A family physician in New Mexico was quick to tell anyone who’d listen that he didn’t need any billing staff, he did it all himself. Had he discovered a way to drastically cut overhead? Depends on how you define overhead.

It was true that he did 100 percent of the work involved in submitting bills, and it was equally true that he spent $0 on staff to help with that process. What he failed to include in the equation is the fact that, after he finished seeing patients, he spent the next 2 to 3 hours entering the information into his software program and transmitting his claims, as well as entering the payments that he received and generating the statements for the patient portion of each bill. While his labor technically didn’t cost money, it was certainly impacting his quality of life.

Someone has to perform the functions involved in charge entry, data submission, and payment reconciliation. Who that someone happens to be is not as important as assuring that whatever effort involved is appropriate to the work involved.

If you want to get paid for the work that you do, and you don’t have a cash practice, then someone has to assign codes (CPT and ICD-9) to the care that was given; someone has to enter that information into the data system (all but the smallest practices are now required to send claims electronically); someone needs to collect demographic and insurance information on the patient to be sure that the claim goes to the right place; someone needs to print the claims or transmit them to the insurance plans; and someone needs to match payments received with the charges and handle anything that wasn’t paid and needs to be written off or billed to another insurance carrier or the patient.

Physicians often don’t have a good understanding of the revenue cycle because their billing staff is tucked away in a corner and, unless there is suddenly not enough cash to meet payroll, their work is somewhat invisible. Physicians see their nursing and front desk staff almost daily and quickly know what works and doesn’t work and how many people it takes to get the job done. Billers, those invisible folks tied to their computer screens, are far more difficult to understand (they speak a strange language) and many physicians just don’t bother.

As revenue becomes ever more critical and overhead must be reduced, or at least controlled, the role of the biller requires closer attention. What should they do and how many should there be? These questions need to be addressed in every practice, on an ongoing basis. Unfortunately the answers are as difficult as the process. The billing process differs by specialty, by volume, by market and payer mix, and by who does what.

Before you throw up your hands and head back to the exam room or your office there are some basic steps that can be taken to get the answers. But before you can decide how many people you need to effectively bill and collect your fees, or even if you should do the job in-house, you have to define the job itself. Kris Fisher, who does billing for a small specialty surgical practice and is a former billing consultant, says that “billing is easy, almost anyone can do it, collecting is hard.” Collecting is all that counts.

Billing service vs. in office

The first step in examining your billing process is to decide if you are going to do it in house or you are going to contract with a billing service. This is an important decision. Fisher says that “nobody cares as much about your revenue as you do.” Keep this in mind as you explore your options. Ask yourself these questions before deciding which option is for you:

Is money an issue? If the practice is tight on money then investing in sophisticated software and hardware may not be an option right now. Many billing services allow you to use their software to make appointments and view patient accounts while they handle the billing/collection functions from their office.

Who manages the office? If you are the doctor and the office manager you may not have the time to effectively monitor the performance of in-office billing staff.

Is space an issue? Using expensive medical office space for billing staff may not be the best option if rising overhead is a concern. If you can lease just the amount of space needed to generate revenue then outsourcing may be a good option.

Is billing for your specialty straightforward or complex? If the bulk of your services are office visits, or your specialty has a high volume of similar services (such as radiology or anesthesiology) finding a company with experience in your specialty may be a good idea. If billing is more complex and you often need to be consulted about questions, such as in a surgical practice, keeping the billing in the office may be the easiest route.

Is the billing service motivated to collect small amounts? Many billing companies go after the “easy money” and may not have sufficient staff to collect the small balances. Ask potential billing companies if they are willing to provide a collection rate guarantee. If they do you will still need to monitor their performance but at least they are somewhat at risk for bringing money in the door.

How much will they charge? Most services charge a percentage of the funds they collect. Do the math. If they collect what you hope they will, what will you end up paying? Is this more or less than you would pay your own staff to do the same job? A good billing service may cost a little more than the cost to do billing yourself, but not a whole lot more.

Before you decide to outsource your billing, let’s explore what is needed to successfully perform billing activities within the practice. Consider each of the steps below to determine if you are up to the challenge, or at least willing to dedicate staff time to that challenge.