Healthcare practices have increased their revenues by greater than 20% using outsourced medical billing services. Medical billing is a complex task that involves medical coding, insurance claims and HIPAA regulations. Manual billing is understandably error-prone and medical practices end up dealing with denied and rejected claims that need several follow-ups resulting in outstanding receivables. 

Before hiring a medical billing service, medical practices should examine:

• How the medical billing service measures its performance, and
• How it solves payment bottlenecks and issues?

Key Performance Indicators (KPIs) to measure medical billing services are:

Collection ratio

Gross collection ratio compares the amount claimed by the medical practice with the amount paid by the insurance company. Net collection ratio adjusts the amount claimed by the practice to the amount allowed by the insurance agency.

Time between billing and collection

The number of days between the billing and its collection indicates the effectiveness of the billing process. Ineffective and tardy follow-ups adds to the time a payment stays outstanding.  The standard for timely payments varies across different medical areas such as dentists, chiropractors and doctors.

Number of past-due payments

Medical billing firms usually segregate past-due bills into categories of 60, 90 or 120 days past due. They try to uncover common characteristics of these claims such as the Current Procedural Terminology (CPT) code. After isolating the common characteristics, medical billing companies can try to analyze the cause of delays for that category of claims.

First-pass payments and denial rates

First-pass pay rates refer to the number of claims that are paid immediately after submission. Denial rates refer to the number of claims that were rejected and needed follow-up. This metric helps medical billing companies analyze the cause of delays in the payments. The most common causes are incorrect CPT code, misplaced claims and denied services.

Patient liability

The billing desk of a medical practice collects any patient charges, such as copay or payments from patients not covered by health insurance. The percentage of patient liability is an indication to the medical billing service to adjust patient collections at the time of service.

Transparency and Reporting

Medical billing companies manage the billing process through web based medical billing software and tools. This offers transparency in the process and allows the medical billing service and the halthcare practice to work together to resolve any open issues. The online dashboard makes it possible for healthcare practice to measure the performance and results of outsourced medical billing.

The complexities of medical billing makes medical billing companies a healthcare professional’s best friend.

Healthcare practitioners have a grueling work life balance. Dealing with life and death situations, giving health and hope can take its toll on healthcare professionals. Add to it the additional stress and worry of medical billing and claims collection  issues associated with running a healthcare practice.

One way a healthcare practitioner can alleviate some of the pressure is to outsource medical billing and claims collections.  There are several HIPAA compliant medical billing companies that are able to solve difficult medical billing claims issues resulting in increased revenues for a medical practice while reducing the costs. Additionally, medical billing firms do not have to be located in close proximity to a healthcare professional’s practice as they have online reporting tools that healthcare practitioners can access from their computer anywhere in the world.

The outsourcing of these back office operations such as medical billing and claims for hospitals and medical practices can help contribute towards fixing the broken US healthcare system, one of President Obama’s top agenda items that has the resulted in a bitter debate in the US congress and divided the country over the last few months, by significantly reducing medical billing and claims processing costs, savings that can easily be passed on to the US consumers and patients.

By bringing in these changes into the medical practitioners revenue management cycle, medical billing companies can also help reduce the stress and workload that comes with healthcare jobs which is likely to grow exponentially with the retirement of baby boomers in the coming years.