Never Outsource Medical Billing? Here's the Real Answer

Many experts will say that you should never outsource medical billing. In years past, they might have had a case. But healthcare has changed in amazing ways in the last few years. This means that it’s time to rethink the old rules and develop a better understanding of the forces that have the biggest influence on your billing strategy decisions today.

To understand why the statement “never outsource medical billing” is outdated, it’s critical to understand what’s changed in healthcare billing. 

Legislation and Regulations have Gotten More Complex

CMS is regularly issuing new legislation and ICD-11 is right around the corner. This is on top of new changes in the industry like the rise of “hospital at home” which shifts much of the care continuum into the home and patient-centered initiatives that are regularly giving birth to new technologies and possibilities – all of which come with changes in billing practices. 

Less Certainty

In the past, when people said to never outsource medical billing, things were much more certain. This was before the “silver tsunami” meant drastic changes in how people expected to age, and before a global pandemic that is still changing the face of health and will be for years. Consider the impact of “long COVID” and how experts are predicting a wave of disability that the healthcare system will have to keep up with [1]. Yesterday’s outsourcing advice doesn’t take these things into consideration. 

Talent Shortages

The United States Department of Labor’s Bureau of Labor Statistics projects that medical coding jobs will increase by 15% from 2014 to 2024 [2]. This wouldn’t be a problem if there were enough talent to fill the positions, but there isn't. As a result, organizations like yours are left navigating issues like:

• A lack of qualified candidates: More than 9 out of 10 of independent groups and solo practices report high turnover, with more than 8 out of 10 citing difficulties recruiting candidates who understand ICD-10, value-based care and MACRA. 
• Retirement: Many professionals under the coding and billing umbrella retired after the transition away from ICD-9. The current age of coders is 54 – organizations should be prepared for similar issues when ICD-11 hits. 
• Shifting Demographics: By 2030, 81.7 million Americans will enroll in Medicare, meaning the entire healthcare industry will be strained for staffing. 

These trends can be more severe, or simply more challenging to navigate if you're trying to recruit and retain billing talent at the regional level – a concern that’s no longer on your plate when you outsource medical billing.

Now, let’s look at some of the old myths and discuss how we should reframe them. 

There’s one right answer for your organization.

People who offer the advice that you should never outsource medical billing are generally short sighted. Even organizations that have had a strong case for keeping all billing in-house in the past will need to reevaluate things regularly. This includes your internal processes' efficiencies, KPIs, as well as external factors such as changing legislation, workforce shortages, and fluctuating patient volumes. 

You’ll never know how much you’ll pay.

In the past, medical billing contracts could have hidden fees included that could surprise you. This though, can be navigated with a conversation up front so that you can be aware of fees, make smart predictions, and continue to see improvement in your organization’s profitability. 

Variable costs are unpredictable.

For some medical billing outsourcing contracts, the costs are variable, which of course means the more you earn, the more you’ll pay. This isn’t always a bad thing! First, if a company is able to increase your receivables through improved efficiency, you could be technically paying more, but overall paying a smaller percentage of your receivables.

At the same time, you should look at a complete picture of your costs and how they could be impacted by outsourcing medical billing. While you might be paying more, how much are you saving in FTEs? How much would you have invested in training, lost efficiency, and increased denials every time CMS changes a regulation or a new code set is released. Also, especially today, patient volumes and revenues aren’t always increasing. Healthcare has become more volatile in a pandemic and because of changing demographics in the United States, even at a regional level. It’s nice to think your revenues will always be heading upward, but anyone with experience knows that often, revenues dip because of fluctuating patient volumes and other reasons.  

Technology is the best answer

While medical billing technology can be incredibly beneficial, this is a question your organization has to answer for itself. Do you have the resources to operate, maintain and train your people on the technology? Will the technology result in less investment in keeping up with fast-changing billing and coding requirements or will it simply create another layer of issues? These are questions that you should be asking yourself and of your leadership.

You’ll lose your autonomy.

This is a matter of perspective. Outsourcing medical billing does mean that you’re handing over your processes to someone and passing off your ability to have immediate control of every minute detail of your billing workflows at your fingertips. But this is the point. Billing has become incredibly complex and many organizations are suffering while trying to maintain complete control over every aspect of their billing processes.

It’s important to look at the benefits of outsourcing medical billing in a modern lens. These include:

• Reduced billing and coding mistakes
• Easier compliance with regulations
• Healthier cash flows
• Lower costs of billing processes and activities
• Less time and effort invested in personnel management
• Automatic checks on insurance eligibility
• Improved internal productivity and better KPIs
• Increased potential for patient satisfaction
• Fewer concerns securing patient data

If you want to discuss the potential benefits you have in outsourcing medical billing in a modern environment, we’d love to talk. Go ahead and contact us here.