Among many other over-hyped business ideas, starting a medical billing business is one. Let us learn about the resource-requirement, cost of setup, profitability and other aspects of healthcare billing business. Whether you are looking to start a medical billing company from home or at a larger scale, this step-by-step guide to starting a medical billing company will help you during this journey.

Being the backbone of healthcare revenue cycle management(RCM), medical billing works a bridge between doctors, patients, and insurance companies. Outsourced billing services ensure timely reimbursement for clinical and medical services to healthcare physicians.

As the Healthcare industry is flourishing, so is the field of medical billing and coding. Aging population, increasing focus on health data and informatics, and the digitization of health records are the key contributors in the growth of the medical billing industry.

Scope of Starting your own healthcare billing business

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There are two factors that have increased the demand for medical billing and coding agencies. Due to the implementation of ICD-10 (International Classification of Diseases-10th Revision) and EHR (Electronic Health Record), the Healthcare Industry is aggressively looking for trained, efficient, knowledgeable, and certified coders and billers.

According to the Bureau of Labor and Statistics, the medical billing and coding field is expected to grow by 15% by the end of 2024. There is a promising opportunity with a bright future for you to expand your company in the upcoming years. Hence its a great time to start your medical billing business.

In this article, we will shed light on tips on how to start your own medical and coding company so are able to set up your independent home-based business or you can also start a company by hiring and building a team of professional billers. Here’s all you need to get up and running for your small business.

What does it Take to Start a Medical billing Business from scratch

Understand the market

The first step to starting your own medical billing company is getting familiar with the relevant industry. Do thorough research before investing time and money in your business. Start from the area you live in and look out if there is a need for third-party billing there. Look out for your competitors in the area. You can contact doctors and healthcare providers and ask them these questions:

Do you outsource your billing or manage it yourself?
what processes do you outsource to your billing company?
What software programs do you use?
How many patients do you see and bill daily?

These questions will aware you of the

demand for billing in your area
latest software being used for billing
provide you with a clear idea of the number of claims you can expect from the clients.

Target the sub-sectors

You can narrow your focus and target specific types of practitioners and providers. This is what most small to medium-sized medical billing companies do. Then, dig deeper into the medical billing industry’s sub-sectors. Each sub-sector has its own billing and coding procedures. Exploring the fundamentals and relevant training is necessary prior to starting billing any of the sub-sector. The following types of medical billing jobs are in high demand:

Dental billing jobs according to research, will grow by 10% between 2018-2028.
Mental health and psychiatric billing are expected to grow due to the increased ratio of mental and psychological illnesses. This may cause more mental health professionals to outsource billing in the coming years.
Family practices are one of the busiest practices and are outsourcing medical billing more often to improve cash flow, avoid errors, and earn more revenue.
Local medical providers are your potential clients, who need continuous help on medical claims processing or medical procedures.

The start-up cost for a medical billing company

There are several things you will need to start a medical billing company

Medical billing software
Software licensing
Computer equipment, A printer, a fax machine, and a reliable business phone system.
Technical support
CMS 1500 forms
Software upgrades
Backup hard drives
Internet connections
IT support

As you grow your business, into a medium/large company, you will most likely spend additional costs like professional, in-house systems to purchase and installation of Servers and training the in-house staff. However, if you’re just getting started, these start-up costs should be catered and you are good to go.

Enroll in medical billing and coding training

As medical professionals will be counting on you in the process of managing their revenue, it is necessary that you become a professional medical biller and acquire an in-depth knowledge of billing for medical practices including the specialty practices that you plan to serve.

If you don’t already have your medical billing credentials you can enroll in online training courses. There will be exams for Primary Coding Manuals & Certification Exams you need to pass from major medical organizations. The Medical billing certificate programs you plan to enroll in should cover three primary code manuals:

CPT: Current Procedural Terminology (set by the American Medical Association)
ICD-10-CM: International Statistical Classification of Diseases and Related Health Problems (Maintained by the World Health Organization)
HCPCS: Healthcare Common Procedure Coding System

After following the course, you should be prepared to take exams offered by the three medical billing and coding businesses listed below:

Certified Medical Reimbursement Specialist exam – American Medical Billing Association (AMBA)
Certified Coding Associate – American Health Information Management Association (AHIMA)
Certified Professional Coder’s board exam – American Academy of Professional Coder’s (AAPC)

It is recommended to get some experience in medical billing field for at least a few months before starting your business. You can work in a billing department of a medical office or a hospital where you will get a first-hand experience in the medical industry, insurance claims, and electronic billing processes.

There are many fake medical billing opportunities circulating around that aid entrepreneurs in starting their own third-party billing businesses. Always be careful and investigate to avoid any scams.

Develop a business plan for your billing startup

Mapping out a business plan is vital before starting a medical billing company. Brainstorm about things your target market will look for while selecting the best medical billing company. For instance, when getting started, consider:

Which medical billing services do you want to specialize in?
Which kinds of practices will you offer billing services to
Do you want to set up an independent practice or partner with other medical billers?
What is your company size?
How will you structure your fees?
How will you manage finances and taxes?
Will your business be an LLC? Will it be a large corporation?
Who is your target audience?
Determine the initial costs
What is the name of the business?

Other start-up necessities

Just like any other successful business, setting up a new billing company requires a proper plan and business structure. To establish a legal medical billing business, you will have to apply for a new business license depending on your business plan you can

Choose to form an LLC or a Corporation.
Register for taxes
Set up a business bank account and credit card
Get business insurance
Obtain necessary permits and licenses

Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to cease. Medical billing companies are legally required to operate under federal regulations regarding health information particularized by the Health Insurance Portability and Accountability Act (HIPAA). Certain state permits and licenses may be needed to operate a successful medical billing business.

Choose a right medical billing software

The most expensive part of setting up your medical billing company is getting medical billing software. Although medical billing can be managed manually but considering the evolving technologies in the medical billing industry, it is recommended to use electronic-based billing software. Choosing the right type of medical billing software can be a tricky task. There are some factors that need to be considered before you make the decision:

Specify your requirements by making a list of features that you are looking for in your ideal billing and invoicing software.
Think of your budget as it is not wise to get an advanced solution if you won’t be using all the features that are embedded in the software. The purpose of having dedicated software for billing and invoicing is to create bills and invoices easily. Look for one that meets your need.
The security feature, that you must look for in an invoicing and billing solution. As you will be dealing with a lot of sensitive details, look for a package that ensures the safety of your data by securing them automatically.
Flexibility: The billing and invoicing software should give you the freedom to choose the type of invoice that you want to create. This flexibility enables you to customize the invoices and bills that reflect the services provided by your company.
Possibility of integration: Do you want the best invoicing software that works as a standalone system or the one having the possibility of integration? For example, if you use accounting software, does it includes invoicing and billing? Your selected software should give you the freedom to integrate back-end tasks.
Scalability: When choosing your ideal invoicing and billing software, make sure that the software is scalable and will work well even when you have to generate several invoices and bills every day.
Customer support: Software must provide customer support. In case of any issue, they can rectify the issue
Tasks Automation: The best invoicing software should enable you to automate your tasks, should be able to add a business logo to the invoices and save changes, should enable you to create invoices that retain data.
Compatibility: Does the software has device compatibility and mobile operating options?

Nowadays, many software companies provide free trials. Give your top choices a try before investing heavily in the most crucial part of your business.

How to Charge Clients

There are a few ways to charge your clients in the medical billing process:

percentage of revenue collections – The most popular method, as it often lends the highest return and revenue.
A per-claim fee This method includes charging a fixed fee for each claim that is submitted, whether paid or unpaid.
An hourly fee, Hourly fee is useful for medical billing businesses that provide complementary services. The current average hourly rate of a medical billing employee in the U.S. is $18/hour. If you are an independent contractor, you will likely earn more.

The option you choose depends on the healthcare physicians you partner with, as well as the billing and medical coding you perform.

Specialize yourself

Making the business more profitable involves specializing in a specific sub-specialty. Most successful medical billing companies don’t work with everyone and anyone. for example, some medical billing companies choose to work exclusively with veterinarians, and family doctors. Some get known in the chiropractor community. Some medical billing companies customize their services for specialists like cardiologists or ENTs. Specializing yourself in one or two fields of healthcare can be significantly beneficial for your medical billing business:

The number of billing codes you need to use regularly will be reduced
Getting knowledge of the specific field of healthcare will enhance your credibility as a medical billing clerk
The more you speak their specific language, the more care providers will hire you for outsourced billing.

Here are a few areas of specialty to consider:

Cardiologists
Billing for Chiropractors
Psychiatrists
Family practitioners
Billing for Dentists
Veterinarians

Partner with a clearinghouse

Once you’ve purchased and become comfortable using your billing software, you will need to work with a clearinghouse to access your billing work. A Clearinghouse is middleman or a third party between the healthcare providers and insurance companies. A clearinghouse assesses medical claims, reviews, edits, formats the claims, and processes them correctly. Once the clearinghouse has ensured that a claim is clean, it can be submitted for payment to insurance payers.

In order for a clearinghouse to suit your medical billing service, you will have to consider the following:

Does the clearinghouse work with organizations nationwide?
Do you work with the same insurance company as the clearinghouse?
Do they provide service in your area?
How do they keep you aware and up-to-date on the progress of insurance claims?
If a claim is rejected, how do they deal with it, and will they provide the reason for rejection?
Do they have a good customer support system?
What is their fee structure?

Make sure to do thorough research, investigate a handful of companies, and get their testimonials about the clearing house before choosing.

Promote your business by employing Marketing and Sales Strategies

A business doesn’t grow itself. All legitimate businesses have websites to market their services. Getting your business online and developing a marketing and sales strategy is mandatory to market and publicize a newly formed business. Expanding your network also increases your chances of obtaining new clients and growing your business. Some ways to market yourself in the medical billing industry is

Create relationships with providers and pay visits to their workplaces.
Build a Network with individuals just graduating from med school, those in residency, and those who are practicing.
Make contacts with hospital administrators even if they may not need your services, this will help you better understand the medical billing industry.
Create and optimize the business website and develop business cards for your service, as well as offer incentives that will stimulate growth and lead opportunities.
Build Social media accounts like Facebook pages or LinkedIn business profiles
Promote your business by posting advertisements, posters, and engaging content. Address the medical billing problems that your company can solve.
Pay for online advertisements like google ads
Create an email newsletter.
Publish content on LinkedIn
Nurture all prospects that have expressed any interest in your service and stay responsive to those prospects who didn’t show interest.
Follow up with every prospect using winning sales email templates and newsletters.
Build a stellar sales team.
Make sure your marketing and sales teams are on the same page.

Medical Billing Startup Checklist

Here’s a free Medical Billing Startup Checklist. ????

Home-based Medical Billing Business

Whether you set up your independent home-based business or start a company by hiring and building a team of professional billers, the attributes that are common is your dedication, hard work, consistency, and commitment to your business that will take you to the pinnacle of success.

Final Words

Establishing your own billing business can be lucrative, enjoyable, and sometimes overwhelming but there are numerous benefits to being your boss, including a flexible schedule and the freedom to make your own business decisions.

We hope that this guide on starting a medical billing company helps you. If you don’t want to go through all of these steps for setting up a new business, you may also consider buying one of the medical billing companies for sale.

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How to Start a Medical Billing Business