Deciding between in house and outsourced medical billing

There’s no single right answer here. A strong in house biller can outperform a careless company, and a good company can outperform an overloaded employee. So set the sales pitches aside, ours included, and compare your own numbers.

What in house billing costs

Salary is only the start. Add wages, payroll taxes and benefits, then software, clearinghouse and statement costs. Then there’s training and keeping up with rule changes, cover for vacation and sick days, and management time, which is the hours your office manager spends on billing questions and never writes down.

The one people forget is revenue lost during turnover. If your biller leaves in June and the replacement starts in August, some of that summer’s claims go out late, and some may not go out at all. That’s a cost of in house billing even though it never shows up on a payroll report.

What outsourcing costs

Start with the percentage or flat fee, including any monthly minimum, then add setup, statement and add on fees. Your staff will still spend time answering questions, because somebody has to reply when the company needs a copy of an op note or a corrected address. And allow for a revenue dip during the changeover.

Our guide to how percentage pricing works shows how to calculate your effective rate.

What to compare

Use the same measures on both sides, going back over the past 12 months or as far as you can.

• Days from visit to claim, which tells you how quickly claims go out
• First pass acceptance, which is how many claims pass without rework
• Denials worked, meaning how many were followed up
• A/R over 90 days, and whether it’s growing or shrinking
• Adjustments and write offs, including what’s being let go and why

If you’re getting quotes, ask each company how it would report those five, so you can keep comparing after you’ve made the decision.

When each one tends to fit

In house tends to fit when you have a capable biller with enough time and a backup, your volume is enough to justify the role, and you want billing staff close to the front desk and providers.

Outsourcing tends to fit when one person holds all the billing knowledge, when denials or A/R are piling up, when you can’t cover absences, or when your volume doesn’t justify a full role. Picture a small office where one biller has done everything for years and nobody else knows the portal logins. It may be running fine today, and you’d still have a serious problem the week that biller leaves.

Doing some of each

Many arrangements sit in between. You can keep daily billing in house and bring in outside help for denials, aged A/R or credentialing, and that lets you test an outside team on a defined piece of work.

Our denial recovery pilot is built for that, and outsourced medical billing is there if you later want to move everything.