Benefits of Outsourcing Medical Billing vs. In-House

Outsourcing medical billing gives a practice a team that works claims, denials and follow-up every day, covers for absences and turnover, and reports on performance. The staff and clinicians who were doing that work get the time back. The trade-offs are less direct control, a vendor relationship to manage, and patient data shared under a business associate agreement. In-house billing keeps control and keeps billers close to the clinicians, but it depends on hiring, training and keeping skilled staff.

Neither is automatically cheaper or better. The right choice depends on your claim volume, how complex your specialty's billing is, how stable your billing staff are, and how well your current process performs. Some practices choose a mix.

What does outsourced medical billing cover?

A billing company can take on some or all of:

• charge entry and claim submission
• coding, or coding review
• eligibility and authorization checks
• payment posting
• denial management and appeals
• accounts receivable follow-up
• patient statements and billing questions
• reporting

Some things usually stay with the practice whichever way you go: clinical documentation, collecting accurate registration and insurance details at check-in, and decisions about write-offs and patient policies. The split should be written down. The HHS Office of Inspector General's compliance guidance for third-party billing companies recommends that the contract list which functions are shared and which are the sole responsibility of the billing company or the provider.

What are the benefits of outsourcing medical billing?

• Dedicated attention. A billing team's whole job is claims, so denials and follow-up are less likely to wait behind front-desk work or patient calls.
• Continuity. Work continues when someone is on leave or resigns. In a small practice, one biller's absence can stop billing entirely.
• Breadth of experience. A team that bills for many practices sees more payer rules, edits and denial patterns than one in-house biller usually can.
• Reporting. A good billing company reports denials by reason, A/R by age and payer, and payment turnaround by payer.
• Scale. Adding providers or locations doesn't mean hiring and training more billing staff first.
• Clinician time. Physicians and managers spend less time on billing questions.

These are what outsourcing can offer. How much of it you actually get depends on the company and on how well the practice and the company work together.

What are the trade-offs?

• Less direct control. You set expectations through the contract and reporting, not day-to-day supervision.
• Communication gaps. Billers who aren't in the building can't walk down the hall to ask a clinician about a note. You need an agreed process for coding queries and missing information.
• Data sharing. A billing company that handles protected health information for you is a HIPAA business associate. You must have satisfactory written assurances, a business associate agreement, that it will safeguard the information.
• Transition effort. System access, payer enrollment details, open claims and the old A/R all have to be handed over, and the practice's staff are involved in that.
• Quality varies. Companies differ in who does the work, how experienced they are and how openly they report.

Outsourced vs. in-house billing compared

To compare costs, add up everything both ways, including the staff time billing takes now and what unworked denials and aging A/R are costing you.

Can you outsource only part of billing?

Yes. Common partial arrangements include coding review only, denial and A/R follow-up only, credentialing, or handling one location or specialty. A partial arrangement can be a way to test a company before handing over more.

When should a practice consider outsourcing?

Signs that the current setup isn't keeping up:

• the same denial reasons repeat month after month
• unpaid claims age past 90 days without follow-up
• claims or appeals miss payer deadlines
• billing stops when one person is away
• nobody can produce a denial or A/R report
• clinicians spend clinic time on billing questions

Any of these can also be fixed in-house, with more staff, training or better processes. The guide to common medical billing mistakes covers the in-house fixes.

What should you ask a billing company?

• Who does the work, what are their credentials (for example, certified coders), and where are they located?
• Which of your practice management and EHR systems do they work in, and do they work in your system or theirs?
• Exactly which functions do they handle, and which stay with you? Is that written into the contract?
• What reports do you get, how often, and who is your contact?
• How do they handle coding questions for your clinicians?
• Do they have a compliance program? The OIG recommends that billing companies have one and share audit results and overpayment findings with their clients.
• How do they find and return overpayments? Accuracy has to run in both directions.
• Will they sign a business associate agreement, and how do they protect your data?
• What happens at the end of the contract: how are your data and open claims handed back?

Get answers in writing, and ask to see a sample report.

How Highview can help

If you're weighing the options, Highview's medical billing team can start with a free call about how billing works in your practice today, and whether handing over any of it makes sense. For end-to-end support from registration to reporting, see revenue cycle management.

Sources

• HHS-OIG, Compliance Program Guidance for Third-Party Medical Billing Companies (63 FR 70138, December 18, 1998): dividing responsibilities in the contract, communicating audit results and overpayments.
• eCFR, 45 CFR 160.103: definition of a business associate (including billing and claims processing).
• eCFR, 45 CFR 164.502(e): disclosures to business associates and the written agreement requirement.