Dealing with Outside Billing Companies

(Excerpted from MGMA Connexion, January 2007)

Using an outside billing concern definitely minimizes a major headache of practice management, but it also entails immense risk. Careful shopping, tough negotiation and constant monitoring are essential to a good relationship; and planning for every contingency is critical.

Due Diligence
Outsourcing works best for high volume, repetitive billing – but can be effective in other practices. Don't enter into any agreement without the benefit of an experienced health care attorney, along with your accountant or consultant – possible even computer experts to handle data conversion issues. Experts generally recommend against using your billing company as your collection agency. A separate collection agency adds another layer to account review and allows a third-party to assess accuracy from your patients.

Evaluate Needs
Once you move billing to an outside source, it is very difficult to bring it back in-house. Chart your current revenue cycle from visit to invoicing to cash in the bank. (This will help in getting detailed quotations from prospective vendors.) Determine what your current overhead/costs are for doing the billing internally, so that you can compare potential cost-savings or expenses.

Details
Research prospective vendors thoroughly, including company history, financial strength and references. Insist on detailed proposals, not generic brochures or standard contracts. Pre-determine how services can be terminated if the relationship does not work out.

Key Points

1. Determine procedures for data transfer, coding and charge capture.

2. Require a monthly reporting system and spreadsheet that tracks every dollar: gross billings, write-offs, insurance disputes, pending insurance, etc.

3. Conduct a thorough review of the vendor's compliance with HIPAA privacy and security measures.

4. Establish procedures for processing patient inquiries and for insurance follow-up/resolution.

5. Establish a plan to manage accounts billed before the transition date.

6. Require “early out for cause” language in the contract for cases where the billing company may go out of business or fail to perform. Such clauses should include procedures for contract termination, liquidated damages for non-performance, patient complaint resolution, data backup procedures and proof of adequate bonding of the vendor.

7. Require the right to audit the vendor's work at any time. Try to obtain real-time access to its data and get answers for any anomalies.

In conclusion, please note that RGI Insurance Services recommends that you should confirm that your billing company maintains Errors & Omissions insurance coverage. Additionally, there should be an indemnification provision in the contract in case you (the doctor) are sued due to the acts of the billing service.