Outsourcing ambulance billing: Pros and cons
Like most issues any ambulance operation must address, there is no "one size fits all" answer as a lot of variables come into play
By Daniel J. Pedersen
For years, your ambulance service billed in house. But now your biller is ready to retire, and she’s the only one in the organization who knows anything about the billing process. In-house billing is all your organization has ever known. You’ve heard about third-party billing companies and the concept of outsourcing the billing function. These are likely questions you are attempting to answer:
- Is it right for our organization?
- Will it be more expensive, or cheaper than paying an in-house biller?
- Will it make things easier, or more difficult?
- Will there be HIPAA risks?
- Will we see a better or worse collection rate?
- Will it enhance our compliance efforts?
- How will the billing service charge us for the claims they bill?
These are difficult questions, and the answers will depend on a lot of different factors. For some ambulance services, making the decision to outsource the billing function may be relatively easy. For others, the number of ambulance transports may make outsourcing cost-prohibitive.
With nearly every major decision any ambulance operation must face, whether to outsource the billing function has both pros and cons. And, like most issues any ambulance operation must address, there is no “one size fits all” answer as a lot of variables come into play.
Pros of outsourcing ambulance billing
Here are four reasons for your EMS organization to outsource ambulance billing.
1. One less headache
By outsourcing, you might think that there’s one less thing for the CEO, chief, president or manager to worry about. The billing agency is (usually) an expert in billing, and can handle the major decisions, deal with the claim submission process and allow management to focus on operational issues.
But outsourcing does not absolve the ambulance service of liability, especially if overpayments are found in an audit. Despite being the expert, the billing company must still be monitored — periodic compliance checks and audits are a must.
2. Decreased cost
Not having a dedicated biller (or billers) can potentially save some money. In some cases, it may make financial sense to outsource the billing function. While there is a cost associated with the billing service, that cost may be less expensive than salary, benefits, insurance and other employment-related costs. And there is the cost to your organization to maintain computer systems, software upgrades and other expenses associated with maintaining an internal billing department.
3. More compliance
Arguably, in cases where the billing company is indeed an expert, your ambulance billing should be more compliant. That is, all facets of the coverage criteria will have a greater likelihood of being satisfied.
There are a lot of different payers and the payment standards and criteria are constantly changing. It’s hard for an individual biller to keep up on the changes of dozens of payers. As the experts, the billing agency is usually better equipped to stay in touch with changes, and be prepared to bill properly.
4. Increased revenue
In many cases, outsourcing the billing function — including collections and appeals activities — can lead to an increase in revenue. Often, the billing agencies have more resources and more personnel at its disposal to aid in the collection efforts.
With in-house billing, there may be only one person in the billing department. That person is not only responsible for coding and billing, but also all follow-up collection work, pursuing appeals, answering questions from irate patients and dealing with troublesome insurance companies. Sometimes, there are simply not enough hours in the day for one biller to get all tasks accomplished.
Invariably, something will slip through the cracks, and certain claims will not be acted upon — potentially causing more write-offs than you may like. Outsourcing can, but not always, help improve collection rates and reduce write-offs.
Cons of outsourcing ambulance billing
Here are four reasons for your EMS organization to keep ambulance billing in house.
1. One more headache
Not having the billing function in the same building (or at least nearby) means less opportunity for monitoring. Although the billing service should be an expert, everyone can make mistakes, and there still needs to be oversight. When the billing department is in-house, in the office next door, it is easy to check up on things, and monitor issues and problems.
It’s hard to monitor daily activities of a billing service located hundreds (or thousands) of miles away. But, this is why it is important to have a solid contract in place that obligates the billing service to provide periodic status reports.
2. Increased cost
Sure, in some cases, outsourcing the billing function might save some employee staffing costs. But, depending on the arrangement, and the scope of the services, the price of outsourcing the billing function can be more expensive. Many billing services bill on a percentage of what is collected.
3. Less compliance
Depending on the caliber of the contracted billing service, and their experience in ambulance billing, compliance with applicable laws could actually decline. It is critical to hire a billing company well experienced with health care billing, especially ambulance reimbursement.
Unfortunately, ambulance billing is very nuanced and specialized. Just because someone (or an entity) may have experience in medical billing (e.g. billing hospital or physician claims) does not mean there is expertise in ambulance billing.
If outsourcing, be sure to do your homework and hire a billing company with a proven track record in ambulance billing. Ask for references and look at their financial and compliance performance. Sometimes, as with anything, cheaper is not always better.
4. Decreased revenue
The experts in the billing company might detect problems in the way things were done in the past. Sure, your in-house biller has billed for what seems like forever, and you always thought he knew what he was doing. But, sometimes, outsourcing the billing function can open Pandora’s Box and reveal all sorts of previously undetected problems.
Prospectively, as a good billing service takes steps to improve compliance, a decrease in revenue may occur. Retrospectively, detecting past billing errors which caused overpayments will trigger overpayment refund obligations. If things were billed incorrectly, hundreds of thousands of dollars may need to be refunded to federal payers to comply with payment policy and to avoid potential False Claims Act violations.
Ambulance Billing is the lifeblood of EMS operation
The ambulance billing function has a lot riding on it — in reality, it is the lifeblood of the operation. Without proper billing, there will be no reimbursement. Without reimbursement, there will be no staff. Without staff, there will be no ambulance transports. Outsourcing the billing function is not for every organization and it’s a decision that must not be taken lightly.
- Consider the pros and cons and not just the ones outlined here.
- Talk to other ambulance services.
- Use an RFP process to help ensure that you are comparing apples to apples when you narrow your choices.
- Interview the RFP finalists and visit their operations.
- Get multiple opinions on EMS billing pros and cons from other experts.
- Talk to software companies and e-PCR vendors.
Ultimately, be informed, and do your research before you sign a contract to outsource, or decide to maintain billing in-house. It is not a decision to be taken lightly.
This article, originally published on March 9, 2017, has been updated.