Salaries are only part of what in-house billing costs. Here is a simple way to compare the full cost of an in-house team with outsourcing to a billing company.
Many practices compare an outsourced billing fee with one biller's salary and decide in-house is cheaper. That comparison leaves out most of the real cost. Here is a fairer way to compare the two options.
What in-house billing really costs
An in-house billing department has costs that are easy to miss:
- Salaries and benefits for billers, coders and a supervisor, plus payroll taxes, paid leave and bonuses.
- Cover for absences. When a biller is sick, on leave or resigns, claims and follow-up stop.
- Hiring and training, including time spent learning payer rules and yearly coding updates.
- Software and clearinghouse fees, coding resources and certifications.
- Office space and equipment for each team member.
- Lost revenue from denials that are never appealed, claims that pass timely filing limits and missed charges.
The last item is often the largest, and it does not appear on any invoice.
What outsourcing costs
Most billing companies charge a percentage of what they collect, or a flat monthly fee. A percentage model means the billing company is paid only when you are paid, which keeps its team focused on collecting every dollar. Ask whether there are setup fees, minimum monthly fees or extra charges for credentialing, patient statements or old AR.
A simple way to compare
- Add up one year of in-house costs: salaries, benefits, software, training and space.
- Estimate lost revenue: look at your denial rate and the share of AR older than 90 days.
- Get a written quote from a billing company based on your monthly collections.
- Compare the totals, then compare what each option is likely to collect.
A billing partner that lowers denials and speeds up payments can increase collections enough to cover much of its own fee.
Questions to ask before you switch
- Will we have a dedicated account manager?
- Which billing software and clearinghouses do you work in?
- How often will we get reports, and what do they show?
- Will you sign a HIPAA Business Associate Agreement?
- How do you handle the transition so cash flow does not stop?
You can estimate your own numbers with the revenue calculator on our Pricing & Guide page, or book a free consultation and we will walk through them with you.
This article is for general information only and is not legal or compliance advice. Always check the latest guidance from CMS and your payers.