The Next Generation of Outsourced Billing
The decision to outsource billing is one faced with increasing regularity by radiology groups seeking to trim costs while maximizing reimbursement. Within this larger decision also lies another conundrum: how to select the outsourced-billing approach that best suits the practice. Kevin Shepherd is chief development officer for Medical Management Professionals (MMP), Atlanta, Georgia. He says, “Outsourcing is generally going to be less expensive. You’re going to save money, but the decision can become more complex, depending on whether you outsource off-site.” Kevin ShepherdShepherd explains that many groups might hesitate to outsource such a critical component of their revenue generation because of a perceived lack of control over the people, processes, and data involved. “A lot of people look at it as having more access to the information if they have it themselves,” he says. “There’s also the notion of control over decisions such as hiring and firing.” Outsourcing in its most recent iteration, however, can provide practices with the control they want, Shepherd says, as well as advantages made possible by next-generation billing technology for data analysis and benchmarking. “The biggest argument for in-house billing is control, or perceived control,” Shepherd says. “When we work with groups, one of the key things we tell them is that this doesn’t mean we’ll make decisions for them. Instead, we get them the data they need to make their own decisions, and if they want, we add our advice.” Advantages of Outsourcing Of course, the primary reasons that any practice would choose to outsource its billing are cost and performance. According to one analysis performed by MMP, practices can save substantially on billing-department staffing (as well as software and hardware) by outsourcing billing; outsourcing also generally results in higher collections, owing to fewer errors and faster processing. Working with an outsourced-billing provider also offers practices access to that provider’s purchasing power, which reduces the cost of patient statements, printer cartridges, claim filing, and more, Shepherd notes. “We assign people to scour the marketplace constantly for the best technology solutions for things like denial-management software,” he says. MMP actually collects revenue information from its billing clients from the 24 months following the company’s takeover of billing and compares it with their revenues from the 24 months prior to the change; Shepherd says that the company has shown an average increase in collections of 4%. This includes both clients where collections didn’t change at all and clients where collections improved by 18% to 20%. “We charge a percentage of collections, so we’re motivated,” he notes. “The more we collect for a practice, the more we make.” Outsourced billing also provides a measure of security for groups both small and large, Shepherd says. “There may be groups that can do in-house billing more cheaply than outsourced billing, if they have a really good manager or a really good billing office,” he notes. “In that case, it comes down to size: Groups in smaller or midsized towns may not be able to attract that kind of talent.” He adds, however, that the in-house model puts even groups with talented billing professionals at risk: “For the groups in bigger cities, the right person, with the right leadership skills, may be able to do billing more cheaply, but if you lose that person, you’re stuck holding the keys and need someone else to drive the car,” he says. With outsourcing, Shepherd says, key billing staff can more readily be replaced with equally talented individuals. Thanks to the advent of advanced reporting software, even groups working with an outsourced-billing provider can access their data anytime, anywhere, via Web, Shepherd notes. Another key advantage of working with a billing provider is its ability to benchmark a practice against its other clients—something MMP does both annually and on an as-requested basis. “We’ll do a lot of big-picture stuff, such as benchmarking days in accounts receivable, net collections, and bad-debt percentages,” Shepherd says. “We’ll also do it on a more granular level, showing a group how its Medicaid ultrasound reimbursement compares to other groups’, how many groups code a procedure that might be a gray area, how many groups are outsourcing their night service and what they’re paying, and so on. Our practices are not operating in a vacuum.” Outsourced: On-site Versus Off-site For groups turning to outsourced billing as a way to simplify processes and increase collections, a fairly new alternative has become available: on-site outsourced billing, a hybridized approach in which the billing company will take over the group’s local office, bringing in its own billing system and, in many cases, hiring the group’s existing billing staff. For groups more comfortable with having a local billing office, or for those for which a local billing office would be more advantageous, the hybridized approach provides an ideal compromise. “When groups don’t want this done in a different city than the one in which they practice, we’ll take over their lease and existing billing operations and hire their employees,” Shepherd says. He says that this model is increasingly popular; around 40 of MMP’s current billing clients are outsourced on-site clients. Although this approach can be more expensive than a traditional, fully outsourced model, the net return is still higher, Shepherd says. “You may be paying 8% of your collections internally or to another vendor for billing, and we may charge 9%, but you still make more money,” he says. “The question becomes whether you will pay an extra 1% to make 5% more.” Shepherd advises practices to consider their individual costs and preferences when settling on a billing approach. If a practice has an inefficient billing process, high staff turnover, or difficulty navigating the necessary technology to optimal advantage, an outsourced-billing model might be a solution. “With outsourced billing, you’re getting masters in the field you wouldn’t be able to afford on your own, as well as a compliance department focused on nothing but compliance and coders focused on nothing but coding,” he says. “We’re also wading through reams of data available through our billing system to offer a concise snapshot of the practice and the data it needs. Through outsourced billing, groups can have more intelligence and confidence in making decisions.” Cat Vasko is editor of and associate editor of Radiology Business Journal.