Medical Billing Services

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 2,000 medical billing services firms in the US perform the billing and collection function on an outsourced basis for physician practices, hospitals, ambulatory surgery centers, and other healthcare providers. They submit claims for reimbursement for procedures performed to Medicare and Medicaid and private insurance companies. They typically earn revenue based on a percentage of the net collections they generate for the client.

Maintaining Privacy of Patient Data

Medical billing companies have direct civil and criminal liability for disclosure of personal health information (PHI) under the Health Insurance Portability and Accountability Act (HIPAA).

Increased Billing Complexity

Medicare billing codes (currently ICD-10) change periodically and all healthcare providers are required to comply in order to receive reimbursement for their services.

Industry size & Structure

The average medical billing service employs 40-50 workers and generates $1 million in annual revenue.

    • The typical medical billing services company serves over 20 physician practice groups and more than 50 physicians, according to the Healthcare Billing and Management Association (HBMA).
    • Medical billing services typically charge a fee of 3-10% of net collections.
    • Medical billing services submit 40-45% of all claims submitted to government and private insurance payors.
    • Larger medical billing services include ADP AdvanceMD, Kareo, Precision Practice Management, Medical Billing Star, and Premier Medical Billing.
                                Industry Forecast
                                Medical Billing Services Industry Growth
                                Source: Vertical IQ and Inforum

                                Recent Developments

                                Nov 1, 2022 - Medical Billing Function Needs Reassessment
                                • The health care industry must prioritize the patient financial experience and rethink medical billing and revenue cycle as a front-end, patient advocacy function rather than a reactive, back-end process, according to healthcare industry consulting firm AKASA. Slim profit margins, workforce shortages, rising denials, and high payment collection costs are having a major, negative impact on income. “Hospitals and health systems in the US have been hyper-focused on improving the patient experience in recent years — and for good reason,” said Amy Raymond, vice president of revenue cycle operation of AKASA. "... improving the patient financial experience in health care is one area that continues to lag behind other industries. If the reactive nature of medical billing continues to be the status quo, patients can miss out on opportunities to prevent medical debt which creates unnecessary hardship."
                                • Medical coding and billing is the latest use case for artificial intelligence (AI), according to industry experts. Medical coding is a complex process in which clinicians and revenue cycle staff translate clinical encounters into billable codes for reimbursement and performance tracking efforts. Organizations are trying to use AI to implement medical coding best practices with fewer coders and revenue cycle staff. While medical billing and coding are ripe for AI innovation, implementation can come with some growing pains for healthcare organizations. Quality data for input into AI systems is essential. Garbage in, garbage out. That has been a major lesson for healthcare with the advent of analytics. The adage is especially true for predictive analytics models that rely on the data fed the system to make predictions. Having a strategic partner parse through historical data and properly train models is key, according to industry veterans.
                                • Medical billing costs in the US significantly exceed those in similar countries, according to a study published in Health Affairs. “We observed that high US costs are caused primarily by expensive and extensive coding activities, not higher wages paid to US personnel,” the researchers wrote in the study. Billing and insurance-related costs ranged from a low of $6 in Canada to a high of $215 in the US for an inpatient surgical bill. That represented about 3.1% of the total professional revenue for the procedure in the US. Providers also spent about 100 minutes processing the claim.
                                • The No Surprises Act, which went into effect in December 2021, may have prevented more than two million surprise billing claims in its first two months, according to a survey from AHIP and the Blue Cross Blue Shield Association (BCBSA). AHIP and BCBSA surveyed 31 commercial health plans and group health plans, asking them to share how many claims they had received that would have resulted in a surprise bill without the No Surprises Act in place. Such claims include emergency services by out-of-network providers as well as non-emergency services and products offered by an out-of-network provider at an in-network facility. The survey result exceeds the government’s projections that the No Surprises Act would result in 17,000 independent dispute resolutions each year.
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