If you make the decision to outsource medical billing, then make sure your medical claims billing company compares your payments to your allowables. It goes without saying that if you do billing in-house the comparison still should be done.

One of the advantages a Medical Insurance Billing Service has is that it sees payment information and patterns across many clients for many payers. This allows medical claims billing services that regularly and systematically compare payments to contractual allowables to spot patterns that a single practice might miss. One that is seen at large Medical Billing Services on a regular basis is the systematic underpayment of claims by payers. As billing services look across multiple clients they will see the exact same CPTs being underpaid by the same amount by the same payer in a given month across all of their clients. The following month they will see the same payer switch to underpaying a different set of CPTs. These under payments are not huge (5 to 10 percent) but they add up quickly to big dollars for a medical practice.

The combination of switching the codes being underpaid from month-to-month and keeping the underpayment amount "under the radar" can make this difficult for an individual practice to spot. It is also difficult for a Medical Insurance Billing Service to spot if they are not comparing your payments to your contracted rates. It has been demonstrated that this single action (comparison of payments to allowables) can increase a medical practice's collections by 5 to 10 percent. This is why you need to insure this critical step is being completed no matter who is doing your Billing.


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Did you know you can negotiate the medical bill you receive from a hospital?

It's true.

A year or so ago I was in immense pain. My lower back hurt and then the pain spread to my groin.

It was unbelievable pain. So bad I couldn't drive. I asked my daughters to call their mom, my ex-wife, to get a ride to emergency.

On the drive I heaved my guts out into a bowl in her car. Once there I continued heaving through the check in procedure.

I have a doctor, but no health insurance.

They got my address etc. and then put me on a gurney in a corridor.

There I lay, moaning and groaning for an hour.

Nothing happened.

No care, except for my ex-wife, bless her heart.

Then the doctor appeared looking at a clipboard, told me he suspected it was a kidney stone, but wanted to do tests. A technician wheeled me away, told me I should stop moaning, and when we arrived at the room where the tests would be done told me to "get off the gurney," and then did a CAT scan. I remember telling him he should say "please. " He replied, "oh, yes, please," but he laughed when he said it.

An hour later they read the scan, saw the stone, and hooked me up to an IV and started the pain killer cruising through my veins. Twenty minutes later I was better.

"Stone got lodged going around a corner," said the kind doctor. "Should pass within twenty-four hours."

A little later we left.

My total stay in emergency was between three or four hours.

Then the bill arrived a month later.

$6000.

There were no details of what constituted the expenses, just the bill.

"We don't itemize anymore" said one hospital administrator I spoke with, "but if you pay the bill off within 14 days of receiving it we'll give you a 40% discount. That's what the insurance companies pay."

So now we were down to $3600.

That's $900 an hour for my stay at emergency.

But I thought I might be able to do better. I wanted to pay them something for their services, but I wanted to pay a fair market value.

"I want to negotiate," I said.

"I can't do that," she replied.

"Who can?" I asked.

She fidgeted, and gave me a name and a title.

The next day I met with the name and title.

She had power.

The power to negotiate bills.

We locked horns.

She was good.

So was I.

I'm sure you can imagine the conversation.

It was intense. She was fighting for the hospital, me for my checkbook.

One phrase that I kept repeating to her was, "I want to pay you something; you did help me, but I want to pay you a fair market value for services received."

I mentioned the technician, the stay in the corridor.

She mentioned all kinds of time payment plans, programs, and forms I could fill out.

Not my style.

Finally she said the words I was waiting to hear.

"What exactly did you have in mind?"

"A thousand bucks," I replied.

She scoffed.

The room was hot.

We were dead-locked.

We both took a breath.

"What's the best you can do?" I asked realizing she would have to answer to her superiors.

She tapped on her electric adding machine.

"$2300," she replied. "We have our bills to pay too."

I sensed she was growing weary, at the end of her rope. We'd been at it for fifteen or twenty minutes.

"Okay, I said, make it $2000 and you have a deal. I reached for my wallet to make my point.

She hit the buttons on the adding machine again. It clicked out a white cash register size receipt.

I held the credit card in front of her.

Visa. Platinum.

She glanced at the card, back at the adding machine, thought a moment, then smiled at me.

"I'll draw up the paper work," she said ripping the ticker tape out of the adding machine and taking the card from my outstretched hand.

Still, I wasn't completely satisfied. I wish I had gone longer, offered to split the difference between my $1000 and her $2300, but something told me that was as far as we were going to get.

I had received a 66% discount on my bill.

I haven't had health insurance since 1999, so that would have been six years of no premiums, which for me would be $800 a month, or $48,000 for six years. (Because I have a pre-existing condition, Graves Disease, insurance companies don't want to cover me unless they can charge these high premiums). If I calculate my $2000 bill, divide it by six years I arrive at $333. per year, or $27.75 a month.



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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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