Justifying a
Billing Service
by Flo Murray
When would an outside billing service be justified instead
of in-house personnel? The focus of this article is to get you to look at your
current billing situation and assess if you would benefit from switching to an
outside billing service.
The main reason many doctors choose to do their billing
in-house is because they feel they have better control. This is certainly true
if someone inside the practice truly understands billing, collecting and
tracking. If that person has done it for many years, has experience with the
hundreds of different scenarios you run into every day, and has the time to
coordinate and focus on getting paid for all claims, then keeping the billing
inside may be the right decision. If the practice is also profitable with the
current in-house billing department expense, the billing should probably be
done inside. A doctor's take home pay is directly related to overhead, and
in-house billing expenses can be a high percentage of overhead.
If you stay with inside billing it is recommended that you
have a support network of some sort: the annual H. J. Ross hotline, CCA
hotline, or other doctors' billing departments that you can call in time of
need. If your billing, department has no outside resources to fall back on, the
ability to collect on certain accounts is limited by your office person's
experience.
If you think things are running smoothly in your billing
department, but you never ask about any one patient's individual account,you have no clue whether
things are running smoothly. When the billing manager is not accountable to
anyone else (the doctor, doctor's spouse, the accountant, etc.), you depend
solely on that person to make sure everything is handled timely and
efficiently.
I know a doctor who thought he had a very efficient billing
department, but he was unaware that his billing manager had plans to leave his
employ. As she neared her last two months of commitment to the doctor, she
stopped sending the billing out! To the doctor's dismay, he was unable to get
paid for approximately $10,000 in claims the managed care plan refused to pay
because of missed deadlines. This costly problem occurred because the doctor
depended upon the billing manager, who was not accountable to anyone else for
her work. In other cases, doctors have had billing managers for years without
problems, because they take pride in what they do and would never consider
leaving without helping to hire and train their replacement.
If no one double-checks your department from time to time,
you really can't be sure. Even if you use an outside billing service, you do
not really gain any control unless you have someone check their work as well.
Though switching to an outside service will not necessarily give you better control,
it can provide some of the following benefits:
- You don't need to worry
about your biller quitting and leaving you high
and dry.
- You don't need to worry
about retraining if your in-house biller leaves.
- You don't need to worry
about the transition on problem accounts from one biller
to the next.
- You don't need to worry
that a new biller will ask you to make an
investment in the software that he or she uses.
- You will have more
space, time and energy to treat patients.
- No one will be argue with an insurance company on the phone where
patients can overhear.
- You will gain the
expertise of the billing company's many years of service to your industry,
assuming you choose a billing company with this sort of experience.
- You should see no break
in your service or cash flow, as long as you choose a billing company that
is dedicated to providing excellent service and has the expansion
capabilities necessary to grow with your business.
- You will save many
expenses associated with inside billing.
To assess whether you will save
money by switching to an outside service, you must compute the cost of doing
the billing inside and compare that to the cost quoted by the outside service.
Your inside costs include: payroll labor hours; payroll labor overhead; postage;
paper; computer support; billing program support; telephone bills; and any
other direct costs you can associate with doing the billing. You should also
consider an alternate use of the billing department's space, such as having an
extra massage room or renting it to an associate who works on a percentage.
Consider your own time and energy expended on hiring and
replacing personnel. Consider who trains the new staff person and the time it
takes a new person to get comfortable with your office and procedures. Your
in-house personnel should attend seminars that keep them updated on industry
changes, but that can be an added expense.
As you can see, some costs are not easy to compute
mathematically. Sometimes the situation is black and white, and you can save a
lot of money by going to outside billing. In other cases where expertise rather
than money may be the issue, you may not see a direct savings. However, a good
billing service will pay for itself with its knowledge and experience, and may
be able to collect more than your own in-house staff. This is particularly true
in offices where a single staff person supports the doctor. That person is
expected to answer all phone calls, do all the paperwork management, and
perhaps even assist in therapy occasionally. If a doctor's volume is only 30 to
50 patient visits per week, using an outside service may not be cost-justified.
However, the cost of a service handling that volume of billing might be as
little as $400 per month. If the billing service has the kind of expertise you
need, then justifying that expense is very easy to do, because they will easily
be able to collect an average of $400 more per month than your inexperienced
in-house biller. Your in-house staff person would
then have more time to help you with recalls, screenings, etc.
I have heard horror stories about billing services. There
are good and bad services everywhere, just as there are good and bad employees.
However, I have heard many more horror stories associated with in-house
problems: drawers full of problem billings that went untouched and are now uncollectable due to insurance policy filing requirements;
personal injury cases that went unpaid because no one had a tracking system for
following up on the old cases; workers' compensation cases that no one in-house
knew what to do with - cases that were easily collectable by someone with the
proper experience.
Once you look at your billing situation, you will probably
have a better sense for how things are running. You might consider bringing
someone in to help assess your department. Many billing services have people
who will do that for you. If they take over the billing, they should help you
make a good transition. Knowing how your office runs will be the key to their
helping you get your billing out in a timely and
efficient manner with as little stress to the practice as possible.
