For any medical organization to flourish as a business and fulfil its promises to its patients it is important to focus on having great financial health. But to achieve that goal an impeccable management team is key. Outsourcing medical billing can bring a lot of benefits to your organization which acts as an enhancer for the financial growth of your organization. If you were to compare outsourcing medical billing with in-house medical billing you will find out that the latter brings a lot of hindrances into the organization.
No matter how big or small your organization is, opting for third-party medical billing organizations will fetch you better results. Not only do they focus on bringing in the best ROI medical billing but they also perform their duty diligently. This way the process of handling medical billing and coding becomes much easier. In recent times, it has been seen that many medical providers tend to opt for outsourced medical billing since it helps in avoiding the unnecessary burden of administration along with the overhead that is oftentimes associated with the process of medical billing.
In recent studies, it has been seen that medical practices that tend to go for outsourced medical billing can see a steady increase of 7% to 10% in their net revenue earned. Moreover, patient satisfaction gets improved tremendously which is always a plus.
What Is ROI and Various Reasons for The Medical ROI
Health Insurance Portability and Accountability Act of 1996 also abbreviated as HIPAA gives the accessibility right to your medical records. Moreover, the regulations laid down by HIPAA have put down their own limitations over this as well, meaning not everyone can receive or review your health information.
However, there can be times when you would have to provide the right to access your own medical records. These are the various reasons for ROI medical billing.
1. Ensures the continuity of medical care
If your current doctor recommends you to a specialist then that medical professional would need information regarding your past medical history in order to provide you with the right kind of treatment. For instance, if you have acute pain in the back, they will ask you if you had any injury in the past that could have caused it. Once a medical records release form is signed by you, it will allow them to review your past medical history. Therefore, they can chart out a treatment plan that caters to your needs.
2. Health Insurance Billing
After getting all the specialized treatment from your doctor, your insurance payer would want to know about the details in order to understand how much payment it would require to cover the cost of your medical treatment. For example, if you had an operation, you might have to pay 30 per cent of the medical bill out of your own pocket.
3. Correct medical billing
The process of medical billing is a long and tedious one. It starts when a patient gets their appointment scheduled with the doctor and ends with the process of reimbursement. Medical ROI is a crucial thing that is needed when it comes to medical billing and for them to charge you for the services that you have been rendered, they need the correct information as well.
4. Provides insight for health studies
Many of the research institutions tend to look for medical data that they can use during health studies which will lead to new therapies and medications. If you willingly participate in a new drug test in a clinical trial you would have to fill out a medical ROI form so that your medical provider can share all the necessary details with the medical researchers.
5. Helps in determining life insurance premium
When you decide to apply for your life insurance, the company might request to see the medical records in order to determine the risk you have currently with your life. This will be an important factor that will help to determine the amount of premium you will need. For instance, if you are a 30-year-old person with type-1 diabetes then the insurance company is likely to review your past medical records and history in order to understand the complications you have faced. This way they can chart out a life expectancy for you.
What Is the True ROI of Outsourcing Billing?
The measurement of ROI requires the determination of the actual costs on the present medical billing process with the aid of variable and fixed costs. In order to determine the variable costs the following factors need to be kept in mind;
- Denial rate and rise in rejections
- Unplanned vacations or staff sick leave
- The statement, postage and stationery fees
- Net revenue and declining amount of cash flow
In order to determine the fixed costs, the following factors need to be kept in mind;
- Clearinghouse fees
- Billing software
- Employee benefits
- Payroll taxes and compensation insurance for the workers’
- Payroll cost and the hourly wages of the medical staff
Apart from all the pointers mentioned above, some useful indicators include First Pass Acceptance Rate (FPAR), First Pass Resolution Rate (FPRR) in order to determine the ROI for outsource medical billing.
To calculate FPAR the following must be considered;
- The number of medical claims that have been accepted by the insurance payer right after it is submitted for the first time.
- The target remains over 95%.
- The final calculation must be the (total number of claims rejected) deducted from the (total number of claims that are submitted).
It must be remembered that if you continuously make changes on the higher percentage of the medical claims or even process the outstanding Accounts Receivable as claims denials then it can lead you to suffer losses. It is crucial to look into the “net collections” and “days in AR” with each other.
To calculate FRRR the following must be considered;
- The total number of medical claims that have been paid by the insurance payer upon the process of adjudication.
- The target must be over 95%.
- The final calculation will be : (the total number of claims denied) deducted from the (total number of claims submitted).
These KPIs play a key role in determining whether or not you are achieving the proper medical ROI that has been promised by your outsourced revenue cycle management (RCM) company. Reliable and experienced RCM service providers like Synergy HCLS can help you achieve the desired results.