What is a "zero-sum game" argument against oustourced billing? “You prefer more clients to better followup."

What is a "zero-sum game" argument against oustourced billing?

A “zero-sum game” argument goes like this: “Other clients and ongoing sales efforts keep you from following up on my claims. Increased volumes from additional clients make up for your losses on unpaid claims. So, by hiring an outsourced billing service I lose both on underpayments by the payer and on billing fees. This happens because 50% of claims have no errors and cost very little to process. As a result, I pay fees for claims that do not require work and still get low or no payments for claims that require work. By adding more clients and ignoring problem claims, the billing service provider gets paid regular fees on clean claims that do not require work and collects nothing on claims that need attention. The billing service provider makes up for the lost revenue by bringing in more clients, processing only clean claims, and ignoring their problem claims. In contrast to outsourced service, in-house billing does not engage in sales to or services of other practices. Instead, I keep my team focused on getting every claim paid and I save on outsourcing fees for claims that get paid anyway.”

A typical “zero-sum game” argument is based on an assumption that billing service provider’s capacity for a followup process is limited and clients must compete for it. A win for one client must necessarily be a loss for another. By driving such followup capacity down to zero, the billing service provider wins at the expense of every one of his clients. His wins grow with the growth of his client base, while the payments to each individual client continue to shrink. On the other hand, the client with in-house billing operation has all of his billing capacity focused on followup and so the in-house billing service will necessarily bring better results than outsourced service.

“You prefer more clients to better followup."

As most “zero-sum game” arguments, this argument too is flawed because it ignores three major components of industrial-strength billing process: first, the necessary control mechanisms to get paid in full and on time, second, continued improvement of the followup process that is only possible with hands-on followup work, and third, new synergies and economies of scale because of centralized billing knowledge base shared across all clients.

1. Control mechanisms: The control mechanisms include continuous individual measurement and monitoring, and transparency.
   
   
1. Proven Results: Ask the billing service provider: what is your % of AR beyond 120 days? National average is 17.7%. Billing vendors using Vericle technology, such as Affinity Billing, all have it below 5%. Such an improvement would not be possible without doing all the required follow up proactively and aggressively.
2. Transparency: The billing service provider must give you access to the same systems they use so you see precise and complete account on every action they did on every claim. You hold the billing service provider accountable on all actions. Without such transparency, you cannot create the process for better billing quality (in-house or outsourced). On the other hand, if a billing service provides you the necessary control mechanisms then you always know which claims were paid and what was done for those that were not paid. You receive both the service and the tools to verify its quality while the billing service provider continues to increase his profitability.
3. Individual Monitoring: You supply monthly expectations in terms of charges and payments and monitor vendor's progress using the Month To Date report, which shows if you are on the right track intra-month. You also monitor distribution of A/R, which is updated in real time as claims are worked.
   
   
2. Continuous Improvement of Followup Process: The billing service provider should have automated most of the process already and the vendor's objective should be to discover new rules and automate them too. This kind of continuous improvement of billing knowledge base can only be done manually by following up on real problem claims.
   
   
3. Synergies and Economies of Scale: Because of centralized technology model, every improvement is immediately shared across all clients and so the quality of payments improves continuously for all clients. A workflow management system makes this work efficient and so the cost of followup is not only profitable already but it is a necessary investment for continued profitability improvement in the future.

Know any health care providers who complain about shrinking insurance payments and increasing audit risk? Help them learn winning Internet strategies for the modern payer-provider conflict by steering them to www.BillingDynamix.com - Billing Service and Practice Management Software for Physical Therapy and Rehab Offices, home of "Practicing Profitability - Billing Network Effect for Revenue Cycle Control in Healthcare Clinics and Chiropractic Offices: Collections, Audit Risk, SOAP Notes, Scheduling, Care Plans, and Coding" book by Yuval Lirov, PhD and inventor of patents in artificial intelligence and computer security.

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