Overwhelmed with the burden of ever-increasing non-medical obligations, such as reporting and compliance, many practices are considering reducing overhead by moving functions like billing, coding, and collections outside the practice. While many practices have reaped benefits from outsourcing, others have lost substantial amounts of money and control over their cash flow by failing to ask the right questions. What questions should practice leaders ask potential medical billing companies before entering into a service contract?
First, the scope of services to be provided by the billing company must be clearly defined. A frequent complaint voiced by practices who are dissatisfied with their billing company is that research and follow up activity is pushed back on the practice. Often practices expect to cover the cost of a billing service by cutting staff, however some billing companies will cite the fact that they do not have access to the medical record or other information to appeal a denial, requiring efforts by practice staff to recover lost revenue. Protocols for missing information should be clearly defined, and practices using outsourced medical billing must ensure that they budget adequately to cover any staff positions necessary to act as a liaison between the practice and the billing company. Who is responsible for coding? Patient demographic entry? Charge entry? Claims submission? Payment posting? Accounts receivable follow up?
The second question practices should ask is whether the interests of the various stakeholders are well-aligned. Percent of collections contracts protect practices so that they have the cash flow to pay for the billing company’s services. Other firms charging a flat fee may be less motivated to serve flat-fee clients and may prioritize other clients with percent of collections fee arrangements, knowing that the probability of collecting declines rapidly as time passes. What is the cost to the practice for leaving a medical billing company if performance is less than satisfactory?
A third consideration is patient satisfaction. Practice leadership needs to identify a medical billing service that will provide a level of service consistent with the practice’s philosophy. One way to test this is to call as a patient (“mystery shopping”) to see how the billing company interacts with patients. The risk of partnering with a billing company that does not provide good customer service is that the practice may cut overhead expenses, but lose a greater amount of future revenue by alienating patients through poor service. Practices should ask to see a copy of the statements patients receive and whether customization is included. Hours are another consideration, as extended hours offered by a lot of billing companies are attractive to patients who have billing questions or need to make a payment.
Does the billing company have experience with the practice’s specific specialty? Do they have certified coders? Practice leadership should ask to see appeal success metrics. Another question to ask is where payments go. Do they go to the practice, or to the billing company? What is the payment posting lag time? Finally, practices should ask to see actual reports. Billing company performance metrics should be transparent and easy to interpret. Do ad hoc reports cost extra or require waiting? Can the practice query billing company data directly?
While there is certainly cost savings potential from entering into a partnership with a billing company, the practice’s cash flow may be at risk, which is why it is important to ask the right questions up front and structure an agreement which will meet the practice’s goals and expectations.
