Just as the practice of medicine is growing increasingly complex, so is the business of running a medical practice.
Contracting with a third-party billing company can relieve private practice physicians of administrative tasks while also allowing them to give more attention to their patients’ needs.
Sea Chen, MD, the AMA’s physician director of practice sustainability, said he saw the advantages to using third-party vendors in the two private practices where he worked.
“Our billing was done in house by our practice manager or a dedicated biller,” Dr. Chen said during an episode of the “AMA STEPS Forward® Podcast.”
“But, as time progressed, the billing process became more and more complex and time-consuming—not only for our staff, but also for the physicians in the practice,” Dr. Chen said. He added that, after billing workload tasks became overly burdensome, third-party billing companies offered some relief.
“For physicians who are starting their own independent practices, this is also an attractive option,” he said.
A related CME module, “Engaging with a Third-Party Billing Company,” is enduring material and designated by the AMA for a maximum of 0.25 AMA PRA Category 1 Credit™.
The module is part of the AMA Ed Hub™, an online learning platform that brings together high-quality CME, maintenance of certification, and educational content from trusted sources, all in one place—with automated credit tracking and reporting for some states and specialty boards.
Learn about AMA CME accreditation.
Contract should list expectations
An overarching concern physicians should have is losing oversight and control of their private practice’s billing processes, Dr. Chen said on the podcast. To guard against this, a comprehensive contract that protects the physician’s personal interests and the interests of their practice is needed.
“That's really important to spell out and to be explicit about it,” said Dr. Chen, a radiation oncologist.
“This is your practice,” Dr. Chen added. “You're going to care about your organization's finances more than anybody else. And so you, as a practice owner, should continue to monitor and manage third-party billing companies very carefully.”
The CME module includes a tip sheet (PDF) on how to manage your third-party billing vendor.
It offers advice on conducting due diligence and researching potential third-party billing vendors, policies that vendor contracts should include, data that must be contained in accounts receivable reports, and counsel on conducting routine audits.
The AMA recommends that, as a physician private practice, you should:
- Research and vet your vendor options before selecting a final candidate. “Do not pull a name out of a hat” or make a choice based on colleague’s recommendation, as their chosen vendor may not be the best fit for you.
- Ensure you have a comprehensive contract that protects the interests of you and your practice. Enter a business associates’ agreement for the handling of protected health information and define the full scope of your expectations in the initial contract.
- Develop a transparent service level agreement to establish expectations and obligations between the two parties.
- Be sure to have “in case of emergency” procedures, such as how to address issues or disputes that can’t be resolved through normal avenues—including contingency plans in case the billing company suddenly goes out of business.
- Outline policies and procedures that will reduce your direct efforts toward the billing operations. At the same time, however, ensure that members of your practice team are engaged in the claim submissions and reimbursements.
- Build plans for how both parties would respond to a data breach.
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Another tip is to schedule weekly or monthly meetings with the billing company to review accounts receivable reports, as well as the timeline tracing from when a visit note is closed to when a payer accepts the claim.
Accounts receivable reports should include:
- Average days from visit-note closure to claim creation.
- Average days from claim creation to claim send.
- Average days from claim send to payer acceptance.
- A breakdown of accounts receivable by days outstanding (1–30 days, 31–60, 61–90, 91–180, and 181-plus).
- Denial rates and denial trends.
Keep staff engaged in process
Clear policies that give practices insight into the steps the billing company will take to ensure claims are clean, correct and successfully submitted to the clearinghouse are essential, said Taylor Johnson, the AMA’s manager of physician practice development, on the podcast.
“In addition to all this, it's important that members of the practice team stay engaged in the claim-submission and reimbursement process to avoid aging claims, errors and inconsistencies,” Johnson said.
It takes astute clinical judgment as well as a commitment to collaboration and solving challenging problems to succeed in independent settings that are often fluid, and the AMA offers the resources and support physicians need to both start and sustain success in private practice.
Find out about the AMA Private Practice Physicians Section, which seeks to preserve the freedom, independence and integrity of private practice.
