Medical Billing Business — Costs You’ll Incur When Starting Part 1

Medical Billing Business — Costs You’ll Incur When Starting Part 1

One of the primary attractions of a career in the medical insurance billing (MIB) profession is the low startup costs compared to other businesses. Most MIBs plan for big expenditures, but fail to figure in small but essential costs.

In this insightful, two-part article, Nitin Chhoda examines the cost of doing business and what MIBs can expect to spend when they open their own business.

medical billingMIBs typically begin by operating their business from home to save on costs. Renting office space is a major expense that can cost thousands of dollars a month depending on the location.

To equip a medical billing business with the basics will require approximately $5,000 and there are numerous ways entrepreneurs can reduce their costs. Keep in mind that prices fluctuate among retail outlets and geographic areas.

Computer System

It can be tempting to purchase the most expensive medical billing business model available, but a good computer system that includes the hard drive and a minimum of a 19-inch monitor can be obtained for approximately $2,000. A 19-inch monitor will help prevent the eye strain of being in front of the computer for eight hours a day.

The operating system must be the latest version of Windows to be compatible with medical billing software.

A multi-function machine, often called an all-in-one, is capable of printing, scanning, copying and faxing. All of the capabilities will be required as part of the medical billing process. A basic model can be purchased for as little as $100.

Medical Billing Software/EMR

MIBs have a wealth of medical billing software from which to choose. The software represents a major outlay for a fledgling business. MIBs can expect to spend around $700 for medical insurance billing software, though there are systems that cost thousands.

Another option is EMR software that provides all the capabilities required for medical billing, communicating with clearinghouses and maintaining HIPAA compliance when dealing with patient data.

Fully functional EMR systems are available and only require a modest monthly fee. An EMR that has built in security features, is easily updated when needed, can handle the full range of ICD-10 codes, and can be used to create CPT code databases to reflect client specialties.

Clearinghouse Contracts

Medical billing businesses will be required to contract with a clearinghouse, which allows them to submit client claims for reimbursement. The average cost is $300. MIBs should be prepared for the need to purchase additional software for complete clearinghouse compatibility or to offer clients extra services, an expense that can run around $350.

Printed Material

medical billing businessManuals and reference materials for medical billing business will account for $200-$300. They encompass coding manuals, insurance directories and disease classifications, along with medical terminology and the intricacies of submitting claims.

Available in book form, many are also offered as CD-ROMS that can offer valuable savings. Part of the reference library should include books on marketing the business.

A career in the medical insurance billing field is one of the few professions that require a minimum of investment by entrepreneurs.

Computers, software, reference material and clearinghouse fees represent the major financial outlays, but there are many smaller costs of which MIBs may not be aware. In the second part of the series, Chhoda will explore the smaller, but no less important costs of launching a medical billing service.

Increased Individual Responsibility with Obamacare

Increased Individual Responsibility with Obamacare

Devised by President Obama and endorsed by insurance companies, the Affordable Health Care Act forces individuals to accept more responsibility for the status of their health.

ObamacareKnown as Obamacare, the Act has many controversial elements, but it also contains a little known initiative designed to assist people live healthier lifestyles through recommendations by the National Prevention, Health Promotion and Public Health Council (USPFST).

The Council is tasked with managing the federal government’s national efforts to promote health and wellness.

The organization will study the issue and prepare a comprehensive list of recommendations on how the overall health of Americans can be improved to reduce serious health conditions and control the cost of healthcare.

Screenings And Services To Stay Healthy

Obamacare includes specific provisions to help achieve its goals. Under the Act, individuals have no co-pay when they obtain approved preventative testing that includes mammograms, colonoscopies, immunizations and medication to stop smoking.

Other services include screening for depression, high blood pressure and diabetes, along with cholesterol, HIV, STDs and free birth control. The full list has not yet been finalized.

The goal is to induce more people to undergo preventative testing in an effort to identify and treat diseases and health conditions in early stages.

The strategy is to avoid costly treatments later on and drastically cut medical costs.

The tests deemed the most effective will be available without co-pays and are those that meet the following criteria – non-invasive, easy to perform and highly accurate. Some healthcare plans have “grandfathered’ status and are exempt from the new Obamacare requirements.

Exemptions on these plans went into effect on Jan. 1, 2011 and will continue those exemptions into the future.

Paying For Healthcare

Part of the price for a healthier life is purchasing healthcare insurance. To facilitate the process, Obamacare has expanded Medicaid coverage for the poor, established a Marketplace where individuals can purchase multiple levels of coverage, and set up subsidies to help them pay for it.

Before Obamacare, those who couldn’t afford insurance or chose not to buy it typically went to emergency rooms for treatment. Obamacare requires every citizen to take responsibility by requiring them to purchase healthcare insurance.

The Rewards Of Good Health

Obamacare allows and encourages employers to offer workers financial rewards who demonstrate measurable efforts toward improving their health.

ObamacareEmployers can offer cash incentives and reduced premiums, deductibles and co-pays.

A different standard must be established for those unable to meet the wellness goals established in insurance policies.

Obamacare attempts to address many of the health and wellness issues currently affecting patients by providing free preventative tests and screenings.

Many have pointed out that health can’t be legislated. It requires better decision making on the part of consumers, access to healthier food, and the financial means to purchase it.

While many medical conditions can be prevented through a healthier lifestyle, the effect of genetics can’t be dismissed. Many patients are wondering if they’ll be penalized for a predisposition toward specific diseases and how they’ll find the funds to eat a healthier diet.

How Will Pre-Existing Condition Coverage Change with Obamacare?

How Will Pre-Existing Condition Coverage Change with Obamacare?

The Affordable Health Care Act, known as Obamacare, has created a wealth of new mandates, many of which will be beneficial to policy holders. One of the new rules stipulates that no insurance company can refuse to provide coverage if the individual has a pre-existing medical condition.

ObamacareIn the past, insurance carriers could refuse to provide coverage, cancel policies at their discretion, and charge policyholders virtually any amount for their coverage.

Obamacare guarantees that all individuals are eligible for healthcare coverage and can’t be discriminated against, regardless of their health status.

A chronic health problem is no longer a reason for not having coverage.

Relief For Parents

It’s a definite boon for parents of children with a heath condition ranging from autism, blindness and cerebral palsy to asthma, diabetes, cancer and sleep apnea. Children can remain on parental policies until they turn 26, a distinct benefit for those with health issues.

The one exception for pre-existing conditions under Obamacare concerns individuals who have been purchasing private insurance. The good news is that individuals can give up their private insurance policies and purchase coverage through the health insurance Marketplace.

The mandate is also beneficial for adults. The Department of Health and Human Services estimates that 129 million people have something in their medical history that could be construed as a pre-existing condition.

Those participating in the Marketplace can choose from a bronze, silver, gold or platinum policy with varying degrees of financial outlays, all of which will cover pre-existing conditions.

Before Obamacare, insurance companies often imposed caps on the annual and lifetime amounts a policy holder could receive. Obamacare removes those caps. The downside is that the provision has already led to increases in premiums, co-pays and deductibles across the board.

There are no restrictions on the amounts insurance carriers can charge.

Open enrollment in the Marketplace begins Oct. 1, 2013 and coverage for these policies begins Jan. 1, 2014. Enrollment ends on March 31, 2014 and doesn’t open again until Oct. 1, 2014. Many will be eligible for a subsidy from the federal government to help pay for insurance and a tax credit on their income tax return.

Eligibility is determined according to income using a sliding scale.

Obamacare

Medicaid Instead Of The Marketplace

For individuals with an income below a specified level, Medicaid is available.

Obamacare increases the eligibility threshold, providing full coverage for the very poor.

However, many states have refused to participate in the expansion and the Supreme Court has ruled that they may do so without penalties. Participating states will offer better coverage and relaxed eligibility requirements.

Adults and children with a pre-existing condition will benefit from Obamacare. Insurance companies can no longer refuse them coverage or set annual and lifetime limitations on benefits.

At first glance, Obamacare would appear to be a panacea for those with chronic illnesses, but with carriers still free to charge whatever the market will tolerate, many are waiting to see exactly how much that benefit will cost them.

How Will Obamacare Affect those with Private Health Insurance?

How Will Obamacare Affect those with Private Health Insurance?

Many individuals without employer-provided health coverage have taken the initiative and purchased insurance coverage on their own. The Affordable Health Care Act, a.k.a. Obamacare, continues to change the health insurance landscape and could prove beneficial for those who purchase private healthcare insurance.

Obamacare on Private InsuranceOne of Obamacare’s goals was to ease the financial strain for workers forced to buy high-dollar insurance policies when they didn’t have access to employer-provided policies.

People without employer-offered insurance have traditionally paid more for their coverage on the open market.

They’re often faced with numerous restrictions, burdensome requirements and few protections against frivolous cancellations.

The Marketplace For Private Insurance

Those who buy their own insurance will benefit under Obamacare. It created Marketplaces where individuals can purchase their own insurance at rates comparable to workers with coverage through their employment.

Individuals with incomes below specified levels will be eligible to receive government subsidies to help pay for their insurance and they’ll receive tax credits on income tax returns.

A study released by Kaiser Family Foundation indicated that 48 percent of families that buy their own insurance would qualify for subsidies and tax credits. Health and Human Services Secretary, Kathleen Sebelius, estimates as many as 9 in 10 people will qualify for some level of subsidy.

Out-of-Pocket Increases

The downside for the privately insured is that the cost of Marketplace insurance policies will increase in accordance with the market.

Many workers with insurance through their employers are already feeling the sting of increased prices for premiums, co-pays and deductibles. Individuals who purchase private insurance through the Marketplace will also experience the higher prices, but it may still be less than they’re paying now.

The Marketplace opens for business on Oct. 1, 2014. Anyone can visit the website, compare plan prices and purchase their mandatory insurance.

Healthcare plans purchased in the Marketplace won’t take effect until Jan. 1, 2014.

More Marketplace Customers

Many businesses have indicated they plan to drop insurance for employees and pay fines imposed by the federal government. It’s a move that will push many workers with employer-provided health plans into the privately insured sector.

Employees insured through the workplace who are seeking lower pricing may find it in the Marketplace, but it comes with certain conditions.

Employees who give up their work insurance in favor of Marketplace coverage must complete a waiting period before it becomes active.

Obamacare on Private Insurance

Participating Insurance Companies

Many of the self-insured will be perusing plans on the Marketplace with companies with which their unfamiliar.

Some insurance carriers have opted not to offer Marketplace plans in all states or limit their participation to preserve current profit margins.

Obamacare doesn’t place limits on what insurance companies can charge, but some carriers have withdrawn from the Marketplace when state regulators ordered them to dramatically reduce their rates from their proposed levels.

Insurance companies cite Obamacare for continuing price increases. Carriers claim the following mandates are too costly to participate:

  1. Inability to cancel policies at their discretion;
  2. Required coverage for those with pre-existing conditions;
  3. A list of standard required benefits;
  4. Caps on out-of-pocket expenses;
  5. No caps on annual or lifetime benefits.

Obamacare offers those who purchase private health insurance with increased benefits, tax credits, and subsidies to help them pay for coverage. The Marketplace will offer the only option for many individuals to obtain coverage, but only time will tell if available policies are truly affordable.

How to Get the Claim: The Billing Scenario

How to Get the Claim: The Billing Scenario

Building a clean claim is a concerted effort. It begins with the office staff that gathers demographic information and comes to fruition when the funds are deposited in the practice’s account.

Much can happen to a claim on its way to becoming a payment and in this informative article, Nitin Chhoda provides unique insights into the pitfalls that face even perfectly prepared claims and elements that affect payment.

claimWhere’s the Claim?

Aside from coding errors, reimbursement claims can go awry in many ways. The insurance provider may not be known at the clearinghouse or the clearinghouse software may glitch and submit the claim to the wrong provider.

In some instances, the payer may not be using electronic medical record (EMR) software necessitating submission of a paper claim.

Verifications

Practices that utilize EMR technology receive a report in real time when a claim has been submitted. These receipts provide billers with critical information in the event of a problem. Occasionally, a claim will appear to vanish into the ether.

Clearinghouse reports tell billers when the claim was received, its status and if any problems were identified. If payment isn’t received in a reasonable time or it doesn’t appear on the biller’s daily verification, that data be used to track down the claim and rectify any problems.

Reimbursement Amounts

The whole point of submitting claim is to get paid, but the amount charged can conflict with what the payer is willing to reimburse. When differences occur, billers can easily refer to the contract the clinician has with the payer to define the reimbursable amount.

CPT codes are assigned a relative value that determines reimbursement amounts, derived from the Resource Based Relative Value Scale (RBRVS).  The value assigned is based on the work required, the cost of maintaining a practice and the malpractice/liability for which the practitioner is responsible. A formula is then employed that takes into account geographical locations to calculate the reimbursement rate.

Prioritizing

Some contracts are RBRVS based, some aren’t, and the differences in each can be immense. Depending on how the contract is written, procedures may be paid based on RBRVS standards or discounts applied for secondary procedures done at the same time.

Some may be paid at a higher rate determined by prioritization, while others are billed according to expected payment. If the contact doesn’t state which procedure is prioritized, it’s up to the biller.

The Deciding Vote

claim submission

The ultimate decision lies in the hands of the company that provides the patient’s healthcare insurance. Once the clearinghouse completes its search for errors, it forwards the claim to the payer.

When reimbursements are less than expected, billers must refer to contract terms to obtain the maximum payment allowed.

Many hazards await claims, from submission to the wrong payer to glitches in clearinghouse software. EMRs facilitate the process by submitting claims in real time and documenting receipts from the clearinghouse.

Medical billing specialists can help clinicians boost revenues by carefully monitoring claims and referring often to contract details. Practitioners must negotiate their contracts carefully to ensure their services are adequately reimbursed.

What Large (and Small) Businesses Need to Know About Obamacare

What Large (and Small) Businesses Need to Know About Obamacare

While the Affordable Health Care Act (Obamacare) will extend the availability of healthcare services to millions of uninsured Americans, it imposes a variety of mandates on businesses of all sizes that increases the cost of doing business.

Obamacare to BusinessesEmployers are not happy about Obamacare and many fear the effect on their productivity and profit margins.

Businesses with 50 or more employees, and those with workers who put in 30 or more hours per week, are required by Obamacare to provide their workforce with health insurance or face financial penalties of $2,000 per employee.

Many firms are choosing to pay the fine – it’s cheaper than providing insurance.

The outcry by the business community was so great that President Obama delayed the mandate’s effective date until 2015 to give employers time to prepare for the transition. Companies across the nation are looking at strategies to lighten the financial load when Obamacare is fully operational.

Shrinking Business Growth

According to a survey by the Society for Human Resource Management, 41 percent of participating small business owners indicated they would not be hiring new employees due to Obamacare.

Twenty percent said they were reducing their payroll and expansion projects are being placed on hold.

Some businesses will receive tax breaks to help alleviate the financial pain of health insurance premiums they pay for employees. The tax breaks only apply to companies with 25 employees or less and many entrepreneurs fear financial failure with the full implementation of Obamacare.

Reducing Workers and Hours

Obamacare to BusinessesTo elude the fines of Obamacare, many businesses have chosen to:

  • reduce their workforce
  • limit workers to 29 hours per week, and
  • transition to a four-day work week

All three strategies have a negative impact.

Higher unemployment rates and reduced hours will force individuals to utilize social service agencies to survive. According to the Bureau of Labor Statistics, only one full-time job was created for every four part-time jobs in 2012.

A survey conducted by Mercer found that 12 percent of all U.S. employers planned to reduce hours for full-time and part-time employees.

In a Reuters survey, a number of businesses indicated that they would be hiring more temporary employees.

That policy would allow employees to qualify for government subsidies to purchase their own insurance coverage through state operated marketplaces.

The strategy is being used by businesses of all sizes, along with educational institutions.

Companies that do provide insurance for employees are being forced to reduce covered benefits while increasing the cost to workers. Some are choosing to eliminate coverage for spouses and children. Insurance companies have raised their rates in response to the array of mandated services through Obamacare.

Economic Repercussions

The costs incurred by businesses through Obamacare mandates will be passed on to consumers. Companies will have to raise the prices on their goods to make up for a loss in productivity, fines and other costs associated with the healthcare Act.

The impact will be felt at all levels, from food and clothing to housing and the auto industry.

Fear of Obamacare has resulted in significant changes in the business community. To combat the cost of mandatory healthcare, businesses are being forced to lay off workers, cut hours and modify work weeks. The result is a loss in productivity that affects profits and limits the ability to expand and create jobs now and in the future.