What is Medical Billing?
Every medical practice needs a system in place for medical billing. Medical billing is a process in which medical providers receive compensation for their work by submitting claims to their patients’ insurance companies. This can be handled either in-house (by the an internal administrative and billing staff) or outsourced (automated by a professional medical billing company).
Every single medical procedure, diagnosis, and treatment has a medical code assigned to that service. The job of a medical biller is to translate that code into a numeric value or dollar amount. That dollar amount, also known as a medical claim, is what is submitted to the patient’s insurance company. The insurance company will either accept or deny the claim and send it back to the medical biller.
What are Medical Billers Responsible For?
The job of a medical biller is very similar to that of a lawyer: they represent their client (the medical practice) when negotiating with the insurance company. They try to maximize the amount paid for the services their client provides, since they get paid based on a percentage of that revenue. Medical billers must be in constant communication with the patients and insurance companies in order to ensure their client gets paid.
The duties of a medical biller vary based on the size of the practice and the number of claims that are submitted. But most medical billers handle the following:
- Unpaid/denied claim research
- Insurance appeal processing
- Billing collections
- General insurance/patient inquiries
- Communication with insurance carriers and their changing policies
- Accounts Receivable issues
- Practice management
In-House vs. Outsource
A common question that medical practices ask is: Should I keep my medical billing in-house or outsource it? In many cases, outsourcing can save you time and money, but that’s not ALWAYS the case.
The decision to outsource your medical billing or handle it in-house depends on several factors. Do you have a qualified back-end staff that has the credentials and expertise to perform error-free medical billing? Do you want to save time, effort, and money by outsourcing? Many doctors simply don’t have the time to hire, train, and manage a medical billing staff at their practice. This is why outsourcing is a popular option.
When should your practice outsource?
Deciding whether or not to outsource largely depends on the assets and resources your practice already has internally. There are several questions you can ask to decide whether or not outsourcing makes the most sense:
- Are you a primary care or specialty care practice? Generally, primary care practice’s medical billing needs are a bit more straightforward compared to specialty care. If you are a specialty care practice, you need to be absolutely sure you have a staff that understands that niche billing process before you decide you can handle it in-house.
- Do you have a back-end staff that has medical billing credentials? You’ll want to have medical billers with the right training and expertise to do the job. If you don’t, you’ll either have to pay for your staff to get certified or outsource your billing to a credentialed company.
- Are you experiencing errors in your medical billing? Errors can threaten your practice’s revenue flow and daily operations. For example, an average of $125 billion is lost every year by medical practices due to denied claims from erroneous billing entries. If you are dealing with these issues, it’s best to outsource to an expert medical biller who can help you avoid losing money on errors.
- Do you want to avoid adding more salaries to your practice’s budget? Hiring in-house medical billers requires you to pay extra salaries. Oftentimes, it’s less expensive to hire a medical billing company.
Types of Service
If you decide to outsource your medical billing, the next question you should ask is: what type of provider do I need? There are plenty of medical billing companies out there. Each offers different services and are experts in different healthcare areas. Here are some things you will want to consider to figure out the best provider for your needs, depending on your type of practice:
General Practice Billing
If you are a general practitioner, then you will want to find a medical billing provider that handles general practice claims. However, there are many different types of general practices. While there are medical billers that are equipped to handle most general practices, you may decide you want to work with a biller that focuses on your particular type of practice.
- Family Practice
There are medical billing and coding companies that specialize in family practice services. As of 2019, there are many coding and billing updates particular to family practice treatments and diagnoses. Family practice medical billers are well-trained in these updates, and can submit correct updated codes and claims for services like skin biopsies, chronic care management, virtual check-ins, and more. They can assure you get the maximum reimbursement on these services.
There are many services that pediatricians provide that most general practice doctors do not have to worry about. Medical billers that specialize in pediatrics have particular expertise in billing and coding for vaccines, newborn treatment, nebulizers, and other child-specific treatments. This is important because child healthcare items like vaccines can cost the practice hundreds of dollars out of pocket, so you need to make sure you’re choosing a biller that can get you your maximum reimbursement. Pediatricians also need to make sure they’re working with a biller that understands parent and child insurance plans, and can cater to families that have children under different insurance plans.
- Internal Medicine
Internal medicine practices diagnose more adult diseases than the average medical practice, which may require them to spend more time with patients. They often have to juggle a variety of medical codes in order to submit accurate claims and get correct reimbursements – which many doctors simply don’t have the time for. Internal medical billers understand the variety of codes and services, and can take that weight off your shoulders.
Specialty Practice Billing
If you run a specialty practice, you will want to hire a medical biller who has experience in your specific specialty. As the healthcare and insurance industries become increasingly complex, it’s almost impossible for one company to be experts in every area of speciality medicine. There are always ‘tricks of the trade’ within each specialty, so find someone who knows the ins and outs of your field. Here are just some of the common types of specialty practice billers:
Oncologists handle numerous amounts of patients and treatments on a daily basis, not to mention the stress of treating patients with serious diseases like cancer. Handling medical billing and coding on top of their already grueling job is difficult. Plus, codes for oncological treatments like IVs, injections, chemotherapy, radiotherapy, and more can be very complicated and detailed. Finding a qualified, reliable medical biller for your oncology practice can feel crucial – it’s often a good idea to partner with a credentialed oncological biller to rest assured your finances are being taken care of efficiently.
Neurologists deal with complex neurological and brain disorders that involve various exams, EMG’s, MRI’s, and more. There is a wide spectrum of treatments and diagnoses they perform on an everyday basis, which can make billing very complicated. Common errors neurologists experience when handling billing in-house include: reduced claims because of complexity or numerous treatments during a visit, increased audits, and low or delayed reimbursements. Professional neurological medical billers work full-time to assure your practice is getting the accuracy, attention, and reimbursements it needs to run efficiently.
Dermatology is one of the most complicated specialty practices to perform medical billing and coding services for. Coding for dermatological procedures can vary depending on size or dimension of the procedure site, thickness of excisions, and graft materials used. Meaning – sometimes, the same procedures for two different patients can require different coding for claim submission. Dermatologists are some of the most common doctors to opt for professional medical billing companies with expertise in their field to handle their medical billing.
Many medical billing services are beginning to offer an all-in-one approach which combines medical billing, consulting, and IT management. This eliminates the need to hire a separate company to manage electronic billing software and IT issues. All-in-one companies usually cost more because of the additional services they provide, but if you want a streamlined solution, this might be the best fit for your practice. Note: Pay attention to the background and experience of all-in-one companies. In some cases, you will find they have plenty of expertise in IT, but limited expertise in medical billing. You want someone who has experience in both.
Local vs. Offshore Billing
While many of the medical billing providers are located offshore, there are also local providers. If you are shopping purely by price, an offshore billing company is going to be your most cost-effective option. There are plenty of reputable offshore medical billing providers, but do your research before signing a contract. Some offshore companies have little understanding of how to successfully navigate the healthcare system and insurance appeals process within the United States. Additionally, it can be challenging to communicate with a representative whose first language is not English. If you prefer a local provider who is ‘just down the street’ then you might have to pay more. But the level of service and availability may be worth it. It depends on the priorities of your practice.
How Much Does It Cost?
Medical billing companies make their money by charging a percentage of a practice’s net revenue, net collections, OR net claims. They also often will charge a set-up fee when signing up, which is often a set amount per physician, and annual administrative fees, which includes things like software upkeep. Every provider does it differently, which can make it tricky to do a price comparison.
Generally speaking, companies will charge an average fee that ranges between 4% and 10% of your practice’s net revenue. Set-up fees start at an average of $300 per physician, and administrative fees can be anywhere between $3,000-$6,000 annually.
General Pricing Guidelines:
- The more expensive your claims, the lower percentage you will pay.
- The more patients you see, the lower your rate.
- The lower your cost per claim, the more you will pay (flat-fee may be best in this case).
Common fee structures include:
- Amount collected – The medical billing service receives a percentage of claims that the medical practice has collected on. This does not include deductibles, co-pays, or other in-office payments. Many practices prefer this option because it directly correlates to profit earned.
- Total claims submitted – The service’s fee is based on a percentage of gross claims that are submitted to insurance providers and other debtors are charged. The downside: there is little incentive for the medical billing provider to aggressively follow up on submitted claims.
- Total collections processed – Collection fee is based on a percentage of net collections, which includes deductibles, co-pays, claims, and other in-office payments. This is a popular choice among medical practices because it provides greater incentive for the billing service to follow up on claims.
- Fixed rate – Charge per claim, which can range from $1 to $2 per general practice claim, but as much as $4 to $7 for specialty claims. This fee structure may save your practice money up front, but it offers little incentive for the medical biller to follow up on claims.
- Hybrid – Charge a percentage of claims submitted on specific accounts or insurance providers, while other claims are charged at a fixed rate. This is becoming a popular choice for medical practices as more states consider percentage billing an illegal practice.
The bottom line: Do the math before deciding on a service with a specific payment structure. If their fee does not offset your net collections, it’s not worth your money.
Choosing a Medical Billing Provider
Once you are ready to start shopping for a medical billing service provider, here are some helpful questions to ask:
- How long have you been in the medical billing industry?
- What is your area of specialty?
- What kind of training and credentialing does your staff receive?
- What type of software do you use? Do you require that clients use your software, and if so, do you offer IT help?
- What is your fee structure (% of net revenue, % of collections they bring in, % of claims, etc.)?
- What is included in your service (credentialing, appeals, collections, etc.)?
- What is your average collection rate? Processing rate?
- How do we contact you when there is a question? How quickly do you get back to us? What are your hours of availability?
- Do you have a limit to the number of times you will re-submit a denied claim?
- Do your clients have complete access to your reports?
- How do you ensure that your company adheres to HIPAA requirements?
- What is your average claim submission time frame?
Ready to get started comparing medical billing companies? Our free service lets you compare up to 5 price quotes with the top medical billers that service your type of practice. Get started here.