Yes, you guessed it RIGHT! This guide will walk you through the pros and cons of outsourced medical billing and coding. But why should you read it? Here’s WHY!
Any practice’s success mainly depends on two things; patient care and revenue management. Since providing healthcare is the primary function of any medical facility, therefore providers consider it the easier part of the two. Contrarily, when it comes to managing the financial aspects of your practice, specifically medical billing, a lot goes into it. Medical billing directly affects the financial health and cash flow, which is necessary to keep any facility running seamlessly.
When it comes to in-house medical billing, you have TWO OPTIONS! You can either hire trained medical billing specialists or train your existing administrative staff. The first adds to your overhead cost since you will need to buy the necessary equipment and lease the space to accommodate the new hires. The latter may make your staff feel overworked, burned out, and unsatisfied with their job, leading to increased turnover.
Here comes the THIRD SOLUTION! Outsourcing your medical billing and coding to a third-party vendor. Most healthcare providers consider it a viable option because it frees them from the complexities of medical billing and coding. Professional billing specialists and certified coders handle the process of claim creation, submission, denial management, and A/R follow-ups while providers focus on patient care.
However, deciding without knowing the ins and outs can jeopardize your practice’s financial health and reputation. Thus, think about your practice and what is BEST for it before making up your mind. To help you out, this guide will present you with a list of pros and cons of outsourced medical billing and coding.
So, without further ado, let’s get started!
What is Medical Billing and Coding?
Simply put, medical coding and billing translate a patient’s encounter into claims using CPT and ICD coding standards that the insurance payer understands to collect reimbursements against the rendered care services.
Many people confuse coding and billing and even use the terms interchangeably. However, they are separate processes. Both coding and billing are integral for healthcare providers to receive payments.
Medical coding involves extracting billable information from clinical documentation and medical records. Medical billing is a process that uses coding details to create insurance claims and bills for patients. Claim creation is the intersecting step for both, forming the backbone of the healthcare revenue cycle.
Pros of Outsourced Medical Billing & Coding Services
For many healthcare practices, outsourcing medical billing and coding seems alien. But in reality, it is widely used by private practices and healthcare institutions.
According to Grand View Research, the global medical billing outsourcing market was valued at US $12.2 billion in 2022 and is forecasted to grow with a CAGR of 12.26% during the period 2023-2030.
Some of the driving factors contributing to its popularity are the ever-evolving regulatory guidelines, technological advancement, increased bad debts, and the complexity of the process.
There are many benefits of outsourcing medical billing and coding to a third-party company. Some of these are discussed below:
Shifting the Accountability
Today, healthcare CFOs are concerned about maintaining their compliance with the ICD coding requirements. They are rightly concerned! There is a possibility of human errors during coding that could result in heavy penalties and increased delays in reimbursements and claim denials.
The first advantage to outsourcing your medical billing and coding is that it shifts the responsibility of complying with the changing coding requirements to the outsourcing company. As a result, the risk of the Recovery Audit Program (RAC Audits) is minimized.
Besides, since all the work is done by the vendor, you don’t have to worry about creating testing mechanisms and strategies to ensure compliance with collections, insurance, and training benchmarks.
Enhanced Transparency
Many healthcare providers worry that outsourcing medical billing and coding is like transferring control of their entire revenue cycle management (RCM) to strangers.
However, it isn’t TRUE! Signing a service agreement with a medical BPO binds them in a contract to provide you with POSITIVE RESULTS based on established metrics.
These metrics can be the first-pass rate (the ability of a claim to get reimbursed on the first try), denial rate (the tendency of claims being rejected or denied by the payers on average), A/R days (the days that a claim takes to get reimbursed), etc.
You can put metrics in place by having an open discussion with the medical outsourcing company. Upon agreeing with your provided metrics, they become obligated to back up outcomes with relevant data. As a result, full transparency of the revenue cycle is achieved.
Besides, any reputable outsourcing medical billing company will generate and share regular reports with you and post delays and concerns more effectively than most in-house workers. This leads to better oversight of the overall financial performance without the need to micromanage.
Cost Savings
In-house billing is expensive. Outsourcing your medical billing and coding enables practices to control their expenses on a cost-per-patient basis.
When you have an in-house medical billing and coding staff, the expenses CREEP UP. These include infrastructure installation costs, onboarding, payroll, insurance, and benefits. On top of all, you struggle to JUGGLE patient satisfaction and quality care while keeping an eye on your revenue cycle.
On the other hand, medical billing companies have only one job – MANAGE YOUR COLLECTIONS! Besides, most contracts with these vendors are based on performance, and your practice only pays them a fraction of the funds they collect.
As a result, you not only save costs on operating an entire in-house department but also ensure a healthier revenue cycle.
Reduced Billing Errors
Following inaccurate collection policies and making billing errors is the ULTIMATE NIGHTMARE for medical practices. It delays your payments, leads to penalties, and compromises your reputation.
Whether it is prior authorization negligence, inaccurate or incomplete patient data, coding error, or duplicate billing, it can negatively impact your revenue cycle, causing delays and denials.
Outsourcing becomes a SAVIOR here as well! It guarantees automated eligibility and benefit verification, up-to-date billing processes, error-free coding, and timely claim submission. Besides, since outsourcing companies house certified coders and billing specialists, they have strict quality assurance measures leading to enhanced accuracy.
Boosts Patient Engagement
Given the recent pricing cut and rising operating expenses in medical practices, all healthcare providers and other staff focus on improving their products and efficiency to support the revenue stream. This can often lead to leaving patients unhappy as the focus shifts from them to the financial aspects of the healthcare facility.
When you relieve your staff from the billing and coding duties, you enable them to divert their focus on in-person care delivery, patient engagement, satisfaction, and building stronger patient-provider relationships.
Faster Reimbursements
When coding and billing errors are reduced to a minimum, it cuts down on the time it takes to get reimbursed, also boosting the first-pass rate. The reason for delays and rejections is SIMPLE – inadequate documentation, coding errors, billing mistakes, non-compliance to regulatory standards, etc. By outsourcing medical billing and coding to professionals, you DITCH these challenges. As a result, faster reimbursements are ensured.
Cons of Outsourced Medical Billing & Coding Services
Nothing in this world is PERFECT! The same is true for outsourced medical billing and coding. It has many benefits, but if you FAIL to choose a trustworthy partner to outsource your billing operations, you may compromise not only your revenue cycle but also your practice’s reputation.
Therefore, before you make a decision, we recommend you also spend some time reading through the disadvantages of outsourcing to a mediocre medical billing company.
So, without stalling, let’s dive right into it!
No Control Over Resources
When healthcare facility administrators transfer their work to outsourcing agents, they often worry about losing control. This is because the partners may use incompatible software or hardware, which can cause a lack of transparency.
Additionally, some agents may prioritize working on high-value accounts to maximize their profits. Besides, it’s important to note that patients may feel uneasy with outsiders accessing and processing their accounts, which could result in customer service issues.
Lack of Security Protocols
Your practice must uphold its responsibility of ensuring the confidentiality and security of patients’ information while integrating outsourced medical billing and coding services. It should be noted that granting third-party service providers access to your systems could potentially pave the way for cyberattacks and other malicious activities.
Unless the outsourcing company keeps its software up-to-date, there is a chance of facing a security breach. Therefore, when considering a potential medical billing partner, it’s essential to inquire how they manage their digital relationships. You can also gain insights into their training programs that aim to prevent internal information leaks. Additionally, it’s crucial to learn about their procedures to identify possible external threats.
According to the US Department of Health and Human Services report, in 2021 alone, there were 48 individual ransomware incidents. Around 34% of healthcare practices and hospitals fall victim to cyberattacks. Out of these, 65% reported that cyber criminals were successful in encrypting their patient data.
This report is enough to emphasize the importance of data security and why you need to perform thorough scrutiny before partnering with any third-party medical billing company.
Is It Worth Outsourcing Medical Billing and Coding?
YES! By outsourcing medical billing and coding, healthcare providers and other medical staff can focus on their practice’s success and strive to keep their patients engaged and satisfied.
But, it is not the only reason. Outsourcing the intricate billing and coding procedure enables practices to save overhead costs as they do not have to spend money on hiring, setting up expensive infrastructure, getting licenses for software, etc.
Your partner billing company becomes responsible for handling your accounts, follow-up of claims, claim creation and submission, denial management, and complying with regulatory standards.
Thus, we recommend you outsource your medical billing and coding to a professional billing firm, like MediBill MD, to boost your practice’s overall productivity and efficiency.
Bottom Line
This guide presented a detailed discussion of the pros and cons of outsourced medical billing and coding. When deciding which company to outsource your medical billing and coding to, it is recommended to perform a thorough background check, read online reviews, and ask some difficult questions, like how they manage data security.
MediBill MD has professional billing specialists and certified coders under its umbrella. We invest in our workforce training and development to ensure compliance with regulatory standards and different insurance payer requirements. As a result, our partner practices enjoy faster reimbursements, reduced denials, and enhanced transparency.
