Big question came up from three people this week – should we outsource billing? Or, we outsource now and think we should bring it back in-house. What do you think?

I think you need to do a combination of soul-searching and concrete analysis. Below we discuss the benefits of in-house billing and outsourced billing, the costs involved, the personnel issues and the things you need to consider before making a choice. There really are pros to BOTH solutions.

Let’s start with the decision-making process. Where is the effort for billing? Most billing effort is expended on claims creation but, claims rejections and denials may need more time per trip to resolve than what was expended on the original claim process. This is the area we see most organizations struggle with – it takes so much time to get claims OUT the door that there is little time left to address the claims that walked back IN the door without payment.

There is also the impact of your trip volume. This varies by service – each service is unique! Very small volume providers may do well with outsourced billing while large volume providers may do well with outsourced billing. Many medium sized services may choose to in-source their billing. None of this is carved in stone!

There are many costs to perform your own billing. Recruitment and training billing personnel – the biggest challenge for providers; there are not enough quality people LOCAL TO EVERY PROVIDER to staff billing departments well. Ongoing periodic training to maintain compliance is needed as well as routine audits. There is a cost to maintain technology, including the purchase of hardware and software and its updates. Don’t forget staffing and the associated payment of employee taxes and benefits. You need office supplies for claim processing and statement expenses (includes cost of paper, toner, postage, envelopes, and more). Last but not least, there are collection costs.

There are reports that say that outsource could cut 30% to 40% of billing costs. But, if the organization has already invested in hardware, software and billing training, you need to factor those lost costs into the decision equation. Even if you outsource, there are costs that stay with your organization – you still need a good QA program and someone to review documentation prior to sending it to the billing company; your crews need periodic training to maintain compliance (but your billing company can be a big help here); costs of technology to maintain a patient care reporting system; and potential collection costs.

If incremental cost savings are less than incremental costs, consider in-house billing, but If incremental cost savings equal incremental costs, qualitative factors must be used to make the decision (community impact, staff impact, etc.).

If incremental cost savings are greater than incremental costs, outsource billing. How do you determine those incremental costs? Look at trip volume and determine billing costs to bill total trip volume. Next, calculate total cost to bill just one more trip. Incremental cost is determined by taking total costs of your current volume minus total costs with additional trip.

Regardless of cost, there are intangible issues that could affect your service and/or your community. What about employee morale, your goodwill in the community, the feasibility of implementing an outsourced billing solution and the availability of resources? What will happen to your current billing staff? Can they be absorbed elsewhere in the organization or will they be laid off? What will you do with the office space you currently use to perform billing?

There are many benefits to outsourcing. Billing services usually have scale to purchase and deploy technologies required to properly submit claims, battle with insurance companies and collect self-pay balances. They commit dedicated staff to denials and appeals. They are able to attract high caliber staff and retain them because they provide opportunities for staff growth and advancement.

Billing companies have a broader view of the industry. They deal with more providers, more facilities and more payers. As a result, they are able to recognize patterns and trends among the payers. I routinely hear of billing companies who go to battle with the VA or visit the offices of an insurer or a local Medicare contractor to resolve problems. Billing companies have might, they have knowledge and they have volume on their side to support their efforts. They have resources to be the “squeaky wheel that gets greased.”

On the other hand, in-house billers sometimes feel they have a “stake” in the outcome of a claim; they know the crew members who cared for the patient. They may even know the patient in person. They know the unique elements of your service – your demographics, your community, the geography of your area. As a result, they fight hard to resolve issues.

Providers feel that in-house billing gives them control and visibility into how accounts are worked and that in-house billing allows the provider to be nimble and move resources quickly to respond to problems or volume (however, this only works if you have the staff resources available). There is a concern among providers that outsourcing may alienate patients or facilities. There is also a concern that billing services will only go after the low-hanging fruit and leave the more difficult money uncollected.

Insourcing has advantages, one of the most important being improved bi-directional communication – with billing and field providers, with billing and dispatch, and with billing and the patients and community at large.

What about fees? Yes, outsourced billing comes with fees (typically a per trip fee or a percentage of collection). But outsourced billing may improve your rate of net collections because more dedicated resources are committed to claims creation and claims denials, billing and follow-up activities.

Bottom line? Put your head and your heart into this decision. Run reports of what you are currently doing (see our previous articles on calculating your net collection rate) and make an informed decision.

Let us know if we can help!

 

About the author:  Maggie Adams is the president of EMS Financial Services, with over 20 years’ experience in the ambulance industry as a business owner and reimbursement and compliance consultant. Known for a practical approach and winning presentation style, Maggie has worked with medical transportation providers and billing companies of all kinds to support their billing, auditing, and documentation training efforts. Check out our newest documentation training webinars and billing webinars on our website.Friend EMS Financial on Facebook, or for more info, contact Maggie directly at maggie@ems-financial.com or visit www.ems-financial.com