But what does outsourcing your billing actually involve? How does it work? What can you expect? I’m going to walk through all of that in this guide. By the end, you’ll have a solid understanding of the medical billing outsourcing process and what it’s really like to hand off this critical function.
The Basics of Medical Billing Outsourcing
Let’s start with a quick overview. When you outsource your medical billing, you’re hiring an outside company (rather than in-house staff) to handle the process of submitting claims and collecting payments from insurance companies and patients on your behalf.
These companies have teams of trained medical billers and coders who input patient information, assign billing codes, file claims electronically, follow up on denials and rejections, and ensure you get paid for the services you provide.
Many offer additional services on top of the core billing function too, like credentialing, accounts receivable management, and even practice management consulting. But at a minimum, they take that whole billing headache off your plate.
Now, why would you want to outsource this work instead of keeping it in-house?
There are a few key reasons practices choose to go this route:
- Cost Savings: Hiring, training and managing a full medical billing team is expensive. Outsourcing allows you to avoid those overhead costs for things like office space, equipment, software, benefits, etc.
- Efficiency & Expertise: Medical billing companies invest heavily in staff training, technology and processes to maximize billing efficiency and protect you from costly coding errors. Their medical billers and coders live and breathe this stuff daily.
- Scalability: It’s easy to scale their services up or down as your practice grows or has staffing fluctuations, without having to rehire or restructure an in-house team.
- Compliance: They stay up-to-date on ever-changing billing regulations and code sets so you don’t have to. This helps protect you from audits and penalties.
So those are some of the big advantages. It’s essentially a way to get expert-level billing support and operational flexibility for a fraction of the cost of building that capability internally.
Sounds pretty good, right? Well, it absolutely can be – but only if you find a reputable, high-quality billing partner. We’ll talk more about what to look for later on.
The Medical Billing Outsourcing Process
Okay, now let’s dive into how this whole outsourced billing process actually works from start to finish.
While there can be some variation between companies, here’s generally what you can expect:
Vetting & Setup
When you first engage with a billing company, they’ll want to thoroughly understand your practice, specialties, providers, payers, systems, etc.
Things like:
- Your specific services and treatment areas
- Payer mix and top insurance companies you work with
- Total patient volume and yearly billing
- EMR/PM systems you currently use
- Office policies and procedures
They’ll ask a ton of questions to make sure they set everything up properly on their end. You may need to do some system integration too, like establishing ways for them to securely receive patient data from your EMRs/PM systems.
Training & Credentialing
Next, the billing company will assign your dedicated team – typically an account manager, some billers, and coders. If you’re contracting for other services like credentialing or consulting, you may get additional staff assigned too.
The credentialing process, where they enroll your providers with insurance companies, can take 90-120 days. So this gets started right away.
Your team will also do tons of training on:
- Your practice’s specific policies and workflows
- All the payers and plans your office works with
- State-specific billing rules and regulations
Go-Live & Parallel Testing
Once everything is prepared, you’ll transition to having the billing company submit all new claims going forward – this is called the “go-live.”
However, most companies will simultaneously have your in-house staff keep billing new claims for a period as well. This lets them compare the outside billers’ work against your internal processes to ensure accuracy during this transition period.
Full Outsourcing
After successful parallel testing, your office can retire its in-house billing staff and the outsourced team will take over all new billing responsibilities.
This includes:
- Receiving patient demographic and visit data from your EMR/PM systems
- Coding diagnoses and procedures
- Scrubbing claims for errors before submission
- Submitting claims electronically to clearinghouses and payers
- Posting payments and making deposit records
- Denial management and appeals
- Patient billing and collecting outstanding balances
Depending on your needs, they may take on other roles like:
- Credentialing new providers and staying up-to-date on renewals
- Payroll setup, monitoring, and adjustments
- Generating custom reports and analytics
- Auditing for compliance purposes
- Identifying process improvement opportunities
Your dedicated account manager will be your main point of contact, keeping you updated on the team’s work and quickly addressing any issues that come up.
Monitoring & Adjustments
Even after going full outsourced, there’s continued monitoring, tweaking and optimizing happening behind the scenes, such as:
- Providing additional team training as needed
- Updating processes and workflows for maximum efficiency
- Integrating any new providers, payers or policies
- Monitoring billing KPIs like denial rates, payments received, aging reports, etc.
- Making adjustments to improve performance over time
Most companies will have frequent check-ins and produce detailed reports so you can continuously evaluate their work and overall return on investment.
So that’s the general end-to-end process you can expect. It all starts with extensive planning and vetting upfront before transitioning your current in-house team off medical billing entirely.
Evaluating Potential Billing Partners
Hopefully, that gives you a clearer picture of how outsourced medical billing works operationally. But of course, not all billing companies are created equal. There can be a massive difference in quality, capabilities, and reliability between vendors.
Since you’re essentially putting the financial health of your practice in their hands, you have to be extremely diligent about evaluating potential partners.
Here are some key criteria to assess:
- Experience: How many years have they been in business? Do they have direct experience with your specialty and common payers? Have they worked with practices similar in size to yours before?
- Team & Resources: What’s their staff-to-client ratio and how are teams structured? Are coding and billing staff certified and regularly trained? What technology and processes do they use?
- Transparency: Are they upfront about all costs with no hidden fees? Do they provide robust reporting and analytics to give full billing visibility?
- Performance: What are their typical metrics around clean claim rates, denial rates, days in A/R, net collection percentages? How will they measure and commit to results?
- Compliance: Do they have a dedicated compliance officer? What auditing processes and program integrity measures do they have in place?
- Integration: Will your current systems easily integrate with theirs? How will data transmission work? Is their software user-friendly?
- Culture: Does their core values and customer service philosophy align with your own? Do they have a patient-centric approach?
- Reputation: What are their reviews like from other clients in your area? Any malpractice or legal issues in their history?
The best billing companies will be upfront about all of this information and encourage you to thoroughly vet their people, processes, and track record during the evaluation period.
In fact, any reputable vendor should insist on doing a FREE test billing analysis where they re-work a sample of your practice’s past claims. This lets you see their capabilities first-hand before signing any contract.
Red flags to watch for are companies being evasive about their performance data, having sky-high markups, or rushing you to sign something without letting you properly examine their operation.
Take your time vetting potential partners and be very wary of any billing company that seems unprofessional, inexperienced in your specialty, or unwilling to be upfront and transparent from the very beginning.
What Things Cost When Outsourcing Billing
Pricing is another big consideration when weighing different medical billing companies. While it allows you to avoid the overhead of an in-house team, outsourcing isn’t free – so you need to understand the costs involved.
Fees can be structured in a few different ways:
Percentage-Based Pricing
This is the most common approach where you pay the company a percentage of your overall collected revenue each month. Typical percentages range from 5-10% but can vary based on:
- Your specialty and claim complexity
- Total billing volume
- The services you’re outsourcing beyond just core billing (credentialing, consulting, etc.)
Flat Rate Pricing
Some companies charge a flat monthly fee instead of a percentage. This fee is based on factors like your patient volume, number of providers, and services included. Flat rates are most common for smaller practices.
Fee-for-Service
You pay a set fee for each individual claim or billing activity performed. This model is less common but can make sense for very low-volume specialties.
Most billing companies will provide hybrid pricing models that combine some of these approaches as well. For example, a percentage-based fee with per-claim fees added for certain services.
No matter which pricing structure a vendor uses, you also need to watch out for things like:
- Setup/Implementation Fees
- Costs for software licenses or EHR/PM integrations
- Monthly minimum charges or billing floors
- Annual price increases written into the contract
Get full transparency into all potential costs and fee models during the evaluation process. Reputable companies will be upfront about their pricing structure and rationale.
Making the Transition
If you do decide to take the outsourcing plunge after thoroughly vetting your options, there are a few key things to keep in mind for a smooth transition:
- Over-Communicate: Have a solid changeover plan and keep an open dialogue with your billing partner to ensure responsibilities are clearly defined and understood.
- Maintain Backups: Even after go-live, keep your in-house billing documentation and at least a small team for a period in case any issues arise and you need to revert back temporarily.
- Be Patient: Anticipate some hiccups early on as the outsourced team gets up to speed on your practice. Build in a ramp-up period before evaluating performance.
- Train Your Staff: Make sure your front-office staff is fully trained on new protocols for data sharing, patient inquiries, etc. Outsourcing impacts everyone.
- Audit Regularly: Take advantage of reporting and analytics to monitor KPIs. Identify improvement areas and hold your partner accountable.
- Have an “Out” Clause: Negotiate an exit strategy into your contract in case you need to switch vendors for any reason down the road.
The transition requires dedicated management on your end, not just letting the billing company take over. But if you plan it carefully and lean on your partner’s expertise, it can go smoothly.
The Bottom Line
Outsourcing your medical billing is not a decision to be taken lightly. It involves trusting an outside party with what is essentially the lifeblood of your practice’s revenue cycle.
However, when you find a reputable, experienced partner that’s a good operational and cultural fit, outsourcing can lift a huge administrative burden. This lets you reallocate resources toward more enjoyable, higher-impact activities for your patients and staff.
Just be sure to thoroughly vet potential billing companies up front. Examine their experience, performance, pricing structure, and processes in detail before signing on the dotted line. An investment of time here can pay huge dividends in a smoother transition and better results long-term.
If you do make the leap, embrace the change and view your billing partner as an extension of your own team. With clear planning, accountability and an open feedback loop, the two of you can optimize billing operations in a way that lets you stop worrying about claims and get back to your true calling – quality patient care.
