Main Subject - Business

Less than 83% of payments are paid to an average practice within the first four months since the date of service. In other words, the average medical practice delivers almost one fifth of its services for free. Since the vast majority (83%) of medical billing practices perform their billing i

According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product

n-house, we see that in-house billing fails to provide adequate payment performance.

A search in the Yellow Pages lists over 4,000 medical billing services nationally and more than 100 such services in New Jersey alone. The large number of competing billing services should guarantee high qual

; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.

Examples of combination products may in

ity of outsourced medical billing. Yet only 5.66% of “better-performing practices” outsource their billing, suggesting that outsourced billing may also fall short from solving the billing problem.

Can an outsourced medical billing service improve or expedite payments and reduce costs? This a

lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.

rticle revisits key arguments for and against billing outsourcing in light of increasing complexity and regulatory scrutiny of billing processes.

Extra Time and Reduced Costs

Traditionally, advocates of outsourced medical billing bring up extra time and cost gains as two main argument

here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe

s in their favor. The practice owner uses the extra time for family, patient care, or practice development. Cost gains are typically measured in terms of salaries and benefits of reduced billing personnel. However, the first argument (extra time) is often irrelevant to doctors satisfied with

d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.

Combination pro

their schedules and practice sizes. The second argument too often turns into a wash in light of commission-based fees typically charged by the billing services.

Upcoding Risks and Denial Followup Concerns

Opponents of outsourced billing often cite upcoding and deficient followup on

ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc

denied claims as key reasons to keeping the billing function in-house. If the billing service charges a percentage of total collections, then, according to the upcoding argument, the service has an incentive to code a CPT code with a higher return, perhaps contradicting medical notes on hand.

easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi

As the practice owner is ultimately responsible for compliance of medical claims, such a billing service exposes the owner to upcoding felony charges. On the other hand, the practice owner with in-house billing operation pays flat salaries to the billing personnel eliminating the incentive for

nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically

upcoding.

Placing upcoding within an overall compliance perspective exposes the fallacy of the upcoding argument. Upcoding is only one of a long list of possibly noncompliant billing procedures. Dealing with each potential compliance problem separately and using an incentive system to avoid

and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ

an infringement is ineffective and expensive. The penalties for noncompliance have been steadily escalating in the recent decade and today include financial, licensure, and imprisonment aspects. A practice without a compliance process faces a higher risk of failing a random post-payment audit

ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi

and paying higher penalties than a practice with a formal compliance process in place. On the other hand, once a comprehensive process is implemented fully and reliably, the practice owner eliminates major risk regardless of having billing service in-house or outsourced. Note that no insur

ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.

Following aspects would a

ance offers today coverage against post-payment payer audit.

Zero-Sum Argument

The deficient denial followup argument is a variation of a “zero-sum argument.” It is based on an assumption that billing service provider’s capacity for a followup process is limited and clients must comp

dd to the challenges in developing combination products:

Which markets to tap where the combination products can do fairly well?
Which combination prod

ete for it. A win for one client must necessarily be a loss for another. By driving such followup activity down to zero, the billing service provider wins at the expense of every one of his clients. The larger is the client base of the billing service, the more it wins, while the payments to ea

cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin

ch individual client continue to shrink. On the other hand, the practice owner with in-house billing operation has all of its billing capacity focused on followup for a single practice and so the in-house billing service will necessarily bring better results than the outsourced service.

Measur

tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen

ng billing quality exposes the fallacy of the last argument. If a medical practice performing in-house billing demonstrates lower percent of accounts receivable beyond 120 days than the national average (17.7%) then its billers do have better followup performance and the comparative analysis r

t?

As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel

educes to comparing total in-house costs to billing office fees.

However, it is important to keep in mind that 10% improvement in overall billing quality means ten times more to the bottom line than 1% reduction in billing fees. Therefore, an outsourced billing service provider charging a per

ping new procedures for reviewing their safety, efficacy and quality.

Professional from academic institutions, pharmaceutical industries, health care indust

centage of total collections has a larger incentive to improve overall payment performance than to sell service to another medical practice. While 59% of in-house billers do not review explanations of benefits and 55% of billers have never appealed a denied claim, an outsourced billing service

y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products

provider must review ALL explanations of benefits and must consider appealing EVERY denial. The recent progress made by industry leaders in terms of overall billing quality and included services confirms this observation. Aggressive upfront scrubbing, real-time compliance analysis, automated

.

As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de

denial followup are just a few of activities, provided by modern Vericle-type technologies to enable continuous improvement of billing performance in step with growing scale and number of clients.

In conclusion, abstract arguments for and against outsourced billing are pointless as both sides

elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.

Companies that provide selfless information through particip

may be shown right and wrong depending on specific and quantitative performance measures. Practice owners must establish objective performance and compliance criteria and use them systematically and within individual practice context when addressing the question of medical billing outsourcing

tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products

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