A Physician's Primer for Selecting a Billing Company

By: Ronald E. Nyman, Esq.

A physician's decision to outsource billing is never an easy one. Undoubtedly, many providers are comfortable with the knowledge that their billing staff is just "down the hall." Nevertheless, a number of practices have opted to outsource billing to third party medical billing companies with beneficial results.

As the owner of a billing service, I have always found it interesting to hear what physicians think about billing services. Usually the comments are positive and center around the theme that billing companies provide a function that the provider can no longer manage in-house. Sometimes physicians are indifferent on the issue or have heard a negative story from a colleague regarding a particular billing service. No doubt, there are billing services that offer sub-par services. It is unfortunate that such companies exist, as they mar the reputations of the companies that offer superior, quality service.

According to the Healthcare Billing and Management Association (HBMA), medical billing companies employ approximately 20,000 people nationwide, and process more than 17 million claims per month, amounting to more than $18 billion per year. This figure adequately demonstrates that there are many billing companies ready and able to service providers. Nevertheless, not every legitimate billing company is right for every provider.

A provider considering use of a billing company should consider the following:

Services

Not all billing companies provide the same services. Most will enter demographic and insurance data, post charges, follow up on claims with carriers, send statements, and deposit and post payments. Some will code for you; others will not. Still others - akin to clearing houses but calling themselves "billing companies" - do none of the above but will only edit claims and send them to the proper carrier. Physicians need to consider what services they need and what services the billing company offers.

Experience

How long has the billing company been in business? How many practices is it billing for? What specialties does it currently handle? Physicians should also contact at least three referrals.

Staff

How large is the staff, and how is it organized? Is the billing company willing to hire additional staff for your account if necessary? Physicians should also consider the experience and educational background of the billing company's management.

Compliance

The Federal government has implemented compliance regulations for billing companies. Does the billing company have a compliance program in place? Is there a Code of Conduct? How does management educate staff in compliance issues?

Pricing

The lowest cost provider is not always the best. Most billing companies charge for their services based upon a percentage of monthly collections. This percentage varies among specialties, with surgeon billing having a lower percentage fee than primary care billing (i.e., internists, pediatricians). Physicians should take no comfort in the thought that they have found the lowest cost billing company, because lowest cost does not always mean best service. It is in the physician's interest to see that a quality billing service reaps an adequate profit. Many billing companies who offer the lowest fee or who are forced by the provider to lower their existing fee find that their only way to make a profit is to reduce the amount of effort spent on handling the account. When this happens, both the provider and the billing company lose out and are no better for the relationship.

This article first appeared in the May/June 2000 issue of News Capsule, a publication of The Fairfield County Medical Association.