The Ultimate Guide to Outsourced Medical Billing

Did you know that the global outsourced medical billing market is projected to reach $19.7 billion globally by 2026? If this happens, the market will expand at an annual rate of 11.8%!

This statistic alone shows that so many people are switching to outsourcing services rather than keeping them in-house—and there are many reasons for this.

However, outsourced medical billing can benefit your business in the medical practice space in various ways. For starters, it can streamline your processes and make your medical practice more efficient in other ways, increasing your revenue.

But if you are going to switch because of the benefits, you need to know more about what outsourced medical billing entails, the differences between in-house and outsourced medical billing for your practice, and what you need to look for in a company when you make the switch to an outsourced medical billing company.

In this medical billing guide, you will learn everything you need to know about the process. Keep reading to stay informed before you switch to outsourced medical billing.

What Is Outsourced Medical Billing?

When a business or organization outsources something, it hires a third-party company or organization to handle specific tasks. In the case of outsourced medical billing, a business or company has outsourced its medical billing to a third party.

This means that the billing process is no longer processed internally. Instead, another company that specializes in medical billing handles this part of the process.

But how does this work?

Typically, an outsourced medical billing company has a team of professionals. They know about medical coding and billing regulations for the industry—what they can do and what they need to avoid when managing the billing process.

Aspects of Medical Billing

When considering medical billing, you may not think of everything that happens with the billing process. The financial side probably comes up for you, but you may not get further than that.

However, so much goes into the complex process of medical billing. Outsourcing can be highly beneficial to organizations because of the complexity of the billing process, especially in the medical world.

Here are some of the aspects of the process.

Patient Info

When someone is sending a medical bill, there has to be information that is part of this. This information has to do with the patient.

The information will contain the patient’s demographics (such as age, height, weight, etc.), insurance information, and medical history.

All information on this part must be correct to bill the patient—this step cannot be skipped in the process.

Medical Codes

As mentioned previously, medical coding is part of the medical billing process. These specific medical codes identify specific medical diagnoses, procedures, and treatments.

The codes can simplify the process for everyone in the medical billing industry rather than having to process it without a code.

For starters, medical codes can help with more accurate billing. It ensures the exact bill is correct for that specific medical procedure or treatment.

It also makes the process quicker because there are fewer errors regarding the type of payment that must be billed to the patient.

It also helps keep the system more compliant to meet various regulations such as HIPAA and CMS guidelines.

Lastly, using medical coding helps with reporting. It provides a lot of data about the patient that can improve patient care and healthcare tracking. This can also help inform trends in patient care and even improve the medical practice overall.

So, what are the codes that medical billing uses? There are two central coding systems. One is the International Classification of Diseases, and the other is Current Procedural Terminology.

Claims Submission

Once medical codes are on the patient’s visit to the doctor, it generates a claim. This claim then goes to the insurance company for payment, completing the first part of the medical billing payment process.

Follow-up

That is not the end of the medical billing process. The claims submission process is just the first part of the payment process in medical billing. Follow-up is then the next step.

This is what ensures that all payments are delivered promptly. An outsourced medical billing company would follow up with the insurance company to ensure this payment will be made.

Payment Posting

Once the insurance company pays, the next step can commence. However, this can only happen once the insurance company pays their part. This is why the follow-up in the process is so necessary.

Next, the payment posting occurs because the payment must be recorded and posted on the patient’s account so that they have the correct information, which keeps transparency in the industry.

Denials and Appeals

Handling denials and appeals is a critical aspect of medical billing. Situations arise when insurance companies refuse claims due to various reasons like coding errors or incomplete information. In such cases, the outsourced medical billing company plays a pivotal role in appealing the decision. 

They meticulously review and resubmit the claims with necessary adjustments or additional information, aiming to secure the appropriate payment. This process is vital for ensuring the financial stability of the medical practice and safeguarding against undue revenue loss.

Patient Billing

After the insurance company has processed a claim, the extent of the patient’s financial responsibility can vary based on their specific insurance plan. While it is common for patients to be responsible for any charges not covered by their insurance, this is not universally applicable. Depending on their insurance plan’s structure and coverage limits, patients may have varying coinsurance or copays.

When the insurance company does not cover the entire allowable amount, the patient may be billed for the remaining balance, coinsurance, or a fixed copay amount as stipulated in their plan. The medical billing company facilitates this by invoicing the patient for the relevant amount. The time it takes for this process can extend the overall billing cycle, as it includes waiting for the patient’s payment and then processing it upon receipt.

Effective communication and clear billing practices are crucial at this stage to ensure patients are aware of their obligations and can make timely payments, thus streamlining the collection process.

Compliance

During this process, the medical billing company must comply with the regulations that monitor the entire medical industry—including the Health Insurance Portability and Accountability Act and Centers for Medicare & Medicaid Services guidelines.

Trends and Statistics in the Industry

For the most part, it is a known thing that medical billing workloads are tough to manage in-house, which is why many organizations outsource the function to a third-party company.

It is also important to note that there are many ongoing staff shortages because of COVID-19, so outsourcing has become an even more popular and needed option for medical billing.

But what other trends and statistics are essential to know regarding your medical practice and its billing processes? There are quite a few!

Important to Note

There are a few factors that influence the rise of the outsourced medical billing market size projections, as we noted in the introduction of this guide. One of the factors is the ICD-10 coding system. Healthcare costs increase due to a new federal mandate to implement EMR management systems, meaning everything must be part of an electronic medical record.

In addition to implementing the new coding system, other factors may impact the trend toward outsourcing medical billing.

For instance, the healthcare system has increased its focus on profitability and revenue generation. This change in direction is primarily due to the impact of COVID-19 decreasing their revenue. Now, practices want to explore outsourced medical billing as an opportunity to strengthen profitability.

Differences Between In-House and Outsourced Medical Billing

Now that you know about the increase in outsourced medical billing practices, you may wonder what the difference between in-house and outsourced medical billing is. Why is everyone making that switch? Let’s take a look at the differences.

Differences in Control Over the Billing Process

If a medical practice has an in-house medical billing team, they have total control over the medical billing process.

However, when you outsource your medical billing, the responsibility of the billing goes away from your practice. That means you can focus on other things in-house rather than billing practices. This can seem daunting, but if you choose the right third-party company, you should trust their ability to do the job right!

Differences in Risk of Medical Billing Errors

Additionally, there is a difference in the risk of medical billing errors between the two types of medical billing.

In-house billing is more at risk of medical billing mistakes like coding errors, which can affect reimbursement from insurance companies and cost the medical practice a lot of money.

Outsourcing medical billing can reduce the risk because they are experts in the billing field. They have the time and focus needed to minimize errors, while the in-house team may be thinking of other tasks on their to-do lists.

Difference in Expertise

Although you may feel that your in-house team has a lot of experience, they may not have the proper billing experience. Outsourcing medical billing is giving the trust over to a company with all the billing department experience.

Doing this as an organization can take the stress of the medical billing process away from your team.

What to Look for in Medical Billing Outsourcing Companies

If you have decided that outsourcing your medical billing is the right plan for your practice, then you need to know what to look for when you start your search. Here are a few things to keep in mind throughout the process.

When They Can Begin Services

When you start looking at medical billing outsourcing companies, you want to ensure that there will be a smooth process when they begin their services.

Typically, a company only needs a month or two to start their services. However, this can differ based on many factors, so looking into this before you hire a new company can make a huge difference in your medical billing sector.

However, a lot of it is on you as well. You will need to be able to provide software access to the medical billing company so that they can start billing insurance and patients at your practice.

One thing that may affect the service start date is the software system. If the company is on a different software system than you, this can affect the implementation timeline.

Ask for References

When looking at a medical billing outsourcing company, they should be able to provide you with references. These references should be a practice similar to your implementation so that you can reach out and ask them relevant questions.

When you get these references, you should reach out to them as soon as possible so that you can see what they feel about the third-party company. Be sure to ask them about their experience. If a company gives out references, they will have something positive to say, proving that this company may be right for you.

In addition to asking for references, you can also do some of your own research for the medical companies. This way, you can read online reviews to see what others are saying (others being those not referred to you by the company). These reviews will be honest and give you a good glimpse into what you may see if you start to work with this company for your medical outsourcing needs.

All of this is to ensure they have a strong track record with their medical billing outsourcing. You want to confirm that you are working with a company with a strong reputation for what they do.

Think About the Services That They Provide

As mentioned earlier, medical billing is a complex process. There are a lot of different tasks that go into the process, so you must understand if a third-party company will be able to provide all of those services.

It is also necessary to know that not all medical billing services are the same. Some services provide certain parts of the medical billing process, while others do it all. It is important to note what you will be responsible for making an informed decision about your outsourcing needs.

For example, you may also want to deal with part of the billing process yourself. This means that you are going to have a custom billing process that you work out with a medical billing service. For instance, you may want to input charges on your medical site but have the medical outsourcing company do the rest.

However, another approach might be that the billing company does everything, so you do not have to worry about anything. It is crucial to make sure that you and the outsourcing company are on the same page so that you know what to expect.

The last thing you want to do is expect them to do something but not realize you were always on the hook. This is why a contract should be implemented after thoroughly discussing services.

Consider the Company Staff Training

When you hire a company for your medical outsourcing needs, you want to know the expertise of the outsourcing services company.

The last thing you want is to outsource your medical billing to a company that doesn’t know what they are doing, defeating the purpose of outsourcing.

You want to confirm that there is proper training for the medical billing company’s staff. This is what will retain their core competency.

The staff should be certified and receive continued education through the company to ensure they maintain their certification—keeping them up-to-date with what they need to know in the medical billing industry.

Know Who Will Handle the Current Accounts Receivable

Before services begin, knowing who will be handling the current A/R is crucial. There are still going to be billings happening during the switchover to the new company.

You want to make sure that there aren’t any unpaid claims that fall through the cracks. This is why when you hire a new company for your outsourced medical billing, you start fresh with them. Handling the rest of the old bills in-house is best, while anything new goes to the hired company.

This is especially beneficial if you are changing practice management software. When changing software, it can be challenging to keep track of everything. This is when you may lose things; you want to avoid doing so in the medical field.

However, if you have a conversation with the company and they are willing to take on the current A/R, you should be willing to discuss this. They can run the old claims out. At the end of the day, it is up to you what you want to do in terms of A/R.

Remember that you will be running two different billing processes simultaneously during this process. This will last a few months during the switchover to the outsourcing company.

Monthly Financial Reports

When you work with a professional outsourced medical billing company, you will have access to your monthly financial reports. However, professional companies should also automate and interpret these results for you. The report analysis will provide your practice with monthly financial summaries, highlight trends, and even provide advice based on the results seen in these reports.

This can be beneficial for the following month to know what needs to change financially – if anything.

You should also have access to financial dashboards for 24 seven monitoring. And outsource medical billing company that knows what they are doing well. Also, establish KPIs and standards for monitoring these financial reports.

When looking for a company, it is beneficial to ask how they provide monthly financial reports and what will be included. You can also ask what this will look like, how you will receive them, and what else you can expect regarding financial reports.

Asking these questions upfront will save you headaches if the medical billing company fails to provide a report.

Technology and Infrastructure

You also want to ensure that you are working with a company with the latest technology and infrastructure. This is what will help with your medical billing processes and make sure that they are efficient.

Your chosen company should have advanced billing software so that everything is secure, safe, and efficient.

It would help if you verified they have secure servers because this will ensure compliance with laws and regulations in the medical industry.

Be sure to also ask about their backups and how they go about making sure the information is saved properly. You want to guarantee service is uninterrupted, and having the latest technology is one way to ensure that for your medical billing procedures.

Pricing Transparency

Medical billing outsourcing companies may charge based on the percentage of revenue collected or a fixed fee per claim.

When you are looking for a company, you want to know what their pricing structure is going to be, or this could change who you want to go with for your medical outsourcing needs.

Make sure to ask about their pricing model and any additional fees upfront. Do not wait until the last minute to do this. It should be one of the first things you consider when choosing a medical outsourcing company.

Be sure that you choose a company that is transparent about its pricing structure and provides regular reports on your billing status.

Transparency is key in the medical billing industry!

Customer Support

One of the most important things you need to look for when outsourcing anything in any business is their customer service and support structure.

If you ever need help, you don’t want to feel helpless or frustrated, especially in the medical field. There are many moving parts, many things that can be easily overlooked, and many more things that can go wrong.

You want a third-party company with excellent customer service and support that is there for you when you need them. Their support team should be available to answer questions and resolve issues when you have them.

Be sure to ask them how the process works when any problems arise in the billing process.

Questions to Ask Your Medical Billing Company Before Switching Over

If you choose to switch to a specific medical billing company, you don’t want to do so without asking the right questions. This can ensure a smooth transition into the new medical billing software and outsourcing.

What Should Stay In-House?

Although you may already know what you want to maintain in-house, it is important to ask the third-party company so that you are on the same page. You need to consider what areas you want to keep and then make sure that the medical billing company you want can adapt to that.

How Will This Affect Patients?

As a medical provider, it is necessary to always be thinking about your patients first. It is a good idea to ask your medical billing company how switching to their outsourcing services will affect your patients.

Some of the decisions you and your office staff typically make may now transfer to the medical billing company. Having a conversation about what decisions they make versus what you make can be beneficial for your patients.

Benefits of Outsourced Medical Billing

Outsourced medical billing has so many benefits, which is why it has become more prevalent in recent years. It’s not just a trend; it’s a smart thing to do!

Ready to learn why? Here are all of the benefits that you should know about.

Maintain Business Continuity

With COVID-19 creating so many staffing shortages, having staff members do other staff jobs can become a burden. This can lead to stress and burnout in the healthcare industry and even in your practice.

When this happens, many errors can lead to decreased cash flow, reducing employee morale and causing even more stress.

Choosing to outsource your medical billing will relieve the stress of so many of your team members. They will be able to focus on their primary role in the practice rather than spreading themselves extremely thin to figure out medical billing.

This will also benefit your practice as it will remain more steady when you outsource the medical billing needs.

Create More Cash Flow

A medical billing company knows the proper codes for every claim they submit. These codes are crucial to get the payment for each claim you submit. And since claims are submitted every single day (and done correctly with the codes by a medical billing company), it is more likely that the claims will process more quickly.

There will also be fewer rejections and higher reimbursements because fewer errors happen throughout the medical billing claims process.

When things are done correctly, you can also expect better cash flow coming back to the practice. The quicker they do this, the more you will see cash flow growing and coming your way consistently.

Specialized Expertise

Although you trust your team and know they can do a lot, they are not experts in billing. That is unless you have specifically hired an expert in medical billing.

However, that is probably not the case. And that’s okay! That’s why outsourcing medical billing can be so beneficial.

They have specialized expertise in the industry that your team members may have yet to have.

All their energy, effort, and resources will go to all things medical billing. Additionally, the outsourced team monitors regulatory changes while staying current on best practices, making your life at the medical practice much more manageable.

Medical billing companies also know the best practices to keep things running smoothly for your entire practice.

Reduction in Errors

Making errors can be easy, especially in the medical billing industry.

With so many moving pieces, things can fall through the cracks. However, this can be detrimental to the practice.

Mistakes can impact reimbursement and claim denials, creating many issues within your practice.

When you use a medical billing partner, they will ensure that a clear process is followed every time a claim is submitted. This will benefit their workflow and ensure all best practices are implemented.

Because of this, there will be fewer errors. With fewer errors comes faster collection times and more money for your practice.

Why wouldn’t you want that!?

Better Patient Experience

Having a medical practice is all about your patients. You want your patient experience to be top-notch. In reality, this is how you will get patients coming back.

However, if your medical staff are always trying to figure out billing issues, they will not be able to elevate the patient experience. Instead, they could be hurting the patient experience.

When you outsource medical billing, your patients can directly communicate with experts on the issue. They can direct their questions and concerns to these experts to help them with their problems. Not only will this help them with their issues, but it will also allow your staff to focus more on the patients themselves.

This is the best of both worlds for your practice.

Reduced Overhead Costs

Although you may think that you will have more costs associated with medical billing when you hire a company to do it for you, it will reduce your overhead costs.

It can change your cost structure from a fixed expense to a variable cost tied to revenue collected.

This means that you will only be paying fees as you make money. You won’t have to worry about paying the bills before you see your medical bill claims reimbursed—reducing your stress and your company’s overhead costs!

Increase Revenue

Ah – the end goal. As a medical practice, one of the main things you want to do is increase your company’s revenue. However, this can be difficult when a lot is happening behind the scenes.

When you outsource your medical bills, you are increasing your revenue.

This is due to multiple factors at play. You are ensuring the correct coding and billing workflows are going through. Claim submissions are maximizing reimbursements in a shorter amount of time than usual.

There are no denied claims because they are corrected and resubmitted, whereas they could have sat at your medical practice for days without being noticed.

You are starting to do more things right at your company and freeing up time for your in-house team. Instead of worrying about billing, they can worry about patient care and customer service.

Now, you have better patient care and better performance with your revenue cycle! This is precisely what you want to see as a medical practice.

Scale Your Practice

At the end of the day, a medical practice is a business. And as a business, you want to grow consistently.

When you outsource your medical billing, you can scale your business more efficiently.

You can offer a new specialty or hire more providers to see more customers. You may want to do more outreach or even invest in a lab department.

You can scale your practice more efficiently when you have more time and resources.

Common Misconceptions About Outsourced Medical Billing

You may have been hesitating to switch to outsourced medical billing companies because of your misconceptions. We are here to debunk some of the most common misconceptions we see in the industry.

It Is Too Expensive

Outsourcing your medical billing is less expensive than doing it yourself because it increases your net collections and improves the amount of reimbursements you get.

How? Because the medical billing company that you hire knows what they are doing. They are a team of experts working for you!

And no matter what you do, you will have to be paying someone to do medical billing. Why not pay someone who is an expert and is going to give your specific team time back to do other things that could benefit your medical practice even more?

It’s Only for Large Practices

Many medical practices may claim that outsourced medical billing is only for larger hospitals and health centers.

That’s not true! Private practices, health centers, and hospitals of all sizes and specialties can benefit from outsourced medical billing!

This is because the outsourcing company can take care of all the nitty-gritty details of the billing process that your practice needs more time or bandwidth for.

The Practice Will Lose All Control

Although you may think you may lose control of the entire billing process, choosing the right outsourced medical billing company will ensure you have as much control as you want. This is a meaningful conversation to have upfront when choosing the company you want to work with.

A professional medical billing company should make your job easier. They want you to feel more in control than you ever did doing it yourself because it takes off a lot of stress from your practice.

Your Comprehensive Medical Billing Guide

When it comes to medical billing, this medical billing guide covers it all!

A lot goes into the outsourced medical billing field, so knowing what to expect and how to go about it can make a huge difference in your practice.

And now that you know more about outsourcing medical bills and working with a third-party company, you may be convinced that it’s time for you to do it at your medical practice.

If that’s the case, you should contact us at CBS Medical Billing & Consulting. We are here to help you with your medical billing needs! Get in touch with us, and we’ll get back to you as soon as possible.