Starting a Home- Based Medical Billing Business

Starting a Home- Based Medical Billing Business

When a patient goes to the doctor, the doctor will dictate what happened during a visit, and a medical transcriptionist will transcribe the dictation and create the patient medical record. Then, a medical coder takes that record, and applies medical codes that health companies use to determine payment. After the coder completes the coding process, the medical biller then fills out either a paper claim thus creating the superbill or will use electronic claims submission methods to send the claim to a clearinghouse that “cleans” the claim and then it goes to the insurance company for payment. “Cleaning” a claim means catching any errors and correcting them.

This article will focus on starting an electronic claims submission business at home. Electronic claims submission is the process of taking a coded medical report and submitting it electronically to the insurance carrier. There are sophisticated software programs available like Medisoft that assist in this process.

The Submission Process in Brief

You will type in the data from each claim into the software program. At the end of your work day, you will electronically submit all the days claims in a batch to the clearinghouse. The clearing house will clean the claims and send back ones that were rejected for you to fix- this log is called the audit/error log. You then print this log and figure out how to fix the claim and resubmit.

Reasons Claims Are Rejected

Even if you do a great job, it is possible to have claims rejected. Here is a list of the common reason for rejection:

-Missing or incomplete diagnosis

-Missing or incomplete group numbers

-Charges not itemized.

-Reasons for multiple visits on the same day not given.

-Diagnosis is not coded correctly.

-Diagnosis does not correspond with the services rendered.

Start Up Costs

Figured into your initial start up expense must be comprehensive medical billing software. This type of software costs about $2,000 and will requires quarterly updates. With electronic claims submission, you will simply mostly do data entry into the software package.

Additional start up costs include the following:

-Computer system

-Printer

-Phone w/ voice mail

-Advertising expense

-Postage, stationery, and office supplies

Getting Clients

The best way to find medical billing clients is to create a flyer and do a mass mailing. You would want to send to many local area physicians. Be careful not to send too many flyers in your mailing because you can always do a second mailing and you don’t want to obtain so much business that you cannot handle it. Sending an initial 250 flyers would be appropriate for your first mailing. Then, you would want to follow up your mailing with a telephone call to the office manager. During this call, you want to ask questions to find out how the office is currently doing their billing, and are they happy with their current system. Then, you want to try to make an appointment to speak with the office manager or physician.

The way to sell electronic claims submission to a physician who is currently using on-site billing personnel and submitting claims manually through the mail are to focus on the following facts:

-30% of paper claims are rejected. Only 3% of electronic claims are

rejected.

-Paper claims take about 60 days to pay out, and if they are rejected,

another 60 days to resubmit. Electronic claims are usually paid within

just 30 days.

-He will save money on both office space and employee benefits.

You will work on a percentage of what you bring in, so you are motivated to work that much harder to assure proper claims submissions and proper billing. Plus, since your system is automated, if the physician ever becomes audited, you will be able to provide detailed reports and accounting. Additionally, you can offer to take care of all the office collections.

Organizing Your Home Business

Whenever you start up a new business, it is imperative that you make sure you are abiding by all state, local, and federal laws. You need to decide if you want to set yourself up as sole proprietor, Limited Liability Corporation, S-corp, or corporation. There are advantages and disadvantage of each of these options. You will need a way to track income and expenses. Some people like to use software programs like Quick Books to handle their business accounting. Others like to have an accountant take care of this aspect of the business. The important issue is to have a system in place. Additionally, you will need to understand which tax laws affect you, and how to handle your business income tax. Consulting with a local tax professional is very good advice for any new business start-up.

Also, many medical billing business owners buy errors and omissions insurance, which is very similar to malpractice insurance to cover them in case they get sued by a client. This usually costs around $1,500 a year depending on the risk involved.

Conclusion

Much money can be made in launching your own medical billing business at home. It would not be uncommon to bring in $8,000 a month if you had 2 medium sized practices to bill for. The start up costs are reasonable and the training time is short in comparison to most other fields. It is more difficult to obtain medical billing clients than it is to obtain for example, medical transcription clients. However, if you can learn to sell the benefits of electronic claims submission to potential clients, then you can have a very lucrative career while working at home.