Technology and the Future of Medical Billing

By Ronald E. Nyman, Esq.

In his fascinating book entitled The World Is Flat, the award winning author Thomas Friedman gives us a clear and concise explanation of the revolutionary changes happening in the world around us. Friedman’s focus is on information technology that enables people to work together even when they are separated by great distances. With lower costs for hardware and software, the rising popularity of the Internet, and local communication networks better able to handle high volumes of traffic, our work environment is no longer constrained by the need for physical proximity. Whether professionals or students, we can work with people in remote corners of the world just as easily as with colleagues down the hall. Distance is no longer an obstacle to fruitful collaboration.

The World as We Knew It

What opportunities does Friedman’s "brave new world" offer for the administration of medical billing? To better understand the answer, let’s look back twenty years and observe the state of the industry in the 1980s. Back then, most healthcare providers handled their own billing with in-house resources. Life was much simpler. A physician would provide care to a patient and send the bill to the patient’s insurance company. The physician set the fee, and the insurance company paid the bill. One or two office clerks could manage the receivables for a practice of multiple physicians, including billing, receiving and tracking payments, and following up on unpaid bills. Most transactions were handled with a paper-based system. Little technology was involved.

In Today’s World

Now, the situation is much more complicated. Insurance carriers have combined into large corporate conglomerates that have the power to control the healthcare market. They have imposed complex and rigid rules for standardized coding of procedures, and they negotiate — some say dictate — the fees for each and every one of those procedures. Because correct coding requires in-depth training, the need to meet carrier requirements has given rise to a new class of jobs, and Certified Professional Coders (CPCs) are now in demand. Adding to the challenge is the fact that carriers’ rules change regularly, requiring periodic re-training and re-certification. In order to receive maximum compensation, physicians must join "networks" and they themselves must be certified by the carriers through a tedious process called "credentialing." The receivables management process is further complicated by government programs such as Medicare and Medicaid.

Physicians, whose training has been focused on providing medical care, are finding the administrative burden overwhelming. As a result, many are turning to medical billing companies to manage their payment processing cycle. The physician still needs to code the procedure, but the billing company can verify its accuracy, call attention to potential issues, keep up with changes to the coding rules, and help the provider stay informed. The billing company can handle the entire collection process, including follow up with carriers and patients. Many billing companies also provide services to help with the credentialing process, which can be very time-consuming, especially for offices where multiple physicians have different specialties.

For Some, It’s Business As Usual

Today, practices that handle their billing in house must employ a fairly large staff and use a software billing package. Supporting a staff involves substantial costs, including the time to hire and train personnel and the hassle of hiring and training a replacement whenever someone leaves. Software packages are expensive and have their own learning curve, and they must be updated and maintained, presenting technical challenges and requiring the commitment of time and staff. Furthermore, both in-house staff and software require implementation of procedures for security and disaster recovery as safeguards against malicious, unintentional, or uncontrollable loss or corruption of records.

For those practices that do use a billing company, many deliver their billing data to the billing office via a paper-based process, that is, a "superbill." Typically, on a weekly basis, the practice will overnight its demographic and charge information to the billing office. The billing company enters the information and sends out claims to the insurance companies. Payors send their checks by conventional mail, and the billing service makes manual deposits to the physicians’ accounts. Every month, the billing company sends each of their clients a paper-based report that shows the status of current collections. Although outsourcing the billing process to these companies relieves the practice of much of the administrative burden, many physicians feel uneasy at being so disconnected from the process. With visibility to their revenue stream limited to the monthly statements from the billing company, they are unable to assess the financial health of their practice for weeks at a time.

For Others, Technology Makes a Real Difference

So what do the Internet and the information age offer today’s healthcare providers? Secure online connections allow 24x7 access to up-to-date information about receivables and credentialing status. Such connections also enable the billing company to interact — often in real time — with insurance carriers, banks, and patients to effect timely transactions on physicians’ behalf. In short, the Internet eliminates the obstacles presented by people working in different places at different times and enables everyone to focus on his or her area of expertise.

The software that enables Internet-based processes can also be located remotely, thanks to what is known as the Application Service Provider (ASP) model. ASP software resides and operates on a server at a secure site, where it is managed by a professional hosting company. That company maintains the software, making periodic updates and enhancements, and it provides redundant servers for greater reliability. Included in the hosting service are regular back ups of client data that is stored offsite to enable restoration in the event of catastrophe.

Importantly, the ASP model allows authorized personnel within practices and billing companies to connect to the software using a standard web browser. The medical practice need have no specialized software or technical expertise. The practice can schedule appointments, enter patient information and charges, and run reports whenever and from wherever it chooses. Likewise, the billing company can view charges as they are entered, verify codes, and send bills out promptly, usually within 24-48 hours of initial entry. When payments are received, the billing company can post the receipts, as well as handle all follow-up for unpaid amounts. Physicians no longer have to worry about filling out superbills, making duplicate demographic sheets, or paying postage costs for mailing paperwork to the billing company. With Electronic Medical Record (EMR) systems, physicians can select the appropriate CPT and ICD-9 codes using the EMR system, and those codes will be transmitted to the billing system immediately, in real time. If a patient visiting the doctor’s office has an account balance, the office will see the amount owed via real-time access to the billing system and can request immediate payment.

More Capability on the Horizon

In the future, the entire process will become more streamlined and virtually paperless, which will speed the payment cycle and make it more convenient for all involved. Information will be transmitted between all parties electronically, and payments will be electronically deposited as well. Coding will be simplified with the introduction of electronic EMR tablets that physicians carry with them to enter coding information directly into the system. The system will then transmit the data directly to the billing company for immediate processing. The entire cycle will be faster, more convenient, and more efficient for physicians and their patients.

For many of us, technology has introduced mystery, perplexity, and even a few hassles. But now, finally, open computing standards, broadband networks, lower cost computers, EMR systems, and ASP computing are converging to make life simpler and easier. For healthcare providers, practice-management technology means being able to better accrue the benefits of using a billing company. By offloading the administrative and technological burdens to those better equipped to handle them, physicians can focus on patient care, while maintaining visibility and control of practice revenue.

This article first appeared in the December 2006 issue of MediStar Meducation Alert^SM, the MediStar online newsletter.