While in-house medical claims billing and outsourcing both have their advantages and drawbacks, one way to determine which is best is to do a cost comparison analysis. Using a hypothetical practice consisting of three primary-care physicians and two in-house billers, let us do some comparisons in a nutshell.
Expenses of maintaining an in-house billing staff
Salaries, insurance benefits and state and federal taxes for two billers may average around $118,000 per year, depending on the area, with periodic updating training for billers costing about $2,000 per year. Computers and software can cost approximately $5,500 annually, not including any initial system purchase.
The average patient bill for this practice is estimated at $125 each. (These amounts and expenses will vary depending on the type of practice, especially for specialty practices.)
Filing in-house claims
The billers prepare a patient’s ‘superbill’ with relevant data: diagnosis, treatment codes, and other billing information. The ‘superbill is sent to a medical billing clearinghouse (which includes a fee – for this example, estimated at about $100 per physician per month (x 3) for 20,0000 claims or a total of around $3,600 annually.)
If a ‘clean claim’ was submitted and considered billable by the clearinghouse, the claim is forwarded to the payer for processing and reimbursement. If a claim is not ‘clean’, then the clearinghouse cleans it and submits (again, for a fee) or returns to the provider for corrections - fees still apply, of course.
When claims are outsourced
With a billing service, the process is more efficient because your ‘superbills’ have been stored and sent electronically, the service handles the data entry and submission. (Yes, for a fee, but usually a percentage, on average of about 5 percent, which is worth it for a busy practice.)
Depending on your needs, the billing service can follow up on rejected claims, handle past-due accounts and invoice patients – saving your staff time, money and aggravation.
When considering a billing service, remember that matching your EHR data to that of the billing service is important for exchanging information between your systems; otherwise data conversion will be necessary. Even if using a billing service you will still need to maintain a computer and printer in order to print documents and communicate between you and the service, usually for an average annual amount of around $500 - almost a pittance compared to in-house monthly billing expenses.
How much revenue is being collected?
This hypothetical practice normally expects to collect approximately 60% of what it bills, in keeping with most industry averages. Contrast that to an increase of 10 or more percent by most services! In our example, the practice’s net collections were $1,496,000 for outsourced, compared to $1,241,800 for in-house.
For those who are still undecided, if any of the following apply to your practice, it may be time to consider outsourcing over in-house billing:
- You are a new provider with enough to do without having to train and supervise billing staff.
- You would rather put your focus on serving your patients than the administrative or clerical aspects of running a practice.
- You have a high turnover among your staff, and are losing money as a result of slowdowns in replacing competent staff to send claims on time.
- Your billing staff is not up to the job: claims are sent late or with mistakes, requiring wasted time and effort (and costing you more money) instead of having done things right the first time.
To learn more about how to maximize your practice’s revenue and minimize billing headaches, contact one of our medical billing specialists. As a leader in medical billing services, our experienced consultants will analyze your practice’s needs and revenue goals to improve reimbursement rates and boost your bottom line.