Complications in Medical Revenue Process Open the Door For Business Process Outsourcing

by Vincent Vallejo on June 14, 2013

Claim Processing Paperwork
From the outside, the average billing cycle for a medical appointment looks pretty simple: Go to the doctor, pay for the visit (with your own money or insurance), repeat as necessary.

For healthcare providers, though, that couldn’t be further from the truth. The reality is more like this:

  • Identify the patient
  • Pre-register the patient
  • Patient arrives, is treated
  • Patient pays, or, in most cases, insurance claim is filed
  • Claim is processed
  • Insurance company may follow up to dispute claim, or deny coverage
  • Office follows up with patient to receive disputed payment
  • Payment may go into debt collection
  • Account closed.

From a two-step process to a nine-step process, in the blink of an eye. The thing is, providers only really care about one thing: getting paid. And that’s where business process outsourcing can come in. Providers receive payments and explanations of benefits in a variety of forms, forms that vary from payer to payer. Aetna may have one form, while Medicaid and Medicare may have others. The manual matching of these forms, and syncing them to a specific provider’s system can take weeks, delaying payment along the way. According to industry data, 2.5 billion commercial payer healthcare remittances are handled manually every year.

It’s that number — 2.5 billion — that opens the door for business process outsourcing. BPO companies can match the claims, payments, and explanations of benefits instantly, whether they’re paper or electronic. After that, they convert the EOBs to a standardized form, eliminating any missing features. The electronic files are then rerouted to the provider, providing a real-time boost in revenue, and eliminating costly labor expenses associated with payment processing. According to the Medical Group Management Association, the cost of billing operations is 18 to 20 percent of a provider’s overhead, and each claim clips $5 to $7 from them.

Then take into account the interest that could be earned each day with speedier billing:

Average check size                        Value, per day, of lost interest revenue

$36                                                     $0.0059

$360                                                   $0.059

$3,600                                                $0.59

$36,000                                              $5.90

$360,000                                            $59.00

The federal government is incentivizing providers to switch to electronic records and billing; still many companies don’t think it’s worth it. But consider this: Providers can take weeks to process claims and remittances. A BPO company takes 24 hours. The difference is tens of thousands, hundreds of thousands, or millions of dollars each year in lost revenue. It’s not worth it to stay stuck in the paper age.

healthcare payment automation

{ 2 comments… read them below or add one }

Dan Enthoven June 19, 2013 at 7:42 pm

The 9 step process can get even bigger when claims have errors and are sent back and forth multiple times. What you’re left with is a waste of time and money and a mess of paperwork to sort through.


Ranjith January 24, 2014 at 8:29 am

I would like to know the different processes and sub processes involved in healthcare BPO.
What type applications used in services and type of applications whether they are web/mobile.

Thanks in advance.


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