Evaluating Your Outsourced Billing Vendor

Outsourcing your medical billing can take a great deal of stress off a practice. Done right, it will increase your revenue and decrease your expenses.

Outsourced billing should gain you access to a professional billing staff with greater expertise as well as the depth of that expertise so that vacations/illness will not delay your billing and your revenue. While this should increase your overall revenue, your expense should also take a breather, as not only do you avoid staff hiring, you also avoid costs associated with space and supplies.

When you outsource you are putting your revenue in the hands of another, and it is appropriate, not as a matter of distrust, but as a matter of proper management and control to periodically evaluate your outsource vendor.

Some elements to consider:

Error rate:
What percent of your claims are accepted by the payer on the initial submission? Sometimes called the first pass rate, this will measure the quality of the submission to avoid rejections, rejections cause more work, and any claim rejected runs the risk of being lost, and then lost to timely filing denials. The number 1 step in billing is to get all your claims in, timely.

Insurance claims to age:
With all of your claims submitted, how are the collections? How fast are the dollars coming in? Monthly you should be viewing these reports to see what is lagging beyond 50 days. An unpaid claim at 50 days out is a cause for concern. Has it been received, and that receipt documented? If not, then what is the process to verifying that the claim has been payer received? Remember getting it to the payer timely avoid a loss to timely filing, and even if payment lags to 60 days from a payer, it’s not lost funds.

Insurance claims follow up:
Not paid at day 60 on an insurance claim? What is your billing company’s practice? It should have already verified that the insurance company received the bill, so there is not lost to timely filing denials, and then at what point do they, on your behalf escalate to the payer, and to the regulators? How is their escalation of your claims?

Patient receivables:
With deductibles and copayments up, payments from patients are growing upwards of 30% of your revenue. How are you doing on collecting? This is not just a billing company issue alone. Your office has to take an active part as well, seeking payment at time of service, or contingent credit cards to bill for any balances after insurance had paid. Your billing company has to be right on top of billing patients promptly after the insurance has paid their portion of the bill.

Patient claims follow up:
If you are not using contingent credit cards to balance bill on accounts, you will have collections from patients. What is your policy, and how is your billing company handling those balances? How many statements? What rules do you have for turning an account over for collection?

Denial management:
Yes, you will have claims denied. The first to learn of this will be your billing company. The question is do they track and report to you the denied claims, and then what happens? Do they communicate to you promptly so that you can provide information for an appeal? And who does the appeal, them or your staff? Who then is responsible to track appeals?

Hiring an outsourced company is not hire and put on auto-pilot. How is the communication between your office and the billing company? Are you rapidly told that a claim was held up needing more information, like the medical record? Are you given feedback on your coding? Perhaps a periodic coding review comparing yours with the norms for your specialty? And do they keep you informed of new codes or coding changes?

How are the communications between your billing company and your patients?
If you have your patients contacting your billing vendor how do they handle the calls? Respectfully? With clarity? Does it reflect positively on your practice? And what is the procedure for keeping you informed about communications with patients? If a patient expresses dissatisfaction with the practice or care provided, how is that information transmitted to you?

Management of your payment rates:
Payers are known to make errors, as often at 20% of the time. How does your vendor track the payments you receive and verify that you have been paid according to the allowable fee schedule? And if not, what is the policy on appealing any negative discrepancies? And while you may want to stay silent if you are overpaid, large overpayments should be cause for concern, as you will want to be advised so that you can reserve the overpayments for future recovery demand. And if it is a Medicare overpayment, you have a legal obligation to report and refund within 60 days of discovery.

Data capture:
Your billing process should dovetail with your internal accounting system. Does the information gets entered into your system so that you can monitor it on an ongoing basis? Are you able to see where each claim is at virtually any given time? You should always be in the position that you have access to your data, your billing data, and while you may rely on the vendor to run reports, you should have the data and be able to do so on your own. Always be in the position that you could, if necessary replace your vendor if they fail to deliver.

Contract terms and term:
What is your arrangement with your billing vendor? You should know the length of the agreement, and on what basis you can exit the agreement. Does it require 90-day notice? And you should never have an auto-renew in the agreement. While nice, better than a periodic re-contracting will force you to consider the vendor and their services.

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