Billing services debate: Do it yourself or hire a third party?

Thursday, March 31, 2005

Just about every HME provider has faced the situation where a cash flow pinch causes DSO totals to back up like a clogged sink. As with plumbing, if the problem becomes chronic, you either call in an expert or try to fix it yourself.
Which way works best? Both sides have their advantages and disadvantages, so ultimately it's up to providers to determine which method best fits their operation.
"It depends on the individual," said Richard Basch, national sales director of Deerfield Beach, Fla.-based Noble House. "Some want to maintain control and have the security of their data being contained within their walls. Others may be more comfortable letting someone else handle it. To those people, I say if they've got a good relationship with their contractor, they should continue it. But if they want a system that tracks documents and inventory, they should do it themselves."
Both third party contractors and billing software vendors promise that subscribers will see significant improvement as a result of their efforts. The third party billing contingent, which has experienced an upturn in business over the past few years, is promoting expertise, experience and convenience as key reasons why providers should outsource their billing departments.
"Things are more complicated than they've ever been," said Brent Mattox, president of Greer, S.C.-based Reimbursement Services. "When we started there was one CMN for everyone that was accepted everywhere. Now Georgia Medicaid has 14 different forms alone. We coordinate and manage all of that."
To be sure, farming out the billing component is a major decision, said Gail Tasch, president and owner of Medwork of (Eau Claire) Wisconsin. Once committed to it, however, the provider will find peace of mind, she said.
"When you outsource, you're using a professional who specializes in billing and keeps up on all the regulations," Tasch said. "Getting paid is our number one priority. We do it right, so your business runs smoothly and efficiently."
Likewise, Ward Cook, president of Tampa, Fla.-based Allegro Billing, said he built his 12-year-old business on dogged determination to submit clean claims the first time and to mobilize quickly on denials, which happen only 9% of the time, he said. Using "slick, sophisticated" technology and "brilliant" billing personnel, Cook said he is able to deliver an average DSO of 31 days to his clients.
"Very few who do it in-house can say that," he said.
Perhaps the biggest drawback to providers handling their own billing is staff turnover, outsourcing proponents contend. Given the intricacies of the industry, stringent payer demands and dense coverage criteria, billers have a huge learning curve that requires substantial investment on the provider's part and that effort walks out the door when the biller leaves. A prolonged void exists until the next trainee can be brought up to speed.
"There is a hideous amount of turnover in this business," said Bruce Brothis, education director for Minneapolis-based Alternative Billing Solutions. "HME companies don't understand how important the billing component is and hire minimum wage people to do it. But people who are very good at this command a very good wage. Our approach is to place 'golden handcuffs' on our billers so they don't leave."
Even veteran provider billing staffs can get overwhelmed as external pressures continue to mount in the wake of the Medicare Modernization Act, said Sarah Hanna, president of Tiffin, Ohio-based ECS Billing and Consulting.
"Billing departments are so focused on what's coming in they're not following up on the old ones," she said. "They need to improve their processes so they can be more effective and turn their claims around more quickly."
While billing software vendors generally agree with the challenges outlined by third party billing contractors, they recommend implementing new technology as the solution.
"With the automation software available today, there is no reason to rely on third parties for billing," said Brian Williams, marketing manager of Harrisburg, Pa.-based Computer Applications Unlimited. "The attitude that [automation] is more trouble than it's worth has changed. You don't need to hire computer experts - it's just point and click. Your people already know how to manage the data. This just helps them work smarter."
What's more, billing is integral to the provider's entire scope of service and outsourcing it removes a critical function, said Spencer Kay, president of Plainview, N.Y.-based Fastrack Healthcare Systems.
"People considering outsourcing should realize that billing is the end result of what we all do," he said. "Tracking clinical information and inventory are keys to success. Having the full capabilities of the system in-house allows for better customer service and can aid in collections."
Even with a state-of-the-art billing system, however, companies can get jammed on cash flow when they're not paying attention, observed Mac McConkey, regional sales manager for Duluth, Ga.-based Fidelis Software.
"Problems happen because of a breakdown in the internal processes that starts small and mushrooms into something much larger," he said. "Companies should have a check and balance system in place to identify potential problems early on, along with diligent follow-up on denials and using management tools that exist inside your internal software system. It really doesn't take that much."
Miami, Fla.-based SoftAid has seen an increase in demand for its products in recent years, said president Jim Clark, because providers are looking to automate their entire business.
"They are looking to do more with technology," he said. "It used to be that if you did electronic billing you were advanced in your use of IT. Now there are e-CMNs, hand-held inventory management devices and electronic purchase orders - it's no longer just about billing."
Although a software vendor who supports providers handling billing themselves, Noble House's Basch says third-party contractors have their place.
"There are circumstances when it may be in a provider's best interest to use a third-party biller," he said. "A small provider who is relatively new in the business may be better served by conserving the capital it takes to invest in an automated billing system and doling it out to a contractor on a monthly basis."
At some point, however, Basch said it will become more economical for a growing provider to incorporate billing into the overall corporate structure.
"If the billing service is charging 10% of its total collections, there will come a time when it costs two or three times the price of a software package," he said.