Radiology Billing and Coding: From In-House Radiology Billing to Outsourcing — Lessons Learned
By John Stiles
Vol. 17 No. 11 P. 28
There was a time when in-house billing was a clear advantage. In fact, that's what I was doing in the 1980s. I was a practice manager of a hospital-based physician group along with managing their in-house billing operations.
The in-house model was preferable to outsourcing during the early years for many reasons. Producing a radiologist's medical claim was not as complicated. All that was required for claim filing was to submit a CPT code along with the patient's insurance information and only one single diagnosis code designating that it was radiology related. During that era, many local patients physically came to the billing office to pay their bills.
The medical billing process has evolved from a relatively simple back-office administrative duty to a sophisticated matrix. It has morphed into a system and workflow that requires subject matter experts in CPT coding, ICD-10 coding, technology, claim filing, edits, managing denied claims, holding payers accountable, payer contracting, responsiveness to patients, compliance, and providing meaningful reports to radiologists, practice managers, accountants, and attorneys.
Most in-house processes have dedicated, well-meaning staff who are trying as hard as they can to support the billing process. Unfortunately, the nature of the process has changed so much that it is extremely difficult to have the necessary subject matter experts in place to manage the process and provide assurance that all the I's are dotted and T's crossed. This can create the unintended result of in-house billing processes not keeping up with best practices, industry standards, and regulatory compliance.
Keeping an in-house billing process can be high risk with low reward. Below is a list of the pros and cons of each billing model that, on a rational level, will provide ample evidence to suggest significant value in considering an outsourcing model.
There is a unique risk that deserves special attention, one that is less visible and can cause many radiologists much unnecessary grief. The very choices that likely need to be made to manage revenue and reduce risk will cause disruption in people's lives.
But that concern, which can be overcome with compassion and specific opportunities, does not justify inaction. As such, let's step back to view the bigger picture and look at your practice from a logical, rational perspective. Let's consider some of the pros and the cons of each model and then further explore opportunities for positive change.
• Control of billing operations: Radiologists have expressed their concern over control when discussing their in-house medical billing services. The office staff is accessible, and changes to a patient account or special handling of a billing situation can be easily accomplished.
• Local service and representation: There is sometimes a desire for either a radiologist or patient to visit the local billing office.
• Loyalty: Radiologists often mention the attributes of loyalty and trust in the employees they have come to know personally. Relationships have been built over an extensive period of time, and they know these individuals will treat them right and often go the extra mile in managing patients' accounts. Additionally, radiologists believe they must be loyal to their billing employees regardless of the overall practice performance.
• Cost and investment: Fixed and variable costs include salaries and wages, employee benefits, payroll taxes, office space, computer systems, billing software, maintenance, phones, administrative expenses, and many other detail line items. Upward cost pressure comes in the form of annual compensation increases, computer system replacement, increases in software access and maintenance fees, and virtually every expense item on your financial statement.
• Liability exposure: Smaller operations that handle substantial amounts of money are at a much higher risk of financial irregularities or even embezzlement due to lack of segregation of duties and not utilizing systematic checks and balances.
There are multiple risks in employee management of a billing staff. First, there are the nonmedical risks associated with human resources and the plethora of federal and state regulations requiring compliance. Add to that the privacy liability exposure from claims improperly submitted, incorrect CPT or ICD-10 codes applied, or sending a statement to a wrong address, and the potential for liability is compounded.
Being a medical provider is not only heavily regulated but there also are significant ongoing changes in laws, regulations, and payer contracts that must be perpetually monitored for compliance. Not being aware of these changes is not a defense for any payer, governmental or commercial.
• Operational and business continuity: Processing delays can occur due to sickness, medical leaves of absence, vacations, etc, which can disrupt continuity. Failing to stay current in all aspects of the billing process breeds many other irregularities in cash flow and often results in a permanent loss of revenue.
The loss of key people through illness, death, or termination poses significant risks including operational continuity and permanent loss of revenue during the period of absence, recruitment, and training of new personnel.
Outsourced Medical Billing
Caveat: As we refer to "outsourced medical billing," we are not referring to "offshore" billing services. Many billing companies contract with offshore (outside the United States) companies for operational activities in their medical billing workflow. This may or may not be acceptable based upon your preferences and risk management objectives. If you do prefer to maintain your billing services domestically, be certain to include this requirement in your service agreement. This will protect you from billing service providers who do not disclose these additional risks to their clients.
• Revenue enhancement: A good medical billing service provider can often recover significant additional revenue. They have enhanced processes and safeguards to validate receipt of interpretation reports and ensure accurate coding, clean claim filing, effective and timely denial management, holding payers accountable to their contracts, quality reporting, and follow-up.
• Cost savings: Outsourcing billing should provide a savings even if the existing in-house operation is currently doing everything it is supposed to be doing. A billing company is advantaged by having economies of scale in each of the primary areas of competency and the ability to allocate less overhead fixed costs to your patient volume.
• Reduced responsibility: Outsourcing provides you a single point of responsibility to manage your billing process. No longer will your group have to manage individuals doing the billing, make sure claims are filed timely and correctly, or deal with issues regarding the adjudication process. No longer will you have to directly be involved in hiring, training, and managing employees or make decisions as to when new software or hardware systems are needed to handle the billing process. This allows you to focus your time on your clinical work and delegate these administrative activities.
• Consistency: You no longer have to accept cash flow variances related to an employee taking a medical leave, being on vacation, or quitting their position. There will be consistency with your charges being entered and filed with the third party billers, resulting in consistency in your cash flow. Other elements of the billing process that are performed consistently will further smooth your cash flow and recover lost revenue. (Example: Effective and timely denied claims follow-up will reduce timely filing denials and responsiveness to regulation changes will assure continuity in the claim adjudication process.)
• Data mining: Good billing companies provide enhanced reporting capabilities. They will provide support to monitor your practice metrics and thereby help you manage your practice's finances.
• Less control: There may be a sense of less control since your billing may no longer be performed close to your practice.
• Out of sight: Too many radiology groups relinquish too much responsibility. You are still ultimately responsible for the claims that are filed and the representation of those claims. Therefore, you need to be educated by your billing service to confirm and validate that they are properly representing you.
• Variable and/or hidden costs: Outsourced billing companies generally work on a percentage basis to support a common interest in collecting as much of your revenue as possible. While this is a good fundamental structure, unscrupulous billing entities may choose to go after the easy money, since it will cost them more to do a thorough job for you. Additionally, some billing companies may have hidden fees for additional services. Make sure you are aware of all such arrangements, prior to a contractual commitment.
• Offshore processes: Offshoring some or all the billing processes can introduce more risks that may or may not be an issue for you. Not all countries outside of the United States are governed under the laws, regulations, and guidelines in the United States. Additionally, if patient call centers are offshored, the quality of patient interaction may be diminished if there are communication challenges.
While this summary of medical billing options is not exhaustive, it represents some of the more important components to the decision-making process.
When fully assessing the potential lost revenue, the cost to stay current, the challenges of having strong subject matter experts in every billing competency, compliance, staying advanced technologically, and myriad other issues, it is very difficult to support a compelling argument for continuing to take responsibility for in-house processes.
There are several other ways to demonstrate loyalty and compassion. A good example is to provide a severance package to employees based on longevity and their commitment to a smooth transition from in-house billing to an outsource specialist. Additional resources can be provided to assist with employees' job placement activities. There are multiple other ways to wisely communicate and implement a smooth transition, which is key to your financial success and in the best interest of those who presently serve you.
In summary, there are two steps to achieving peace of mind regarding your radiology billing process. The first is to assess the costs and risks of maintaining an in-house process to determine whether it is the best pathway for you and your group's future. Once that decision is made, the second step is to consider and determine the best way to seamlessly transition. A successful transition can enhance your financial strength while simultaneously mitigating your risks.— John Stiles is a principal of HealthPro Medical Billing, Inc, and has more than 30 years of medical billing and physician practice management experience. Stiles is a graduate of The Ohio State University and has degrees in risk management and mathematical statistics. He is active in the Radiology Business Management Association, Healthcare Billing and Management Association, and Medical Group Management Association.