5 Legit Reasons Medical Practices Outsource Coding and Billing

by  Find-A-Code™
Sep 4th, 2023

Being certified as a medical coder or biller opens the door to plenty of job opportunities across the country. Yet taking that first job doesn't necessarily mean working for a hospital or private practice. It does not even have to mean working for an employer at all. You could set up your own medical coding and billing company that acts as an outsourcing partner for hospitals and private practices.

Regardless of whether you work for another firm or start your own, there are legitimate reasons practices outsource their coding and billing to third-party providers. There are also legitimate reasons for keeping coding and billing in-house. They are a topic for a different post, though. This post will focus on the following five reasons for outsourcing:

1. Medical Billing Never Stops Evolving

The medical billing paradigm, which also includes the coding necessary to turn clinician notes into usable bills, never stops evolving. Coders and billers work with numerous coding sets including CPT and ICD-10. The sets are updated constantly. New codes are added, obsolete codes are deleted, and confusing codes might be modified.

To expect in-house staff to keep up with the evolution of medical billing is a big ask. In environments in which coders and billers can take some normally scheduled work hours and devote them to training and education, it is no big deal. But in extremely busy billing departments, that might not be possible.

2. Errors Have a Cascading Effect

Every billing department, whether in-house or third-party contractor, wants to keep errors to a minimum. But even the best coders and billers produce errors from time to time. The problem is that billing errors tend to cascade. Practices without dedicated staff rely on their coders and billers to track down and fix errors. But then they fall behind with the routine coding and billing work. Meanwhile, third-party contractors tend to be better equipped to handle errors without allowing cascading problems to build up.

3. Insufficient Staff

One of the biggest reasons practices outsource their billing and coding is insufficient staff. They simply do not have the numbers. In the end, practice owners decide it is more cost-effective and efficient to outsource rather than hiring and maintaining a billing staff.

Remember that bringing on additional staff means paying additional salaries and benefits. The savings on benefits alone can be enough to convince practice owners to outsource. Benefits are not cheap, even for medical practices.

4. Lack of Financial Resources

Hand-in-hand with insufficient staff is a lack of financial resources. In simple terms, setting up and maintaining a billing department can be costly. You need to pay for more than just labor. You need equipment, software, and supplies. Coding and billing staff must undergo costly training to keep them up to speed. Sometimes it is just cheaper to outsource.

5. Billing and Coding Expertise

Some practices outsource because they want access to billing and coding expertise. It's tough to maintain a high level of expertise in a busy practice, especially when billing and coding specialists have other responsibilities. On the other hand, billing and coding is the only thing a contractor does. A third-party firm and its employees are experts by default.

There are exceptions to the rule in the sense that some contractors don't do as good a job as others. But by and large, outsourcing medical billing and coding translates into greater efficiency, fewer errors, less money spent on getting paid, and faster payments from insurance companies. It just makes sense for some practices to skip the in-house billing department and outsource both coding and billing to a third-party contractor.