these other support services. (Keep in mind practice D will also need to consider additional staffing to perform these activities in-house, which will most likely not offset the cost of allowing the professional medical billing company to manage the process.)

These two examples clearly demonstrate the basic factors that influence the rates when considering percentage based medical billing services. While there are numerous negotiating points where a practice can save on general costs, they should consider what other costs may arise later to manage the services not provided by the medical billing company.

Pros of Percentage Based Agreements:

• Percentage Based Agreements directly tie the success of the billing company to the success of the practice if they based on collections.
• Practices can often choose which services they require for potential short term savings.

Cons of Percentage Based Agreements:

• Short term savings garnered by keeping some billing activities within the practice can lead to long term costs in additional staffing.
• Small claims may not be addressed as vigorously. For example, consider a $5.00 patient invoice with a medical billing service charging 8% on collections. The medical billing service would actually lose money in pursuing the claim. Adding up the cost of postage, envelope and paper, as well as staff time for printing, stuffing and mailing, it would be more than the $0.40 that would ultimately trickle back to the service.

Flat Fee per Claim:

Another common approach to pricing offered by medical billing services is what we’ll call Flat Fee per Claim. With flat fee pricing the medical billing company charges a fixed dollar rate for each claim submitted, regardless of the size of the claim.

Similar to percentage based agreements, flat fee per claim pricing can vary significantly depending on the volume of claims and the extent of services provided. In its most basic form, a fee per claim medical billing service might provide only claim generation and submission services for as little as a dollar or two per claim. In this case it would be the practice’s responsibility to follow up on claims. Of course flat fee per claim pricing can also include other services such as follow up with carriers, patient invoicing, etc. With these additional services, practices might expect costs to increase to $4, $5 or even $7 per claim or more.

Dependent on the practice, the flat fee per claim can be cost effective, but should be considered carefully. Follow up with insurance carriers and the bureaucratic problems should not be overlooked. In some cases, once the medical billing company has submitted a claim, they might make a phone call or two; but they’ve done the submission and the transaction is billable to the practice, regardless of how it’s paid out. Fee per claim pricing doesn’t have the inherent incentive like some types of percentage agreements. Nonetheless, it can be the solution if you have the resources to manage the follow up, or if your familiarity with the medical billing service is strong enough to trust in their follow up.

Pros of Flat Fee per Claim:

• Fee per claim pricing has the potential to be more cost effective, particularly on higher priced individual claims.

Cons of Flat Fee per Claim:

• If carrier follow up is included with this service, the medical billing company has little incentive once the initial claim has been submitted. Moreover, it can be near impossible to evaluate how rigorously a medical billing service is following up.
• If carrier and payer follow up is not included with the service, the practice must manage it in-house. Inevitably, hiring and training new staff or allocating time of existing staff leads to increased overhead, often offsetting the benefits of using a medical billing service in the first place.

Hybrid Approach:

The final example in this discussion is what we’ll call the Hybrid Approach, which takes advantage of percentage based agreements and flat fee per claim approach. Through this pricing method, a medical billing service might apply a percentage to certain insurances and patient balance bills, then apply a fee per claim for others. This approach is usually siloed by carrier or claim type, in that it would use the percentage for all claims to carrier X, and flat fee for all claims to carrier Y.

The hybrid approach has become more common in certain areas of the US over the past several years as some insurances frowned upon percentage based agreements. An example was seen when the state of New York rendered percentage contracts on state Medicaid claims illegal, requiring medical billing services use the flat fee per claim option. The principle concern arises from a few unscrupulous billing services who believe “up-coding”, or submitting false claims for higher priced services, is the easy way to increased profits. While these few services threaten to tarnish the reputation of an entire industry, those bona fide medical billing services seeking long-term growth and profitability clearly realize that small gains won from illegal activities are no way to sustain a successful business.

In short, the hybrid model allows honest billing companies the chance to tie their successes to that of the practice while respecting the concerns of those insurances guided by formal legislation.

Summary

When medical providers and practices consider teaming with a medical billing company, they have an array of options. Flat fees per claim may appear more cost effective in the short-term, but the potential for revenue interruption due to poor follow up by the medical billing service provider, or the need to hire and train additional in-house practice staff to handle the follow up on its own, will undermine the initial cost savings to the practice. Agreements based on a percentage of collections are self policing and ensure the medical billing service will pursue reimbursements rigorously.

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Medical billing service providers come in many different shapes and sizes. At one end of the spectrum are large Practice Management Companies, with an extensive network of support but sometimes rigid and expensive. At the other end are small, home-based businesses. With more and more programs offered through local colleges, mail order and online, home-based businesses are popping up everywhere. Somewhere in the middle of these two extremes is what we’ll refer to as Professional Medical Billing Services. When considering your options, it is important to understand what each type of medical billing service provider has to offer and which is best for you. This article discusses these common types of medical billing service providers and some of the services they offer.

Home-Based Medical Billing Businesses vary significantly from one to the next in experience, ability and services offered. Many are small start up businesses with only one or two employees. Some offer extensive experience from previous employment in a doctor’s office, others may have only one or two clients. While these service providers can offer the highest levels of customization, a small, home-based business can sometimes run short of management knowledge and business acumen to be there for the long term. And what happens to practice cash flow when the solo biller decides to take vacation? Most provide the core services of medical billing (discussed later) and many have other personal experience to offer ancillary services.

Practice Management Companies are typically larger firms that may have 100 or more employees. Most true practice management companies take a holistic approach to supporting your practice, in that they seek to handle all facets of managing the business- including medical billing, marketing, staffing, and even patient scheduling. Although some providers might be excited about the opportunity of having a practice management firm take all the “trouble” off their hands, others find it stifling to have someone else running their business. While their offering can be comprehensive, those providers interested in working with a practice management company should read service agreements and contracts carefully to make sure they know exactly how their practices will be “managed.”

Professional Medical Billing Services fall in between the extremes of home-based medical billing businesses and the practice management companies, leveraging the strengths of both and eliminating the weaknesses. With a few dozen employees, Professional Medical Billing Services can offer greater flexibility than a practice management company, but more structure than the home-based service. Clients often find medical billing services have the sustained network of support to eliminate interruptions to cash flow from vacations or unexpected leave time, while simultaneously offering personalized services tailored to meet their needs.

As you consider each type of medical billing company, it’s also important to think about what services you need, which services you can handle in-house, and what expectations you have your medical billing professional. Each of the types mentioned above should be able to offer the following standard services; though service delivery, flexibility and customization can vary widely.

Standard Medical Billing Services Standard services offered by medical billing companies are generally similar across the range of companies discussed above. There will be variations in the level at which those services are provided. Again, experience and size play a key role in defining where the variations might be. Regardless, the following list identifies the most basic services provided by any well organized medical billing company.

Claim Generation and Submission Claim generation includes entry of patient demographic, insurance and encounter information into medical billing software. Claim submission is the process of sending that data to the carrier, either electronically through a clearinghouse, or via paper submission in the mail. With electronic medical billing, services should apply one or more “scrubbers” to the claims (and manual quality checks to paper claims). Scrubbers are quality assurance checks of diagnosis and procedural codes for errors or mismatches typically integrated into premium medical billing software programs.

Carrier Follow Up Carrier follow-up is an integral part of the medical billing industry- arguably the most important aspect. The quality of a medical billing service is often defined by the level of follow up they apply to claims and will have an enormous effect on reimbursements. Through follow up, medical billing companies are able to isolate those claims that may go unpaid, or partially paid, and work with the provider and carrier to make sure edits and resubmission (if necessary) are clean.

Secondary, Tertiary and Workers’ Comp Claims These special claims usually require special consideration and handling as they often entail additional documentation. Service providers can sometimes get bogged down in the details required for these unique claims if not experienced and prepared.

Practice Reporting and Analysis Reports can be generated through almost any medical billing software, but how often and with what depth will your medical billing service provide these reports? Reports provide critical information about avenues for practice improvement such as directions for growth, cost savings and ways to increase profitability. The importance of reporting cannot be overstated for monitoring the health of the practice. Reports should be provided at least monthly, and experienced medical billing service providers should be able to make recommendations on how the practice can enhance profitability.

Patient Invoicing and Support Patient invoicing is a very detail-oriented process, but if done properly it can significantly enhance practice revenue. Nonetheless, balancing accounts, printing statements, stuffing envelops and applying postage can be very time consuming. And once patient statements are sent, someone will inevitably have a question about their bill. A good medical billing company has the infrastructure to support patient inquiries with customer oriented approach showing they understand their conduct is a reflection of your practice.

Other Services As most medical billing services are well experienced in the inter-workings of a medical office, other services that may be offered. Some lateral practice services might include the following.

Credentialing Credentialing may be of particular importance to new practices. This process of “signing up” with carriers for the first time can be tedious and overwhelming, especially when just starting out. Credentialing services are also an asset to established practices as another way of growing into new business. Many medical billing companies bring the experience of working with carriers to help make your credentialing painless.

Medical Coding A natural extension of the medical billing service is medical coding. Coding is really the first step of the billing process, preparing the diagnosis and procedural information for entry into the medical billing software.

Transcription With wide experience in the medical practice support field, it is natural for many established medical billing companies to broaden their offering to include transcription services. The familiarity with HIPAA requirements and in-depth knowledge of the insurance industry support this natural addition to practice support services.

HIPAA Compliance The detailed requirements of HIPAA are not limited to healthcare practices, they extend to anyone handling patient information. Medical billing services well versed in the responsibilities outlined by HIPAA often develop programs to assist their clients in maintaining compliance.

Summary Partnership with the right medical billing service is vital to your practice’s success. Just as with finding a good accountant or lawyer to support your practice’s needs, it is imperative you are comfortable with your medical billing service provider- they are the key to your revenue flow. There are many different types of medical billing service providers to choose from, each with its own set of pros and cons. The key is deciding what type of medical billing service provider you are most comfortable with and growing an open working relationship that will help you reach prosperity.

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There are many reasons healthcare practices might outsource their billing to a professional medical billing service; confusing insurance requirements, staffing problems and just keeping up with industry changes are a few examples. In the end though, the reasons most medical billing companies hear about come down to the two driving principles of any business – Time and Money. This article discusses how medical billing services are able to create significant savings in time and money for healthcare providers.

Medical Billing Services Save Training and Research Time - Some readers might take the short view and think medical billing companies just enter data into a computer and send it off to a clearinghouse. In reality medical billing is a detailed process requiring specialized skills and in-depth knowledge of medical practice management, insurance industry practices, and the regulatory framework around state and federal laws. Professional medical billing companies invest countless hours in training and research to keep abreast of current codes, submission requirements, industry trends and the needs of their clients.

Significant expenditures are also made to ensure medical billing companies are up to date on the latest software. In a constantly changing industry, software vendors are always finding new and better ways of supporting practice needs. It’s not practicable for small or medium sized practices to dedicate the time necessary to stay on top of the latest innovations.

These investments of time by professional medical billing services are often not considered by providers, but they eliminate endless hours otherwise spent in seminars, meetings with vendors, or on the phone with clearinghouses and carriers. This time savings creates a valuable commodity for a practice seeking the edge necessary to keep up with a rigorous patient schedule.

Medical Billing Services Save Operational Time -Medical billing services are able to save operational time by leveraging the economy of scale and the efficiency of task specialization.

Professional medical billing companies, by their very nature, create an economy of scale in maintaining a team of medical billing professionals to provide services across several practices. This structure creates a well trained pool of resources to manage each practice’s needs rather than just one individual overseeing all billing functions. The team approach also removes interruptions to revenue flow that result from vacations, unexpected sick time and staff turnover.

Task specialization among teams further heightens the efficiency of medical billing companies. Through task specialization, a team of billers can accentuates individual skills and reduces distractions of other activities.

Consider a provider who sees an average of 30 patients per day, or a total of 150 encounters per week. The time required to generate and submit 150 patient claims and follow up with insurance carriers with a high lever of accuracy can take up most of the time of an in-house biller. But this is just the beginning. That same individual will also need to follow up on denied or partially paid claims, researching why and resubmitting for further review. Patient invoices require additional time- printing, stuffing and mailing- as well as posting payments, running reports and providing detailed analysis on the current state of the practice; all this just to meet the standard offering of professional medical billing companies.

Through task specialization, medical billing companies might offer each of its clients several billers submitting claims and reviewing insurance payments with the highest level of accuracy. At the same time, the service might have other individuals or groups dedicated to managing patient invoices and questions across several practices with increased efficiency. This approach maximizes the time available for each activity by specialists with a greater knowledge of their roles, and, again, guarantees minimal (if any) interruption during employee leave and staff changes.

Medical Billing Services Save Money -Hiring and training new staff, employee benefits, vacation/sick leave, and staff turnover are just a few factors increasing the costs of managing an efficient in-house billing program. Added to the operational overhead of day to day billing, software/hardware maintenance, clearinghouse fees, postage, and so on, the list of expenditures for practices is endless.

Good medical billing companies will design their services around covering all of these costs and immediately do away with the problems they create. To clearly demonstrate how medical billing services can save practices money, let’s compare the core costs associated with in-house medical billing against working with a professional medical billing service.

Cost of In-House Billing: Our comparison begins with a typical practice with one or two providers. Let’s assume this practice has a dedicated, in-house biller receiving an annual salary of $30,000, or about $14.50 per hour. The chart below outlines the additional costs of having a full time employee in the office to handle all aspects of medical billing.

• Base Pay ————————–$30,000
• Medicare and Social Security ———$2295
• 401K ——————————–$1080
• Disability —————————–$720
• Healthcare ————————–$5220
• Time off —————————–$3270
• Total labor for 1 in-house biller ——$42,585

Next, we’ll need to consider materials and fees. An average practice will probably upgrade computers and software every 3 years at a cost of about $6,000. Spread out over those three years, we’ll assume an average annual software/hardware expenditure of $2000. Since our practice will send out its own patient statements, we’ll need about $150 per month for postage, paper and envelopes, an annual cost of $1800. Clearinghouse fees for electronic claims will come to about $60 a month, or around $720 annually. For the sake of simplicity, we’ll forget for the moment that our biller will need a climate controlled workspace, lights, general office supplies and a desk.Here’s what our list of software/hardware, materials and fees looks like:

• Software/Hardware —————–$2000
• Materials —————————$1800
• Clearinghouse Fees ——————$720
• Total ——————————$4520

Adding the two totals above (labor + materials & fees), the annual cost of medical billing services performed in-house by the practice comes to $47,105 per year. Of course this number might not mean much until we put it in perspective against teaming with a professional medical billing service. As we move forward, keep in mind this conservative estimate does not factor in those other costs mentioned above that are often hidden - ongoing training, unexpected leave and sudden staff changes.Cost of Professional Medical Billing Services: To evaluate the cost of working with medical billing services, we’ll assume our practice has contracted with a medical billing company for full service billing. This includes all of those activities that would otherwise have been performed by the in-house staff above; claim generation/submission, insurance follow up, patient invoicing and support, detailed reporting, expert practice analysis, etc. We’ll also assume the practice has negotiated a rate of 8% of collections with its professional medical billing service.

Note: Calculating costs for medical billing services will vary slightly depending on the fee structure but will usually be based on either a percentage of collections or a fixed fee per claim. For more information on fee structures, see Percentage vs. Flat Fee Pricing by Medical Billing Services.

Assuming our provider visits 30 patients per day, 50 weeks out of the year, we’ll have 7500 patient encounters per year. If each encounter results in an average reimbursement of $60, our receivables come to a little over $450,000 per year. At a rate of 8%, the annual cost for the professional service to manage all aspects of medical billing services for the practice would be $31,500. In comparison with in-house services that’s a savings of $15,600 per year!

Summary In evaluating the benefits of outsourcing to a professional medical billing company practices should consider the overall savings in time and money, beyond just minimizing the hassles. Medical billing companies provide knowledge, training, continuity of operations and a network of support leveraging task specialization and the economy of scale. Medical billing companies are able to eliminate dependency on one or two costly staff members to maintain revenue flow for the entire practice.

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