Outsourced Billing: Taking a Second Look
The forces pushing providers to reexamine RCM services, and how providers can integrate outsourced billing into their businesses.
- By David Kopf
- Nov 10, 2022
Outsourced billing services have been available to HME providers for more than 20 years, but various factors are pushing HME providers that might not have outsourced their billing to take a second look. How do they get started?
Outsourced billing got its start in the industry because, for some providers, it’s not a core competency but rather something they need to do. Without payer-directed billing, there is no reimbursement, and without patient-directed collections, there is no patient pay beyond up-front co-pays.
Moreover, for years, there was a sizable segment of providers that did not concentrate on collecting patient co-pays after the fact because reimbursement was sufficient. Money was willingly left on the table.
Of course, those days are long gone. Now that reimbursement has narrowed margins to a razor-thin degree, providers must manage their revenue cycles to ensure they are collecting every penny due to them. And while some HME providers have built solid billing infrastructure, current marketplace realities are giving them a reason to take a second look at outsourcing some or all of their billing.
Earlier, HME providers outsourced their billing for three main reasons, according to John Stalnaker, vice president of sales for billing service company ACU-Serve (acuservecorp.com).
“They either grew too fast and couldn’t keep up with their billing, they lost a key player on their billing team, or they just literally could not collect their money — such as their A/R was aging out, and they were writing too much off,” Stalnaker explains.
And that last point — simply not getting desired results — was becoming an increasingly important driver for outsourcing revenue cycle management.
“To get that DSO where it needs to be or to get that A/R balance where it needs to be, that makes sense to bring in a partner with that expertise,” explains Joey Graham, chief revenue officer for billing service and RCM company Prochant LLC (prochant.com). “… That drove providers to outsource.”
Covid-19 Enters the Chat
Then, in March 2020, Covid-19 hit in earnest. Pandemic lockdowns began, the HHS public declared a public health emergency, and a variety of unforeseen economic issues began hitting the United States in general and the HME industry in particular. And the biggest Covid-related factor to impact HME providers when it comes to their billing is staffing. In a hotly competitive job market, it’s tough for HME providers to keep a billing team together.
“The original drivers for outsourcing are still there, but now, with the resource shortage, no one can find qualified candidates,” Stalnaker says. “It’s hard to get and hard to keep your billing employees because they leave so easily now.”
“The cost of staff, the lack of availability of staff, plus the whole change in the mindset of the workforce have driven providers to say, ‘While I have never done it before, maybe I should consider working with an outsourcing company,’” Graham explains.
Additionally, work-at-home arrangements are not all they’re cracked up to be when it comes to billing. There’s a lot of institutional knowledge that needs to be shared with newer employees, and when it’s gone, it’s gone for a very, very long time in some cases.
“Everybody got sent home, but now people are looking to put the office back together,” Graham says. “However, a lot of people are quitting their jobs because they don’t want to go back to the office, and they want to continue working remotely. So that’s further driven that, that staffing pain.”
And even if there is available staff, work-at-home isn’t a technological, organizational, or logistical slam-dunk to implement when it comes to billing. Stalnaker notes that his company, ACU-Serve, spent considerable time undertaking a work-from-home strategy so that it could sharpen its billing services.
“Two years before the Covid-19 pandemic, we decided to go with more than 90 percent work-at-home model,” he recalls. “We had already vetted the way we were going to structure that at-home office to where we could apply our technology to manage things the way we wanted.
“Providers were not ready for that,” he said. “Don’t forget that many providers were having issues managing the billing staff that was sitting in their building. Then they sent them home and added a whole other layer of complications.”
Investing in Work-at-Home
And why did ACU-Serve go with a work-at-home strategy? Because well before the pandemic, it was tough to attract the kind of top-tier billing talent and knowledge that any outsourcer needs to work out of one location, according to Amie Barone, executive vice president of operations for ACU-Serve. So, the billing company spread out across the country to attract the right talent and now has 230 employees across 37 different states.
“That strategy allowed us to go after talent, no matter where it is located,” she says.
And work-at-home is an investment in not only talent but technology and resources, Barone adds. For instance, ACU-Serve work-at-home team members operate on secure, thin-client devices. Flexibility can’t come without security.
“We have many tools in place to monitor our team, where they all work off of HIPAA-compliant workstations,” she explains. “They can’t print, they can’t save. Everything is through our Amazon Workspace.”
If a billing company did that more than two years ago to ensure it had a solid billing team, the average HME provider might find itself late to the party trying to run an entirely in-house billing team in the post-lockdown job market.
Not an ‘Either-Or’ Option
And the expression “entirely in-house” is an important distinction. Outsourcing doesn’t have to be an either-or option. A provider doesn’t have to outsource all or none of its billing. It can take a blended approach — and in many cases, that might be the wisest approach.
That has somewhat been the strategy for Lehan Drugs Inc. (lehandrugs.com), which is headquartered in DeKalb, Ill., with several locations in the state. Founded in 1946, the multi-generational family-run company has seen several stages in its evolution as a multi-line HME provider business with pharmacy services as well. One of those stages has been the option to outsource its billing, and that was not a “head-first” dive into the deep end, says Jim Lehan, owner and CFO of HME provider and pharmacy Lehan Drugs Inc. (lehandrugs.com) in DeKalb, Ill.
The company saw significant growth after getting some respiratory contracts during Round Two of competitive bidding and seeing some success in the mother-and-baby space after the passage of the Affordable Care Act.
“Over the course of about 10 years, we were averaging 20 percent to 25 percent revenue growth a year,” he says. “Even if you start with a small number, when you keep repeating that and get to a larger size, our growth was outpacing our ability to keep up with hiring, training, staffing on the billing side of things.”
Lehan says his company had tried to outsource its billing before but had made the mistake of outsourcing as much of the revenue cycle as possible, from order confirmation to the end of the revenue cycle. The experiment did not work out.
“That showed us that we were naive in thinking, ‘Hey, we kind of just wash our hands of billing and the outsourcer does it all, so that we can focus on the other parts of the business,” he says.
So, Lehan Drugs reapproached outsourcing its billing with a staged approach.
“Instead of the whole ball of wax, we started out with outsourcing one piece of billing, improved the process, and make sure it’s going well,” Lehan explains. “Then we said, ‘Okay, what else can we add? Are there things that aren’t our wheelhouse, that aren’t our area of expertise?’ And that’s certainly the A/R portion of billing for us.”
From there, a provider can look at other processes in the revenue cycle that can be outsourced. Leehan notes that for his business, those processes seem to be the steps that are complicated and insulated from front-facing relationships. If there are repeatable processes with variable decisions attached to them (“if this, then that”) that are not diectly engaging patient or a provider relationship, then those are the types of workflows that Lehan documents and aims to transition to an outsourcing situation.
“That’s what we’ve done with three or four different processes with Prochant,” he explains. “And they’ve been flexible and worked with us.”
To that end, Lehan says that providers considering outsourcing their billing need to look at the outsourcer as an employee. In Lehan’s case, his company works with Prochant and sees the company as part of its org chart. It manages and communicates with Prochant the way it would any member of its business.
Ultimately, if providers take a staged approach, think carefully about the billing workflows they want to outsource, and consider their billing partner a part of the process, the outsourcing relationship will become like second nature, Lehan says.
“I’m sure every provider does things a little bit differently, and being able to work with a billing company that can tweak their staff to follow unique processes is an ongoing effort that requires patience and work,” he explains. “And then, when you get to the point that it’s running smoothly, you think, ‘How can we ever go back?’”