The COVID-19 pandemic and difficulty in hiring staff have led to an increase in the outsourcing of medical billing, according to some industry experts. Although enlisting the services of outside firms can be an attractive option, practices should be aware of some important considerations.

“Staffing shortages, shutdowns, quarantine, and workforce virtualization have all led many practices to outsource billing services to a company that can take on the administrative and human resources burden,” said Matt Seefeld, head of revenue cycle at MedEvolve in Little Rock, Arkansas, which offers specialty practice management and revenue cycle software. “Often, outsourced billing companies charge a fraction of the revenue collected, which can cost less than keeping in-house billing staff.”

Amy Raymond, head of revenue cycle operations at AKASA, a company that uses artificial intelligence and machine learning to provide health care systems with automating revenue cycle operations, also believes outsourcing of medical billing can be a prudent option in today’s environment. “Outsourcing can help you avoid the additional cost of employee turnover. In terms of investments, the average employer spends $4,000 and 24 days on a new hire and the average cost of replacing an employee is between 16% and 20% of that employee’s salary,” Raymond said.

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She also observed, “Outsourcing can potentially provide a more flexible workforce that is able to scale up and down without additional cost and undue burden on the organization.”

Raymond advised practices to be selective in which billing tasks they outsource to ensure they can be handled efficiently and in a way that improves the bottom line.

More Direct Collections From Patients

In recent years, Seefeld said, medical billing companies have had to change their collection practices in light of a rise in high-deductible health plans that has increased health care costs for patients. So in addition to submitting claims to insurance companies, companies often have to seek payment directly from patients. “Collecting money from patients is a totally different situation requiring soft skills and proactive communication along with innovated technology,” Seefeld said. “The old ways of billing and collecting do not work anymore. Much of the work of medical billing used to happen after the appointment. Now, what happens before the appointment can be even more important to prevent issues later.”

Outsourcing of medical billing can limit practices’ ability to work out payment arrangements with patients who are financially strapped. For example, internist David Prelutsky, MD, medical director of Southampton Healthcare in St. Louis, Missouri, noted that with an outside billing company handling collections, he loses flexibility in setting up payment schedules with patients and the option of not pursuing payment from indigent patients. “I don’t like outsourcing billing because I know the patients’ backgrounds and financial status and we don’t go after them, if we know they are poor,” Dr Prelutsky said. “If they are not scammers and they are behind, they visit the billing person and we set them up on a billing system. They can pay as little as $5 a month.”

Areas of Concern

Jacqueline Washington-Todd, executive vice president of revenue cycle management (RCM) at Alta Medical Management in Salt Lake City, Utah, said practices need to consider some important factors when outsourcing medical billing. For example, they could be liable for a billing company’s mistakes. “With any vendor relationship there are risks,” Washington-Todd said. “Although rare, there can be security breaches and HIPAA violations.”

Although violations of HIPAA privacy can happen with in-house billing, the risk is potentially greater and harder to manage when it is outsourced, she said.

Seefeld advised practices to obtain real-time reports from medical billing companies. “Monthly reporting is no longer acceptable, but unfortunately most RCM companies cannot produce real-time actionable metrics that allow the provider to hold them accountable,” Seefeld said. “Some billing companies outsource services to India and other countries, which leads to delays, issues with timely filing of claims and communication barriers.”