How to Reduce Medical Billing Costs While Improving Collection Rates

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Although a complicated and tedious task for physicians and doctors, medical billing and coding is absolutely important for medical practices. Patient care is top priority for them, but a medical practice is still a business that needs to make money.

Knowing Whether Medical Centers Are Actually Making Money

A focused, reliable and knowledgeable team that oversees a medical practice’s medical billing will ensure that they make money.

You know your billing department is doing a great job if they are able to follow the tasks mentioned below to a tee.

  • Reporting diagnosis and treatments undertaken, and applying rates appropriately, also known as Medical Coding.
  • Processing insurance claims successfully by following up with insurance companies. This is called Medical Billing.
  • Following up with patients to make sure they clear their unpaid dues as soon as possible.

However, this is an ideal scenario where everything falls into place and collections are done on time.

In reality, this is not the case with almost all the medical practices. Often a lot more time is put in and energy is spent than really required. The medical staff are not able to focus on their core responsibility, which is patient care.

So, what are the options for a medical practice to improve their collection rates.

They can either continue with in-house medical billing or explore the option of outsourcing their revenue cycle management.

Let’s take a look at the pros and cons of both the options.

In-house Medical Billing


  • In-house medical billing is often a cheaper option.
  • You will have more control over the process.


  • Buy and maintain a medical practice management software to track patient’s balances and send bills.
  • Employ a certified medical coder to oversee the operation.
  • The in-house staff will be additionally responsible for replying to rejections or claims that are denied.
  • Staying up-to-date with the changing regulatory framework and new policies. For instance, the recent ICD-10 coding that changed in October 2015.
  • It is complex and time-consuming.
  • If medical billing process is not executed efficiently, a substantial amount of money can be lost.

Outsourcing Medical Billing Process

Essentially, medical billing process is an interaction between medical practices and insurance companies (payers). This entire process is also referred to as billing cycle or Revenue Cycle Management.


  • Takes over the entire medical billing process to free up medical staff for more important tasks.
  • Increases the collection rate.
  • Reduces rejections and denials.
  • Ability to generate on-demand reports to view day-to-day finances through their software.


Medical billing service providers charge a subscription fee or a percentage of the collections. Hence, their services may end up being more expensive.

However, in the long run outsourcing the revenue cycle management process results in more money for the doctors as they can focus on their day-to-day activities and tasks in a better way. The medical staff at health care centres can also concentrate on other more important things than completing the taxing task of billing and coding.

If you feel that outsourcing your medical billing and coding process is the best option for you, then your next task is to look for a good medical billing service company. The problem here is that there are literally thousands of medical billing services.

How do you choose a medical billing service that suits your requirements? Let’s take a look.

Choosing a Medical Billing Service

There are a couple of things that you need to keep in mind while choosing a medical billing service. Of course, cost is the most important, but there are additional things that you’ll need to consider too.


The costs will vary depending on specific requirements like size and focus of the medical practice.

Usually, the medical billing service charges a certain percentage of the medical practice’s monthly revenue. It is often between 4% and 9%. To get a clearer idea of what the medical billing service will cost you, you can ask the following questions when contacting them.

  • What services are included in the monthly cost?
  • What about clearinghouse fees? Are they included or will it cost extra?
  • Does the cost include co-pays that the staff collects while rendering services?

#2-Services Offered

The most common services that the medical billing company offers is scrutinizing the claims for any errors before processing them and then following up with insurance companies to ensure that they are accepted.

Some companies will also provide additional services like analysis of accounts receivable and recommendations on how to enhance the financial performance among others.

You also need to consider the services that your medical practice and patients will benefit from the most. Ask the following questions.

  • Are medical coding services included or will the medical practice need to make their own arrangements?
  • Are the medical coding services up to date? For example, do they have ICD-10 coding system in place?
  • Does the medical billing company have experience in dealing with specialty medical practices?
  • Any other additional services?

#3-Open Lines of Communication

Since the medical billing service will be dealing with the medical practice’s finances, they need to be very communicative. Most companies provide software that lets the medical practice keep a track of revenue cycles, claims as well as rejections.

If something goes wrong, the medical billing service needs to be responsive as well as helpful. Open lines of communication between both the parties is essential. Before signing on the dotted line, consider asking the following questions.

  • Can the revenue cycle be accessed at any time by the medical practice?
  • If the medical billing service makes a mistake, how will the service rectify it?
  • Will ‘explanation of benefits’ or ‘electronic remittance advice’ documents received from the insurance companies be provided to the medical center?

#4-Patient Engagement

A medical billing service is also expected to keep the patients of the medical center informed. Many medical billing services send statements directly to the patients. If required, they also transfer unpaid accounts to collection agencies.

Some medical billing services field phone calls, address patient questions and offer a patient portal so that patients can pay off their accounts.

Medical billing services also need to continuously stay in touch with patients and keep them updated about how much they owe the medical practices. Find out the following about the medical billing service first.

  • What is the waiting time before the medical billing service transfers their unpaid balance to a collection agency?
  • Is the patient portal an additional cost or included in the monthly percentage?

#5-Remote Hosting

Most medical billing services will host the medical center’s data and the software on their own servers or offer cloud hosting. If this is offered, then the medical center will not be required to invest in their own servers, thus, saving on a major cost.

A remotely hosted medical billing system is a great investment as updates and system maintenance is taken care of at their end, in turn, freeing up the medical center staff from one more task.


As is quite evident, outsourcing all the medical billing and coding requirements to a medical billing service makes absolute sense in the long run.

You have access to highly-trained and dedicated billing experts, streamlined medical billing systems, reduced billing errors and turnaround times, and reduced cost. While considering them, choose one that meets your medical center’s and patients needs.

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