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Is In-House or Outsourced Medical Billing/Revenue Cycle Management Right for You?

Marcy Marquis, CRCP-P, maxRTE Client Services Manager

Revenue cycle management (RCM) is essential for keeping medical practices and hospitals fiscally healthy. Billing is a complicated process filled with delays and many opportunities for things to go wrong (coding errors, rejections, uncollectible balances). Following up with insurance companies and patients regarding denied or unpaid claims can eat up resources as balances erode the bottom line.

Handling billing in-house or outsourcing each has its advantages and disadvantages:

In-house billing is cheaper and provides more control. However, small practice staff wears many hats that take attention away from time-consuming, complex RCM, which could lead to losing a substantial amount of money.

 Outsourcing billing and RCMalleviates staff burden and increases collection rate and speed by reducing rejections and denials. In addition, these companies usually provide on-demand reports about day-to-day finances. However, it is a more costly route, with charges based on a percentage of collections or subscription fee.

Guidelines for choosing a trusted billing service

Outsourcing has far-reaching financial and legal implications that are critical to financial success, causing some providers to think long and hard about outsourcing RCM. However, should you choose to outsource, here are a few things to keep in mind:

Practice management software

You should look for a firm using reputable, flexible software from a provider that charges a flat fee for the most economical advantage. Make sure it is available to providers as well in case you decider later to bring these activities in-house. Questions to ask:

  1. Which software does the service use, and does it operate with your electronic health record (EHR) system?
  2. Does the software provider support in-house billing as well, so if you choose to bring billing in-house, the transition would be fairly easy?
  3. Does the software provider charge a flat fee instead of a per-transaction fee?


Most companies charge a percentage of monthly revenue as payment—usually between 3-9 percent of net collections. Here are key cost questions:

  1. What specific services are included in the monthly percentage I am paying?
  2. Are any clearinghouse fees included in the percentage?
  3. Does the percentage include any co-pays my staff collects at the time services are rendered?


Services often offer more than scrutinizing claims for errors before processing them and following up with the insurance company to ensure claims are accepted. Nail down offering specifics:

  1. Does the medical billing service have certified coders on staff?
  2. If the billing service performs coding, is it current with the more robust ICD-10 coding system?
  3. How detailed are financial reports? Do they include analysis and suggestions to improve performance?
  4. Experience with billing for your specialty?


Open lines of communication can mean the difference between a breakdown in the billing department and a boost to your bottom line:

  1. Can I access information about my practice’s revenue cycle at any time?
  2. What can I expect from the medical billing service when a mistake is made?
  3. Will the billing service provide my practice with copies of any “explanation of benefits” or “electronic remittance advice” documents it receives from payers?

Patient communication

You’ll want to be sure the service is willing to stay engaged with your patients about what they owe:

  1. Does the service send patients statements directly?
  2. How long will the billing service wait to transfer unpaid balances to a collection agency?
  3. Is a patient portal included in my monthly percentage?
  4. Does the service field phone calls and address patient questions?

Remote hosting

You’ll want to understand the service’s IT arrangement:

  1. Does the service offer cloud hosting or host the software and your data on their own servers, eliminating both the need for you to have servers and responsibility for updates and system maintenance?
  2. How does the service protect your practice’s (and patients’) data? If something happens to hardware, how is data backed up?

maxRTE has been helping healthcare providers shorten the revenue cycle for more than 20 years. With maxRTE, just one click validates plan-specific benefit data such as patient coverage effective dates, co-pays and deductible information. Visit maxrte.comfor your free web demo.