Economic Pressures Bolster Case for Outsourcing Billing

Battling declining reimbursements and rising operating costs, many physicians are feeling pressure to rein in expenses. However, paying a third party to manage the revenue cycle is one cost that can actually improve your bottom line, experts say.

“The greater the economic pressure on a practice, the more viable outsourcing becomes,” said John Boland, managing director and leader of Physician Business Process Management for Chicago-based Navigant Healthcare Cymetrix.  “Outsourcing billing processes should ultimately reduce the cost of collections and maximize revenue, allowing a practice to invest in clinical resources and get better quality results.”

Keeping up with collections is difficult for many practices, according to benchmarking data gathered by the Medical Group Management Association (MGMA), which show that the average multispecialty practice has almost 17 percent of all accounts receivable (A/R) over 120 days. The American Academy of Family Physicians recommends keeping the number of accounts in the 120-day bucket below 12 percent, especially considering that the longer an account ages the harder it is to collect.

The pressure to upgrade technology and train staff to use it has further complicated the billing process, notes Nancy Enos, a Warwick, R.I.-based independent consultant and coding instructor affiliated with MGMA. Many practices are looking to third-party billing companies as technology partners to help them keep up to date with changes in EHR and practice management systems, which is crucial to meeting quality standards and qualifying for insurer-based financial incentives.

“For practices with the staffing, technology, and infrastructure in place, it might make sense to keep billing house,” she says. “But for those that don’t, outsourcing can make a lot of problems go away.”

Enos and Boland offered the following tips on assessing the potential benefits of outsourcing and finding the right vendor.

1. Take stock. Take an honest assessment of your revenue and expenses. How does the productivity of your physicians compare to industry standards? Are you maximizing revenue for the services you are providing? On the cost side, what is the cost of maintaining updated technology and qualified staff vs. paying a third party?

2. Assess your technology. Getting access to quality data and efficient reporting is a very compelling reason to outsource for many practices, experts say. A good billing company should be able to help analyze poor performance data and pinpoint problems to address.

3. Look for coding expertise. When assessing billing partners, look for professional certified coders who are experienced in the appeals process and familiar with processes and procedures specific to your specialty.

4. Do your research. Before hiring a billing company, go on a site visit and talk to or visit other practices that use the service.

5. Be specific. The cost of outsourcing is based on a percentage of collections -typically ranging from 4 percent to 8 percent. Make sure to establish upfront exactly what that fee covers and the delineation of responsibilities between the outsourcer and the practice. Also, note that coding-related services are not included as part of the percentage fee and should be carved out as a separate service.