Medical billing is a process by which hospitals, doctors or other healthcare practitioners bill health insurance companies for claims. A claim starts with a patient’s visit to a hospital. The clinician diagnoses the patient and tries to categorize the exchange for the insurance provider. The process ends with a reimbursement, either from the patient or health benefit payers (i.e. insurance carriers). Healthcare providers submit medical claims to the insurance carrier and manage the complete claim process. This process is complicated as different entities (or administrations) share the accountability of releasing payment for the patient’s treatment.
Compliance, Regulation, and Complexity
The healthcare industry is highly regulated. Its regulations are set forth by the United States Office of Inspector General (OIG). Compliance holds the utmost importance here. Regulations are constructed around prevention of any fraudulent or abusive practice by healthcare practitioners. All combined, these healthcare and legal regulations, layers of codes (that too ever changing), and HIPAA compliance issues are making medical billing one of the most complex billing systems in the world.
ICD-9 to ICD-10 and Beyond
Add to that, the proposed implementation of ICD-10 from October 1, 2014, which many believe, would be the most substantial and complex change to ever happen in the history of medical billing. According to the AAPC (American Academy of Professional Coders), this massive overhaul of the national coding system, going from roughly 17,000 codes to about 140,000, will be the most significant change to healthcare in decades.? That’s a whopping 10x increase in medical billing complexity.
According to AAPC, ICD-9, which has been used in the US for the last 30 years, is extremely limited in the level of specificity it can provide in clinical diagnoses within health care.
As per a recent report by Healthcare Business & Technology, USA collectively incurs loss of approximately $125 billion each year due to improper billing and coding. As per the report, as many as 80% of medical bills contain errors. Individual practices miss 3% to 5% of their net revenue due to incorrect medical billing and coding.
Outsourcing of Medical Billing
To overcome these challenges, healthcare providers consider outsourcing their medical billing and coding to specialist companies.
24/7 medical billing service providers like Vee Technologies have flexible pricing models such as transaction-based pricing models, outcome-based pricing models, and FTE based pricing models in meeting present-day business objectives with particular emphasis to billing and coding outsourcing.
FTE based pricing is the grandfather of all pricing models. The full-time equivalent, or FTE based pricing model, is still very much prevalent in business process outsourcing services. Most of the business’ value proposition was built on specialist manpower replacement, meaning pricing on the basis of full-time equivalent or FTE pricing. Also referred as input based pricing model, FTE pricing is simple to understand and easy to implement.
Transaction based pricing is a model where service providers are able to build a baseline and meaningful prediction. It not only improves visibility into consumption pattern but also inspires productivity and efficiency improvement. It is one of the most widely accepted pricing models.
Outcome based pricing model (also called Percentile Based Pricing Model) is a more value driven, sure-footed approach in the evolution towards extraordinary outcomes where the client has even more piece of the action and vendor has even higher performance demands to meet.