The Advantages and Disadvantages of Dermatology Medical Billing Outsourcing

Medical billing outsourcing provides an opportunity for healthcare organizations, including dermatology clinics, to reduce operating expenses. It is becoming an increasingly popular business practice because of its immediate impact on costs and other benefits.
Dermatology medical billing outsourcing advantages - Dermatologist writes on medical record.

Written by Rene Mallari 


The healthcare industry is complex and evolving due to the rapid business, economic, and technological trends surrounding it. Despite the sector’s growth over the past several years, healthcare costs are rising because of governmental regulations, high-priced pharmaceuticals, expanding physician education expenses, and increasing costs of the latest medical equipment and devices. 

Medical billing outsourcing provides an opportunity for healthcare organizations, including dermatology clinics, to reduce operating expenses. It is becoming an increasingly popular business practice because of its immediate impact on costs and other benefits.

What Is Medical Billing Outsourcing?

What Is Medical Billing Outsourcing - Dermatologist reading on a document report and writing on paperwork, searching for medical treatment and codes.

Medical billing outsourcing is the business practice of contracting a third-party service provider to manage specific billing operations. The external service provider acquires the patients’ insurance information and files claims with their health insurance providers. These vendors pursue these claims until the insurance providers, the US government, or individual patients pay the healthcare company for the services delivered.

One of the purposes of delegating these functions to an outside entity is to boost revenue and productivity and reduce daily administrative tasks. Reimbursement tracking, referral coordination, collection assistance, and invoicing are some of the services outsourced to a dependable service provider such as Unity Communications, a BPO company.  

Intricate and Time-consuming

Medical billing policies and regulations are intricate and time-consuming to tackle. Billing rules are ever-changing, leading to modifications and errors on the biller’s end. As a healthcare provider, your main goal is to take care of patients while keeping your organization up and running. 

Medical billing outsourcing enables you to tap the billing expertise and coding capabilities of BPO companies to get the most out of your insurance payments. These external providers make sure that your billing process is accurate to maximize payments from insurance firms and minimize claim denials or nonpayment. 

Is Medical Billing Outsourcing the Same for All Healthcare Industries? What Is Medical Coding?

Is Medical Billing Outsourcing the Same for All Healthcare Industries - Doctors in meeting discuss billing and patient records.

The two functions are vital for healthcare providers to obtain payments for the services rendered. Knowing the differences and the basics of these processes will allow you to run a more efficient revenue collection and cycle. 

Medical Coding 

Medical coding deals with patient medical records. Coders transform medical services, procedures, equipment, and healthcare diagnoses into universal medical alphanumeric codes. Coders obtain all this information from medical record documentation such as laboratory results, medical notes, etc. 

When a patient uses the services of a hospital or a clinic, the healthcare practitioners itemize the visit or services in the patient’s medical record. To avoid coding and billing errors, medical coders stay abreast of new coding standards and government regulations.

Working and coordinating with doctors, nurses, and other healthcare professionals to correctly specify the services and products delivered to patients are among the responsibilities of medical coders. They also evaluate operative reports used during surgery to apply procedure codes and assess patient charts and histories for accurate coding of medical care. 

Medical Billing

Medical billing uses medical codes to create insurance claims and bills using billing software. It entails processing and sending claims to health insurance firms and government agencies for reimbursements of services delivered to the patients. 

Collaborating with patients and insurance companies on claims submissions are among medical billers’ responsibilities. These experts frequently attend to customer-oriented tasks such as following up with insurance firms, healthcare professionals, and patients to ensure the settlement of claims.

The medical coding and billing processes begin with patient registration and end when the healthcare organization obtains complete payments. The transaction or payment cycle can range from a couple of days to many months. 

The duration depends on several factors, including the type and sophistication of services delivered, the ability of the healthcare provider to make a patient settle the financial responsibility, and the efficiency of the healthcare company’s claim denial management.

Why Would a Healthcare Company Consider Outsourcing Its Medical Billing?

Healthcare Company Consider Outsourcing Its Medical Billing - Compliance

Many healthcare organizations consider medical billing outsourcing part of their business strategy to maximize revenue and minimize costs. It is a generally accepted approach nowadays due to the tangible results it delivers, such as cost reductions, economies of scale, access to skilled and specialized human resources, the use of the latest technologies, and more streamlined processes. 

Like any other strategy, medical billing outsourcing has its advantages and disadvantages.

Advantages of Medical Billing Outsourcing

1. Cost Savings

This is one of the primary reasons healthcare companies resort to outsourcing. Relying on third-party vendors or BPO companies to handle their medical billing operations enables them to save on training, compensation, benefits, and other remuneration and expenses. Hospitals and clinics no longer have to purchase new furniture, software, equipment, and other office supplies to put up their own in-house billing team or department. 

When running your own internal medical billing team, several hidden costs burden you along the way. Training, insurance, hardware, and software setup, and payroll are some of the expenses that you have to shoulder to manage the team efficiently. Allowing a BPO company to take on the billing tasks will significantly lower your operational costs. 

2. Decreased Billing Mistakes

External service providers have skilled and knowledgeable medical billers who can handle complex claim processes. These third-party vendors provide their employees with extensive training and require them to finish quality and knowledge assessments. They should deliver accurate and timely claims submissions to reduce denials and errors.

Billing lapses and poor collection approaches can affect a healthcare company’s bottom line. Mistakes will result in payment delays, confusion for patients, and complaints. Partnering with a BPO company experienced in medical billing will significantly bring down costly inaccuracies such as authorization errors, duplicate billing, and incorrect patient information. 

3. Guaranteed Compliance

The ever-changing government regulations in the healthcare industry make medical billing a more challenging task than other non-core operations. You have to stay updated with the latest policies and revisions, such as changes in Medicaid and Medicare regulations. It is often hard for you to anticipate these amendments and adjust accordingly. 

External service providers have dedicated teams to keep track and follow new industry information and government guidelines. They make sure that your healthcare organization complies with the regulations by staying abreast of the changes in medical billing rules. 

Disadvantages of Medical Billing Outsourcing

1. Inadequate Control over Resources

Giving up control is one of the main issues when handing over billing tasks to an external service provider. It’s not easy to transfer most, if not all, of the functions and responsibilities to an outsider despite its well-known reputation and experience. Incompatible software or hardware and patient preference for those with the same culture or language are a few of the situations that can arise.

2. Insufficient Security Measures

Safeguarding patient information is another concern when enlisting a BPO company to manage billing operations. In particular, integrating your system with that of the external service provider can expose you to cyber intrusion and malicious-code attacks. Online hacking will pose a significant problem if you and your third-party provider do not have the latest software technologies and skilled technicians. 

3. Hidden and Variable Costs

Some service providers ask for a share of your collections—the higher your revenue, the higher your charges will be. Others include hidden fees such as startup rates and charges for submitting and generating reports and printing statements. 

There can also be high cancellation fees that the third-party service provider might require. Make sure that you go over the details of your contract and check all fees included before signing it.  

How Does a Dermatologist Benefit from Switching to Outsourcing?

Benefit from Switching to Outsourcing - Patient Care

An article on the Florida-based software company Modernizing Medicine (ModMed) website discusses how its revenue cycle management (RCM) service benefits a clinic called Danville Dermatology. 

Located in California, Danville Dermatology has offered various skin treatment services, such as general, medical, and cosmetic dermatology, for more than 35 years. Office Manager Marie Miller says that the clinic faced several in-house billing challenges as the business grew. With its limited workforce, handling the timely billing and increasing accounts receivable became difficult. 

To address this concern and improve revenue, the clinic decided to outsource its billing operations to ModMed’s RCM services known as EMA. An electronic medical record software application, EMA helps dermatologists and other healthcare practitioners record diagnoses, gather patient data, order prescriptions and tests, and make billing information. Danville integrated the solution into its own electronic health record system.

After deploying the platform, the clinic saw improvements in its financial performance. Miller notes that denials dropped from 15% to 2%. Patient collections also improved, and the accounts receivable went down considerably. ModMed’s dermatology-specific solution covers the entire billing process from patient registration to final payment. 

In addition, EMA comes with a dedicated account manager who assists the clinic in the billing processes. ModMed’s billing specialists are dermatology coders certified by the American Academy of Professional Coders, an authorized professional association specializing in medical billing and coding.  

Miller points out that outsourcing Danville’s billing tasks to an experienced third-party provider enabled it to focus on patient care. She expects the clinic to be more efficient and service-oriented soon. 

The Bottom Line

Advantages of Dermatology Medical Billing Outsourcing - the bottom line

The advantages outweigh the disadvantages of medical billing outsourcing. More physicians, healthcare professionals, practice managers, healthcare centers, dermatology clinics, and hospitals have adopted this business strategy. BPO companies, medical billing companies, and similar organizations have thrived and catered to this healthcare industry’s specific needs. 

While outsourcing is becoming a standard tool among healthcare providers, you should properly outsource your medical billing functions. Choose a reputable third-party vendor with extensive knowledge of your medical practice and the determination to make your organization more efficient and patient-focused.

Your potential partner should not only provide you with the current and relevant technologies, but they should also present you with clear and straightforward policies on its rates.

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