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Billing Services: Build or Buy?When do you know whether to outsource or keep in house?

Presented by:Phil Skiba, CPA, PMP, MBA

Vice President Business Servicesand Jane Speyer, Senior Billing Manager, OCHIN

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Billing Services

• Maintaining stable revenue stream is fundamental to the success of any business, especially healthcare

• While not the core competency of most medical practices, billing is a core function

• Billing can make or break a medical practice

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Should you outsource?

Its not for everyone. Ask yourself these five important questions first:

1. Is cost or increased performance your primary motivation?

2. How important is having the billing/coding knowledge available in house?

3. How stable and productive are your staff?4. Is your practice ready to partner with an outside

agency?5. How does your practice compare to industry

benchmarks?

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Question 1

Is cost or increased performance your primary motivation?– If your primary motivator is to reduce costs,

outsourcing may not be your best option– Cut-rate billing companies that cost less may

not provide the level of service and performance you expect and need

– High quality billing services may not cost less, but should more than make up the cost through increased collections and value added service

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Question 2

How important is having the billing/coding knowledge available in house?

– If you are able to find and keep knowledgeable staff, having them onsite is a great advantage• Allows for integration with front desk staff and

providers to improve revenue cycle performance• Face to face contact with all personnel who impact

revenue cycle can improve commication

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Question 3

• How stable is your staff? – If you have a high turnover rate, keeping

billing in house gets very expensive• Cost of recruitment• Training• Loss of knowledge of key processes with every

departure• During vacancies, cash flow might come to a

grinding halt

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Question 4

• Is your practice ready to partner with an outside agency?– Need to be open to new ideas and processes– Need to be willing to actively communicate

with billing agency for best results– Trusting an outside agency with your life’s

work is a huge step– Will your staff be willing to cooperate with the

agency?

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Question 5

• How does your practice compare to industry benchmarks? – If performing at or below benchmark, stay the

course• Transitioning to an outside billing service could

disrupt your performance• Don’t fix what isn’t broken

– If performing at average or worse, outsourcing can bring real improvements

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What are the industry benchmarks and how do I measure them?

• Days in AR: – Best performers under 35 days– Average performers between 35 and 50 days– Poor performers over 50 days

• Percent of AR over 120 days– Best performers under 12%– Average between 12- 25%– Poor performers over 25%

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Industry Benchmarks

• Net Collection Rate (payments/(charges-contractual adjustments)– Best performers 99% or higher– Average: between 95% and 99%– Poor performers: less than 95%

• Denial Rate*– Best Performers: 5% or less– Average: 5% – 10%– Poor Performers: over 10%

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Can this billing office be saved?

• If your metrics are below industry benchmarks, but you aren’t ready to outsource, what areas should you review?– Does your staff have Revenue Cycle

knowledge or training gaps?– Are you making the most out of your Practice

Management system? – Is there partnership between front desk staff,

billing and providers?

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Areas to Review– Do you have the right amount of staff to do

the job?• MGMA recommends 1 FTE per 10,000 encounters

for best performance for back office billing– Are your staff working on the right stuff?

• Are they using their time effectively to improve revenue cycle performance?

• Are your billing staff dedicated to billing, or do they have to wear multiple hats?

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Advantages of Outsourcing• Increased Revenue

– Best practices– Denials followed up to secure payment– Faster payments

• Reduce Overhead– Staff salaries and benefits, recruitment, training, supplies, office space

• Less Human Resource Issues– Staff Turnover, Vacations, Absenteeism all contribute to low collections

• Focus on Your Core Competency– spend more time with patients providing care, less on billing

• Risk Mitigation– Employee theft, regulatory compliance

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Disadvantages of Outsourcing

• Loss internal control• Social responsibility to the community• Possible staff reductions• Billing knowledge no longer in house• Sending your patients to an outside entity• Loss of inherent company knowledge• Cash flow issues during transition/

implementation

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What services could be included?

• Claim submission and reconciliation• Insurance follow-up• Payment processing and posting• Patient collections• Customer service• Medical coding• Credentialing• Financial analysis• Recommendations for improvement• Sharing of best practices

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Selecting the Right Partner

• In finding the right fit, consider 5 key areas:– Service– Experience– Technology– Pricing– Performance

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Service• Insurance Follow-up:

– How will the billing service follow-up on denied claims? – What is their track record in denial recovery?

• Customer Service– Is their staff aligned with the values and culture of your practice?

• Regulatory Compliance– Are they HIPPA compliant? – How do they stay on top of billing regulation changes?

• Reporting and Analysis– They able to translate financial data and reports in useful way?

• Collaboration and Value– Will they provide recommendations for improvement?– Will they share best practices?

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Experience• What is the average years experience of staff who

will work on your account?• What is the level of billing expertise with your

clinic’s specialty?• How extensive is their knowledge of Medicare and

your clinic’s state Medicaid programs?• Is their staff bilingual and culturally sensitive to

your clinic’s patients?• Are there Certified Coders to assist your

providers?

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Technology• How will information flow from the clinic to the

billing service? • Will the Billing Service be able to integrate with

your EHR system?• How will they protect the security of your data?• What is their disaster recovery protocol?• What software will you need to purchase and

maintain?• Will you have access to the PM system?

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Pricing

Three different pricing models:– Percentage of Collections

• Aligns billing service and practice with end goal of maximizing collections efficiently

– Fee-based• Per claim or per encounter• Predictable costs, but less incentive to collect

– Hybrid • Some states do not allow percentage of collections

for Medicaid

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Performance• How long have they been in business?• How many claims do they process annually?• How do their clients compare to industry

benchmarks?– Days in AR– % of AR over 90 days– Net Collection Rate

• Can they provide Return On Investment (ROI) data for clients who have used their services?

• Can they share client satisfaction data?• Will they share their entire client list for references?

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Are they a good fit?

• Is the billing service willing to customize its approach to match your clinic’s needs?

• Will they provide on going training to your front desk staff and providers to reduce denials?

• Is there full transparency and access to the work they do?

• Will they treat your patients with respect and dignity?

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Building a Partnership

• Billing Service should have a single account representative who will be your primary contact person

• Clinic should appoint a single person to communicate with billing service on a regular basis

• Have scheduled meetings, including some that are face to face to ensure good partnership and communication

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Good Partnership• Contract should clearly define scope of

services– Billing Service responsibilities and agreed to

deliverables– Clinic’s responsibilities and agreed to deliverables

• CFO should attend Account Review meetings monthly

• Ensure both groups are working together to improve overall revenue cycle performance

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Questions

• May we answer any questions?

• Please remember to complete your survey

• Thank you for your time and participation