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 Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Quarterly Insight, 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

                                Coronavirus Update

                                May 8, 2022 - Telehealth Usage Soared During Pandemic
                                • Telehealth usage increased more than 7,000% year over year in 2020, according to nonprofit Fair Health’s fifth annual healthcare indicators report released in March. Many consumers and providers who have embraced online care are lobbying legislators to expand telehealth access once the national health emergency ends, according to the report.
                                • Some healthcare industry experts say that an expected wind down of pandemic-related emergency measures could create major disruptions for a US health care system made more generous, flexible, and up-to-date technologically. Winding down those policies could begin as early as the summer. That could force an estimated 15 million Medicaid recipients to find new sources of coverage, require congressional action to preserve broad telehealth access for Medicare enrollees, and scramble special COVID-19 rules and payment policies for hospitals, doctors, and insurers. There are also questions about how emergency use approvals for COVID-19 treatments will be handled. The Public Health Emergency declaration that enabled the emergency measures is set to end on April 16, but many experts expect the Biden administration to extend it through mid-July.
                                • Medical billing firm revenue may decrease if wellness visits and elective medical procedures decrease due to an increasing number of new COVID-19 cases. New COVID-19 case rates increased in early May, with the seven-day rolling average increasing to roughly 72,300 on May 7, up from 58,000 on May 1 and 30,000 cases per day on April 8, according to a New York Times COVID-19 case tracker. Experts note that the American population has different vaccination rates, levels of previous exposure to the virus, and degrees of underlying health conditions, so the trajectory of new cases could vary. Analysts note that the data regarding new cases are getting less reliable as the public testing infrastructure continues to wind down and home test results are less likely to be reported to officials.
                                • The rules and regulations about COVID-19 diagnosis and billing are still evolving. Providers and medical billing services should constantly monitor guidance from the Centers for Disease Control (CDC), Centers for Medicare & Medicaid Services (CMS), the American Medical Association (AMA), and other health organizations to ensure compliance.
                                • New diagnostic and billing codes and other documentation had to be created because the virus that causes COVID-19 is a new or “novel” virus. The CDC added the new International Classes of Diseases, Tenth Revision, Clinical Modification (ICD-10-CM) emergency code added by the World Health Organization (WHO) in 2020. According to CDC guidelines, the new code – U07.1 – is only to be applied to confirmed cases of COVID-19 as determined by a positive test result or presumptive positive result.
                                • The AMA has also updated its Current Procedural Terminology (CPT) codes to allow for correct coding and billing of coronavirus testing. The CMS also issued two new codes for documentation and billing for COVID-19 tests done by CDC labs and clinical labs outside the CDC. The AMA posts regular CPT fact sheet updates on its website, including codes, descriptors, clinical examples, and procedure descriptions. Recent CPT coding additions include codes for the three approved COVID-19 vaccines – Pfizer-BioNTech, Moderna, and Janssen (Johnson & Johnson). The Pfizer-BioNTech and Moderna vaccines require two doses, so four codes cover both of each vaccine’s doses. Each vaccine also has an administrative code. The Janssen vaccine requires only one dose, so it has two codes, one administrative code and one for the actual dose. Similar coding has been added for the AstraZeneca and Novavax vaccines which will be effective if they receive Emergency Use Authorization from the FDA. New codes were also added for the smaller doses of the Pfizer-BioNTech vaccine for emergency use authorization in children aged 5 to 11. In August 2021, the CDC published three studies that suggest that vaccine efficacy tended to wane over the summer of 2021 as the highly contagious Delta variant of the coronavirus spread more widely. CPT codes have been added as vaccines have received approval for booster doses. To make it easier for providers to track the evolving SARS-CoV-2-related coding environment, the AMA offers an Excel file for download, and it is updated as new codes are added.
                                • The Centers for Medicare & Medicaid Services (CMS) has updated its billing rules for claims eligible for a 20% add-on payment for COVID-19 hospitalizations. To qualify for the add-on, hospitalizations will have to include a positive COVID-19 lab test performed within 14 days of hospital admission. Lab results must be from viral testing (molecular or antigen) and can be performed by an entity other than the hospital. Testing results can be manually entered into the patient’s medical record. The new Medicare billing requirement applies to hospitalizations occurring on or after September 1, 2020.
                                • Providing healthcare services has become more costly as providers must wear more personal protective equipment (PPE) and sanitize more often. Some medical providers, dentists, and assisted living facilities have added the extra costs to bills. The AMA has approved a new CPT code (99072) for the additional costs. In October 2020, the AMA petitioned Medicare to begin paying for the new code without any patient cost-sharing. Instead, CMS has said code 99072 can be bundled with other office procedure codes on an interim basis.
                                • Errors in coding for COVID-19-related medical services have resulted in patients receiving bills and co-pay notices that should be covered under the US CARES Act. Because the COVID-19-related codes are so new, medical billing services may offer additional team member training to avoid errors. The CARES Act requires insurers to pay the total billed charge for COVID-19 testing unless they have pre-negotiated a price. Hospitals have billed insurance companies up to $640 for a COVID-19 test that costs $50 to run, according to Medicare claims analyzed by Hospital Pricing Specialists for Kaiser Health News. Some free-standing emergency rooms have billed as much as $1,000 for a test and may add thousands more in associated facility fees. The disparity in billing for COVID-19 testing has attracted the attention of state regulators. Coding issues have also contributed to patients receiving exorbitant bills after being hospitalized for COVID-19 treatment, according to The New York Times. Early in the pandemic, hospitals voluntarily waived cost-sharing requirements for patients hospitalized for COVID-19, shielding about 88% of fully-insured people from out-of-pocket costs associated with co-pays and deductibles, according to the Peterson-KFF Health System Tracker. However, recent Peterson-KFF analysis suggests that more than 70% of the two largest insurers in all 50 states and Washington DC are no longer waiving such costs. Another 10% of plans phased out the waivers at the end of October. Some healthcare industry watchers suggest that with the widespread availability of vaccines, insurers are ready to let hospitalized COVID-19 patients, most of whom are unvaccinated, shoulder more of the financial responsibility for their care.
                                • The COVID-19 pandemic is expected to accelerate the healthcare industry’s adoption of technologies that reduce costs, streamline operations, and reduce errors. Pay-by-text for medical billing is projected to increase as consumers demand contactless payment options and providers seek to wring out excess costs. The healthcare sector will also increase its investments in robotic process automation (RPA), which can cost-effectively improve the speed and accuracy of manual, repetitive processes such as billing and claims processing. About half of US healthcare providers expect to invest in RPA over the next three years, according to Gartner.
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