More and more medical practices are outsourcing their billing which has become a viable business option due to rising operational costs, declining reimbursement rates and an increase in the cost of technology that is required if an in-house effort is pursued.

In short outsourcing can dramatically improve a practices financial results and allow them to gain operational efficiencies if the correct vendor is selected for outsourcing.

The key to successfully outsourcing your billing is to do your due diligence before selecting the firm that is going to handle your billing. A little work up front can mean the difference between selecting a firm that becomes a part of your team and produces positive results or a firm that could essentially negatively impact your bottom line.

Use the following criteria to assess prospective vendors:

Specialization - Make sure the firm you are looking at has billing experience in your specialty. Although as the provider you are ultimately responsible for the coding, you want a billing firm that is knowledgeable in your specialty so they can rework any denials and act as a coding reference for your practice.

Reports - Make sure the billing firm is going to provide you with 24/7 access to the practice management reports that you would normally have if doing your billing in-house. Some firms have been known to withhold such data from their clients because their work was sub-par and they did not want their clients to see the results of their work.

HIPAA - Discuss with the firms you are considering their policies and procedures they have in place to protect your patient information. The last thing you want is for your billing firm to expose your private patient information and ultimately ruin the relationship you have with that patient or even worse lead to a potential lawsuit.

Staffing - Inquire about the education level and experience of the billing firms staff. When was the last time they attended a coding seminar? Some billing firms are notorious for being understaffed which can lead to slow claim submission and therefore negatively impact your cash flow. Ask the firm how long it takes them to submit your claims once they are received. Generally speaking claims should be submitted within 48 hours of receipt.

Collection Benchmarks - Regardless of whether you outsource or do your billing in-house a few rules of thumb apply. On average you should be collecting between 95 and 100 percent of your adjusted charges within 60 days of submission. At any given point you should not have to much more than a months worth of charges outstanding with 10 percent of your total insurance A/R balance greater than 90 days.

How to do your due diligence

As usual ask for references and make sure and actually call them. It may even be worth going and visiting those references and talking with them face to face. Make sure and ask your references about these key points:

Collection results - Talk to that current client and ask them where they stand in terms of the benchmarks discussed above. If at all possible ask that client if you can see their insurance A/R aging. A quick look at the aging will tell you whether or not that billing firm is doing a good job.

Meetings - Ask references if the billing firm makes themselves available for face to face meetings. A billing firm should get together with their clients at least once a month to discuss any issues that need to be addressed.

Reports - Is the billing firm providing that client with their reports or is getting the reports like pulling teeth? If not, there may be an issue of just how good of a job that billing company is actually doing.

Staffing - Are the firms staff communicating with the clients office staff on a daily basis in terms of additional items needed to process claims? Do the staff educate the providers about coding issues that arise?

Agreement - Review the contract the firm has their clients sign and make sure it includes things such as services to be provided, costs of all services, confidentiality agreement, terms for termination and adherence to regulations.

Outsourcing your billing can be a huge benefit to your practice if done properly. If you follow the above steps, at a minimum, you will feel better about the firm you choose to move forward with and the overall experience will be both a positive and profitable one.

Dallas L Alford IV, CPA is a licensed Certified Public Accountant in the state of North Carolina and owner of Atlantic Financial Consulting, a consulting firm that is focused on helping business owners improve cash flow. Services include full service medical billing for healthcare providers, cost segregation studies for commercial property owners and an array of other services for general businesses.


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