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.

Hypothetical Income

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.

5 Things to Look for in a Medical Billing Company

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.