The United States spends a staggering $3.6 trillion annually on healthcare. U.S. payers and providers drop approximately $496 billion on billing and insurance-related (BIR) costs each year. That’s an immense amount of money dispensed in one industry.
Providers continually strive to achieve the highest level of reimbursement possible to procure their part of the country’s robust healthcare expenditures. In order to do so, they must have a strong revenue cycle with detailed medical billing processes and procedures.
Some healthcare providers choose to perform their medical billing in-house, meaning they’re responsible for all aspects of revenue cycle management and submit claims for reimbursement, set charges, collect patient fees and manage the accounts receivable. Many, though, opt for outsourced medical billing, in which a medical billing service performs those tasks and usually takes a percentage of a provider’s collections as payment.
The medical billing outsourcing market is projected to grow to $16.9 billion by 2024 and $23.1 billion by 2027. Why is this service so popular among healthcare providers? Because practices that fail to streamline their medical billing risk losing out on thousands of dollars in owed revenue. For example, claims denials cost healthcare organizations approximately 5 percent of their net revenue stream. The following statistics emphasize the cost and fallout from denied healthcare claims:
- An estimated 1.38-5.07 percent of claims are denied by payers on the first submission.
- An estimated 90 percent of denials are preventable.
- Reworking denied claims increases administrative costs by almost $9 billion annually.
- One-in-five claims submitted to health insurance companies are processed inaccurately.
- About 42 percent of claim denial write-offs are due to missing data.
- Up to 65 percent of denied claims are never resubmitted.
Putting the Focus Back on Patient Care
Employing outsourced medical billing enables providers to cost-effectively enlist the services of staff with comprehensive industry knowledge who are up-to-date on complex and seemingly always changing healthcare codes, rules and regulations. This increases compliance and prepares them for any payer audits.
By investing in outsourced medical billing, providers also are able to reduce operating costs and administrative workload and improve cash flow through markedly reduced errors. Physician practice staff members often are tasked with performing multiple roles and must undergo extensive training in medical billing. Outsourcing medical billing enables them to increase their focus on patient care and gives them access to a dedicated billing staff working around the clock.
Controlling Operating Costs
Paying the salary and benefits of an experienced medical billing professional can be costly, especially when staff turnover is high. Training a new staff member for this role not only takes time but also leaves a gap in a practice’s billing workflow. Plus, there can be severe consequences to the revenue flow of a provider without a well-trained medical biller.
In-house medical billing requires adequate IT infrastructure and billing software, both of which have to be upgraded periodically. It also entails purchasing and maintaining computer equipment and utilizing office space. Providers that outsource their medical billing don’t have these expenditures.
Investing in Expertise
One of the major causes of denied and rejected claims is errors, most of which are avoidable. These errors often result in rejected claims and delayed payment. Instead of getting reimbursed within weeks, providers with error-prone billing methods often have to wait months to get paid.
Outsourced medical billers are able to submit accurate claims in a timely manner, reducing the number of rejected claims and mitigating problems with non-payment due to a missed submission deadline. They have extensive knowledge on the policies and procedures of claim submission, so denials are detected upfront, resulting in improved payment rates and quicker, optimized cash flow.
Through detailed analytics and performance reports, outsourced medical billing partners have the capability to identify bottlenecks and other issues within a provider’s revenue cycle that might be affecting its cash flow. They also can utilize those analytics to help providers negotiate better payer contracts.
Is your medical practice in need of a way to reduce denied claims and improve cash flow? Read our tips for choosing a good medical billing company for outsourcing. Or, contact us today!