Medical billing outsourcing: three models and how to choose

"Outsourcing medical billing" can mean very different arrangements. Comparing a percentage-of-collections billing company with a dedicated remote biller is like comparing a managed service with a hire. This guide lays out the models so you can compare them fairly. It's part of our revenue cycle management staffing series.

Model 1: Full-service billing company

The billing company takes over most or all of the revenue cycle: charge entry, claims, payment posting, A/R, denials and often patient statements. It usually works in its own software or yours.

• Typical pricing: a percentage of collections, a per-claim fee or a flat monthly fee
• Good fit: practices that want billing off their plate entirely
• Watch for: less visibility into day-to-day work, contract terms that make leaving hard, unclear ownership of data and reports, and fees on collections the practice would have received anyway

Model 2: Dedicated remote staff (staffing model)

A staffing provider recruits and employs billers who work only on your account, in your systems, following your procedures. You direct the work; the provider handles employment, equipment, backup coverage and HR.

• Typical pricing: a monthly or hourly rate per full-time person
• Good fit: practices and billing companies that want control and visibility, and have someone to direct the work
• Watch for: you still need management time and documented procedures; quality depends on hiring and training

Model 3: Hybrid

Keep billing in-house and outsource specific queues: A/R follow-up, denials, eligibility, prior authorization or credentialing. This works well when one area is chronically behind.

• Typical pricing: per person, per task or per queue
• Good fit: practices with a capable in-house biller who is overloaded
• Watch for: clear handoffs between teams so nothing falls through the gaps

How to compare the models

Run your own numbers with the worksheet in our staffing cost guide. It uses public BLS wage and benefit data for the in-house baseline.

Questions to ask any outsourcing partner

1. Who exactly will work on our account, and where are they located?
2. Will you sign a business associate agreement, and do your subcontractors sign one too?
3. What access controls do you use (MFA, secure remote access, no local downloads)?
4. What reports will we get, and can we see the work queues directly?
5. How are errors, write-offs and refunds approved?
6. What happens to our data and reports if we end the relationship?
7. What are the contract term, notice period and fees for leaving?
8. Can you give references we can contact directly?

Be cautious of anyone who promises a specific reduction in denials or A/R days before reviewing your data. Results depend on your payers, specialty and processes.

HIPAA applies to every model

Any outsourcing partner whose people access patient information on your behalf is generally a business associate under HIPAA, and you need a BAA before access (HHS). There is no official "HIPAA certification" for vendors. Ask about specific safeguards instead, using our HIPAA guide. If the team is overseas, read our guide to offshore medical billers.

Which model fits?

• Small practice, no billing manager, wants it handled: a billing company is often simplest.
• Practice or billing company with a manager and growing volume: dedicated remote staff gives capacity with control.
• Strong in-house biller, one area behind: hybrid.

This site is operated by Alliance Global Solutions, which offers the dedicated-staff model. It signs a BAA with each client before any of its staff access protected health information. You can read about its outsourced medical billing staffing and broader staffing services. If you'd like help deciding, request a free staffing assessment; we'll tell you if a billing company is the better fit.

Approved vendor: Alliance Global Solutions, which operates this site, provides dedicated remote staff for this work and signs a business associate agreement with each client before any PHI access. See approved vendors and how we vet vendors.