How outsourced medical billing works

While each service may have slight variations, the general process of working with an outsourced medical billing service is fairly straightforward:

• You send patient information, insurance data, and diagnosis and procedure codes to the billing service.
• The service checks the data, completes the appropriate claim forms, and submits them to a claims clearinghouse.
• As claims are approved, explanation of benefits forms (EOBs) and checks are sent to you. Claims that are denied or rejected are returned to the billing company, which then corrects any errors and either resubmits them, or returns them to you.
• The outsourced medical billing provider delivers regular reports on your claims and payments.

Even if you want additional services, focus your evaluation first on these basic aspects of outsourced medical billing.

Communicating claims to an outsourced medical billing service

Medical billing providers can offer multiple ways for you to submit patient data and claim information:

• Paper-based – Mail, fax, or scan and email your paper-based claims to the provider. This may involve the least change to your procedures, but puts a more significant burden on the billing provider. Make sure the provider submits your claims electronically, even if you stick with paper.
• Email – The simplest method of electronic transmission – you simply type up the information and send encrypted emails to the billing service.
• Web-based – Log in to a secure web page – run by the provider or a third party – and enter claims and patient information directly into the billing system.
• Software-based – The provider installs billing software on your computers that you use to enter claims and get access to your data. It transmits data to the provider's system through a secure Internet connection.

Web-and software-based systems provide more structured data entry and better error checking than other methods. They also allow better cooperation between your staff and the billing service and let you pull reports and review claims status as needed. To get the most out of an outsourced medical billing service, these two methods are by far the best choice.

The service should do a "scrubbing" pass on the claims before submitting them. This helps catch missing information and mistakes in diagnosis codes before the claims are sent to the clearinghouse, and is another contributing factor to improved payment rates.

Claim submission and follow up
One of the most important characteristics of a medical billing service is how well they follow up on claims that are initially rejected by the clearinghouse or denied by the payers. Since problematic claims take more time to troubleshoot for the same amount of money as a normal claim, it’s very important to learn how much staff and time a service will dedicated to pursuing unpaid claims. The expertise of the billing staff in resolving coding errors, insurance mismatches, and other common reasons for denied claims can also go a long way to help you increase your collections.

Ongoing accounts receivable work is another critical aspect of your evaluation, if you choose to outsource it. While you'll still collect payments in person for copays, coinsurance, and non-covered expenses, an outsourced medical billing service can take care of billing patients with outstanding balances. The service should have people and systems in place to track aging claims and take measures to collect on them. In some cases, the service will even turn to a collection agency.

Receiving EOBs and payments
You can handle incoming checks and EOBs from the insurance companies in a couple of ways. First, you can have them sent directly to your office. However, you then have a responsibility to get the information back to the outsourced medical billing service, either by scanning the EOBs or by entering the information back into the billing system.

A bank lockbox can be more efficient in most cases. With lockbox service, your payments are scanned and electronically delivered to your provider, then promptly deposited into your account. This speeds the availability of your funds and ensures that the billing service gets the information they need. In fact, the funds turnaround is often faster than if you were collecting and depositing checks yourself.