Billing Service or EHR Vendor?

Imagine that you’re running a small practice and have just bought an EHR. You’ve been using a billing service for years, but now you need a practice management system to do your scheduling, send demographic data to your EHR, and to handle your billing. Your EHR can send charges automatically into the practice management system’s billing module, or the two systems can share a single database.

But you don’t want to hire a full-time billing person, and you’d prefer not to deal with the hassles of billing and collection yourself. What do you do?

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Some vendors have begun offering billing services as part of their EHR and EHR/PM system packages. This is becoming increasingly common among vendors that cater to small and medium-sized practices. Alternatively, some vendors will refer you to outside billing companies that use their billing system, or one that interfaces with their EHR. And a growing number of “value-added resellers” (VARs) are also packaging billing services with the EHRs that they distribute and install.

What makes this approach possible is the ability of vendors, billing services, and VARs to operate computer programs remotely over a high-speed Internet connection. The application may reside on the computer server in a practice or on a remote server. Either way, it can be accessed by the entity providing billing services. So instead of mailing, faxing, or using messengers to deliver charge slips to a traditional billing service, the practice enters the charges manually or sends them over from an EHR, and the billing service checks the coding and submits the claims to a clearinghouse. The service typically emphasizes collection of unpaid claims, and some vendors also work with practices to improve their eligibility checking, coding, and in-office collection processes.

Athenahealth, based in Watertown, Mass., was one of the first companies to combine hands-on revenue cycle management with Web-based, propriety practice management software. The firm, which partners with Physicians Practice to produce PayerView, the annual project that ranks payers by their degree of “hassle factor” for practices - now offers an EHR, as well. But physicians cannot buy that EHR separately; they must use athenahealth’s PM software and its billing service, too. Other companies like Greenway, e-MDs, and MED3000 started off with EHR and/or PM software and branched into billing services. Henry Schein Medical Systems, which focuses on practices of one to five doctors and recently launched an integrated EHR/PM system, refers doctors who want to outsource their billing to one of the 50 billing services that use its MicroMD PM system. And some of the VARs that distribute the iMedica EHR to small practices will also do their billing.

Patrick Hall, COO and vice president of practice management for e-MDs, notes that the majority of the support calls his company receives are related to billing, and much of that has to do with the training of billers. So in January, the Austin, Texas-based company launched a billing division. A group that wants to use e-MDs for billing must buy its integrated EHR/PM system, and also pay about 5.75 percent of collections. That’s toward the high end for billing services operated by software vendors, which typically charge 4 percent to 6 percent. Traditional billing services usually take 6 percent to 8 percent, which covers the cost of data entry as well as a fee for the use of their software.

The real difference between billing services, however, is how effective they are in collecting bills. Anyone can submit claims, Hall notes, and if the practice is doing a decent job on the front end, about 95 percent of those claims will be accepted. Many billing services are content to file claims, forward payments, and post remittances; but a good service will work hard to collect the unpaid 5 percent or so of bills and will partner with a practice to maximize its first-pass acceptance rate. Hall says e-MDs employs certified coders and promises in writing that it will meet MGMA benchmarks in areas such as time to file, days in A/R, and net collection ratio.

Most small practices are not good at handling claims denials and self-pay balances, notes Margaret White, president of Health Care Strategies, a Dallas-based billing service and VAR that resells iMedica. “What we focus on are the services that typically don’t get done in a small physician office. They just don’t follow up very well on unpaid claims, because they may have only two or three employees. If the receptionist or the scheduler is out, that billing person gets pulled.”

About half of Health Care Strategies’ iMedica customers have asked it to do their billing, White says. Most of them used billing services previously, and most have iMedica’s practice management system as well as its EHR.

You might wonder why you should pay for a billing system in addition to a slice of your collections if you’re outsourcing the billing function. One reason is that you can see exactly what your billing service is doing for you: Instead of having to wait a month or more to get a report from an outside service and not knowing how long it takes the firm to submit your claims, you can use the PM software to see exactly where you stand at any particular time.

Moreover, White notes, “A lot of billing companies try to capture their clients for a long-term relationship by making it difficult for them to stop using them, usually because they have the practice data in their information system. But if you want to stop using us for billing, that should be an easy decision for you. The database is yours, you can see every report that we can see, and we show you to how to run those reports. We also log into the system all the calls we make to collect on these unpaid claims. So they can scan that and tell if we’re doing anything or not.”

ProSperus, another iMedica VAR in the Milwaukee area, has developed a different spin on the same approach. Instead of using the iMedica PM system, it offers practices the ability to interface their iMedica EHR with its own proprietary billing system. Like the other vendor-related services, it charges about 5 percent, unless a practice wants help with staffing and/or data analysis. A one-stop shop, ProSperus also installs computer systems and provides technical support.

Richard Yonis, president of Henry Schein Medical Systems, based in Boardman, Ohio, says his company will hook up EHR customers with billing services that use its MicroMD software. “With all the automation of billing today, you don’t need a full-time biller,” Yonis says. “For a small practice, buying EHR software and outsourcing the billing is a very cost-effective solution.”

That may be true, but it all depends on the billing service. Whether you have an EHR or not, a good service can more than justify its cost, while a bad one can sink your practice. Caveat emptor.

Ken Terry is a New Jersey-based freelance writer and the author of the book “Rx for Health Care Reform.” He can be reached via physicianspractice@cmpmedica.com.

This article originally appeared in the July/August 2009 issue of Physicians Practice.