Billing Services: Build or Buy? When do you know whether to outsource or keep in house?

1. Billing Services: Build or Buy?When do you know whether to outsource or keep in house? Presented by: Phil Skiba, CPA, PMP, MBA Vice President Business Services and Jane Speyer, Senior Billing Manager, OCHIN OCHIN

2. Billing Services • Maintaining stable revenue stream is fundamental to the success of any business, especially healthcare • While not the core competency of most medical practices, billing is a core function • Billing can make or break a medical practice

3. Should you outsource? Its not for everyone. Ask yourself these five important questions first: • Is cost or increased performance your primary motivation? • How important is having the billing/coding knowledge available in house? • How stable and productive are your staff? • Is your practice ready to partner with an outside agency? • How does your practice compare to industry benchmarks?

4. Question 1 Is cost or increased performance your primary motivation? • If your primary motivator is to reduce costs, outsourcing may not be your best option • Cut-rate billing companies that cost less may not provide the level of service and performance you expect and need • High quality billing services may not cost less, but should more than make up the cost through increased collections and value added service

5. Question 2 How important is having the billing/coding knowledge available in house? • If you are able to find and keep knowledgeable staff, having them onsite is a great advantage • Allows for integration with front desk staff and providers to improve revenue cycle performance • Face to face contact with all personnel who impact revenue cycle can improve commication

6. Question 3 • How stable is your staff? • If you have a high turnover rate, keeping billing in house gets very expensive • Cost of recruitment • Training • Loss of knowledge of key processes with every departure • During vacancies, cash flow might come to a grinding halt

7. Question 4 • Is your practice ready to partner with an outside agency? • Need to be open to new ideas and processes • Need to be willing to actively communicate with billing agency for best results • Trusting an outside agency with your life’s work is a huge step • Will your staff be willing to cooperate with the agency?

8. Question 5 • How does your practice compare to industry benchmarks? • If performing at or below benchmark, stay the course • Transitioning to an outside billing service could disrupt your performance • Don’t fix what isn’t broken • If performing at average or worse, outsourcing can bring real improvements

9. What are the industry benchmarks and how do I measure them? • Days in AR: • Best performers under 35 days • Average performers between 35 and 50 days • Poor performers over 50 days • Percent of AR over 120 days • Best performers under 12% • Average between 12- 25% • Poor performers over 25%

10. Industry Benchmarks • Net Collection Rate (payments/(charges-contractual adjustments) • Best performers 99% or higher • Average: between 95% and 99% • Poor performers: less than 95% • Denial Rate* • Best Performers: 5% or less • Average: 5% – 10% • Poor Performers: over 10%

11. Can this billing office be saved? • If your metrics are below industry benchmarks, but you aren’t ready to outsource, what areas should you review? • Does your staff have Revenue Cycle knowledge or training gaps? • Are you making the most out of your Practice Management system? • Is there partnership between front desk staff, billing and providers?

12. Areas to Review • Do you have the right amount of staff to do the job? • MGMA recommends 1 FTE per 10,000 encounters for best performance for back office billing • Are your staff working on the right stuff? • Are they using their time effectively to improve revenue cycle performance? • Are your billing staff dedicated to billing, or do they have to wear multiple hats?

13. Advantages of Outsourcing • Increased Revenue • Best practices • Denials followed up to secure payment • Faster payments • Reduce Overhead • Staff salaries and benefits, recruitment, training, supplies, office space • Less Human Resource Issues • Staff Turnover, Vacations, Absenteeism all contribute to low collections • Focus on Your Core Competency • spend more time with patients providing care, less on billing • Risk Mitigation • Employee theft, regulatory compliance

14. Disadvantages of Outsourcing • Loss internal control • Social responsibility to the community • Possible staff reductions • Billing knowledge no longer in house • Sending your patients to an outside entity • Loss of inherent company knowledge • Cash flow issues during transition/ implementation

15. What services could be included? • Claim submission and reconciliation • Insurance follow-up • Payment processing and posting • Patient collections • Customer service • Medical coding • Credentialing • Financial analysis • Recommendations for improvement • Sharing of best practices

16. Selecting the Right Partner • In finding the right fit, consider 5 key areas: • Service • Experience • Technology • Pricing • Performance

17. Service • Insurance Follow-up: • How will the billing service follow-up on denied claims? • What is their track record in denial recovery? • Customer Service • Is their staff aligned with the values and culture of your practice? • Regulatory Compliance • Are they HIPPA compliant? • How do they stay on top of billing regulation changes? • Reporting and Analysis • They able to translate financial data and reports in useful way? • Collaboration and Value • Will they provide recommendations for improvement? • Will they share best practices?

18. Experience • What is the average years experience of staff who will work on your account? • What is the level of billing expertise with your clinic’s specialty? • How extensive is their knowledge of Medicare and your clinic’s state Medicaid programs? • Is their staff bilingual and culturally sensitive to your clinic’s patients? • Are there Certified Coders to assist your providers?

19. Technology • How will information flow from the clinic to the billing service? • Will the Billing Service be able to integrate with your EHR system? • How will they protect the security of your data? • What is their disaster recovery protocol? • What software will you need to purchase and maintain? • Will you have access to the PM system?

20. Pricing Three different pricing models: • Percentage of Collections • Aligns billing service and practice with end goal of maximizing collections efficiently • Fee-based • Per claim or per encounter • Predictable costs, but less incentive to collect • Hybrid • Some states do not allow percentage of collections for Medicaid

21. Performance • How long have they been in business? • How many claims do they process annually? • How do their clients compare to industry benchmarks? • Days in AR • % of AR over 90 days • Net Collection Rate • Can they provide Return On Investment (ROI) data for clients who have used their services? • Can they share client satisfaction data? • Will they share their entire client list for references?

22. Are they a good fit? • Is the billing service willing to customize its approach to match your clinic’s needs? • Will they provide on going training to your front desk staff and providers to reduce denials? • Is there full transparency and access to the work they do? • Will they treat your patients with respect and dignity?

23. Building a Partnership • Billing Service should have a single account representative who will be your primary contact person • Clinic should appoint a single person to communicate with billing service on a regular basis • Have scheduled meetings, including some that are face to face to ensure good partnership and communication

24. Good Partnership • Contract should clearly define scope of services • Billing Service responsibilities and agreed to deliverables • Clinic’s responsibilities and agreed to deliverables • CFO should attend Account Review meetings monthly • Ensure both groups are working together to improve overall revenue cycle performance

25. Questions • May we answer any questions? • Please remember to complete your survey • Thank you for your time and participation