Relative Value Price-Performance Calculation for outsourced Electronic Medical Billing Service


Internet-based technology has been used effectively to reduce your medical billing, especially the electronic submission levels and cleaning. However, beyond a focus on reducing the cost of individual process components while ignoring all payment information quality unveils medical practice significant financial downside. Measuring the quality of the collection and its inclusion in the price-performance equation Billing Service yield substantial financial picture and better decisions about billing service choices and its management. Such an approach also results in significantly higher contrast and better regulatory compliance. It is effective, however, only the collection of performance guarantees and transparency

Traditional order management steps to streamline medical practice billing and reduce costs requires a physician to invest in processes, personnel and technology :.

  1. Unless your denial to eliminate errors using claims-scrubbing software
  2. Educate front-end employees duties and know how to be a part of
  3. Investigate tools for electronic submission and utilize the technology
  4. Set guidelines for the claims and the dollar amount of merit appeals
  5. Providing patients with clear policies pay up-front

ROI of Claim Processing Technology

For example, consider the case of three office practice 17 internists and patient panel of 20,000, quite similar Potomac Physician Associates (Donato 2003), in Bethesda, MD, who in 2002 led the submission requirements and practice management service in the building. Assuming three FTE is working on the collection and use of technology Vericle is, the cost would be about $ 120,000 for staff and $ 36,000 for technology. For reference, Vericle technology works comprehensive claim validation, patient demographics and qualification before visiting, electronic claim submission, and comprehensive reports for followup etc. In addition to using Vericle technology, 98% of the claims now clean, add further value for investment in claims processing technology. In this case, billing costs add up to $ 156,000 per year. This is a significant achievement in terms of billing processing costs, because without advanced technology, the same job may have at least seven FTE’s at the cost of $ 280,000.

According to the arrangement before installing Vericle technology costs at least $ 292,000 (based on 1/3 of the cost for other admittedly inferior billing package). So $ 36,000 investment in better technology to save at least $ 136,000, which is obviously impressive ROI of $ 36,000.

However, this approach does not account for the entire spectrum of the cost of in-house billing approach. It ignores the revenues aspect of the billing function, which is the ultimate purpose.

Measurement of loss due to insufficient tax collection Quality

For more detailed overview Let’s calculate the total loss of this approach form of uncollected payments. We will continue with the implementation of convenient start and figuring out a way to reconcile loss.

In our experience, the probability of payment shrinks significantly with time. With few exceptions, are unpaid loss in more than four months eventually forfeited. Hence the importance of A / R beyond 120 days. Therefore, to calculate the total loss, we must begin to calculate the total income and then use the days of receivables as a proxy for underpayment.

For the investigation at hand, we all practice based on the income of the average physician income of $ 300,000, which for 17 doctors, adds up to a total of $ 5.1 million. Next, indicating percent pure requirements for electronic submission is about average (98%), we will also assume that the average nation-wide A / R beyond 120 days, which now stands at 17.7% (Lower, 2004 ). This figure indicates the amount of loss on Billings of $ 5,100,000 approaching $ 902,700. Even though 40% of the A / R was finally collected we would still face a revenue loss of $ 541,620.

Therefore, while exercising saved $ 136,000 on staff, lost it anyway approximately $ 541,620 for the collection of quality despite the newly installed technology

The lesson of this parable is that the cost of collection functions can be grossly underestimated because following the arrival :.

Pitfall # 1: Focus on the cost of individual components billing function in order to calculate the bottom line cost of implementing

Pitfall # 2 :. underestimate the cost of these things as benefits, illness, management, exchange, education and holidays in the case of personnel costs

Pitfall # 3: .. Focus on the numbers or the quality of the claims instead charged and paid number of dollars

Alternatively, the bottom-line oriented approach, guarantees improve income before spending a dime

  1. Measure the current rate of A / R beyond 120 days, taking (for the sake of conservative management) that money is lost.
  2. Find billing service provider with significantly higher capacity than your own solution
  3. Base your management decisions on the overall statistics of cost / performance.

Price-Performance calculation

A collection service with guaranteed performance levels will typically charge a percentage of the payments. This approach recognizes the interests of the biller and the medical and results in significantly lower A / R beyond 120 days, often down to 4% or even 2%.

In this case, the difference between the two methods of delivery amounts to $ 463.020 or 9:08% more to the bottom line.

Note that the collection of quality is a key component in the collection cost calculation and the decision to outsource billing services based on multi-fold improvement in the collection of quality. Such improvements will be so great that only expert-billing provider can create and maintain the required volume and economies of scale. Therefore, one should consider outsourcing only after due diligence involved in the billing provider delivers better results, the difference in performance is measurable and significant enough to bottom-line growth, and performance can be verified independently and continuously. A rule of thumb is that the new combined rate fees and uncollected revenue will be down in the house A / R (collection of quality measured by% of the invoiced amount in A / R in excess of 120 days).

alternatives Quantitative Billing Outsourcing

Note also that by outsourcing to the right billing service, exercise liberates itself from the many other issues related processes, personnel and technical aspects of the collection . Specifically, only after the billing function for practice owners is the periodic review of cash flow and accounts, in other words, completely bottom-line driven control. There is no need to micromanage the submission process, accept rejections, appeal to payers, etc. Similarly, there is no more need to manage the collection of employee team, vacations, sick days, benefits, teamwork, and turnover. Finally, there is no more need to deal with the technical issues, such as installation, maintenance, backup, disaster recovery, HIPAA compliance, and upgrade

References :.

  1. S. Donato, “Three Steps to Less denial. Getting Requirements Management under” Physicians Practice, April 2003.
  2. R. Lowes, “Practice Tips: How to cut / R”, Medical Economics, September 3, 2004.


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