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7 Factors to Consider When Choosing a Medical Billing Company

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While medical billing can be a headache, providers cannot absolve themselves of responsibility entirely. When choosing a medical billing company, it is important to choose wisely—and to put appropriate contractual protections in place.

For many doctors and other health care providers, billing is the most frustrating part of their practice. The billing rules under Medicare, Medicaid, and other government health care benefits are extraordinarily complex, and private payors will not hesitate to deny payment even for the smallest technical billing deficiency. Yet, billing is important for obvious reasons, and this means that the burdens of billing compliance cannot be ignored. However, they can be lessened by engaging a third-party medical billing company.

Why Is It Important to Choose a Reliable Medical Billing Company?

Many health care providers rely on medical billing companies to administer their billings to government health care benefit programs and private health insurance companies. There are lots of these companies out there, and they compete for providers’ business in various ways. Some compete on price. Others compete based on their capabilities. While these companies all ultimately offer the same basic services, as a health care provider, your choice of medical billing companies matters, and you need to choose very carefully.

Once you make your choice, this is not the end of the road. Even if you outsource your practice’s billing administration, your practice still remains directly responsible for ongoing compliance. If your practice’s medical billing company submits a “false” reimbursement request, this will not come back to the billing company—it will come back to your practice. As a result, in addition to choosing carefully, it is also essential to ensure that you have appropriate contractual protections in place to audit the billing company’s compliance efforts and pursue legal remedies when necessary.

How Do You Choose the Right Medical Billing Company for Your Practice?

So, how do you choose the right medical billing company for your practice? There are several factors you will want to consider, and it will be important for you to research all candidate companies thoroughly. This is not a decision you can afford to rush, and you need to make sure you are relying on complete and accurate information about the company’s experience, capabilities, and financial responsibility.

Here are seven examples of factors that health care providers should consider when choosing a third-party medical billing company:

1. Experience of the Company’s Leadership Team

Due to the profitability of the medical billing industry, there is no shortage of competition, and new companies sprout up on a regular basis. With this in mind, when choosing a company for your practice, it is a good idea to consider the experience of the company’s leadership team.

Even if a company is relatively new, if its executives have extensive medical billing experience, this could weigh in favor of consideration. Conversely, if an established company has recently undergone a shakeup and now has non-industry leaders at the top, then it may be worthwhile to consider other options.

2. Specific Knowledge of Pertinent Billing Rules and Regulations

What government health care benefit programs and private payors does your practice bill for services, equipment, and supplies? Whatever the answer may be, you will want to choose a medical billing company with personnel who have specific knowledge of the pertinent billing rules and regulations. While there is a significant amount of overlap between payors, it is the details that often get providers into trouble.

3. Billing Compliance Policies and Protocols

Just as your practice needs to have robust billing compliance policies and protocols, your practice’s medical billing company must have robust policies and protocols as well. When performing your due diligence you can – and should – ask for information about each candidate company’s compliance documentation and practices. Upon reviewing a company’s compliance documentation and practices, you should be left without a doubt that the company can serve your practice’s billing administration needs effectively. If you are not, then you should look for another company.

4. Cybersecurity and Privacy Policies and Protocols

When choosing a medical billing company, in some respects, you need to think about the engagement just as you would think about managing your practice’s billings in-house. For example, since your practice would need to maintain adequate cybersecurity and privacy protocols to protect patient data, you need to ensure that your practice’s medical billing company has adequate cybersecurity and privacy protocols to protect your patients’ data as well.

5. Recoupment Rate and History of Complaints

Since medical billing companies specialize in billing government and private payors, their recoupment rates should be extremely low. They should also have a limited history (if any) of complaints, and it should be clear that the issues underlying any prior complaints have been thoroughly addressed.

6. Pricing

Pricing is obviously an important factor, and there is a wide array of pricing terms and fee structures across the medical billing industry. When evaluating different companies’ offerings, it is important to ensure that you have a clear understanding of all applicable costs and fees. Some companies are more upfront with their pricing than others, and you do not want to learn about surprise fees after putting in the effort to negotiate an agreement and integrate your practice’s operations with a company’s billing technology platform.

7. Medical Billing Contract Terms

Speaking of negotiating an agreement, beyond examining the pricing structure, there are various other contract terms that you will need to carefully consider as well. From representations and warranties to insurance coverage and indemnification, there are numerous contractual issues that can either: (i) give your practice crucial protections; or, (ii) leave you practice exposed in the event that the billing company makes mistakes. 

FAQs: What Do Providers Need to Consider When Choosing (and Negotiating with) Medical Billing Companies?

Q: Can my practice outsource billing compliance to a third-party medical billing company?

No, and this is extremely important. While health care providers can outsource billing administration, they cannot outsource billing compliance. Even when a provider engages a third-party medical billing company, that provider is still ultimately responsible for ensuring that its billings comply with all pertinent laws, rules, and regulations.

Q: Is it possible to negotiate contract terms with medical billing companies?

Yes, it is possible to negotiate contract terms with medical billing companies, and providers should negotiate prior to entering into billing services agreements. This is a commercial relationship; and, even if a medical billing company’s salespeople present a form contract and suggest that it is being offered “as is,” there is still room for negotiation.

Q: What are some of the key terms that need to be negotiated in a medical billing services contract?

When negotiating a medical billing services contract, there are several key terms that must be reviewed—and potentially negotiated. Setting aside commercial terms such as pricing and response time, some of the key provisions in a medical billing services contract include:

  • Warranties and representations
  • Audit rights for the health care provider
  • Cooperation during health care audits and investigations
  • Indemnification for billing errors
  • Insurance coverage for billing errors
  • Legal compliance
  • Legal remedies and dispute resolution

Q: What are the risks of choosing an unreliable or unprofessional medical billing company?

There are several risks associated with choosing an unreliable or unprofessional medical billing company. Perhaps the most obvious risk is that the company will not be able to administer your practice’s government program and/or private insurance billings effectively.

However, this is far from the only concern. As we mentioned above, when engaging a medical billing company, it is still important to approach certain aspects of the relationship as though you will be managing your practice’s billings in-house. Your practice will remain liable for any miscues, and issues such as data security breaches and insolvency can have a direct and significant impact on your practice as well.

Q: What happens when your practice’s medical billing company makes a mistake?

If your practice’s medical billing company makes a mistake, your practice could become the target of a federal health care billing fraud audit or investigation. These inquiries are commonplace; and, as billing rates increase and providers bill for new and innovative medical services, tests, and devices, the risk of facing an audit or investigation due to a third-party medical billing company’s mistake increases as well.

Regardless of the specific issue involved—and regardless of whether your practice’s medical billing company is to blame—you will need to defend against the audit or investigation in order to avoid unwarranted penalties. In the event that penalties are imposed, you will need to look to the terms of your agreement to determine whether you have grounds to seek indemnification (or other legal remedies) from your practice’s medical billing company.

Speak with a Federal Medical Billing Compliance Lawyer at Oberheiden P.C.

If you have questions about medical billing compliance or the legal issues involved with engaging a third-party medical billing company, we encourage you to get in touch. To speak with a senior medical billing compliance lawyer at Oberheiden P.C. in confidence, please call 888-680-1745 or request an appointment online today.