Expert EMS Billing

Performance Archive

Why Should You Outsource EMS Billing?

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EMS billing isn’t for the faint of heart. While patient care is the core mission of any EMS organization, it’s impossible to provide adequate care without resources provided by a healthy revenue stream.

Billing Isn’t Just Paperwork

Agencies that handle their billing in-house, rather than outsourcing EMS billing to a third-party vendor, are in fact running two business. Ambulance transport and EMS billing are different enterprises with different requirements for staffing, IT infrastructure, compliance, operational costs, analytics, and more.

This leads many EMS agencies to outsource their billing. Smart decision. The fee that a billing service will charge will certainly be less than the cost of running a second internal business. Let a specialized company handle the specialized work of billing so that the EMS agency can focus on patient care and other operational priorities.

Here are five main reasons why EMS agencies have made the switch to outsourcing. 

1. Reduced Costs

An established third-party billing company has a head start on infrastructure that an in-house department may never catch up with. Staffing, workspace, IT, hardware, training, software licenses, maintenance, even office supplies and equipment – these essential elements create burdensome ongoing fixed costs. Letting the billing provider handle these costs allows the EMS organization to direct resources to other essential budget items. Meanwhile, if the billing company invests in scaling their operation, building technology, and attracting top-tier staff, those benefits will be passed along to clients.

2. Industry Expertise

Billing companies deal with hundreds of providers, payers, and facilities – far more than a single EMS organization with an in-house billing department ever will. You may transport to a few different hospitals, but a billing firm may have connections to hospitals across an entire region and access to databases of patient data that your in-house billing team will not have. Outsourcing EMS billing allows you to take advantage of these economies of scale and collect every dollar.

Billing vendors also have the benefit of a broader range of resources and staff who can engage with industry associations, attend events, and stay abreast of trends in the changing healthcare environment. A good partner will keep you informed of new developments when necessary and will make sure that changes are incorporated into technology and policy as needed.

3. Top-Tier Technology

All billing companies rely on claims processing software to manage their operations. Good billing companies develop their own claims processing software to manage their operations with efficiency, opportunities for customization, and automated processes balanced with manual oversight.

Simply put, it would be impossible for an in-house billing department to develop and scale the technological expertise needed to maximize the potential of technology for billing.

4. Customer Service for Patients

After a traumatic 911 event, the best customer service may be no customer service at all. In other words, the best thing for a patient is not to have to worry about how to pay for their emergency transport.

Often, individuals are confused about their insurance coverage for EMS services. Third-party billing companies have advanced technology solutions designed to identify patient insurance information quickly and efficiently – more so than an in-house billing department could do alone, even armed with the best software. If your billing company processes millions of claims annually, they have established manual and automated processes to uncover patients’ insurance information through clearinghouses, demographic databases, admitting hospital data access, and sheer manpower.

Patient inquiries and other sensitive customer service touchpoints will inevitably still arise, so it’s important to look for a third-party vendor with high levels of professionalism and sensitivity to your organization’s reputation.

5. Increased Collections

The results of the combination of cost reduction, industry expertise, targeted technology, and great customer service? Increased collections for your organization. A billing company has one goal: maximizing the return on every claim submitted. To keep the business viable long-term, they must do so compliantly and direct resources toward infrastructure and technological innovation. This results in increased collections for clients.

Third-party billing companies should also have the capability to perform sophisticated analysis by looking at the right metrics to measure performance. Your billing partner should help you understand the right data at the right time for the right reasons. Then, you’ll be able to monitor and assess your billing company as well as project revenues.

Deciding how to handle your agency’s EMS billing takes analysis and careful consideration, with plenty of pros and cons to weigh. We’ve provided a handful of good reasons to outsource EMS billing. What are your reasons to keep doing your own billing? 

Finding Money Ain’t Cheap

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Should your ambulance billing service collect $16 million in billings for you or $20 million? Seems like a stupid question. But what if the service knows they will make a profit of $240,000 on the $16 million but only $140,000 on the $20 million?

It’s more expensive to process claims that involve denials, appeals, and multiple phone calls. If your billing service collects an average of $250 per transport and charges 5% of collections, they make $12.50 per claim. What are they supposed to do with claims that need a $20-an-hour-employee to stay on the phone for an hour? Some billing services will ignore these claims; it’s more profitable to write them off and send them to the collections graveyard. And if you’re the EMS client, it’s your agency that loses, not the billing service.

Perhaps you are thinking your billing service has an ethical obligation to work every claim, and if you agreed to pay a set fee per claim, they clearly do. But when the fee structure is an incentive-based percent of collections, things get a bit murky. When paying a percent of collections, you’re basically telling your billing service, “We want you incentivized such that the more money we make, the more money you make – and if we make no money, neither do you.” If that’s the case, is it really a violation of the deal for the billing service to choose not to make money for you on the claims that are not profitable for them?

Everyone in government and business is looking for the best price. EMS chiefs and finance officers have to consider the lowest-price option when seeking bids for goods and services. That’s not only logical, it’s the law in many cases. But low cost and cost effective are not the same thing. Every good manager knows this. Yet when purchasing decisions face the scrutiny of an elected board of commissioners or a finance director or a purchasing office, managers need to have a strong justification for not buying the cheapest available product. Municipalities need to keep two things in mind: First, the profit-oriented private sector does not think like the politically accountable public sector; second, it’s really difficult to beat people at their own game.

For manufacturers and service providers, lowering the price has a number of ramifications, not all of which are pleasant. On the plus side, a low price:

  • Forces efficiencies
  • Makes a business clarify what’s essential
  • Fosters competition

But there are negatives too, including:

  • Forces cost cuts that affect training, support, and the quality of life you can provide to your employees
  • Quality gets compromised
  • The safety and security of your people, your PHI, and your investments may suffer

Any seller can cut price, but great brands offer something beyond low price – convenience, dependability, service, or innovation, for instance. Consider Jet Blue in the airline industry or Amazon in retailing. In the world of EMS billing, that “something beyond” is the ability to process every claim profitably while charging a competitive fee. Few ambulance billers can do that.

The math of collections is worth doing. You may be able to realize double digit collection increases with a single digit fee increase. The higher fee will cover the costs of the technology and advanced processes that can increase collections far beyond the difference you may be paying out. While initially more expensive, applying advanced technology to pursue every dollar on every claim will produce a substantial amount of incremental revenue.

Fire chiefs, revenue cycle managers, finance directors, and municipal officials need to consider their options carefully when making decisions about which billing company offers the best value for their organization. You might think you’re getting a bargain with a billing service that offers a low cost per claim, but just because something is cheaper doesn’t mean it’s a better value. When you’re paying people to find you money, don’t be surprised if they find more when you pay more.

Apples and Oranges: The Problem with Comparing Collection Percentages

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In completing over 500 responses to RFPs over the past 10 years, Digitech has encountered the requirement of a collection percentage guarantee multiple times. The municipality’s goal in including this requirement, we suspect, is to identify the agency with the higher collection percentage because that agency will collect more money. While intuitively this may seem inevitable, in reality and where medical billing is concerned, it is not.

Experience has shown us that collection rates for ambulance transports are dependent on several factors: the payer mix and demographics of the area, the speed of claims processing, the agency’s rates, treat-no-transport billing or not, and a number of other inputs that are variable across different types of agencies and different geographic locations. What applies to one emergency transport provider may not apply to the next. Even with reasonably accurate carrier mix data, using collection percentages as a means of comparing billing companies can be misleading. Comparing one service’s collection rate to another’s is often a futile attempt to make the apple taste like the orange.

Given the relationship between actual collections and collection percentages, a collection percentage guarantee is often not advantageous to the provider agency. Think about it: Would you prefer a vendor that collects 100% of a $400 charge or 50% of a $1000 charge? Increasing collections often means suggesting that you bill higher ambulance fees that will generate more revenue and, in the process, lower collection percentages.

On average, Digitech collects approximately 99% of the Medicare and Medicaid allowed amounts, between 80% and 93% of insurance, and anywhere from 1% to 8% of private pay. The overall collection percentage depends on the client’s payer mix. For instance, if all claims were Medicare claims, Digitech’s overall collection percentage would be 99%. If the payer mix is comprised completely of private pay claims, our collection percentage would be 8% or below. These are obviously extreme examples, but they illustrate the impact of carrier mix on overall collection percentage.

So if collection percentage analysis is not the best way to compare vendors, what is the alternative? We recommend looking at collections per transport (CPT) because it is generally a clearer measure of collections as it removes variance due to volume. This makes it easier to compare vendors’ performance. Ask the billing companies you’re considering for examples of where they have taken over from other companies and compare CPT. Then call those entities and ask specific questions.

Another way is to look at the technology that each prospective billing company is using and dig into its capabilities. Superior technology is the most significant determinant of success in ambulance billing. The best companies will have mature, well-conceived, customizable software that is specifically designed for ambulance billing.

Finally, references should be at the heart of any evaluation. In many cases, clients have gone from one billing company to another. Ask the clients about the circumstances under which they left their previous vendor. Who collected more? Who responded better? How did their implementations compare? Whose reporting was better? Answers to these questions paint a much more complete picture of prospective companies than collection percentages will.