3 Ways You To Know You Should Outsource Insurance Billing
This blog is about how you know you should outsource your insurance billing, but these tips can also be used to define when you should outsource other business processes in your private practice. As a therapist in private practice, your time, skills, knowledge, and value to your community can hardly be overstated. Therefore, it is our goal in this blog to give you clear, concrete, and actionable steps to preserve and amplify your effectiveness in private practice!
Before we get into how you know you need to outsource your insurance billing, we should talk about why you need to think about outsourcing as a valuable activity in the growth of your private practice, and the impact that your practice can have in the community.
Why Outsource Insurance Billing...or Really Anything?
An important reason to outsource medical billing services is cost reduction or cost-effectiveness. To run an in-house billing department, therapists would either have to hire a part or full-time individual dedicated solely to billing procedures or would have to train an already existing staff or intern, not only does this accumulate to higher monetary costs but also ends up wasting valuable time.
Highly Skilled People
Moreover, with few of the renowned medical billing services available in the market, who would only charge as much as 6% of the claims, therapists in private practice would surely not want to get into the hassles of operating an in-house billing department until it is cost-effective to do so. Knowing when to in-source billing is a different blog for a different day. Outsourcing allows you to deepen the skill pool more than you would if you were to prospect a biller for your own private practice. Because billing companies want to provide the best service available they also find the most skilled billers in the marketplace to serve your private practice. You can take advantage of this reality at a competitive rate.
Efficient Processes and Procedures
There have been instances where in-house billing departments have resulted in numerous claim denials and operational delinquencies. According to statistical surveys, outsourcing medical billing services can significantly reduce the number of denials. Supporting evidence of this statement would be a reduced number of coding errors.
No doubt, outsourced medical billing service alleviates the burden from physicians and reduces the stress level amongst them. More interestingly, the established medical billing service companies also provide therapists with financial reports – helping them assess the financial health of their practice and also providing them with strategies to increase practice productivity.
Outsourcing is Better for Liability Management
Outsourcing your insurance billing can protect against the risk of mistakes made by internal staff or inexperienced clinical staff. A billing company that provides medical billing services assumes the risk of the work to be carried out and bears the financial consequences if it violates the law. A medical billing company employs specialized people who have great experience thanks to the specific nature of their work. In addition, they work with numerous systems and procedures that improve security.
Outsourcing Strengthens Your Market Position
Surviving in these economically tough times can be a battle. It was an option to choose between in-house and outsourcing work, a couple of years ago. Things have changed now. You may not have the budget or the volume to assume the risk of an internal office person or you may not have the time to focus on turnover or staff training.
You can expect the outsourcing company to employ experienced and skilled professionals. It would directly result in more cases being closed and more cash flowing in. Any delay in payment would work against the reputation and cash-flow of the outsourced biller, so they are incentivized to get you paid as quickly as possible thus strengthening your market position. It is all too common for internal staff to work less hard because they can depend on their salary.
Here are the overall reasons why you should outsource:
Stronger Market Position
But here are the three reasons how you know you should outsource:
3 Ways to Know You Should Outsource Insurance Billing...or Really Anything?
#1 You Would Make More Money Doing Therapy vs. Insurance Billing
Let's get really honest. You took and paid for 60+ credits of a master's degree, did thousands of hours of supervision, dealt with the ins and outs of community mental health, were inspired to start a private practice, did the research to create a business, did the work to form a legal business, paid taxes, invested personal money to grow, built solid partnerships with other community leaders to build a caseload, engage in CEU hours, invest in conferences, care about your patients, care for your family, hire clinicians, engage in self-care, etc, etc.
We could probably go on and on with the list of tasks that you engage in on a regular basis. BUT it is safe you say you did not do the list above to sit at your computer and try and figure out insurance billing. You got into this business to help people and make a significant difference in the community that you are in. So, here's a question:
How are you going to do that spending time doing insurance billing?
Don't get us wrong, there is a time to DIY almost everything in your private practice, but insurance billing is not on that list because you can't afford not to. If you don't believe us and need a benchmark for when to outsource, we can certainly give you one.
Let's take made-up practice, but the math and the reality of the situation will be based on our expansive data-set built from hundreds of practices across the country. The name of this fake practice with be The Fake Practice:
The Fake Practice - By the Numbers:
The Fake Practice is owned by Tania and Tania is the only clinician in The Fake Practice (TFP). She got into private practice because she didn't want to work the hours that she was in community mental health and she wanted to spend more time with her family as well as make a big difference in her income and community.
Tania takes 3 insurance companies and sees about 25 patients a week on average and has an average reimbursement rate of $75.48 (i.e. the national average reimbursement rate for a 60-minute session). She doesn't believe she can afford an outsourced billing company so she decides to do her own billing.
She has figured out that in order to accurately manage the billing in her practice she needs to spend around 1 to 1.5 hours a day on billing in order to do the following:
Post insurance and client payments
Follow up on denied claims
Follow up on rejected claims
Submit her claims
Call insurance companies on incorrectly processed claims
Do eligibility and benefits checks for her new clients
Run patient statements
Take patient payments
Explain balances to patients
Fix and reconcile payments in her EHR system
If Tania spends 1 to 1.5 hours a day on billing to do billing is equivalent to $566.10 of her time or $26,776.53 per year WITH 4 weeks of vacation!!
Don't believe that? Let's do the math:
An hour and a half (1.5 hours a day) at $75.48 per hour X 5 days a week = $566.10 a week
$566.10 X 4.3 (Average weeks in a month) = $2,434.23 a month
$2,434.23 X 11 (i.e. 4.3 weeks off for vacation a year) = $26,776.53 per year or 355 hours a year.
So, Tania is essentially paying close to $27,000.00 per year doing her own billing based on the amount of money she could make if she saw patient's during that time. We are going to make the argument that Tania will save $21,000.00 if she outsources billing based on the time she would spend on billing.
What is the math if Tania outsources her billing at 6%?
Let's do the same math:
Tania sees 25 patients per week at an average of $75.48 = $1,887.00 per week
$1,887.00 per week X 4.3 (average number of weeks in a month) = $8,114.10 a month
$8,114.10 per month X 11 (4.3 weeks of vacation per year) = $89,255.10 per year
$89,255.10 X .06 = $5,355.30 per year
The math is pretty clear! She can either spend the time-equivalent of $27,000.00 or she can use that time to make money and spend $5,335.30 on a biller that would spend time on her billing every year. The economics makes sense, and most billers won't charge any money until the practice makes money. In other words, if you make $0.00 they will make $0.00.
#2 You Don't Know Where to Start with Insurance Billing
The second reason how you know you should outsource your insurance billing is that you don't know where to start with insurance billing and you need direction. Most outsourced insurance billers have a clear, standard, and visible set of processes and procedures around insurance billing including what software to use and what the expenses include.
This level of direction around insurance billing processes and procedures can save you ungodly amounts of time when it comes to setting up your private practice to take insurance. It is probably safe to say that 99% of therapists that go into private practice were not taught the business side of private practice and partnering with people and companies that come with canned processes, you can start and scale your practice much faster than you would if you were going to spend money on courses and time researching how to do insurance billing.
Let's break down the benefits of outsourcing insurance billing and outsourcing in general when you don't know when to start:
Did you know that insurance billing comes with liability? The insurance industry and the claims process is not built intuitively. Meaning there are plenty of places to go wrong in terms of fraud and false statements when billing insurance. If you don't file claims correctly you could be subject to audit and recoupment from the insurance company or fines from the government. You can avoid all or close to all of these compliance issues by outsourcing your insurance billing.
Did you know that billing insurance has to be done in a very specific way? That's right it is not just sending a claim in and waiting to see what happens. You have to know in what order to do billing inactivities in order to make sure you are getting paid for every claim that you are sending into the insurance company. What is that process? Here is a starting point for you:
Claim Follow Up
Eligibility and Benefits Checks
Documentation and Tracking
If you feel like you are not going to build each of those out in a tremendous amount of detail then it would be a good idea to outsource your billing and let your insurance biller to think through the processes for each of those categories.
Did you know that not all billers are created equal? Jim Collins in the book Good to Great outlines that great companies get the right people on the bus, the wrong people off the bus, and the right people in the right seats. Often private practice owners will say that their employees are their greatest asset but that is not true. Your best employees are your greatest asset. Your biller will drive your success and support your practice and your schedule so you can work on the business and not in the business, but a bad biller will do just the opposite.
#3 You Have an Insurance Billing Mess
It goes without saying that insurance billing can be complicated but getting out of insurance billing mess can cause you to lose sleep and be increasingly stressed about your future. The worst-case scenario with insurance billing is that it causes you to lose hope for your financial future, the outcome of therapy for your patients, or to lose hope for your private practice.
Let's say that Tania of TFP has either done the billing herself and didn't follow a clear process or hired a biller that didn't know what they were doing and now Tania has a mess that she needs to get out of. There are a few concerns with a billing mess that Tania has to think about and plan for, but what does a billing mess look like?
A billing mess can look something like this:
This is an insurance aging report. That means that this report reflects what each insurance owes the practice based on the claims that have been submitted through a specific period of time. The top row represents the number of days that claims have been submitted and unpaid.
The way you know this is a mess because the amounts increase as time goes on indicating that claims are submitted but not paid on a regular basis. In this situation, Tania has about $112,000.00 in therapy services that have gone unpaid by the insurance companies, and that could be for a host of reasons.
You can see how $112,000 of unpaid insurance claims could be quite stressful.
With an effective outsourced biller the aging would look like this:
In this scenario, Tania's claims are paying on a regular basis and she is only holding a small number of claims past due. If you don't know what this situation is like we applaud you, but if you are in this situation then you will want to get help and get help fast.
There are a lot of ways to do private practice, and we are here to help educate you on the best ways to do that and take insurance. If you ever want us to research a topic related to billing, insurance, private practice, or revenue cycle management feel free to reach out to us. We would be happy to write about what you want to hear. We hope you have enjoyed this post about knowing when to outsource and why outsourcing is important.