Importance and Benefits of Electronic Medical Billing
Many hospitals and other healthcare organizations are in a struggle to maintain financial viability. According to Deloitte, “health systems are facing a margin cliff as the aging of the US population combined with lower reimbursement from government payers put pressure on traditional revenue sources.”
Administrative expenses account for nearly $360 billion annually for American medical practices, government health agencies, and insurers. And billing-related functions make up a large part of those expenses.
Electronic medical billing promises to reduce costs, save providers time, and improve patient satisfaction. However, many healthcare entities have been slow to adopt digital billing alternatives. These organizations may be putting themselves at risk. McKinsey & Company found that organizations that invest in digital capabilities such as electronic medical billing may achieve competitive advantages, especially during difficult economic times.
Electronic medical billing isn’t just for hospitals, health systems, and medical offices—third-party medical billing companies are also turning to digital billing on behalf of the providers they serve to speed the revenue cycle, increase patient payments and provider revenue, reduces costs, and drive higher patient satisfaction.
What is Electronic Medical Billing?
Electronic medical billing is a process whereby a healthcare provider or third-party billing company submits a bill or claim electronically to a patient or third-party payer (typically an insurance company).
Once a patient visit is completed, the provider assigns diagnosis and procedure codes to the interaction. These codes help insurance companies to assess the claim and any associated coverage. Claims are submitted to insurance companies via an electronic, ANSI 837 file, a format created to meet HIPAA (the Health Insurance Portability and Accountability Act of 1996) requirements for the electronic submission of healthcare claim information.
Medical claims adjusters review submitted claims and, if approved, are reimbursed based on established percentages for each procedure. Denied claims are returned to practitioners for further information or clarification.
Electronic medical billing also refers to the process of billing patients directly, whether it be a self-pay patient or an insured patient whose deductible or other out-of-pocket expenses have been established. Electronic medical billing, mobile billing, or digital billing can complement or replace a paper billing process to speed payments and reduce costs.
Advantages Over Paper Billing
Lowering costs and reducing revenue cycle times between patient care and payment are the most widely-touted benefits of adopting electronic medical billing. Electronic medical billing can lead to other practice benefits as well — especially when integrating electronic medical billing with electronic medical records and other digital initiatives.
Lower Costs and Faster Payments
Healthcare providers that adopt electronic medical billing could see a big boost to the bottom line. According to Harvard University economist David Cutler, the transition to electronic billing could save the US healthcare system approximately $32 billion annually.
There are several ways that providers can benefit financially from making the switch:
As patients rely more on digital interactions through tablets and smartphones, practitioners often find manual, paper-based billing less relevant and effective. Transitioning to electronic medical billing can dramatically improve the revenue cycle. This third-party medical billing company serves nearly 400 physicians in Tennessee and increased patient payments by 43% with the switch to digital billing.
Lower Administrative Costs
Migrating to digital billing reduces stationery and postage costs and eliminates storage requirements for paper bills. It also requires less of medical office staff who no longer need to print and mail manual invoices and follow-up notices.
Time Savings for Medical Professionals
Electronic billing reduces the administrative burden for doctors, freeing them up for more high-impact activities.
Operational and Administrative Efficiencies
Healthcare practices that incorporate electronic medical billing as part of larger mobile-first initiatives can streamline administrative functions and see other operational benefits:
Integration with Practice Management & Billing Systems
An electronic billing event automatically updates the patient’s electronic medical record, reducing redundant data entry and creating a single, comprehensive patient profile.
Better Storage, Security, and Back-up
Manual billing records must be stored and secured and are vulnerable to theft, accidents, and catastrophic events (e.g., fires and floods). Digital records can be securely archived and backed up locally or remotely.
More Comprehensive Reporting
Electronic billing allows practice managers to generate custom reporting and link billing information to existing accounting systems.
Reduced Coding Errors
Patient data from electronic medical records can be shared with billing systems, enabling practitioners to generate more accurate claims to insurers. This data sharing also eliminates human errors associated with re-entering charges from billing sheets and entering incorrect codes.
Improved Patient Satisfaction
No patient likes to receive a bill but with the rise in patient financial responsibility, patients expect to pay at least a portion of their medical expenses. Patients also expect this experience to be not only digital, but mobile, and providing this process digitally can enhance the experience and improve patient satisfaction:
Electronic billing allows healthcare providers to communicate more proactively, and patients can receive their bills on their smartphones, tablets, or laptops. Many electronic billing solutions also provide customers the means to pay with a single click.
72% of patients said they are confused by their explanation of benefits and 70% are confused by their medical bills. Electronic medical billing gives patients the ability to receive more detailed information about their bill or payment options, access payment plans, and pay from a unique link sent via text or email.
Improved Brand Perception
Healthcare practices that provide more digital interactions (including electronic billing) are perceived as more efficient and ‘current,’ especially by younger patients. This perception is critical to attracting and maintaining new patients.
How To Implement Electronic Medical Billing
Migrating to an electronic medical billing solution is a formidable undertaking that can impact many aspects of a medical practice. There are critical activities that healthcare providers must consider, and several of these take place concurrently. Detailed planning, resourcing, and monitoring of each step will help ensure a successful electronic medical billing implementation.
It’s essential to build a detailed project plan and timeline before beginning the transition to electronic medical billing. The plan should include the following elements:
- Establishing goals and required outcomes
- Identifying key stakeholders and project primes, including a lead super-user (in-house expert), lead physician, and the project manager
- Creating a timeline and identifying project dependencies
Documenting and analyzing current billing workflows will ensure that processes don’t get missed during the migration. Understanding current workflows is foundational to subsequent steps: developing, testing, and adjusting new workflows to support electronic medical billing.
Planning the Budget and Securing Funding
Identifying all potential project costs and creating a provisional budget will help when presenting the project plan to business stakeholders. Regular budget revisions and updates will be required throughout the project.
Internal Communications and Engaging the Workforce
Positive employee participation is crucial to the project’s success. A formal kick-off, followed by frequent updates, will keep the entire team engaged. Implementing a role-based training plan will help all stakeholders understand new procedures and their associated responsibilities.
Evaluating and Choosing a Vendor
Selecting a vendor is a complex process involving several steps:
- Gathering input from healthcare peers
- Researching potential vendors
- Soliciting proposals
- Contract negotiations
- Building and executing a project plan with the selected vendor
As you approach the market, be sure to ask for references and case studies. Vendors with long-term relationships with their customers and who are leaders in patient-centered outreach are more likely to have a pulse on patient expectations and preferences and be on the forefront of technology that can meet these expectations.
Implementing the Solution
Selected vendors will help create the solution implementation plan and identify all necessary activities, including:
- Collecting existing patient data and migrating it to the new billing system
- Validating and updating the workflows if required
- System testing
- Delivering user training
- Testing with a pilot group
- System cutover and ‘going live’
Establishing Security Protocols
It’s critical to document and enforce strict protocols to safeguard patient data:
- Applying HIPAA regulations
- Drafting security policies and associated procedures
- Creating a disaster recovery plan
- Establishing an action plan in the event of a privacy or security breach
Once the electronic billing system is live, it’s important to measure performance against established success parameters. It’s also essential to gather stakeholder feedback. Are system users experiencing any difficulties? Have business metrics improved (e.g., collections or practice revenue)? How well does the solution integrate with other existing systems?
Regular performance evaluations will help identify opportunities to optimize and enhance the billing system.
Can Electronic Medical Billing Transform Your Healthcare Practice?
Healthcare is rapidly evolving to address financial challenges, new medical breakthroughs, and changing patient expectations. According to Deloitte, “digital technology has the potential to transform medicine and the healthcare industry in a sustainable way.”
Electronic billing is a key component of this evolution. Especially when combined with digital patient records, electronic medical billing can improve a healthcare practice’s financial performance while also boosting patient satisfaction.
For healthcare providers who have yet to make the transition, careful planning and execution can help them achieve the many benefits promised by electronic medical billing.
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