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ELECTRONIC MEDICAL BILLING: In-house or outsourced, which is the better option?

Electronic medical billing (EMB) is a process whereby healthcare providers digitally submit their patients’ bills and claims to the concerned health insurance company which will either result in payment to the provider or rejection of the claim. There are two options available to providers in this regard. They can either outsource their billing to a […]

Electronic medical billing (EMB) is a process whereby healthcare providers digitally submit their patients’ bills and claims to the concerned health insurance company which will either result in payment to the provider or rejection of the claim.

There are two options available to providers in this regard. They can either outsource their billing to a medical billing company or set up an in-house system of billing.

So what should a practitioner opt for and what factors will he consider before making the crucial decision?

For most providers, cost incurred against total revenue generated is the decisive factor. Assuming that healthy and streamlined cash flow is the only factor that matters to providers in choosing one out of the two options, outsourcing would outweigh most in-house solutions. There are a number of arguments that point towards this conclusion.

In-house electronic medical billing is costly because it requires maintenance of a billing department within a practice that will include several employees who need office space, regular trainings and other facilities. Not to mention, the practice will also have to invest in practice management software to record medical information. In-house medical billing will also involve an extra entity in the form of a clearing house before a claim is sent to the insurance company. Needless to say, the clearing house will charge a practice for each claim submission it makes.

Outsourcing, on the other hand, needs no such investment in personnel or software and requires minimal spending under this head. Even though outsourced billing includes a high claim-processing cost, the effect is cancelled due to a much higher claims success rate ensuring higher revenues for providers.

In-house billing is error-prone due to human involvement and is much slower than its alternative, owing to the involvement of a clearing house. This means that claims success rate for in-house billing will be much lower and the billing cycle much longer.

All these arguments clearly indicate that outsourcing medical billing will generally result in higher profit for a practice.

 

However, while profits may very well be the driving force for several providers, those with other motives and preferences might choose a different direction based on the characteristics of their practice and personal preferences. For instance, a new provider might find it feasible to outsource medical billing while an old practice that has already invested in training staff and purchasing billing software might continue with in-house billing to avoid wastage of time and money.

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