Before I begin this month, let me take a paragraph to say how nice it is to receive so many excellent questions from readers. Please keep' em coming.

Several recent questions have concerned billing services: Are they a good idea, and are they worth the cost?

As with most things, it depends. To answer the question for your particular situation, you and your office manager should do a detailed analysis of how your billing is being handled now.

In reviews of this type that I've observed or participated in, it is common to find examples of missed charges, as well as failures to add modifiers and unbundle services (where that is legal and proper).

The most common errors made by in-house billing employees include the following: missing filing deadlines, writing off services that should be appealed, appealing issues that are not winnable, not responding to carrier requests for information, not working accounts receivable, and not sending out timely statements.

Engaging a good billing service will correct these problems.

Embezzlement is another serious concern, as I've discussed in the past. (If you missed that column, go to www.skinandallergynews.com

In addition, there are changes coming to the billing process that your staff needs to be aware of. Since the beginning of the year, there has been a new CMS-1500 form to fill out. Beginning in May, you'll need to have your National Practitioner Identification (NPI) number in use. Carriers are mandating in ever-increasing numbers that claims be filed electronically. The same goes for electronic fund transfer and automatic remittance—meaning no more checks or paper explanation of benefit forms. And, of course, electronic health records are adding their own wrinkles. If your office equipment is inadequate to meet these new demands, a billing service could be your best option.

So, should you outsource your billing or not? Inga Ellzey, the noted practice management consultant (and owner of several billing services), suggests you ask the following questions:

▸ How much are in-house billing and collections costing you?

▸ Is your staff writing off services unnecessarily?

▸ Are they following up on unpaid claims?

▸ Do you honestly know what percentage of your gross charges you are collecting?

▸ What is your accounts receivable after 90 days?

▸ Are you losing key employees and having problems finding good replacements?

▸ Are you adding associates, nurse practitioners, or physician assistants, and do you need the space now being occupied by your billing department?

▸ Are you facing expensive computer upgrades?

These are excellent questions, in particular the first. When calculating what billing is costing you now, be sure to factor in postage (the biggest expense); printing of statements; envelopes and return envelopes; computer time; ink and paper; and, of course, staff time (printing, stuffing, stamping, etc.).

The greatest cost to a practice from in-house billing, however, is revenue lost by underqualified employees performing this vital function in a suboptimal manner. So it is worth remembering that even if, on paper, in-house costs are the same as those of a billing service (or even a bit lower), outsourcing may still be preferable due to decreased staffing headaches and increased quality of billing.

If you are considering a billing service, Ms. Ellzey suggests looking for a company with organizational stability, sufficient staffing, knowledge and experience within your specialty, reasonable fees, acceptable contract length and penalties, efficient methods of communication with your office, and state-of-the-art technologic capabilities.

She also suggests you consider the following questions before making a final decision:

▸ Are you willing and ready to give up control of the day-to-day billing process?

▸ Can you accept that a billing service has its own ways of doing things, which may be different from yours?

▸ Is your entire staff willing to change the way billing is handled? (A stubborn holdout could be an embezzler.)

▸ Does outsourcing of billing make economic sense for your practice?

If the answer to all of these questions is an emphatic yes, outsourcing may be the way to go.

Then again, now that I have perhaps convinced you of the merits of billing services, there is another alternative you might consider—one that I've mentioned before.

Consider doing what a growing number of businesses—including every hotel, motel, and country inn on the planet (and my office)—already do: Ask each patient for a credit card, take an imprint, and bill balances to it as they accrue.

It takes time to implement such a system, but once in full swing, your billing needs could decrease by as much as 80%, as they have in my office.

The details of this system were spelled out in my columns of December 2005 and March 2006.

Is a Billing Service Right for You?