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In August, Thomas Pontinen, MD, a Chicago-based anesthesiologist, found himself spending far more time with his billing vendor than he wanted.

It was a new contract — the fifth billing company he has hired in the 20 years since opening his integrative pain management clinic, which sees about 4000 patients each month. Initial meetings were promising, but the training process quickly became tedious.

“The most frustrating thing about outsourcing billing is they give you a great sales pitch, and then they change their tune,” Pontinen told Medscape Medical News.

Since midsummer, his new vendor had challenged his clinic’s workflow with what he called “nitpicky arguments.” The latest dispute was over a minor data entry issue. Because of his software setup, insurance information doesn’t integrate into the clinical notes. Staff must click a link to view it in a separate tab — a single extra step. The biller pushed back, saying it slowed them down and that Pontinen’s staff should take on more work.

“It seems like a stupid argument,” he said. “But because it’s not like what they are used to, they don’t want to do it.” Ultimately, Pontinen reminded the biller that flexibility was his top priority. “If you can’t be accommodating, this isn’t going to work.”

Why Outsourced Billing Has Become a Lifeline?

Medical billing vendors have become indispensable for many practice owners, but choosing the right one and streamlining the process, can be complicated. Not to mention, their added efficiency can come with a hefty price tag.

Outsourcing helps solve a longstanding problem: turnover among in-house billing staff. Conrad Fisk, MD, a family practice physician and practice owner in North Carolina, said, he repeatedly tried to manage billing in-house for cost and control, but turnover made it unsustainable. Training new hires only to lose them to nearby hospitals, or insurers drained time and revenue.

“When a biller leaves, the backlog of uncollected claims can drain a practice’s revenue almost overnight,” Fisk said.

Medical billing vendors, in contrast, provide a steady supply of staff. “Income can still fluctuate, but at least you’re insulated against it dropping to zero overnight,” Fisk said.

The Price of Efficiency: What Billing Really Costs?

That protection comes at a price. Most billing vendors charge a percentage of collected claims, though some use a flat per-claim fee or bill based on the number of full-time employees required.

Pontinen said, 4%-6% for charge entry and accounts receivable are standard, with rates jumping to 8% or even 10% for claims older than 90 or 120 days.

Fisk has seen fees range from 4.5% to 8%, which can be cutthroat for a family practice provider. “It’s difficult to pay 7% of what comes in the door and still stay afloat,” he said.

Earlier this year, Fisk dropped a vendor that kept increasing rates without adding services. After shopping around, he found a more competitive option.

Even with the right vendor, oversight is essential. “You have to run regular reports and make sure you’re getting what you pay for,” Fisk said.

“If you start to see any of those [30, 60, or 90-day claims] going up above the promised rate, you have to decide what to do,” Fisk said. If the proportion of unpaid claims at 30, 60, or 90 days starts creeping above expectations, it’s time to act.

Who Can Your Patients and Staff Talk To?

Billing issues are sensitive for both patients and practices. When outsourcing, physicians need to clarify upfront how communication will work.

“Many companies outsource overseas, which makes it cheaper but more difficult for patients who call with questions,” Fisk said.

Trying to communicate across multiple staffing layers and time zones to resolve a billing error can be costly and slow down resolution. Pontinen recommends asking early who your team can communicate with and how quickly to expect responses. Also, confirm whether you can speak directly to the billing staff handling your claims or only through a middleman.

Equally important: Establish how the vendor will report back to your practice. Will you get monthly analytics? How often will your billing manager meet with theirs? Fisk said once a month is usually sufficient — but only if it’s guaranteed in writing.

How to Vet a Billing Vendor Before You Sign?

Both Pontinen and Fisk agreed: The process starts with understanding your own practice.

Know your break-even point, patient volume, and revenue cycle. Be clear on what parts of billing you want to outsource and what you’ll keep in-house.

“Be as specific as possible,” Pontinen said. For instance, how will the vendor contact patients if a claim is denied? He once discovered too late that a vendor expected his staff to make those calls.

Similarly, does the biller cap the number of times they will try and collect on a claim? Pontinen said that’s nonnegotiable.

Questions Every Physician Should Ask a Billing Vendor

It’s nearly impossible to think of everything but attempt to work through every step in your revenue cycle and see how the potential vendor aligns with your needs. Here are other questions to consider:

• Are they familiar with your electronic medical record and other software?
• Have they worked with a practice similar to yours?
• What’s their process for contacting the insurance company?
• Do they cap the number of attempts to collect on a claim?
• How do they handle denied claims?
• What is their clean claims rate (the number of claims processed without any error additional information)? Ideally > 90%
• What percentage of claims do they collect within 60 or 90 days?
• How do they communicate if performance drops?
• What analytics will they provide — and how often? 

Billing Isn’t Set and Forget — It’s an Ongoing Conversation

Even after careful vetting, problems will arise — whether coding issues, pricing disputes, or workflow mismatches like Pontinen experienced.

“Billing is such a big part of a medical practice that when you outsource it, you need ongoing conversations and corrections,” Fisk said.

Donavyn Coffey is a Kentucky-based journalist reporting on healthcare, the environment, and anything that affects the way we eat. She has a master’s degree from NYU’s Arthur L. Carter Journalism Institute and a master’s in molecular nutrition from Aarhus University in Aarhus, Denmark.