One of the key advantages of billing outsourcing, when it is done correctly, is the clear alignment of incentives between the practice and the billing company.
Almost all medical billing companies are paid a percentage of what they collect. This means they are only paid when you are paid. It also means the more they collect for your practice, the more they are paid. Internal medical billers, on the other hand, are almost always hourly employees. They are paid based on showing up in your office, not based upon how well they perform your medical billing or how much money they collect for your practice. This is not an alignment of incentives.
This issue, however, is often not fully understood or appreciated by many providers. These providers frequently say: "the staff works directly for me in my office-- they are more loyal and will do a better job and I can see what they are doing". Experience has shown, however, that this is often not true.
I recently spoke with a partner at a busy cardiology practice. While one of the billers was out sick, some paperwork was required and the supervisor went looking for it. When the supervisor opened the missing biller's desk, a stack of unfiled, old claims was discovered. It turned out about $40,000 of them were past timely filling deadlines. They were lost. I repeat-the practice lost $40,000! When the biller returned from her leave, she was "sternly" reprimanded. Let me say it one more time-she was reprimanded. Not fired, but reprimanded. Either way, the practice lost $40,000 in just this one instance alone.
Why wasn't more severe action taken? Because of concerns with upsetting the billing staff and exacerbating a staffing problem that existed. The biller was moved from follow-up to the front desk where she is now being trusted to collect the critical demographic information required to properly bill claims.
There should be safety nets in place to catch $40,000 in missing claims. So how could this have gone unnoticed until a desk excavation? The office did not track and reconcile charges, payments or write-offs. The doctors had been told that the practice's system could not report at this level. The system, however, indeed had the capability to do this, but the billing staff did not know how to properly use it. Without the the fully aligned incentives of a medical billing company, the investment is often not made to full utilize the capabilities of a practice's medical billing system. $40,000 in missing charges is likely only the tip of the ice berg for this medical practice.
Utilizing a medical billing company is not a panacea for such situations, but if you insure the following actions are built into your agreement with the billing service, you should be in good shape:
- Complete visibility and tracking of charge and payment batches should be in place. This will prevent anything from "falling through the cracks".
- Any claims that are denied for timely filing should be the responsibility of the billing company. In other words, they should make the practice whole if they fail to file your claims. This is not a demand you can make of in-house billers (it is not even legal to make it).
- 24/7 access to the medical billing system so that full transparency exists between the practice and the medical billing company.
As physicians struggle with stagnant (at best) reimbursements and escalating costs, it is critical that they make the best possible decision in regards to their medical billing. Selecting a solution that structurally minimizes the risk of poor medical billing is critical.
No - your staff will not work harder for you just because you employ them; and No - the biller who lost you $40,000 will not do any better job collecting money and gathering information from patients. You will probably need to "sternly" reprimand them again.
A judicious selection of a medical billing company that meets the criteria outlined above is your most direct and reliable method for avoiding your own medical billing horror stories.
Copyright 2008 by Carl Mays II - 16890
Almost all medical billing companies are paid a percentage of what they collect. This means they are only paid when you are paid. It also means the more they collect for your practice, the more they are paid. Internal medical billers, on the other hand, are almost always hourly employees. They are paid based on showing up in your office, not based upon how well they perform your medical billing or how much money they collect for your practice. This is not an alignment of incentives.
This issue, however, is often not fully understood or appreciated by many providers. These providers frequently say: "the staff works directly for me in my office-- they are more loyal and will do a better job and I can see what they are doing". Experience has shown, however, that this is often not true.
I recently spoke with a partner at a busy cardiology practice. While one of the billers was out sick, some paperwork was required and the supervisor went looking for it. When the supervisor opened the missing biller's desk, a stack of unfiled, old claims was discovered. It turned out about $40,000 of them were past timely filling deadlines. They were lost. I repeat-the practice lost $40,000! When the biller returned from her leave, she was "sternly" reprimanded. Let me say it one more time-she was reprimanded. Not fired, but reprimanded. Either way, the practice lost $40,000 in just this one instance alone.
Why wasn't more severe action taken? Because of concerns with upsetting the billing staff and exacerbating a staffing problem that existed. The biller was moved from follow-up to the front desk where she is now being trusted to collect the critical demographic information required to properly bill claims.
There should be safety nets in place to catch $40,000 in missing claims. So how could this have gone unnoticed until a desk excavation? The office did not track and reconcile charges, payments or write-offs. The doctors had been told that the practice's system could not report at this level. The system, however, indeed had the capability to do this, but the billing staff did not know how to properly use it. Without the the fully aligned incentives of a medical billing company, the investment is often not made to full utilize the capabilities of a practice's medical billing system. $40,000 in missing charges is likely only the tip of the ice berg for this medical practice.
Utilizing a medical billing company is not a panacea for such situations, but if you insure the following actions are built into your agreement with the billing service, you should be in good shape:
- Complete visibility and tracking of charge and payment batches should be in place. This will prevent anything from "falling through the cracks".
- Any claims that are denied for timely filing should be the responsibility of the billing company. In other words, they should make the practice whole if they fail to file your claims. This is not a demand you can make of in-house billers (it is not even legal to make it).
- 24/7 access to the medical billing system so that full transparency exists between the practice and the medical billing company.
As physicians struggle with stagnant (at best) reimbursements and escalating costs, it is critical that they make the best possible decision in regards to their medical billing. Selecting a solution that structurally minimizes the risk of poor medical billing is critical.
No - your staff will not work harder for you just because you employ them; and No - the biller who lost you $40,000 will not do any better job collecting money and gathering information from patients. You will probably need to "sternly" reprimand them again.
A judicious selection of a medical billing company that meets the criteria outlined above is your most direct and reliable method for avoiding your own medical billing horror stories.
Copyright 2008 by Carl Mays II - 16890
About the Author:
Carl Mays II, Founder and CEO of ClaimCare Medical Billing Services, is an expert in the field of medical billing and medical practice management. Carl has been working in the medical field since 1995. Prior to that Carl worked as a mechanical engineer for Boeing. Read more about medical billing companies at ClaimCare's medical billing blog.
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