Offshore medical billing services have recently gained traction for administrative operations in healthcare. In fact, numerous practices have outsourced their billing and coding operations overseas in an effort to reduce costs. However, instead of saving money, these practices often experience increased losses.
Medical billing processes become more complicated every year. To address these challenges, many healthcare facilities have started working with third-party medical billing service providers. These providers help streamline administrative workflows and fulfill staffing requirements. Collaborating with a reputable US-based medical billing agency can benefit your practice by improving collection efficiency, simplifying billing procedures, and freeing up internal resources.
Yet despite the benefits, some healthcare agencies opt for cheaper offshore medical billing services instead of local providers. Unfortunately, choosing overseas providers over local ones can have negative consequences for your practice.
Let’s take a look at how outsourcing your medical billing services overseas may actually end up costing you more, and how working with a local provider can improve your administrative processes instead.
Problems with Offshore Medical Billing Services
Offshore medical billing is when a healthcare organization outsources billing tasks to a partner in another country. Typically, staff members cite potential cost savings as their primary rationale for this.
Unfortunately, using offshore medical billing services comes with significant challenges for physician practices and third-party billers.
Security & Liability
Potential for Legal Issues: Providers are responsible not just for their practice but also for the actions of their overseas business associates and subcontractors. The 2013 HIPAA Omnibus Rule restricts medical providers from applying HIPAA regulations outside the US. Furthermore, providers are liable for any unauthorized disclosures or breaches involving their overseas business associates and subcontractors. If providers outsource billing or EMR services abroad, they are accountable for HIPAA fines—up to $10,000 per violation.
Certain “US-based” medical billing firms have US headquarters but outsource work overseas. These companies heavily depend on foreign staff. Nevertheless, as American entities, they must handle any offshore operation issues with their clients.
Experience and Legal Knowledge: Surveys indicate that offshore medical billing services tend to have less experience and little understanding of the complex and ever-changing US healthcare laws.
Security Concerns: Of course, there’s no guarantee that an offshore medical billing service follows HIPAA regulations, in spirit or in practice, since they operate outside the US. Thus, the risks of HIPAA security breaches and patient privacy violations are greater with offshore contractors.
Bait-and-Switch Tactics: Many offshore medical billing services start by assigning their best workers but later replace them with low-paid, inexperienced staff who use the original worker’s login credentials. This leads to increased errors, decreased productivity, and compromised security.
Risk of Data Theft: Low-paid offshore workers have been caught misusing electronic protected health information (PHI). This is a significant risk that outweighs any potential savings from cheaper labor.
Unexpected Pricing & Timing Differences
Hidden Costs: Offshore contractors might offer a basic service package but then charge extra for services that are typically included in initial agreements by US-based companies like California Medical Billing.
High Turnover Rates: Offshore employees often seek higher-paying jobs, resulting in high turnover rates. In contrast, at California Medical Billing, we focus on creating careers with opportunities for personal growth. As a result, we attract quality employees.
Time Zone Differences: Time zone differences can affect client and patient interactions, as well as real-time access to patient accounts and revenue cycle management reports. For instance, the time difference between India and the US’s Central Time is 10.5 hours.
Transparency Issues: Whereas a US-based firm can work on clients’ systems, offshore medical billing services often use their own systems, which can result in a lack of transparency in reporting and data management. This directly affects payment posting, collection efforts, charges, and third-party payer claims.
Delayed Resolution: Obtaining a judgment against an offshore entity is nearly impossible, extremely time-consuming, and expensive. Plus, recent estimates from the National Bar Association of India suggest a case backlog of 350 to 400 years.
Offshore Medical Billing Services Study
In January 2015, the rush to prepare for ICD-10 was intense. Healthcare organizations urgently sought coding support for the transition to the impending deadline. KIWI-TEK, an outsourced coding services company, struggled to meet the demand despite recruitment efforts. To address this, they partnered with offshore medical billing services in April 2016.
To compare the quality of domestic and offshore coding, KIWI-TEK collaborated with six hospitals and health systems. They aimed to determine which provides higher coding accuracy. All participants had experience with both domestic and offshore coders, following consistent onboarding, auditing, and training procedures for all.
Comparative Analysis
Over a two-year period, organizations in the KIWI-TEK study closely monitored training, denials, accuracy, and productivity for US-based and offshore medical billing services.
Standardized procedures were applied across all facilities. The study also tracked metrics like coding accuracy rates, training durations, and orientation times.
For evaluation, facilities were classified into multi-hospital health systems, teaching facilities with large care centers, and small community hospitals. Averages were calculated to assess differences in offshore medical billing service outcomes based on facility type—focusing on inpatient accuracy, onboarding time, and training duration.
Results
The most noticeable variance in offshore medical billing service performance was seen in onboarding time, with multi-hospital health systems taking longer to onboard offshore coding partners. While no major differences were found by facility type, the data serves as a reference for organizations considering offshore medical billing services.
Additionally, significant gaps were identified when comparing offshore and domestic coding precision, training, and monitoring requirements across facility types. These differences emphasize the importance of time and cost considerations for healthcare executives. Inaccurate coding can result in increased payer denials, and the additional time needed for onboarding, training, and auditing outsourced coders can raise operational costs. These factors are crucial for organizations deciding between US-based or offshore medical billing services.
Offshore Medical Billing Services Conclusions
During the period from January 2015 to January 2017, the study revealed six key performance patterns in offshore medical record coding:
- Lower Productivity: Requires more full-time equivalents (FTEs) to manage patient volume compared to domestic billing services.
- Reduced Accuracy: More error feedback, increased auditing, and training time.
- Higher Denial Rates: Increased rework time for denials.
- Fewer Inquiries into Inpatient Encounters: Results in reduced payment levels and a 0.1 case mix index (CMI) decrease, equating to an average $4,500 reduction per inpatient encounter.
- Excessive Onboarding Time for New Coders: Challenges in adjusting staffing levels.
- Slower Turnaround Time: Rise in discharged not final billed (DNFB) cases.
In conclusion, despite expectations, cost savings from offshore medical billing services fell short.
Local vs. Offshore Medical Billing Services
Of course, this isn’t to say that outsourcing your billing is always a bad thing. Many medical offices lack the resources to manage high-quality billing in-house. Outsourcing to US-based providers can maintain reliable billing processes without straining internal resources. While offshore medical billing services may seem appealing due to seemingly lower costs, opting for a US-based provider is often the superior choice.
Fewer Billing Errors: US-based providers are more likely to reduce billing errors, leading to fewer denied claims. They’re well-versed in US billing processes and stay current with ever-changing rules and regulations. Choosing a reputable US-based company with a proven track record can free up your practice’s resources and minimize billing headaches.
Better Customer Service: Reliable and knowledgeable customer service is essential when dealing with billing issues. US-based providers understand common challenges and offer fast, efficient resolutions. You can expect quick responses during office hours without language barriers, which is a common drawback to offshore providers.
Lower Operating Costs: Although US-based providers do charge for their services, outsourcing to a domestic company can still reduce your practice’s operating costs. These providers have fully-trained staff, eliminating the need for your practice to hire and train new employees. Additionally, there’s no need to invest in new software or office supplies. Expert staff from US-based companies can handle billing more efficiently, improving cash flow and revenue while lowering overheads.
Increased Patient Satisfaction: By freeing up time and resources for your in-house team, US-based providers report higher patient satisfaction. Reduced billing errors lead to fewer denied claims, which elevates the patient experience.
Secure Data: US-based billing companies adhere to strict compliance standards for patient data, ensuring the highest levels of security. Choosing a domestic provider gives your practice and patients peace of mind knowing their data is protected and handled securely.
Offshore Medical Billing Services Verdict
While outsourcing your medical billing overseas may seem like a cost-effective solution at first, the hidden costs and risks associated with offshore medical billing services can create more financial strain in the long run. By choosing to work with a reputable US-based medical billing agency, you not only ensure the proper handling of sensitive patient information but also gain access to a team of experts who are well-versed in the ever-changing healthcare landscape. This ultimately leads to improved collection efficiency, simplified billing procedures, and greater resource allocation within your practice.
