Experience. Integrity. Advocacy.
Experience. Integrity. Advocacy.

Outsourced Billing Solutions for Hospital-Owned Physician Practices

Outsourced Billing Solutions for Hospital-Owned Physician Practices

By the end of 2020, nearly half of American doctors were employed by hospitals/health systems (49.3%), according to analysis by the Physicians Advocacy Institute, with another 20 percent employed by other corporations and private equity companies, a trend greatly accelerated during the COVID-19 pandemic. That means nearly seven out of 10 physicians in the United States are employed by hospitals or other corporate entities.

While a hospital’s revenue might increase with the acquisition of physician practices, through a combination of bundled services, tightly controlled referrals, and so-called provider-based billing, where a facility fee is collected separately from the provider fee, physician compensation itself often sees a small decrease, according to findings published in Health Affairs in 2021. In addition, the study revealed that physicians employed by health systems had about 49 percent lower annual Medicare billing compared to independently practicing physicians. 

In some cases, the decrease in physician income may result from differences in commercial contracts between the physician’s negotiated prices with payers and the hospital’s. In other cases, the hospital’s billing department may not be as familiar with billing “professional” services as with facility claims. The difference might also result from differing accounts receivable strategies. 

Which means one way hospitals can ensure they’re maximizing physician reimbursement is to outsource the billing of professional medical claims to medical billing companies who specialize in physician billing. Such outsourcing offers several key advantages for hospitals, as well as other corporate entities. Here’s why.

Supplement Not Supplant

First, outsourced medical billing companies can supplement…not supplant…a hospital’s existing revenue cycle management strategy. Hospitals already successfully account for resource utilization through UB-40 billing. A medical billing company can fill in the gaps of CMS-1500 billing by leveraging their own experience with professional claims. 

Small Balances, Big Bottom Lines

Also, medical billing companies know how to turn small balances into big bottom lines. Whereas hospitals are used to dealing with large balances in the thousands or tens of thousands, and may not bother to collect a $20 co-pays or a $150 coinsurance, medical billing companies specialize in the small stuff. They have proven methods to collect these relatively small balances from insurance companies and patients.

“Regarding accounts receivable management, hospital administrators may not understand the different revenue cycle of an office practice,” according to an ACPInternist article. “For example, from the hospital’s perspective, collecting accounts receivable balances is a simple allocation of resources. In the hospital world, the accounts are much larger, thus they tend to have a much higher writeoff threshold. A $500 balance is small change for the health system. In a physician’s office, $20 co-pays add up to a significant amount of the total practice revenue. It’s all a matter of scale.”

Understanding Physician Specialties and Payer Contracts

Outsourced medical billing companies also understand the nuances of physician specialties and physician-based payer contracts. They know the coding and billing requirements needed to to send a clean claim out the door. Physician medical billing companies also are attuned to payer underpayments and denials on professional claims. By working with claims from multiple providers and groups, these trends become obvious more quickly and are able to be resolved collectively.

Bridging the Gap

Finally, outsourced medical billing companies are used to bridging the gap between many parties–administrators, physicians, payers, patients–and will work to loop everyone in on the hospital side, too, including CFOs, Director of Physician Operations, controllers, and clinical staff.

“As many hospitals found out in the 1990s, the ones that are successful in owning/managing physician practices are those that recognize that the most successful model in the long run retains as many of the effective traditional physician practice dynamics as possible,” ACPInternist contends.

Learn More

CIPROMS works with independent, corporately held, and hospital-owned physician practices to optimize revenue from professional claims. With 40 years experience, we provide services that are designed to increase your revenue, improve cash flow, reduce costs, and minimize the administrative aggravations associated with ever-changing rules and regulations. 

Considering outsourcing your medical billing? Contact CIPROMS today to learn more about how our full-service medical billing can decrease your administrative burden and increase your revenue today.

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Charity Singleton Craig

Charity Singleton Craig is a freelance writer and editor who provides communications and marketing services for CIPROMS. She is responsible for creating, editing, and managing all content, design, and interaction on the company website and social media channels in order to promote CIPROMS as a thought leader in healthcare billing and management.

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