In-House Vs. Outsourced Medical Coding and Billing: What Are the Differences?

For medical practices, especially those that are small or medium scale, an effective revenue cycle management (RCM) is vital to ensure healthy cash flow and the overall success of the organization. Due to the complexities of billing and revenue collection in healthcare, business owners and health practitioners should definitely invest in their RCM teams to prevent costly errors and increase claims efficiency.

Two of the main processes involved in RCM are medical coding and billing. The roles of medical coders and billers often get interchanged, but their responsibilities are different. A coder is tasked to review medical documentation and assign them diagnosis and procedure codes to be used for reimbursement. On the other hand, a biller is in charge of arranging payments and submitting claims to insurance companies or other payers as well as following up on rejected claims and billing patients directly.

Depending on preference, budget, and business needs, one can choose to have these RCM functions done in-house or outsourced from a provider. Read on to find out what is better for your practice.

In-house

Building an in-house team of medical coders and billers is advantageous in terms of having direct and hands-on control over your RCM processes, which also gives you the chance to test out new methods that you perceive to be beneficial to your RCM and your organization in general anytime. Moreover, having an in-house team allows you to address billing-related problems and issues faced by your staff immediately since you are all technically in the same place.

Establishing an in-house RCM team with expert medical coders and billers, trained staff, and a solid billing infrastructure is regarded to be a great investment for your organization in the long run. When you have this, all that is left for you to do is refine your operations to the best of its ability and you will have an effective RCM.

Of course, just like other things, there are also downsides to in-house RCM. For one, building a team can entail high costs, which can be a burden particularly for small organizations. Additional expenses for salary and benefits will occur for every new personnel in your team and you also have to spend for the necessary billing software and training for your staff. Given this, it will be challenging financial-wise to recruit more people, which means you are likely to have a limited number of personnel. In case of emergency, this can put you at risk of stalled operations.

Lastly, both medical coding and billing are time-consuming and tedious processes that can take the focus of your staff away from actual patient care, which can be detrimental to your operations and business. This is why outsourcing RCM has become more popular at present.

Outsourced

At first look, the most obvious benefit of outsourcing medical coding and billing is cost-cutting. According to a 2020 Black Book report, approximately 90% of hospitals have already outsourced or are planning to outsource their RCM functions to reduce overhead costs. By outsourcing, you’ll be able to save on recruitment and administrative expenses, which you can then allot to more revenue-generating activities.

You also save time in hiring, training, and managing coders and billers and give more attention to enhancing patient care and improving your practice when you opt to outsource. Moreover, the right partner will give you access to RCM professionals who have the industry experience and required skills to ensure that all your billing-related processes are handled properly to minimize errors and to ensure all payments are made on time.

While outsourcing can feel like you have lesser control over your processes, you can always request for comprehensive performance reports for more transparency in operations. Other drawbacks of outsourcing RCM include variable cost and hidden fees, which can be prevented by studying your contract thoroughly and talking with your service provider before you ink that partnership.

Outsourcing has always proven to be a beneficial strategy to improve business operations, especially in the healthcare industry. The key is to just find the right partner that can provide the following gains: