Why I Won't Outsource Medical Billing (Part 1)

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Fall 2016

Why I won't Outsource Medical Billing

• We can’t afford to spend money on extra services.

• It will make billing more complicated.

• We want control of billing and collections.

• Our community needs these jobs.


Medical billing is one of the most crucial components in the healthcare business equation. However, the healthcare industry has created a complex monster...

The opportunities for mistakes…astronomical

• 250 people may potentially be involved in a single patient's bill 1

• 55% - patient bills containing errors

• 30% - incorrect insurance verifications 2

Economic Impact of Billing Errors

• $17 billion lost to admin. costs due to errors 3

• $125 billion lost to poor billing practices 4

• $58 million in improper Medicare CAH outpatient payments
92% caused by insufficient/incorrect documentation

• $3.4 billion in improper Medicare hospital outpatient payments
95% caused by insufficient/incorrect documentation

• $1.3 billion in improper Medicare inpatient payments 5
47% caused by insufficient/incorrect documentation
50% caused by medical necessity errors

Rural Healthcare Facilities in Trouble

Making Managed Care Affordable

• 673 rural hospitals currently vulnerable to closing 6

• 60+ rural hospitals closed since 2010

• 68% of closed facilities were CAH

• 99,000 healthcare jobs at risk

Symptoms of a Struggling Facility

1. Elevated days in A/R (more than 55 days)

2. Denials increasing

3. Net collections rate declining

4. Claims not received by payers

5. Lack of internal business process controls

6. Difficulty recruiting and retaining qualified and experienced staff

Failure to Adapt Critically Impacts Bottom Line

1. Decrease in volume

2. Demographic shifts

3. Changes in payer mix

4. Reimbursement reductions

5. Deteriorating physician relationships

6. Overzealous spending

7. Poor financial management

“In most cases there were plenty of signs the hospitals were in trouble, but these signs were ignored. Most of the hospitals didn’t have “a bad year” that caused the financial difficulty. They were following a downward trend over time, and 67% of the hospitals that filed for bankruptcy eventually closed.”

Amy Landry, in the Department of Health Services Administration University of Alabama, Birmingham 7

Solutions…Typical Solutions (Negative)

1. Downsize through layoffs or attrition

2. Reduce the scope of services provided

3. Micro-manage employees’ tasks & time

4. Make administrative pay cut

Seven Positive Solutions to Increase Profitability

1. Improve the hospital’s reputation through high patient satisfaction
Without a good reputation a hospital will not achieve success financially or otherwise.
Its reputation has a fundamental influence on its bottom line.

2. Re-think billing and collections
When patients don't clearly understand their financial responsibilities
they are less likely to pay on time (or at all).

3. Focus on communication strategies
Communication is a crucial link between your clinical efficiency and
a patient’s experience.

4. Increase patient satisfaction by providing high quality
customer service

5. Focus on limiting readmission regulatory penalties

6. Reduce unnecessary testing whenever possible

7. Get a complete understanding of your revenue cycle performance

Questions? Concerns?

Contact Donald Tapella for a FREE, no obligation consultation
(816) 229-4887, ext.111, dtapella@mrsa1.net

For a complete listing of our services, visit our website at: www.mrsa1.net

1. http://www.cleveland.com/healthfit/index.ssf/2012/05/medical_billing_a_world_of_hur.html
2. http://www.physicianspractice.com/blog/poor-medical-billing-process-can-impact-patients
3. http://wolterskluwerlb.com/health/resource-center/articles/2012/10/economics-health-care-quality-and-medical-errors
4. http://www.healthcarebusinesstech.com/medical-billing/
5. https://www.cms.gov/Research-Statistics-Data-and-Systems/Monitoring-Programs/Medicare-FFS-Compliance-Programs/CERT/CERT-Reports-Items/Downloads/AppendicesMedicareFee-for-Service2014ImproperPaymentsReport.pdf?agree=yes&next=Accept
6. http://www.beckershospitalreview.com/finance/the-rural-hospital-closure-crisis-15-key-findings-and-trends.html
7. http://www.healthcarefinancenews.com/news/hospital-bankruptcies-result-trends-not-single-event