Connections for Success



Does Third-Party Billing Make Sense for My Practice?
Jason Flahive

Physician practices wrestle frequently with the decision about whether to outsource their billing processes. It can be hard to balance the pros and cons. What’s good for one practice might not work for another.


Cost efficiency: In most cases, the cost of handling billing in-house is more expensive than if it were outsourced, when all related costs are considered (personnel, software, hardware and infrastructure, etc.)

Improved billing process efficiency:  The medical billing service manages the billing process from initial claim submission, through collection, including follow up on rejected claims, collection activities on delinquent accounts, and patient invoicing for self-pay and balance billing.

Higher collections:  As a result of improved revenue cycle management, a practice can expect a 5-15% increase in the amount they are able to collect by switching to a billing service.


Variable cost:  Fees paid to a medical billing service are typically based on collections.  The industry average is approximately 7% of collections.

Relinquishing control:  The practice no longer has control of the billing process when they outsource to a medical billing service.

Fees:  In addition to collection fees, the practice may be billed for implementation charges and additional fees for reporting or other ancillary services, such as invoicing patients, preparing statements, etc.

Key Questions

How does your practice billing and collection metrics compare with industry standards? Do you believe your billing and collection procedures and systems would benefit from upgrades? Are your billing and collection operations keeping up with the practice’s growth?

Reimbursement models and payer requirements are evolving constantly. So be sure your revenue cycle processes and technology are up to the challenge. For example, is your practice able to keep up with changing compliance and payer policies?

Have you had difficulty recruiting and retaining qualified billing and collections staff? Do staff members spend too much time trying to resolve denied claims? And last, do you have any concerns about misappropriation of funds or fraudulent billing?

Depending on your answers to these questions, your practice may want to consider subcontracting billing and collection functions to an outside vendor.

Finding the Right Third-Party Billing Vendor

This function should offer several flexible, value-based contracting options in which payments are tied to the practice revenue results achieved. In addition, the services it offers should be tailored to the practice’s structure and requirements. Solutions in the vendor’s package should function seamlessly with the practice’s EHR and practice management systems.

Look for a vendor that employs a full staff with experience in all phases of revenue cycle management, as well as the related technology. Its services should comply with HIPAA and support both ICD-10 and Meaningful Use in all stages.

The vendor’s operations should include the ability to electronically process the submission of claims and remittances and the use of credit cards. Additionally, the arrangement should allow the practice access to all of its billing data, up-to-date reporting and analytics competencies in real-time.

Finally, through the outsourcing contract, the vendor should assume responsibility for resolving claims denials.

Finding a billing vendor that meets these criteria will be worth the effort when it pays off in reduced costs and improved revenue cycle performance.

If you have questions on whether or not to outsource your billing functions, contact Jason Flahive at [email protected] or call him at 312.67.7444 or contact your ORBA CPA. Visit to learn more about our Health Care Group.

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