Executive Summary
Medical billing is a complicated task for many medical practices, but for some Local Health Departments (LHD), Community-Based Organizations (CBO), and other Healthcare Providers (HCP) specializing in HIV service provision, the complicated nature of medical billing has impeded the formation of any billing capacity. Changing this trend will allow these organizations to address ways to increase their revenue and their stability, so that they can continue improving public health through the services they provide.
Third-party billing refers to billing Medicare, Medicaid, and private insurance for medical services provided, as opposed to first-party billing which refers to charging patients. There are many challenging components to the medical billing process that may deter organizations from prioritizing billing. However, third-party billing is important when considering alternative and dependable revenue streams. Given the complexity of the medical billing process, some organizations choose to contract with external companies for third-party billing services. This choice is known as medical billing outsourcing. The decision to outsource begins by understanding and analyzing the risks, costs and differences between handling medical billing in-house versus outsourcing.
The process of creating an in-house medical billing department includes:
- Creating a fee schedule which sets the price for the services provided
- Hiring billing staff to manage the billing process
- Credentialing and contracting in order to work with insurance companies, Medicare, and Medicaid
- Finding a clearinghouse to check claims for errors and forward information to insurance payers
- Completing billing activities such as coding, claims submission, and denial management
The process of outsourcing medical billing includes:
- Creating a fee schedule, possibly with the help or review of an outsourcing partner
- Hiring a medical billing outsourcing company which will most likely charge a percentage of monthly revenue as payment
Overall, in-house billing departments offer HIV service providers greater control over the process and patient satisfaction, the ability to limit the sharing of confidential information, freedom from possible hidden costs, the ability to predict fixed billing costs, and a return on investment if a provider has already invested in in-house medical billing. Yet, establishing and maintaining an in-house medical billing operation can be prohibitive for organizations providing HIV services with little experience or resources available to manage the process. The benefits of outsourcing include reduced errors, enhanced consistency, maintaining focus on patient care instead of billing, steadier and more predictable cash flow, ensured billing compliance, liability avoidance, and the benefit of relationships the outsourcing company has already established. Outsourcing partners can also provide helpful performance reports, and all of these factors often actually lead to higher revenue for providers from outsourcing than from in-house billing.
Outsourcing has moved away from being an “all or nothing” affair due to technology that has become available in the last few years allowing organizations to take a hybrid approach to revenue cycle outsourcing. The best outsourced medical billing firms design their offerings with an understanding that medical providers face unique constraints depending on the services they offer.
HIV services providers can also choose to outsource as little or as much as they would like. This leaves them with the flexibility to focus on their strengths while utilizing the services of an outsourcing partner in the aspects of the process where they need the most help. In an environment where many organizations are receiving none of the revenue they could potentially receive from third-party payers for the services they are already providing, outsourcing may offer an option for them to bill those payers without having to go through the process of setting up an in-house medical billing department from scratch. For those that have some capacity for third-party billing already, outsourcing could still help fill in the gaps, so they can bring in more revenue overall.
This white paper was funded by a grant from the Illinois Department of Public Health.
Read full white paper: Options for HIV Billing
