Outsourcing vs. In-House Medical Billing

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A major question facing every medical practice is whether or not to outsource their medical billing. Why is this considered to be a major issue? What are the differences between outsourcing and in-house medical billing? What are the pros and cons of each?

What They Mean: Outsourcing and In-house Billing

A medical practice’s cash flow depends on their billing department. The more statements they can get out to patients and claims to insurance companies, the sooner they’ll be bringing money into the practice.

In-house medical billing is usually done by a doctor’s or provider’s staff. Usually someone is hired specifically for the purpose of running the billing department. This isn’t always the case though, as more offices are cross training front and back office employees. Those who answer the phones and perform scheduling may also send claims, as well as may someone whose main job description is assisting the doctor with patients.

On the other hand, some medical offices outsource their medical billing. Outsourcing means a doctor or provider hires a billing company outside of the practice to take care of all of his or her medical billing needs.

The Pros of Outsourcing

  • Consistency in billing – Not only will a medical billing company regularly send claims to insurance companies, they are contractually obligated to follow up on all unpaid and denied claims. Often, claims will be denied because of a lack of information or inaccurate documentation. Once the issue has been fixed, the claim can be resubmitted.
  • Regularity of billing – A doctor doesn’t have to worry about bills not being sent out in a timely manner because of staff illness or heavy workload. A medical billing company is hired to focus on one thing: medical billing. Therefore, bills and claims should be sent regularly and on time through a company.
  • The doctor has a better idea of billing operations – If requested, medical billing companies are required to give a provider performance reports. Based on these reports, the provider is not only able to see how well the practice is doing financially; it will be able to evaluate the performance of the billing company.

The Cons of Outsourcing

  • Not a great option for a hands-on doctor – Many doctors like to focus on what they do best—taking care of their patients. There are some doctors, though, who are more hands-on and like to be able to evaluate the billing operations of their practice more closely. Having an off-site medical billing company wouldn’t allow a doctor to do this.
  • It’s more difficult to budget – Many billing companies don’t charge a provider a flat, monthly or annual rate. They base their fees on how many claims are sent out. So, if the provider is doing more business one month, they will be charged more. If they have a slow month or take some time off, the fees charged that month will be less. This can make it incredibly difficult to create a billing budget.
  • The possibility of hidden fees – It’s always important to ask about extra fees prior to hiring a medical billing company. Some companies charge a sign on or start-up fee. Because more billing is being done electronically, some billing companies will charge extra for any bills they have to print and mail. The provider may also be charged a printing rate plus the cost of postage. Another possible fee is that of cancellation.

Why In-House Medical Billing Might Be Best

  • The biller is close at hand – If there are any issues that arise, a doctor will have the ability to discuss with his or her own in-office billing staff or take a look at a claim, a bill, or any chart documentation themselves. Billing issues can be more easily resolved when billing is done in-house.
  • The doctor can retain more control – There are some doctors who prefer to manage every aspect of their practice; from the billing, to the scheduling, to the purchasing of supplies. A doctor or provider should take into consideration if they would be comfortable giving that much responsibility of their operations by outsourcing. If they determine that this wouldn’t be prudent for them, an in-house billing position would be best.

The Downside of In-House Billing

  • Billing operations can easily stall – Whether an in-house billing staff is made up of one person or three, if someone is out of the office, the billing department can see a sharp decline in productivity. This may have a negative impact for a few reasons. First, those left behind at work will have more work to do. Second, the biller will have a lot of work to catch up on when they return to the office. Third, cash flow into the office could significantly decrease because of this stall in billing operations. 
  • Higher costs – While it may not be easy to budget for outsourcing, it may still be cheaper than hiring an in-house billing staff. Why? When a doctor has an in-house staff, they have more overhead. They have to pay an hourly wage, benefits such as medical insurance, sick time and paid vacation time. In addition, there is the cost of setting up a billing system. Other costs include the software and tech support needed to process and send claims and to create billing statements.
  • More opportunity for liability –In-house billing can result in some liabilities for the company. If a doctor hires a biller who doesn’t perform accurately, they can end up with miss-billings or incorrect billings. This can result in patients receiving inaccurate estimates or being billed for more than they actually owe.

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One response to “Outsourcing vs. In-House Medical Billing”

  1. Marisol says:

    Very informative.Thanks for sharing.