Medical Billing Software

Last Updated on April 20, 2012 - The medical billing software market is very fragmented. There are several hundred companies offering solutions at just about every price point with varying feature sets. To make the market even more complex, vendors have customized systems to address the unique needs of the different types of medical providers. We have written this buyers guide to provide an overview of the market and to help buyers navigate their way to identifying the right solutions. 

Here’s what we’ll cover:

What is Medical Billing Software?
Deployment Strategies
Medical Billing Software Vendor Landscape
What Type of Buyer Are You?

Market Trends You Should Understand
Recent Events You Should Know
Benefits & Potential Issues
Cost & Return on Investment

What is Medical Billing Software?

If “cash is king,” then top medical billing software should help providers attain their regal status. This application category promises to help medical offices increase collections. It accomplishes this by helping office staff code claims properly, check claims for errors, verify patients’ insurance coverage, send claims electronically, post payments and EOBs, and provide reports on collections and rejections. In addition to simply increasing providers’ collections, medical insurance billing software provides automation and efficiency to traditionally repetitive and error-prone tasks. Most healthcare providers invest in formal systems since getting paid in medicine is such a challenge anyways. 

Computerized medical billing systems run the gamut of functionality. The most basic (and least expensive) systems will help providers generate paper statements based on demographics and billing codes input by the user. More advanced medical office billing software systems will have many of the same features that software for billing services typically includes; these systems may allow providers to submit claims electronically and help in coding. The most advanced systems will also scrub claims, post payments, offer alerts, and provide advanced reporting. 

Deployment Strategies

Buyers will need to decide if they want to implement a standalone system, a system integrated with patient scheduling (typically called “practice management”), or a fully-integrated billing, scheduling, and electronic medical records (EMR) system. Many vendors such as AdvancedMD and NueMD will offer all three options. Billing has long been the only or primary application used in many doctors’ offices, and it is usually the first system new practices will implement. Despite government legislation requiring the adoption of EMRs, we still hear from many practices looking for standalone billing or practice management systems. 

The Medical Billing Software Vendor Landscape

While the market can appear confusing and highly fragmented, the available solutions are differentiated by their appeal to the different buyer types.

Market Trends You Should Understand

These following trends are impacting the  market and should be considered when selecting a vendor.  

• Software-as-a-Service (SaaS). SaaS or web-based medical billing systems have certainly become very popular and comprise well over 50% of new solution sales. Low upfront costs, greater accessibility, and little to no IT requirements are contributing factors to so many buyers preferring web-based systems. Assuming buyers have reliable Internet access, we typically recommend they consider these programs. 
• Transition to ICD-10 codes. The Department of Health and Human Services (HHS) is planning to replace the ICD-9-CM (diagnosis) code set with the ICD-10-CM code set on October 1, 2013. This transition will require vendors to also update their codes. Buyers will want to make sure they select a viable vendor that will be able to make such an extensive change. We have already found many vendors stating that they will not be able to support the transition. 
• ONC-ATCB Certification. While government legislation requiring the use of EMRs is impacting primarily the EMR market, it also has large effects on the billing market. Since many buyers recognize the benefits of having an integrated EMR and billing system, buyers looking for a standalone program will want to make sure that the vendor offers a certified EMR that can later be adopted (assuming the buyer qualifies under the HITECH Act). 

Recent Events You Should Know About

There are two major events you should know about: the conversion to Version 5010 and ICD-10. Each should be carefully considered as you evaluate new medical billing and coding software.

• Transition to HIPAA Version 5010. Version 5010 is the latest set of HIPAA electronic transaction standards which replaces the current Version 4010. The deadline to transition to Version 5010--for all HIPAA-covered entities--was January 1, 2012. However, on March 15th the Center for Medicare and Medicaid Services’ (CMS) Office of E-Health Standards and Services (OESS) extended enforcement through June 30, 2012. If you are purchasing or upgrading your electronic medical billing software system, or your EMR software, you should ask your vendor if they support the new version. Practices or billing services that don’t use compliant software may experience claim disruptions or rejections.
• Conversion from ICD-9 to ICD-10. By law, every health care provider and payer--or at least those that are subject to requirements of the Health Insurance Portability and Accountability Act of 1996 (HIPAA)--must use ICD-10 billing codes by October 1, 2013. This is a very large undertaking as there are 155,000 classifications of diagnoses, tests and procedures under ICD-10; a big upgrade from the 17,000 ICD-9 codes. Just like the transition to Version 5010, providers and billing staff should make sure their software vendor supports the latest set of codes.

What Type of Medical Billing Software Buyer Are You?

Before you can evaluate, run a comparison or watch a medical billing software demo, you’ll need to assess what type of buyer category you belong to. We have found that the following five categories cover at least 90% of all buyers:

• Inpatient care providers. This category of buyers includes hospitals and long-term care facilities that need to submit claims on the UB-04 forms. This type of form typically requires a system designed for inpatient billing, although some outpatient healthcare billing software systems do have a module for UB-04 billing. 
• Outpatient care providers. This category is made up of the private practices that submit claims on the CMS-1500 forms. These buyers need to submit electronic claims to Medicare, Medicaid, and private insurance companies using medicare billing software or medicaid billing software. Software needs do not vary much by size of organization, although larger organizations will need a more robust, scalable program. 
• Outpatient care, cash-heavy providers. This category includes the outpatient providers whose billing is predominantly made of patients paying providers directly via cash or credit card. These providers have much more lightweight needs as they typically do not submit many (if any) claims to insurance companies or government payers. Chiropractors, naturopathic doctors, and mental health providers of varying designations are the most common buyers in this category. 
• Outsourced billing services. These buyers are third-party companies that submit claims on behalf of providers. They are typically paid a percentage of collections by providers. They have similar functional requirements to their respective provider clients, but may require a very broad, flexible system if they bill for clients of varying specialties or types of care. 
• Integrated suite buyers. These buyers require billing functionality, but would rather implement one integrated suite for scheduling and EMR. Their vendor selections are often driven by functionality offered by the EMR since most integrated systems are differentiated by their EMR offering, not their billing modules. 

Benefits & Potential Issues

Medical billing computer programs should benefit both clinical and administrative staff. The following are the minimum benefits that should be realized with a successful implementation:

• Efficiency. Billing and other administrative tasks are notoriously paper-laden and cumbersome. Billers should be much more efficient at coding, submitting, and following up on claims with a formal system. 
• Improved collections. Staff should find that medical claim billing software helps them code claims correctly and check them for errors. As a result, most providers find that their collection rates increase when going from manually submitting claims to using software. Furthermore, they should be better equipped to follow up on claim rejections quickly and accurately. 
• Transparency. Advanced reporting tools typically provide insight into collections that is tough to gain without software. By knowing which claims get rejected most often, which payers pay the slowest, and which visits can be upcoded, providers can make data-driven decisions to improve collections.  

The two primary concerns we hear from buyers most often are in regards to data security and ease of use (or rather difficulty of use). Since medical billing involves the storage and transmisssion of so much sensitive patient data, buyers will want to make sure they implement a secure system. Vendors are well aware of this need and most systems available today are HIPAA compliant. The second concern, usability, tends to be more a function of the end user and how the system is configured than the software itself. Buyers with medical experience can typically adopt most systems quickly. Many complaints with regards to usability tend to be related to setup and maintenance of servers and other hardware, not the applications themselves. 

Costs & Return On Investment

The goal for any electronic medical billing system is for collections to increase and the effort required to decrease. The traditional measures of effectiveness include the ratio of claims accepted to rejected and the average collection timeframe. 

Medical billing software prices often depend on the application’s deployment model. On-premise systems will require upfront costs for licenses, servers and other necessary hardware, set up, and training. Buyers of on-premise systems will also need to pay ongoing maintenance and support fees, which are typically 15%-20% of the upfront licensing costs. SaaS applications typically require lower upfront costs and ongoing monthly fees that cover licensing, support, and upgrades. Most buyers who have successfully implemented systems will be able to generate returns on their investments. 

Have an opinion on this guide? Email the authors. We appreciate the feedback.