| This is a very difficult decision for any physician | | | | In my opinion billing services that own collection |
| and partially boils down to this or her own | | | | agencies or establish close affiliate relationships |
| personal ideology and comfort level.Hospital-based | | | | with them are unethical and should be avoided at |
| physicians will almost always be better off | | | | all cost. Even though it is nearly impossible to find |
| outsourcing because of the office related | | | | a collection agency that does not have |
| expenses that they would not otherwise incur. As | | | | relationships with medical billing services the point |
| the owner of medical billing service you may think | | | | I'm trying to make is to be sure that your billing |
| I'm naturally biased towards outsourcing. I can | | | | service is independent and you have the freedom |
| assure you that this is not the case.Physicians | | | | to select a collection agency of your choice. This |
| who are overly controlling, uncomfortable or | | | | relationship presents a scenario whereby the billing |
| mis-trusting toward billing services are nearly | | | | service can simply go after the easy to collect |
| impossible to administer. I don't want anything to | | | | accounts and allow the more difficult but still |
| do with those types of physicians but I | | | | collectible ones to slip into the hands of a collection |
| completely respect and understand their point of | | | | agency who obviously charge a much higher |
| view. Setting all ideology aside I would like to | | | | percentage of collections. Again, it's easy to see |
| delve into the pros and cons of this difficult and | | | | how a billing service can facilitate or erode your |
| complicated decision.I am a physician who is very | | | | sense of control. The most reputable collection |
| interested in the business aspect of medicine and | | | | agency I've dealt with is a company called |
| I do not mind spending my valuable time | | | | Collection Information Bureau (CIB). I've been |
| managing the medical billing aspect of my | | | | doing business with them for years and they |
| practice.Clearly, the best way to do your billing is | | | | have never attempted to establish an affiliate |
| to do it personally. Obviously, doing it yourself is | | | | relationship with my company. CIB can be |
| probably not an option but if you're willing to | | | | reached at 1-800-231-3514, contact sandy |
| spend the time and have the interest I would | | | | Lopez.Different types of billing servicesThere are |
| recommend that you do your own billing. Keep in | | | | three different types of billing services.* Fee per |
| mind that most billing service owners and certainly | | | | claim* 50/50* Full serviceFee per claim billing |
| our employees have limited medical backgrounds. | | | | services charge a flat rate per claim. The fees |
| Physicians who study CPT, regularly attend billing | | | | generally range between $1.25 to $5.00 per claim |
| seminars and keep up to date on industry | | | | depending upon the services |
| changes are the ultimate medical billing gurus in | | | | provided.Advantages:· May be helpful to a |
| my view.I am a physician who has absolutely no | | | | brand-new practice who is not fully implemented a |
| time or interest in the medical billing aspect of my | | | | computer system or is still trying to decide |
| practice. I am completely reliant upon my office | | | | whether to outsource.· Practices with old or |
| manager and billing staff.Unfortunately, most | | | | outdated computer systems· Relatively |
| physicians are in this position. Even if they were | | | | inexpensive cost per claim· Excellent for |
| interested in keeping up with all the changes and | | | | practices who have a problem with only one |
| elements of medical billing the practical reality is | | | | particular payer group such as Medicare or payers |
| that there is absolutely no time. Let's face it; time | | | | that require electronic claims submission· |
| is your most valuable asset. It's sort of like | | | | Physicians planning to retire within one year· |
| mowing your own lawn. You'd be way better off | | | | Highly flexible· Low-volume practices· |
| financially seeing patients for three hours on | | | | less employeesDisadvantages:* Expensive for |
| Saturday morning. I believe the following | | | | high-volume practices* Poor integrity of accounts |
| information will dramatically help with your decision | | | | receivable* Lack of information systems* Lack of |
| to outsource your billing or continue to do it | | | | control50/5050/50 billing services install computer |
| yourself and with future decisions in the | | | | terminal/terminals in your office. The billing service |
| ever-changing business aspect of medicine.The | | | | performs part of the billing process while your |
| pros and cons of outsourcing your medical billing | | | | office performs the other. As you can probably |
| services.I would like to preface this article with a | | | | tell from my list of disadvantages this is in my |
| couple of obvious but important points. If you | | | | opinion the least desirable type of billing |
| have a system of controls, keep an open mind | | | | service.Advantages:· Less expensive than |
| about the competence of your office manager, | | | | full-service billing services· Avoid the purchase |
| you've got an excellent computer system, proper | | | | of practice management software· Creates |
| information systems and your office is doing a | | | | a system of checks and balances· less |
| superb job at collecting your money, then by all | | | | employeesDisadvantages:* High set up fees* Low |
| means do not make any changes. Conversely if | | | | accountability from the billing service* Lack of |
| you're planning to outsource your billing make sure | | | | control* Communication Problems(all collection |
| you hire quality firm. I'll spend some time at the | | | | problems will be blamed upon your office)* Your |
| end of this article discussing this further.Most | | | | staff will still probably wind up doing most of the |
| leading experts agree that it costs about 4.5% of | | | | work* Completely reliant upon the Internet* Loss |
| net collections to perform the billing function within | | | | of data* HIPPA issuesFull-serviceAdvantages:· |
| a physician's office. Incidentally, this is close to my | | | | completely remove the billing process from your |
| actual cost as well.Theoretically, a billing service | | | | office· symbiotic relationship· avoid |
| should be able collect more money than a | | | | expensive computer system· system of |
| physician's office because it is our core | | | | checks and balances· less |
| competency. The question is how much more? | | | | employeesDisadvantages:· expensive· |
| This is why I focus on how to choose a billing | | | | loss of control· patient relations· |
| service at the end of this article.The numbersA. | | | | collection agency relationshipsShould I outsource |
| Lets just do the math in a theoretical model.We'll | | | | my billing checklist: If you answer yes to most of |
| base our numbers on a practice whose total | | | | the following questions then you should probably |
| gross receivables are $100,000 per month. | | | | consider outsourcing?· Is your overall |
| Obviously, this is an overly simplistic model | | | | collection rate declining?· Is your accounts |
| designed to quantify the aggregate cost and or | | | | receivable too high?· Are you experiencing an |
| opportunity cost of the medical billing component | | | | increased number of denied claims?· Is your |
| only.Current Aggregate Billing ExpensesIn-house | | | | overall frustration level regarding your billing |
| expenseTotal gross revenue $100,000Current | | | | business office very high?· Are you facing a |
| billing expense $4,500(4.5%) ---------------Net | | | | major capital investment in new hardware or |
| Revenue $95,500Outsourced Billing ExpenseTotal | | | | software?· Are your computer support fees |
| gross revenue $100.000Current billing service exp. | | | | to high?· Are you having a difficult time |
| $7,000(7.0% net collections) ---------------Net | | | | keeping or hiring experienced billing staff?· |
| Revenue $93,000Net cost increase with | | | | Are you spending too much time on the business |
| outsourcing = $2,500.00As you can see in this," all | | | | aspect of medicine?· Are you concerned that |
| things being equal" theoretical model your practice | | | | your staff or office manager has knowledge of |
| would incur a $2,500 decrease in net revenue with | | | | your income?· Are you completely reliant |
| the implementation of a billing outsource strategy. | | | | upon your office manager?· Are you planning |
| Keep in mind that this model does not address | | | | to expand your practice?· Do you believe |
| other less tangible issues such as your reduced | | | | that your practices cost structure is too |
| payroll, computer expenses, ect. In reality the net | | | | high?· Do you have several employees |
| cost could be substantially less than $2,500. Many | | | | performing tasks that could be handled by a single |
| physicians will perceive this as a small price to pay | | | | more experienced manager?· Is your |
| while others will consider it to be cost | | | | computer system obsolete?· Are hardware, |
| prohibitive.5% theoretical increase in gross | | | | software, and information technology disrupting |
| revenue with outsourced billingTotal gross revenue | | | | the operation of your practice?How do I select a |
| $105,000 (5% increase)Billing service expense | | | | billing service?1. The service should fit or |
| $7,350(7% net collections) ----------------Net | | | | complement the size of your actual practice. Try |
| revenue $97,650$95,500 - $97,650 = $2,150.00 | | | | to get a basic idea of the size of the firm. A solo |
| increase in net revenue.As you can see from this | | | | practice will most likely have greater success with |
| model with a 5% increase in collections your net | | | | a small to medium-sized billing firm. Obviously, a |
| revenue will increase $2,150.00 with the added | | | | solo family practitioner would probably not be |
| expense of the billing service. Keep in mind that a | | | | very well served by a publicly traded firm.2. Avoid |
| 5% increase in gross collections is actually quite | | | | long-term binding contracts. You should be free to |
| conservative and should easily be obtainable by | | | | terminate your agreement any time within 30 |
| quality billing service.IntangiblesB. A billing service | | | | days written notice. The agreement should clearly |
| should be able to provide you with a substantial | | | | specify what each side will do for the other. Make |
| reduction in your day-to-day aggravations such as | | | | sure the agreement assures that upon |
| practice management software issues, fewer | | | | termination you'll receive a highly detailed account |
| employees, hassle of hiring competent employees, | | | | receivable report [listed by individual patient] .3. |
| less health insurance, less training, ECT..ect. | | | | Ask for references and call the other providers!4. |
| Conversely you will however lose some control | | | | Inquire/investigate the actual owner of the |
| over your practice. If the billing service does not | | | | company. Ask to speak with the owner directly.5. |
| collect more money your expenses will increase. | | | | Avoid firms who offer too many different types |
| It's up to you to determine whether or not the | | | | of service. Medical billing is a very highly specialized |
| increased expense is offset by decreased | | | | field. Companies who offer, collection agency |
| aggravation.securityC. A billing service should be | | | | services, payroll, financial consulting, tax consulting, |
| able to increase your security levels by creating a | | | | malpractice insurance, marketing services etc. etc. |
| system of checks and balances. As a former | | | | are not in my view focused enough on what |
| police officer I can assure you that crime | | | | they're there to do. Collect your money!6. Ask |
| statistics indicate most embezzlement/fraud/theft | | | | other physicians. Keep open mind about this one |
| occurs from within. During an investigation a store | | | | because physicians who are happy with their billing |
| manager for Sears and Roebuck Co. once told | | | | company do not necessarily want them to grow |
| me," our customers take it out piecemeal but our | | | | and generally like to keep a low profile on this |
| employees take it out in wheel barrels" This logic | | | | issue.7. Is the billing service for sale? Try to |
| also applies to a doctor's office. A billing service | | | | ascertain whether or not the firm has recently |
| can provide an extra layer of protection because | | | | been sold. In your contract/agreement you should |
| there is a system of independent checks and | | | | request to be notified within 30 days of the |
| balances. Typically billing services are fairly large | | | | pending sale. In my experience billing services are |
| businesses with strict internal controls. My | | | | constantly being bought and sold. Sometimes the |
| organization Medi-Bill Inc. Operates internally similar | | | | acquisition is a positive thing but quite often the |
| to a banking institution with the way we handle | | | | merger/acquisition can be very detrimental. You |
| funds. It is highly unlikely that the ownership of a | | | | should at least be notified and given ample time to |
| reputable medical billing firm would risk the | | | | make a proper decision on whether you'll stay |
| consequences of committing fraud against a | | | | with the new firm or select another.8. Where will |
| client.Conversely, the issue once again boils down | | | | your checks and correspondence be mailed? This |
| to control. Many physicians are understandably | | | | delicate and important issue need not be as |
| quite unsettled at having their checks and | | | | complicated as it appears. Many physicians for |
| correspondence mailed directly to the billing | | | | obvious reasons are reluctant to allow checks and |
| service. Further compounding this dilemma is," | | | | correspondence to be forwarded directly to their |
| what will happen to the checks and | | | | billing service. Some reputable, high-quality billing |
| correspondence after the billing service agreement | | | | services will not even provide services to clients |
| is terminated?"(Again, we will discuss alternatives | | | | who insist upon having the checks and |
| to this at the end of the article)TechnologyD. | | | | correspondence mailed to them directly. I'd like to |
| State-of-the-art practice management software is | | | | spend a few moments on this important issue |
| an extremely expensive investment. If you've | | | | and explain the ramifications of exactly where |
| already invested in a high quality computer | | | | your checks and correspondence will be mailed. |
| system I do not believe outsourcing your billing | | | | Maintaining the integrity of your accounts |
| would make much sense financially unless your | | | | receivable is crucial! If your office routinely fails to |
| computer vendor is charging outrageous support | | | | properly mail copies of checks and |
| fees. If you're considering purchasing a computer | | | | correspondence to your billing company your |
| system or a medical record management system | | | | practice could be in grave danger of losing control |
| my favorite vendor who we've been working | | | | of the accounts receivable. If your account |
| with for over 15 years is Office Management | | | | receivable is to maintain any semblance of financial |
| Solutions (OMS) based in Tampa Florida. The | | | | integrity it is crucial that billing service employees |
| owner's name is John Peake and he is by far the | | | | do not spend valuable time and effort following up |
| most honest and reputable computer vendor I | | | | on claims that have already paid and not properly |
| have ever worked with. OMS can be reached at | | | | forwarded to them. Understandably, your service |
| 813-963-5582 or you need to update your | | | | may even look upon this as an intentional effort |
| system, purchase a new system or your support | | | | to reduce their commissions. Again, bank lock |
| fees are getting out of hand this may be an | | | | boxes provide a sound alternative to this dilemma. |
| opportune time to consider outsourcing your | | | | Some practices solve this problem by directing all |
| medical billing services.Financial securityF. Many | | | | checks and correspondence to a P.O. Box keeping |
| physicians, for obvious reasons do not want their | | | | EOB's separate from other corporate mail. The |
| office managers/staffers to have any in-depth | | | | checks and correspondence are mailed to the |
| knowledge of how much money the practice is | | | | billing service," unopened" biweekly. This is an |
| making. A reputable and properly run billing service | | | | excellent compromise and creates a system of |
| can create this level of financial security. The best | | | | control. There are many other possible options |
| case scenario is for your staffers to only see | | | | but the important point to remember is that ONE |
| your expenses and have only a limited | | | | entity must be completely responsible for the |
| understanding of the revenue being generated. | | | | validity and integrity of your EOB's.9. Make sure all |
| This can also be accomplished internally by making | | | | checks and correspondence are issued under your |
| and recording your own deposits. If you're going | | | | tax identification number and made payable to |
| to do your own billing I must emphasize the | | | | you! Make sure your contract/agreement |
| importance of financial security. You must create | | | | specifies that the billing service will not countersign |
| a system of financial security. If you don't have | | | | or attempt to countersign your checks and |
| the time to personally open your mail and make | | | | correspondence.David J. Duncan |
| the deposits you are definitely a candidate for | | | | President and CEO |
| outsourcing. Many banks offer a "lockbox" where | | | | Duncan is a graduate of Florida Atlantic University |
| you can direct your checks and correspondence. | | | | with a B.A in Finance and is the original founder of |
| Bank lockbox services are generally quite pricey. | | | | Medi-Bill Inc. He also has an extensive law |
| They usually charge about .25 per copy. You may | | | | enforcement background and is a former police |
| also opt to take out your own P.O. Box located | | | | officer with the City of Fort Lauderdale. Mr. |
| adjacent to your billing company. This way you | | | | Duncan's reputation for honesty and integrity is |
| still maintain control of your checks and | | | | well known throughout the medical community. |
| correspondence.Collection agenciesG. Many billing | | | | During his career, Mr. Duncan has provided billing, |
| services own or have affiliate relationships with | | | | financial and practice management services to |
| collection agencies. You'll most definitely want to | | | | physicians and medical practices in a variety of |
| avoid this situation. Make sure your billing service | | | | specialties throughout the country. He has |
| provides you with a monthly report containing | | | | extensive experience with, managed-care, hospital |
| proper information on delinquent accounts enabling | | | | contract negotiations, data integration and practice |
| your office manager to properly send the | | | | management. |
| information to a collection agency of your choice. | | | | |