STARTING A BUSINESS

How to Start a Medical Claims Processing

A doctor's attention should be on patients--not money matters. Help

competencies with a medical billing service.
NOVEMBER 1, 2002

Editor's note: This article was excerpted fromStart Your OwnMedical Claims Billing Se

What's Inside
Introduction
Target Market
Startup Costs
Operations
Income and Pricing
Marketing
Resources

A medical billing service is a doctor's key to getting paid. Despite the fact that the he

doctors and other health-care providers have no idea how to get themselves paid qu

patients who are also waiting for that check to arrive in the mail. Private and govern

PPOs and a host of other mysteriously initialed plans have conspired to make physic

the end of the rainbow. Doctors, once the lords of the health-care world, are fast bec

Not to worry--the medical billing industry is on hand to save the day. A billing expe

revenue. Through the miracle of cyberspace, the biller electronically transmits insur
other words, into the company's check-generating computers.

Medicare gives priority to any claims submitted electronically. Claims received onlin

claims, which are set on the back burner for at least 27 days. Most other insurers now
paper. The results can be dramatic.

Amazingly, however, while electronic claims processing is the method for getting pr
Snail Mail Age. This makes electronic billing a thriving eld with room for growth.

Not a Small World

With legions of providers and an ever-expanding patient pool, the health-care indus

government's Health Care Financing Administration (HCFA), national health-care ex

spending accounted for $224 billion of that total. So let there be no doubt: Health ca

growth shows no signs of slowing. This makes it fertile ground for the medical billin

Target Market
Your target market--the clients you're aiming for--can be as diverse as the eld of

game. You can go after family practitioners, providers of every specialty from geriatr

obstetricians and oncologists, proctologists and podiatrists. You can target mental h

And don't forget the groups of providers not normally associated with doctoring, suc

ambulance services, pharmacists, home-health practitioners, providers of durable m

What's Inside
Introduction

Target Market
Startup Costs
Operations
Income and Pricing
Marketing
Resources

If you've had previous experience working in a particular medical specialty, you mig

comfortable with the jargon and procedures so your sales pitch--and your initial bil

you may already have contacts in the eld who can either become your rst clients o

If you're a newbie in the world of medicine, you might want to start o targeting do

chiropractors, cardiologists or dentists. These providers' practices involve a narrowe

practitioner, general surgeon or internist, so you'll have fewer new codes tossed in y

scratch strategy, but don't let it dictate or limit your contacts. Most MIBs (medical in
through whatever means, is the specialty they end up going with.

Does Size Really Matter?

OK, you've decided--or are thinking about planning on deciding--which areas to sp

decision-making skills to rest. Next you have to think about what size practices you'

you might consider starting o with small to midsized practices. This way, you won'
the upside of your learning curve.

You should also consider the size to which you ultimately want your practice to grow

grow a whole lot," medical billing service owner Mary V. counsels. "[Then] you want
good income, depending on the type of doctor you have."

"We love our chiropractor," Mary adds as an example, "but I will never take on anot

Why? "Sheer volume," Mary says. "A chiropractor can see a hundred patients a day i
whereas a neurologist sees 20 to 26 [patients per day]."

Even though both doctors bring in the same amount of money for a day's work, Mar

must generate far more claims--and more work for the medical claims processor--t

Practice Particulars

What, specically, you will be doing during your peak hours and beyond will depend

perform full practice management for their clients--they handle all aspects of the d
to billing patients to tracking accounts payable and receivable. Other MIBs prefer to

medical billing specialists, being savvy businesspeople, take on whatever is required

working in dierent ranges of practice management for dierent clients.

"I'm kind of an a la carte," Vicki D. says of the services she oers. "[The doctors] jus
I try to provide and then I charge them accordingly."

Mary V. and her partner discovered that smaller practices, those with one or two doc

desperately need assistance. "We don't like to say full-practice management," Mary

practices, "because we're not in that oce. We call it accounts receivable manageme

Startup Costs

One of the many nifty things about a medical billing service is that its startup costs a

homebased-ability, which cuts oce lease expenses down to nothing. You have almo

pretty doodads to grace display spaces (you have no display spaces!). Your major na

your software and/or business opportunity--and if you're like many moderns, you a

But let's take it from the top. The following is a breakdown of

everything--from heavy investment pieces to yweight items--you'll

What

need to get up and running:

Computer system with modem and printer
Fax machine
Software and/or business opportunity fee
Clearinghouse
Reference materials
HCFA 1500 forms
Phone
Voice mail or answering machine
Stationery and oce supplies
Postage

Software Solutions

Your medical billing software is going to be your closest partner after your signican

lengthy, with medical billing/patient accounting programs and packages ranging fro

capabilities, but more expensive is not necessarily better or worse. You can buy the b

opportunity package, which can include lead generation, seminars, marketing help a
software.

"You can hire a [local] marketing guru for lots less than [you can buy] a business op

which publishes The Directory of Medical Management Software. Don't ignore the busin

sure you're getting your money's worth. Whichever option you choose, you'll want t

Once you identify the software of your dreams and pocketbook, make sure it has a go

developer has been in business and how many people (preferably thousands) are usi

about calling them. Most medical claims processors are only too happy to share their

than just a software reference. It can be one of your rst forays into networking. Ask

friendly? How good is the technical support? How available is the technical support?

the program? Are they happy with it? Have they heard any rumbles about possible pr
permanent Tahitian vacation?

Clearinghouse Costs

Hiring a clearinghouse--the companies that receive and transmit claims electronica

like a marriage partner or signicant other, then the clearinghouse is the brother or

the rest of your life. You'd better be sure you're happy living under the same roof wit
Also like software, clearinghouse costs vary radically. You should allocate from zero
per doctor for sign-up.

Reference Books

Although your reference library can comfortably contain a wealth of texts, we'll cons

the ICD-10, CPT and HCPCS Expert 2000 coding books. If you're billing for dentists, yo

of CPT codes. You can sketch in about $200 total for the rst three on the list, plus a

Operations

Editor's note: This article was excerpted from our Medical Claims Processing Business startA medical billing service is a doctor's key to getting paid. Despite the fact

What

that the health-care industry is alive and well in America, most doctors
and other health-care providers have no idea how to get themselves paid
quickly and eciently, if at all, by either insurers or patients who are
also waiting for that check to arrive in the mail. Private and
government-administered insurance companies, HMOs, PPOs and a host
of other mysteriously initialed plans have conspired to make physician
reimbursements as elusive as the pot of gold at the end of the rainbow.
Doctors, once the lords of the health-care world, are fast becoming the
underdogs.

Not to worry--the medical billing industry is on hand to save the day. A billing expe

revenue. Through the miracle of cyberspace, the biller electronically transmits insur
other words, into the company's check-generating computers.

Medicare gives priority to any claims submitted electronically. Claims received onlin

claims, which are set on the back burner for at least 27 days. Most other insurers now
paper. The results can be dramatic.

Amazingly, however, while electronic claims processing is the method for getting pr
Snail Mail Age. This makes electronic billing a thriving eld with room for growth.

Not a Small World

With legions of providers and an ever-expanding patient pool, the health-care indus

government's Health Care Financing Administration (HCFA), national health-care ex

spending accounted for $224 billion of that total. So let there be no doubt: Health ca

growth shows no signs of slowing. This makes it fertile ground for the medical billin

Income and Pricing

What can you expect to make as a medical insurance biller? The sky's the limit, depe

you are to expand. Annual gross revenues for the industry range from $20,000 to $10

home, bringing in enough to supplement the family income. Others have launched th
assistants.
Kim H., a medical biller in rural Virginia, runs her business in
conjunction with a full-time career as a high school teacher. At the other

What

end of the spectrum, Jan D., an MIB in Walnut Creek, California, who's
well into her ninth year in business with a sta of 22, is pleased with her
income as well.
However you choose to tailor your business--part time or full time, at
home or in an outside oce--the income potential is excellent. But
almost everyone in this particular industry is quick to point out that
medical billing is not an easy business.
"This is denitely not something that just anybody could do," explains

Curt J., a biller in Illinois. "Between the personal marketing skills and relating to pro
and the computer side, it's been a challenge. [But] I enjoy a challenge."

How soon can you expect to start making money? "You have to have a business plan

advises. "We usually tell [people] 'Don't stop your full-time job because you're going

about ve months before they start making money because it takes a while to get set

conversion done, to do everything. If you think you're going to start doing it tomorro

Talking Money

Medical billing services charge their clients by three methods: percentage, per claim

MIBs who do full-practice management or a combination of patient billing and claim

provider a percentage of the money he or she collects per month as opposed to the a

will depend on several variables: the going rate in your part of the country, the sorts
patient volume.
"We charge [the doctors] on collected revenues, not on their production levels," Jan

it into their own personal checking accounts, and then I'll bill them, depending on h
sometimes once a month. And they pay the bill in a timely manner or we stop doing

Some MIBs prefer to charge on a per-claim basis rather than by percentage. This is t

consists mainly of straight claims billing with little or no practice management tasks

The third, and least popular, method of charging clients is per hour. "I think it would

Felicia T. "They're already paying somebody on an hourly basis. Why would they wan
hourly as well?"

You might want to consider this option if you have a client whose billing rate is so lo

not feasible. Or you might run into a client who's comfortable working under this arr
her norm.

Marketing

The absolute best way to attract clients is through word-of-mouth. Doctors have a s

that shampoo commercial where the silken-tressed model tells two friends and "the
also pass the word on.

People Will Talk

The rst option is referrals, or networking, which is really a variation on word-of-m

you sit back and wait for others to talk about you and send business your way. With n
Talk to everybody you know. Let them all in on the exciting news that
you're now running a medical billing service. You can start with your

What

own doctor. Next time you see your doctor on a professional basis, tell
him or her about your service. But don't ask directly for their business,
as this might put a strain on your relationship.
Chances are, however, that your doctor will have referrals and probably
some tips on how to approach other doctors. Terric! It's always easier
to call other doctors when you can say "Dr. Whatsit suggested I call," or
"Dr. Whatsit referred me." People always pay more attention when
someone they know has given you a green light.

After you talk to your doctor, call other providers you know directly or indirectly: yo

your father's cardiologist, your pharmacist and your dentist. Using the name of a rec
door.

Once you've tapped out those resources, start approaching physicians who specialize

children, for instance, begin with pediatricians; if you're into athletics, you could try

There are lots of other people you already know you can put on your networking list.

estate agent probably have their own little card les full of physicians and will be ha

They want to keep you happy. Besides, most people like helping a fellow businessper

Resources
Associations

What
American Association of Healthcare Administrative Management
American Dental Association
American Medical Association
Blue Cross Blue Shield Association
National Electronic Billers Alliance
Helpful Government Sites
The Centers for Medicare & Medicaid Services (CMS)
Professional Journals
Medical Economics Magazine

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