Consider these areas before outsourcing billing

(Editor’s note: In this first part of a two-part series on outsourcing your coding, billing, and collections, we discuss how to determine whether to outsource. In next month’s issue, we provide billing benchmarks and tips on how to get paid by insurance companies.)

As same-day surgery managers face increasing workloads that leave less time to pursue unpaid claims and collections, an increasing number are turning to outsourcing as a solution. At a recent session on outsourcing at the annual meeting of the Federated Ambulatory Surgery Association (FASA), approximately one-half of the attendees indicated that they are outsourcing their billing and collections.

"Problems [with in-house coding and billing] include inexperienced coding, which can lead to rejected claims, delayed claims, and improper reimbursement, which in turn lead to cash-flow problems," says Ann S. Deters, MBA, CPA, founder and CEO of SevenD & Associates, an Effingham, IL-based consulting and management company affiliated with 17 surgery centers. Deters spoke on outsourcing your billing at the recent meeting of the Federated Ambulatory Surgery Association.

Other problems with in-house billing and coding include not being up to date on coding changes, pressures to unbundle to enhance reimbursement, staffing issues such as sick leave and vacations, and potential delays in billing and collections, sources say.

To ensure you make the best choice for your program and receive all the money you’re owed, consider reviewing these areas:

Experience of billing staff.

The company you’re working with must have certified coders and must have policies for continuous education and training, suggests Deepa Malhotra, MS, CPC, president of Healthcare Education Resource Services (HERS), an Aurora, IL-based coding firm. (For information on seminars, see resources below.) Your local medical association and chamber of commerce may have seminars, Deters suggests. "In a bad outsourcing situation, you have a biller that is not certified or experienced in billing, coding, and collections," she says.

  • Number and nuances of contracts.

Diana T. Ellison, MBA, CASC, administrative director of Hamden (CT) Surgery Center, has had difficulty in finding an outsourcing organization that can load her facility’s contracts into its information system.

Ellison personally loads her facility’s contracts into her in-house billing system. Contracts have many nuances, she points out, and her center has approximately 20 contracts. "If something is added after a contract is signed, there’s constant monitoring of that process that needs to be done," she says. "I think it would be difficult to do with an outsourcing agency."

  • Size of facility.

Outsourcing billing is often cost-effective for small facilities, but becomes less so as organizations grow larger, says John J. Goehle, MBA, CPA, chief operating officer at Brighton Surgery Center in Rochester, NY, which performs about 7,500 procedures per year.

"We do all of our own billing in-house, and we have an average of 44 days in receivables — well within industry best practices," Goehle says.

  • Control of the billing and collections process.

The biggest problem with outsourcing, other than the cost, is handing over control of your accounts receivable and billing functions to an outside company, Goehle says. Several issues arise, he says. For example, how do you deal with patients who complain about their bills or have questions about billing?

"It’s always easier to answer questions within the organization rather than going to an outside company," Goehle says.

Keeping proper control over the information flow is vital, he says. Also, determine whether the billing company is going to be aggressive in going after small remaining claims, Goehle advises. How do you evaluate the billing company’s performance? Have a predefined process for periodically auditing their work, Malhotra suggests.

Adequate resources required for success

Regulatory issues may arise, so ensure the company’s processes are HIPAA-compliant, she says.

Goehle says, "We bill in-house because it gives us total control over our revenue cycle and is cost-efficient with our size operation."

The most important key to the success of in-house billing is having access to the resources — equipment, services, and personnel — necessary to do the function in-house, he says. "If you can’t get those resources, it’s better to let an outside organization do it," he says.

  • Timely, thorough communication.

With a low-quality billing company, there is no reporting, Deters says. You receive no communication on your receivables, including your aging receivables, she says.

Sometimes problems don’t get addressed, says Ellison, referring to her previous experience with an outsourcing company.

"If there was a code being constantly misused, it didn’t occur to them to forward through channels and determine whether there is another code to use or another way to get reimbursed," she says.

You lose that control of the flow of information, Ellison says. "The goals of an outsourced company are to post your payments," she says. "Their goals are not the management of those accounts receivable."

The billing company is working under its own budget constraints to accomplish those tasks, she points out.

  • Emphasis on collections.

In-house coders/billers/collectors tend to focus their energies on billing and avoid the collection process, despite the fact that collections are imperative for proper cash-flow management, Deters says.

You need analysis of your bills so you know if you’re getting paid, if the payments you’re receiving are timely, whether you’re receiving rejections, and if so, the reasons for the rejections, Ellison says.

For example, her facility was receiving rejections because the Medicare system wasn’t accepting the physician’s correct unique physician identification number. A biller recognized the problem, determined the reason, and involved the doctor’s office in solving the problem.

"If you don’t do those things on a timely basis, you potentially lose out on getting paid for those claims," Ellison says. "Since it’s my employee, there’s better ownership for that receivable. She wants to make sure we collect every dollar that we’re entitled to."

Collections should be your priority, Deters emphasizes. "That’s where you really need to be tenacious," she says.

When the payer says "it’s in the mail" or "we’re processing that claim," a good outsourcing billing company will stay on top of that problem by making calls on a daily or weekly basis, Deters says.

"It’s the collection process that is the whole key to being successful in this arena," she says.

Sources and Resources

For more information on outsourcing your billing and coding, contact:

  • Ann S. Deters, MBA, CPA, founder and CEO, SevenD & Associates, Effingham, IL. Telephone: (217) 342-2255, ext. 222. E-mail:
  • Diana T. Ellison, MBA, CASC, Administrative Director, Hamden Surgery Center, 2080 Whitney Ave., Suite 100, Hamden, CT 06518. Telephone: (203) 288-2555. E-mail:
  • Deepa Malhotra, MS, CPC, President, Healthcare Education Resource Services, 2670 Ridge Road, Aurora, IL 60504. Telephone and fax: (630) 236-4212. E-mail:

For information on coding seminars, contact:

  • For specialty coding: McVey Associates, 150 Ford Way, Novato, CA 94945. Telephone: (800) 227-7888. Fax: (415) 892-1271. Web: www.
  • NJPR, 129 Littleton Road, Parsippany, NJ 07054. Telephone: (800) 562-7899 or (973) 334-3443. Fax: (973) 334-2823. Web:
  • Reimbursement Management Consultants, 12042 Sunnyside Road, No. 452, Clackamas, OR 97015. Telephone: (800) 538-5007. Web: www.

For more information on collections seminars, contact:

  • Lorman Education Services, P.O. Box 509, Eau Claire, WI 54702-0509. Telephone: (888) 678-5565. Web: Click on "Collections."
  • Tim Paulsen & Associates, 67 Hillingdon Ave., Toronto, Ontario, Canada M4C 3H9. Telephone: (416) 691-2648. E-mail: Web: