Hidden Costs You Should Know Before Hiring a Billing Company

Healthcare offices need to hire an expert billing company to simplify the complex billing process. It generates more revenue by reducing errors and delays in claim processing. People sometimes assume that paying in-house is cheaper, but there are hidden charges in billing companies that may make it costlier than employing a medical billing agency. Poor billing might cost healthcare firms 10–15% of their potential revenue. Therefore, Hidden Costs You Should Know Before Hiring a Billing Company can help maximize the revenues.

Healthcare organizations need a full-time in-house billing team, or they can contract a medical billing service to handle the complete revenue cycle management (RCM). This is why it’s crucial to explore various options to prevent financial losses and ensure the practice runs smoothly.

Standard Pricing Models in Billing Companies

There are many pricing models available at different billing companies.  

• Percentage of Collections Model

In this price model, billing services receive a percentage of the overall revenue generated for the healthcare organization. This amount may be between 4% and 10%, and it usually relies on how many bills need to be paid and how difficult they are to pay. This approach may help billing services earn more revenue since they are compensated based on the firm’s revenue. However, if there are many collections to process, the overall costs may increase.

• Flat Fee Model

For this plan, each claim or patient visit costs a predetermined amount. This usually involves all parts of the billing process, such as filing a claim, making a payment, and keeping track of any follow-ups. The flat charge method makes prices transparent, but it does not always consider the time and labor required to solve complex situations.

• Hourly Fee Model

This plan charges a fee for each hour that billing tasks are done. The system makes it apparent how much each part costs, so the customer only pays for the job that is done. But the amount of time required might vary a lot, which makes it impossible to anticipate how much it will cost ahead of time.

• Hybrid Fee Mode

This pricing scheme is a mix of the finest aspects of the flat fee model and the percentage of collections approach. You may have to pay a set cost to file a claim, plus a percentage of reimbursement. This design is adaptable since it may be adjusted to meet the demands of the service. However, this design may be more challenging to operate compared to other models.

Hidden Costs You Should Know Before Hiring a Billing Company

Healthcare providers must consider in-house and outsourced billing models before deciding on their outsourcing billing expenses.

• Administration Costs

When a hospital does its medical billing, it has to hire experts to handle the job. This means recruiting, training, and maintaining a billing team, which requires significant time and investment. It may be expensive to pay employees, provide them with benefits, teach them, and manage them. Neglecting to take care of the billing staff can make your business less efficient and less profitable.

• Ever-changing Payer Rules and Compliance Hazards

Laws on healthcare and rules about payers change a lot. The billing team at the office may have trouble keeping up with these changes. To prevent having claims denied, being fined, or losing revenue, stay up to date on the latest rules. Ongoing training, strong processes, and resources that are solely for compliance may help lower compliance risks. Not knowing or understanding payment rules might cost your practice a lot.

• Software and Setup Costs

In-house medical billing needs costly tools and technology. Getting and keeping these things costs you a lot. Included are billing tools, secure computers, and methods for storing data. Upgrading to new technology is also costly. But professional medical billing services employ the latest tools and software, so you don’t have to spend a lot on upkeep.

• Claims Processing Incompetence

Processing claims slowly might mean that reimbursements take longer and revenue cycles are affected. In-house billing personnel can make mistakes when they mail claims, forget to provide paperwork, or take too long to respond to rejections. Mistakes make billing take longer, funds take longer to arrive, and accounts payable go up. Hiring professional medical billers makes it easier and faster to handle claims. This also makes it easier to say no. Getting rid of unproductive activities helps bring in more cash flow.

• Limited Expertise and Industry Knowledge

You need to know a lot about medical billing since it’s hard. Your in-house billing personnel may not know how to deal with complicated payer rules, coding changes, and payment requirements. Claims may be written or sent improperly, which can lead to rejections and lost revenues. Professionals who know a lot about the sector work for professional billing services. This makes sure that the codes are correct, the rules are followed, and the most reimbursement is received.

• Opportunity Costs and Missed Revenue

At first, doing medical billing in-house costs more than it saves. If you spend too much time on bills, you can miss out on chances to increase revenue and slow down the growth of your practice. It could be preferable to use staff time and skills to improve patient care, create new services, or reach strategic objectives. When you outsource medical billing, your personnel may focus on what they’re good at, which might increase sales and profits.

• Overhead Costs Sneak Up Quickly

You need more than just a few desks and computers to run an in-house billing team. Your regular expenses include rent for the office, electricity, office supplies, billing software, and new equipment. People don’t frequently think about them when they figure out how much to charge for internal billing, but they add up quickly and hurt your bottom line.

• Poor Reporting Makes It Hard to Improve

One of the best things about outsourcing billing expenses is that you get detailed data and statistics on performance. Teams that work in-house sometimes don’t have the time or skills to keep thorough invoicing records. You can’t spot problems or make wise financial choices for your firm without knowing the rates of rejection, past claims, or collection trends.

How Hidden Fees Affect Your Healthcare Practice Profit?

There may be some hidden outsourcing billing expenses that make a healthcare firm less profitable and less efficient. Here are some primary ways in which it impacts your revenues.

• Reduced Profit Margin:

Hidden charges, including accounting fees, additional claim follow-up expenditures, or hidden licensing fees, may eat up a lot of a practice’s profits. Over time, these expenses pile up, which means you have less investment to keep your practice growing.

• Cash Flow Disruptions:

Claims might take a long time to authorize or deny, making payouts impossible to predict. It disrupts revenue flow, making it hard to pay bills, rent, and salaries and buy supplies on time.

• Increased Administrative Cost:

A lot of the time, billing company hidden costs come in the form of more paperwork and activities that need to be done. This might imply that office workers have to spend more time talking to patients and less time phoning insurance companies or dealing with claims.

• Low ROI:

When there are inaccuracies on bills or delays in acquiring credentials, the ROI that was supposed to come in from insurance contracts goes down. Practices may pay to join more than one insurance network, but the higher billing service fees may not bring in as much revenue as they anticipated they would.

• Patient Dissatisfaction:

While billing and authorization issues cause patients to get incorrect bills, wait for approvals, or have their claims rejected, patients may become agitated and lose their faith. Unhappy customers are less likely to return or recommend the business to others.

• Compliance and Legal Risks

If you attempt to save by bypassing certain costs or rushing through licensing, you might wind up with missing papers or not following the regulations established by the payer. This might result in refusals, penalties, or possibly being booted out of the insurance network.

• Lost Opportunities to Grow

Doctors may not be able to see patients with certain insurance plans if they have to wait too long to receive their credentials. This not only cuts down on the number of patients, but it also makes it harder for the practice to develop.

• Damage to Reputation

Frequent billing issues, late payments, and insurance difficulties may undermine the professional image of a clinic. Trust is incredibly crucial in healthcare, and it might take a long time to restore a negative reputation.

Questions to Ask Before Signing a Contract While Outsourcing

Billing can help grow your practice and increase your cash flow. However, choosing the right billing company is essential. But if you pick the wrong billing company, you could end up with even more problems and financial stress. So, ask the following question before contracting anyone.

• What credentials/experience does the billing service have? 

Get the billing company’s history and reputation. Check their professional liability insurance and state registration or licensing, if needed. Ask how many clients they have and if any are similar in size and patient numbers to yours.

• Does the billing company have experience in your specialty?

The billing company should be familiar with your specialties’ coding, payment, denials, and appeals. Ask whether they have the tools to catch up to avoid income loss.

• What kind of training does the staff have and receive?

Verify that a professional billing organization accredits the billing service management and that competent billers and coders are employed. Check whether the service trains and supports these workers.

• What is the procedure to protect the privacy of information?

Check whether the service has a compliance officer. They ensure the billing company follows HIPAA and transmits encrypted messages. If the billing company uses remote workers, know their HIPAA compliance.

• What are the company’s technical capabilities?

Do they send Medicare bills online or via a clearinghouse? Discover how often the center gets claims, how third-party payers are handled, and if batch controls limit data entry and other concerns. Check whether the service handles paperwork, superbill design, office tasks, etc.

• How do they handle a claim?

Learn how the service amends ICD-9-CM or CPT® numbers for mistakes. Data loss management: how?

• What type of financial reporting does the billing company provide?

Check whether your clinic can review payment information in-house and evaluate month-end reports for accuracy.

• How much will everything cost?

Ask them which pricing model they accept and what the cost of the whole procedure is. Also, check what will be included in that price.

These questions should help you choose a payment service. If none of the answers satisfy, keep looking.

Tips to Avoid Hidden Charges in Billing and Credentialing

• Talk about billing service fees, schedules, and medical billing costs right away.
• Study the market to find out how prices work and if there are any extra fees in billing services.
• For itemized bills, ask for full receipts.
• Set criteria for payments based on success.
• Check billing service contract terms often to make sure they meet the goals of the business.
• Monitor payment records and credentialing progress within the company.

Conclusion

In today’s competitive healthcare market, every dollar matters. Medical bills and licenses may have hidden charges in billing companies that can hurt earnings, make it difficult to get along with patients, and screw with cash flow. Practices can make informed decisions, maintain their finances in excellent condition, and preserve the confidence of both patients and insurance companies if they are upfront about prices from the outset. Credex Healthcare offers billing cost transparency and upfront pricing that matches your budget. Our billing and credentialing experts help you get and maintain long-term success and development.

FAQs

Q: What hidden fees do billing companies charge?

A: Some examples of hidden fees are setup fees, claim follow-up fees, early termination fees, and fees for access to tools or reports.

Q: How can I avoid extra medical billing costs?

A: Ask for a full, itemized contract, and ensure that you understand all the possible fees before you sign.

Q: Are setup fees standard for billing companies?

A: Yes, a lot of companies do charge setup fees. The fees can be small or large, depending on the company.

Q: Can hidden medical billing costs be negotiated?

A: Yes, most fees can be reduced as long as they are talked over before the deal is signed.

Q: What should be in a billing contract?

A: There should be clear language in a billing service contract about prices, timelines, roles, and how to end the contract.