In-House vs Outsourcing SNF Billing – The Pros and Cons of Each Option

Quality Healthcare Resources
April 12, 2022
August 23, 2022
Polaris Group Profile
Polaris Group
August 23, 2022
Summary

Learn more about Revenue Cycle Management options for your SNF and what you should consider as you make decisions.

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Billing is a core function of any skilled nursing facility. The two most popular operational choices are handling operations in-house, with an internal team, or outsourcing, partnering with a company specialized in Revenue Cycle Management. See how these two options compare:

 

Pros and Cons of In-House Billing

Since the introduction of OBRA in the late 1990s with mounting Medicaid Case Mix billing complexities, billing has become more complex for SNFs. To deal with this shifting payer landscape, many operators chose to move their billing in-house so they could consolidate operations and bill from a centralized location. While some communities have elected to outsource billing because of a lack of internal expertise, handling RCM internally remains the preferred choice.

 

Pros: You have more control over how your finances operate

Some SNFs prefer to handle billing and collections in-house because of visibility and control. You understand what cash you have on hand, can communicate quickly with your financial team, and can dictate changes in RCM practices as you see fit.

 

Con: You sacrifice expertise for convenience

Finding qualified help can be challenging for communities under the best of times. Finding people who really know what they’re doing with billing during today’s unprecedented labor shortage is even more difficult. Many communities, especially smaller ones, and those in more rural areas, face limited labor pools to draw from to fill the roles they need to conduct billing In-House. This can lead to vacancies and compromises in hiring out of necessity, sacrificing potential staff expertise for the sake of convenience.

 

Pro: In-house billing operations typically cost less

Handling billing in-house is generally cheaper than outsourcing. Your back-office staff may be responsible for work beyond RCM, you don’t have as many specialized people focusing on aging or payer tracking, and you probably don’t have the same quality assurance safeguards built in.  As more RCM tech solutions enter the market, it’s also becoming easier to implement out-of-the-box and automated processes that help your internal team work more efficiently and leave less money on the table.

Con: In-House billing departments have lower collection rates, so you're losing money if you don't outsource

While partnering with an RCM vendor costs more, your gross collections and net collections will be higher. They have the processes, expert staff, and time to submit clean claims, follow-up with denials, and work your aging. It’s hard to internally replicate this level of expertise and singular dedication when your staff have patients to care for and other financial and back-office fires to put out.

 

Pros and Cons of Outsourcing Billing

With the introduction of complex Medicare billing regulations (PPS, PDPM), more and more communities have chosen to forgo billing In-House and instead turn to outsourcing. As a result, they see higher collections, and improved bottom line, and can devote more time to what matters most: patient care. Outsourcing is also a strategic and operationally efficient way for communities to address staffing shortages and employee turnover. Here are some other benefits and considerations to outsourcing:

Pro: Outsourcing your billing increases your cash flow

RCM firms like Quality Healthcare Resources also go beyond traditional RCM to implement additional practices to billing and collections, like improved tracking and aging management, which further enhance community cashflows and yield a significant ROI.

 

Con: You have less choice in RCM Practices (but that also depends on your partner)

You’re hiring a vendor because they’re experts with best-in-class processes, SOPs, and systems for tracking financial performance. However, that also means you can’t be as prescriptive in how you’d like billing and reporting to run. That said, different companies have different business models. Quality Healthcare Resources focuses on solutions that meet a client’s financial, operational, and personnel needs. We work directly with a community’s BOM or other onsite individual to understand their operations, integrate, and enhance processes from there.

 

Pro: Outsourcing allows your staff to focus more time on patient care and internal operating efficiencies

Outsourcing takes billing off your community’s plate of things to worry about, freeing you up to focus on what comes first: patientcare. You’re hiring a vendor to not only improve your financial performance, but also to make your life easier! A good partner is communicative, reliable, and convenient. They’re an extension of your team. With a good partner, your current staff can be reassigned to more pressing, onsite work and you can rest easy knowing someone’s looking after your SNF’s wallet.

 

How is your billing affecting community’s financial performance?

Whether you handle billing in-house, are considering outsourcing, or already have an outsourced provider, it’s always a good idea to take a step back and review your financial performance. Don’t leave money on the table if changes can be made to billing that will improve your community’s cash flow. Get a complementary A/R Assessment with QHCR to identify RCM issues and go over potential solutions. You can sign up for an A/R Assessment here.

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