Outsource or Not to Outsource….That is the Question
By Lisa Bargmann, Bargmann Management, LLC
The complex world of DME Reimbursement continues to burden many companies. These days I often hear many business owners who are ready to close down their billing operations and outsource to a billing service. This type of reaction is often born out of the frustration of ever changing regulations, combined with the difficulty in finding employees that are well versed and up to date on the latest reimbursement information. This frustration can lead to significant financial ramifications, including poor corporate cash flow. There are many important considerations to evaluate before making this big step. There are pros and cons for each option and the answer will not be the same for every company. Be sure to be realistic during your evaluation process.
It sounds very simple to “outsource my billing and I do not need to worry about knowing all the rules and regulations.” This could not be a more false statement. The fact of the matter is that your intake staff is the first and most important line of defense in getting paid. These employees must know how to qualify patients, fulfill documentation requirements, and in many cases need to know how to enter the information into some computer software system. This piece cannot be treated lightly. No matter who is doing the billing, it is critical to invest in the education and resources for your up front staff to understand reimbursement guidelines as they pertain to them. A quality billing service will be able to provide training and feedback in this area. Since they are reviewing and working your accounts, trends and points for improvement should be communicated.
Another thought may be to “outsource my billing and I can eliminate all my reimbursement staff.” Once again this is not completely accurate. There will need to be some residual reimbursement function(s) left in tact for most cases. Some billing services will either not perform all functions your existing billing department has performed, or will charge extra for various services. Some of these items may include, CMN retrieval and quality review, obtaining prior authorizations, confirmation and quality control of orders/delivery tickets, cash posting, month end reporting and/or system administration so that data pulls correctly. Specifically in the area of private-pay collections, most billing services focus on Insurance billing, and will either not process these accounts or may simply mail statements with no phone follow up. They will additionally expect your staff to handle all phone contact with patients including their questions. It requires a trained Billing Specialist to answer your customer’s questions. The last thing anyone wants is a rash of patient complaints because they cannot get their issues resolved. It is also important to determine who will be the liaison between your company and this billing service. Many times there is information that needs transferred back and forth between the companies. Think about what talent you may have on your staff that you should retain to do these functions.
It sounds great that “I do not need to manage my reimbursement functions any longer.” Although you should not have the same degree of management responsibilities, you will still want to manage your billing service. Even with the best billing services you will want to be aware and involved in the results you are getting and ask questions. Like anything else, those that are vocal typically receive the most attention. You will want to make sure your company is getting the focus it deserves. Be aware that some companies may charge for more individualized attention but understand up front what you can expect. It will be important that your employees embrace the process and work as a team with the billing service. If this does not occur, the results obviously suffer and can result in a constant finger-pointing match. A solid commitment to the management of the relationship must exist on both sides. There are many good billing services out there but unfortunately many bad. Obviously this will impact the time you need “managing” the process. Do your homework up front to maximize the chances of being satisfied.
What should you look for in a billing service? First, you will want to interview the company. Find out how many customers they have, what their sizes and specialties are, and what states they operate in. The closer in similarity the billing service’s customers are to you, the better chance you have of success. If they currently do not operate for clients within your state, you may run into issues where they do not understand your payers. Quiz their knowledge, in general, on payer requirements. Ask them what they do to keep their staff educated. Do they have enough staff to handle your account? What is the average tenure and background of their employees. How many are on staff? Ask for testimonials and references for past and present customers and be sure to call them. Find out strengths and any weaknesses, including current success measurements such as DSO and cash goal achievements. Evaluate an Insurance billing service that partners with a private-pay billing/collections company to provide a seamless transition between your private-pay accounts. Finally, be sure that you have an explicit agreement that clearly outlines your responsibilities, their responsibilities, and a termination clause you can both live with. This agreement must also clearly contain what you will pay for and at what charge. The charges you will pay are a huge factor that most owners focus in on. Obviously important but often misleading, most will go for the cheapest rate they can find. You truly get what you pay for when it comes to billing services. Many times the extremely low rates include nothing more than transmitting/mailing claim forms, sometimes only one time. You are expected to do everything else, especially provide clean information and when you do not, you will be the one penalized with low cash flow. These companies price themselves so low they cannot afford to employ the best people and cannot afford to have an appropriate number of staff available. Be realistic in your expectations by thinking about what you currently pay to have a billing staff. They may have some efficiency through economies of scale; however, your costs and their costs will be similar. As mentioned previously, your intake staff is key to the success of any internal or external billing. If your intake staff is inexperienced, you can expect to spend more on a quality billing service. Not only is their more work involved to get the claims paid but also re-education of intake staff is necessary to avoid future pitfalls. In general, a billing service is more expensive than doing billing in-house, however, worthwhile if it means your results are where they need to be.
Who should use a billing service? Small companies and start-ups can benefit from using a billing service, especially if they do not have reimbursement savvy staff. This will allow these companies to get grounded in doing things the right away and at some point they may decide to pull the billing in-house if it makes sense. Spending the extra money up front will be money well spent to get a company off on the right foot. All too often companies try to skimp and then end up in a major cash crunch. Once behind, it is that much harder to catch up and can be detrimental to survival. Larger companies that cannot get their results together due to turn over, lack of available appropriate staff, or that do not invest in proper training are also candidates. Again, you will spend more and will essentially be paying for someone to keep your intake process in line, but if that is what works then it is worthwhile. Using a billing service does not have to be a permanent proposition, however, solid commitment to the process is key.
In conclusion, outsourcing some or all of your billing processes may make sense and benefit you. Be sure to have realistic expectations, knowledge of cost and what part your existing staff will need to play to be successful. Fully evaluate a billing service’s abilities and creditability. Be sure to be involved regularly to understand the results you are seeing and measuring. No matter what choice you make, out source or not, you must be responsible in your reimbursement process to have positive results.