Outsourcing to reputable medical billing companies has quickly become a popular and efficient way to handle medical billing needs for practices of many sizes and disciplines

Medical billing companies are becoming industry partners with a growing percentage of clinics, especially for clinics that are starting out.

Medical coding, billing, and receivables form a chain that truly becomes the backbone of a practice, and screening medical billing companies to find the right fit is crucial for practice owners.

Now, more than ever, it is an absolute necessity to approach the screening process by examining the fundamentals (some of which go easily overlooked) of outsourced medical billing best practices.

Versatility

Medical billing companies should have the flexibility to submit claims via various resources, depending on the specific need of the practice.  While most clinics will have no preference of one clearinghouse over another, an outsourced medical billing company that has the ability to submit to more than one clearinghouse is an indicator of experience in submission variances.  At a minimum, one of the clearinghouse partners the medical billing company works with should coordinate with the clinic directly, in tandem with billing team members, for enrollments purposes.

Additionally, the medical billing company should offer integration via medical coding and billing components of practice management software.  A streamlined workflow operates on integration, so your EMR/EHR (which should be certified by the ONC like In Touch EMR is), practice management software, and billing should all flow together in one continuous cycle, allowing your staff to have direct access to what the billing team is doing and allowing the clinical manager or owner to audit billing flow and correlate this with front desk and clinical results.

For clinics operating in conjunction with or under the business umbrella of a hospital, the ability to handle both CMS (HCFA) 1500 as well as UB-04 claims is an absolute must.  This also applies to clinics or practices looking to expand into institutional billing.

Measuring Against Industry Standards

In order to know how a medical billing company will perform for you, it’s important to know what the general concept of “good performance” amounts to in the world of outsourced medical billing. These concepts are called Industry Standards, and are the baseline for what is the average performance of a nominally priced outsourced billing provider.  The two most important Industry Standards to look at are collections percentage and first pass rate.

The collections percentage is the amount the medical billing company charges a clinic, calculated as a percentage of either the total amount they collect on the clinic’s behalf or on the total amount billed out.  Avoid any medical billing company that charges based upon the total amount billed out. You should only pay for the amount of money that is collected and that’s how we charge at In Touch Billing.

Collections percentages should be based only on the amount collected by the company on behalf of the clinic.  There are two simple reasons for this:

• Clinics should not be responsible for paying a percentage on claims that may never be reimbursed.
• Pressure should always be on the medical billing company to secure the highest reimbursement possible in the shortest amount of time.

The easiest way to think of it is: the medical billing company should only be paid on a claim when the clinic is paid on a claim.  The Industry Standard for average collections percentage is currently 6% of collections, depending on claim volume.  Companies may also charge a monthly minimum for billing in an effort to cover overhead in the event that the clinic has an unexpected period of lower claim volume.  This is a common practice, but be sure to do the math of monthly minimums.  A common tactic of unscrupulous companies is to advertise low percentages, but hide high monthly minimums in their contracts.  Monthly minimum charges should never be higher than what a clinic would reach during an average billing cycle and should always be openly discussed in negotiations.

First pass rate is the Industry Standard for the success rate of claims being submitted to a payer, via a clearinghouse, and being accepted and paid accordingly on the first attempt.

Currently, the average first pass rate fluctuates between 88% and 90%.

These two simple pieces of information can help in the screening of medical billing companies by comparing where they stand against common Industry Standards.  The best companies will have a collection percentage lower than 6%, while maintaining a first pass rate above 90%.

BONUS TIP: Another Industry Standard to keep in mind in length of term. This is the term of the contractual agreement between the practice and the billing company. Most contracts will automatically renew after the initial term unless renegotiation is requested by either party (usually the clinic). While practices should never expect to automatically get a lower rate after an initial term, billing companies should remain open to renegotiation based upon increases in claim volume. Additionally, beware of any medical billing company that requires a length of term longer tan 24 months. Common terms are 12 months and 24 months. Any longer, and there may be unknown risks or ulterior motives.

Security

Technical terminology can make this aspect of screening for medical billing companies feel overwhelming or convoluted, but knowing what to look for and what information to ask about can make or break your compliance in era of ever-tightening regulations.

Medical billing companies should strictly comply with HIPAA, FDCPA, Patients Privacy Act and HITECH regulatory standards.  They should be ISO 27001 certified to ensure the highest level of data protection at all times.  The International Organization for Standardization (ISO) 27001 certification helps companies establish effective data management systems.  The medical billing company should also be ISO 9001 certified on the basis of continual improvement initiatives related to the transparency of data and increase in quality of services.

An aspect of security sometimes overlooked is FTP.  Before considering a medical billing company, always ask if they have their own secure FTP servers.

Expectations of Work Flow and Metrics Data

Medical coding, billing, and receivables management are all data driven aspects that depend on proper workflow.  As such, knowing the specifics on how a practice’s claims and AR will be handled is key.

Upon receipt of documentation and service data, the first and most obvious step is for the medical billing company to check for standard coding issues.  This happens faster and more efficiently when the integration discussed in section one is in place.  Once documentation is finalized, it should appear in your integrated practice management and billing software that your staff has access to and that the billing team works out of directly.  If this isn’t in place, the onus is on the practice to provide access to this information to the billing team.

As a general rule, claims should be created within 24 hours of receipt of service data and the claim created, pre-scrubbed, and submitted within five days.

A practice that uses an ONC certified EMR platform will already provide the billing company with service data containing ICD-10 codes to the more specific level, correctly applied functional limitation G-codes, background data on 8 minute rule calculations where applicable, and PQRS will automatically be reported (for best results, use an ONC certified EMR/EHR platform that is also it’s own PQRS registry).

If a practice is not utilizing an EMR platform that automates these processes, the medical billing company should be checking each aspect of the claim data while performing other procedural checks, such as for NPIs, payer identification numbers, claim specific patient demographics, etc.

When searching for a medical billing company, be sure their team includes an EDI specialist who will analyze any rejected claims should they occur, correct the errors, and resubmit a clean claim. Simultaneously, any errors received should be shared and filed with the billing team members responsible for charge entry and any on-staff coding specialists to minimize re-occurrence of errors.

As practice owners or clinical managers compare medical billing companies and their workflow, ensuring a payment posting team quickly (within 24 hours) reviews the EOB files received through scans or ERAs through the clearing house should be another factor to consider. Before posting payments, this team analyzes and reconciles deposit slips, insurance check copies, patient payments, etc., and calculates total payments received by batch with the amounts received from the payer.

Check to be sure that the contract between the practice and medical billing company includes the services of a dedicated AR specialist. This specialist generates reports of claims which are unpaid for more than 30/60/90 days and analyzes them. The AR specialist follows up with the payer with respect to the pending claim status, analyses why the claims remain unpaid and takes appropriate action to get the claim paid. No additional costs should be associated with this vital step.

If a practice has decided on a medical billing company integrated with practice management and EMR software, reporting and metrics tracking easily becomes an advanced tactic capable of populating any scalable metric entered into the system from intake to posting.  This set up allows practice owners and manager to trend referral sources, income based upon code, provider performance, rejection and denials over time and based on cause, evaluation lineage, and more.

For companies or set ups that don’t fully integrate all of these features, a 15 day and 30 day billing summary should be provided alongside all weekly standard Accounts Receivable reports.  The medical billing company should also provide an option (not a mandate) to send patient statements on behalf of the practice.

BONUS TIP: Avoid interaction between billing companies and patients.  Once the statements are sent, the patient should communicate with the practice in all matters, even those related to payments.  The patient experience is the responsibility of the clinical staff, and clinical culture should never rest upon interaction with an outsourced billing team.

Knowing what to look for, what to expect, and the right questions to ask can take the complicated process of finding and screening medical billing companies, and simplify it.  Always remember that the medical billing company should operate as your ally in the quest for full and prompt payment from insurance companies.  Ensure you’re signing a contract with a company that will act as your partner, and know the facts before ever signing.