Medical Billing Services for Small Practices: Things to Consider Before Outsourcing Medical Billing Services

If you are running a healthcare organization, or to be more precise, a hospital or any company that is providing healthcare services to the customers, you will have to deal greatly with insurance companies that provide insurance to the customers.This is a very tiring and laborious activity for a healthcare company. It is because such work requires a separate specialized staff for this work to be done. Medical billing services for small practices make the work less hectic because you can outsource all the work to these companies at a very reasonable price.

In this article, we will be discussing all the details about what medical billing services companies are, how you can collaborate with them, and how they can make your revenue cycle go smoothly. 

What Are Medical Billing Services for Small Practises?

Medical billing is a terminology used in healthcare services to submit requests for health insurance claims by the healthcare service provider on the behalf of the patient. The purpose of this is to claim the money in response to any service provided by the medical unit, such as a hospital or a rehabilitation centre. 

If the work is done by the hospital or rehabilitation center itself, it would require a lot of work hours of the staff, plus the inefficiency of the staff because of the workload. To overcome the problem, several medical facilities outsource this work to several medical billing services companies. 

There are different types of fees that the health facilities have to pay to these service providers, such as set-up fees, annual or monthly service fees, and a collection percentage. These companies charge the healthcare facility according to the number of cases, amount of money claimed, and the annual or regular monthly charges. For every amount of money claimed from the insurance companies, they charge a certain percentage of the amount back as a fee. 

A problem arises when these companies refuse to provide medical billing services for small practices because small practices have a smaller number of patients to deal with. So a lesser number of cases for claims. This makes the profit proportion for the company very low. Thus, these companies hesitate to provide medical billing services for small practices.

Duties of Medical Billing Service Providers 

If you hire a company for medical billing for small practices, they will charge you some fee for the following duties:

● Implementing successful processes for patient collection and insurance receive. 

● Maintaining good public relations (PR) with the hospital and the insurance company. 

● Keeping a check on various policies of insurance companies to make sure the returns and reimbursements do not get delayed. 

● Keeping an eye on successful follow-up procedures and appeals processing for the claims. 

How Do the Medical Billing Services Companies Work?

Medical billing services companies have a specialized staff to do the work of medical billing for different health services provider organizations. 

This staff has expertise in this niche and has proper knowledge of how to deal with the insurance companies regarding claims of different patients and a proper follow-up to each case. 

The entire process is referred to as the billing cycle, sometimes also called Revenue Cycle Management. 

The entire process is based on processing claims, a proper follow-up, payment, and billing. The process usually takes several days to several months for completion and requires proper communication between the billing service provider and the health insurance company.

Once the claim has been sent to the insurance company, a team of medical examiners review the claims and review their authenticity, plus validity according to their criteria(s) for eligibility of patients and the credentials of the health facility. 

The insurance company approves some claims, and this amount is then reimbursed to the health facility after deducting some percentage as a fee. 

The rejected claims are sent back to the facility, along with a proper explanation of the rejection. The health facility then makes necessary amendments in the claim to get a maximum amount of claim.

In all this process, the medical billing service provider works, and the health facility just has to review the denied or partially-approved claims. 

What Is Revenue Cycle Management Process Flow?

A Revenue Cycle Management Process Flow or RCM is a process involving medical billing software to track records of patients from start to end, consisting of several steps. 

Communication between insurance companies and the agency that provides medical billing services for small practices is an important part of RCM. The steps of the Revenue Management Cycle are as follows:

  1. Patient Registration – During this process, all the necessary information is collected from the patient, along with his medical history and details of his health insurance status.
  2. Charge entry – In this phase, the important data regarding the treatment of the patient is collected, and a charge sheet is sent to the insurance company. If the health facility has hired a service provider for this purpose, the next few steps are then done by the medical billing service provider.
  3. Utilization Management – After receiving the data and the cost to be claimed, the health insurance company reviews the data and communicates with the medical billing service company. There are proper criteria to determine the eligibility for approval of claims.
  4. Claim Submission – If the claim is valid and authentic, the health insurance company will make preparations for the claims. This process is very crucial as all the reimbursement of the funds depends on the approval. A good service provider makes sure it makes a proper and legally valid report for this case. 
  5. Follow-Up – Follow-ups with health insurance companies are an important step in maximizing the number of claims. If a claim is denied, it is then amended and sent back to the health insurance until a complete or maximum claim is approved. Follow-ups are important because they make sure that the health facility gets the maximum amount of their money back to the patients.
  6. Billing and Collection – The approved claims are sent to the medical facility after deducting a small percentage of the collected amount as a fee. 

The whole process can take months for its completion because of repeated denials, and a long procedure of follow-ups and communication between the two parties is essential during the whole period.

Why Should You Outsource Medical Billing to the Service Providers?

As discussed earlier, medical billing services for small practices can be kind of a headache. That is why it is always recommended to hire an agency to outsource this work to them. There are several valid reasons for this:

  1. Increased Cash Flow – Hiring a medical billing services provider can increase the cash flow into the medical facility reserves because of immediate approvals and quick reimbursements of the approved funds. The more the funds are approved, the more cash flows back into the health facility accounts and a result of a better profit ratio.
  2. Expert Staff – These service providers have proper teams of people that have the expertise to deal with health insurance companies. They know how to deal with each condition and to take maximum benefit in terms of approved claims by the company.
  3. Elimination of in-house costs – If you hire medical billing services for small practices, you can save a lot of money. Many in-house expenditures are cut-off if a health facility hires a company to do the work for them. They do not have to pay for a separate staff member and the benefits he enjoys during the stay at the workplace. 
  4. Reduced workload on health facility staff – If you outsource the work to another external agency, it will certainly reduce the workload on the workers of your health facility. A reduced workload will lead to greater productivity of the staff which would help your health facility grow.
  5. Improved Revenue Cycle Management – The health facility has nothing to do with the excessive workload of refusals of claims, follow-ups, or any kind of communication with the health insurance company. You just have to check the status of your success rate in the approval of claims. For this, a reasonable fee has to be paid every month. 
  6. Reduced treatment costs – If the service providers remain successful in providing maximum claims of the patients. It will surely return a reasonable amount of money to the patients. This will eventually increase the patient’s trust in the facility. When most of the cash flows back to the patients in the form of claims they will surely recommend other people about your health facility because you have lower treatment costs for the patients.
  7. Improved Profits – If you have a small health facility, and you hire a company for medical billing services for a small facility, you can surely increase your profit because a good service provider will make quick recoveries in the form of approved claims. These claims will surely also increase the profitability of smaller health facilities.

Can Medical Billing Services for Small Practices Be Unfavorable?

As far, we have discussed some of the very good reasons to outsource medical billing services to any third party. The advantages at their place are very well justified, but every good thing comes with a cost. Outsourcing medical billing services for small practices can also be unfavorable for several reasons. Some of the reasons are as follows:

  1. Some third-party companies demand high fees for the work. They have many types of charges, and the administration of the health facility can get easily blackmailed by them once they take control over the assets. They can give reasons to pay them so that the proper system of revenue cycle management flows smoothly.
  2. Outsourcing may reduce patient satisfaction. The one who suffers the most in outsourcing is the patient. Patients feel more comfortable when they have their queries answered within the hospital. The companies usually ignore patient queries. It causes a reduction in patient trust and satisfaction.
  3. These companies may also have hidden charges. These third-party agencies can charge you for the hidden charges. Medical billing companies may ask for extra charges despite their legal charges. Sometimes they demand to hire a single person as a communicator between the health facility and the services company, and the expenses are to be paid by the health facility.
  4. You can lose control over your resources. It is one of the biggest drawbacks. You lose power over your assets because the third party is the one that regulates how much income flows into your accounts. 
  5. Some inexperienced and new medical billing companies have unprofessional and non-compliant behaviors. When you outsource data, there is a risk of data theft, which can be intentional or accidental.
  6. Hidden ambiguities in the contract can make your health facility fall prey to fraudulent and notorious companies. This is why it is recommended that before signing any contract or memorandum of understanding with any external party, make sure to consult with the legal advisors.
  7. One of the drawbacks of outsourcing medical billing services is that your internal business activities become limited. In-house medical billing staff can access all the patients’ data and a record of approved claims, but there is no such thing if you have outsourced the services to any third-party agency. There is no guarantee of authenticity and accuracy of the record provided by the services company.

The Final Words

We discussed a brief detail of medical billing services for small practices, their structure, and how they work. We also had a discussion on how good or bad they are based on their advantages and disadvantages. 

There is a thing to keep in mind, that you should never do the dealing without consultation of a legal advisor because there are many companies and agencies that are involved in fraudulent activities.

Any mistake from your side can give them a chance to blackmail them. Such are the legal implications of the matter. Also, just go for the one agency that is experienced and has a proper customer support staff because customers, when unsatisfied, can make your business go down within a matter of days.


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