In-house vs. Outsourced Medical Billing Services


In House Vs Outsourced Medical Billing Services

A never-ending challenge for a physician is to decide whether to outsource the medical billing services to a third party or to keep the medical billing process in-house that winds up heavily on a healthcare provider. This explicitly differs from practice to practice and is based on several factors:

  • Duration of the business
  • Size of clinical staff
  • The financial health of a healthcare organization

Medical Billing often referred to as Revenue Cycle Management (RCM), includes the most complex and crucial components of a healthcare business. The advents of the latest inventions in technology, increasing government regulations, and uncollectible accounts have ignited a new trend leading to an increased preference for taking the help of an expert medical billing service provider. The cash flow depends on medical billing, so the decision of how to handle it shouldn’t be taken lightly. In the primary stages of the decision-making process, however, a healthcare facility needs to reason with the market trend and think through the advantages that they can leverage. There are major conveniences and drawbacks within the in-house and outsourced medical billing service options, a healthcare provider should evaluate the following points before choosing any of the two.

Claim Processing, Billing Staff, and Infrastructure Cost

A healthcare provider dedicates a fair amount of time to non-medical work, which is bound to encounter difficulties, resulting in inflated costs in their revenue cycle. The cost incurred, as a result of streamlining the claim process, is an absolute variable that influences the growth trajectory of a practice. It becomes imperative to have a solution that caters to this necessity and gives a fair turnover. A successful medical billing process can recuperate a healthcare facility from financial constraints by streamlining the non-medical services like credentialing, billing, coding, follow-up, collections, payments, etc.

In-house medical billing is exactly as it sounds, i.e. all billing aspects are followed in-house. It requires a continuous investment to sustain the rising expenditure of medical billing and demands expertise. For this, the healthcare provider has to go through the drudgery of hiring certified coders and billers which can result in backlogs/pending work if any one of them fails to show up or is inefficient, therefore, risking the whole revenue cycle.

It is estimated that there is more than 20 million newly insured US citizens; consequently, a healthcare provider needs to pay attention to their attrition rate when there is a dearth of skilled medical billers & coders and the claim turnover exceeds the capability of health human resources.

Outsourcing the medical billing service means a healthcare provider hires a medical billing service provider outside their practice to do all the billing works, often giving a fair percentage cut of the total revenue generated. The medical billing outsourcing market was valued at nearly USD $6.3 billion in 2015 and it is expected to reach USD $16 billion by 2024. A healthcare provider experiences timely submission of claims when they opt for an expert medical billing service provider who is acquainted with the latest ICD-10 coding and employs skilled medical billers & coders. It also ensures that a physician does not need to worry about staff turnover.

Although outsourcing can be a viable option, it can deter a small healthcare facility to budget their finances as the medical billing service provider works on a percentage of the collection; therefore, fees will be higher for fewer volumes of the claim.

Claim Success Rate

Statistically, it has been proven that 10% of the claims are incorrect and there is a revenue loss of 11% due to underpayment which is huge for non-specific medical work like medical billing. Also, 65% of denials are never even appealed. Though the billing work falls on the hired in-house medical billers yet the pressure builds on the healthcare professionals. On the other hand, according to Amednews report, 90% of denials are avoidable and nearly 60% are reclaimable, thus stating the obvious that processing claims in-house has the risk of delayed payments and error in amounting.

A healthcare professional can recover from this hardship if they consider taking the services of a medical billing service provider who focuses on the areas where errors occur in coding or submitting the claim and solve the problem at its root, thus saving the healthcare facility from bad debts. The skilled team of an expert third-party vendor successfully cracks each rejected or written-off claim with resounding success and also solves all aged ARs successfully.

A healthcare professional should weigh up the differences in the claim success rate of the in-house and outsourced medical billing processes and take their decision likewise.

Convenience on Provider’s Part

If the medical billing is done in-house, then, it can be frequently monitored which can lead to an increase in transparency and accountability. However, the healthcare professional will face challenges in maintaining an optimal quality of service and managing the administrative tasks, patient care, and other daily operations.

After separating the medical billing process from their niche business, a healthcare provider can concentrate on their core responsibilities resulting, in an increase in the doctors’ productivity. Patients are happy too, as they get the uninterrupted attention of their doctor. A medical billing service provider also gives comprehensive reports on a regular basis giving an ample idea of the financial whereabouts of the medical billing process which can be used for further evaluation.

Convenience is an important aspect in medical billing as it directly influences the efficiency of a doctor; a healthcare provider should evaluate the proximity and time factor to choose any of the medical billing processes.

Adherence to Safety Measures

Though there can be a reduction in security breaches if medical billing is done in-house, it can be a matter of concern for healthcare provider to constantly train their employees.

Outsourcing eliminates the need for training as the medical billing service provider keeps up-to-date with the changes in healthcare regulations and coding systems and adheres to the regulations of HIPAA thus, safeguarding the privacy, security, and confidentiality of protected health information (PHI).

Option to Scale-Up

A third-party healthcare BPO can offer the ability to scale up the provider’s requirement on a need basis, thus giving the option to expand their business, which is quite difficult in an in-house medical billing structure without affecting the revenue cycle as it requires additional resources, both human and infrastructure.

Medical billing practices involve a high level of technological expertise and skilled staff. Furthermore, the implementation of IT platforms in the healthcare sector has affected the growth of the medical billing market and is expected to be driven by factors such as efforts on the provider’s part, the requirement of error minimization, meeting necessary regulations, implementing digital record keeping and other federal mandates. Using any of the above models will streamline the medical billing, allowing the provider to develop margin-friendly evaluation, which will help them to track the financial health.


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