Traditional Medical Billing vs. the FTE Model

As an independent provider, you are probably tired of so much back-and-forth with insurance companies. You may also frequently struggle with medical coding errors. When you have a practice to run, it’s difficult to dedicate the necessary time to solving billing solutions.  

Would having a dedicated team of billing staff help you overcome major financial challenges in your practice? If you answered yes, it’s potentially time to consider completely outsourcing your RCM or adopting a full-time equivalent model. 

The FTE model gives you access to a specialized billing team that understands your practice and handles billing on your behalf, freeing your team to redirect your time to more patient-forward tasks. 

In this article, we’ll look at the traditional approach to medical billing and compare it to the FTE model. This comparison will examine the methods of both systems and how you can determine which is the best fit for your practice. 

RELATED ARTICLE: 4 Reasons Your Practice Should Outsource Medical Billing Services 

Understanding Traditional Medical Billing 

Traditional, in-house medical billing approaches can be complex between patients, coders, payers, and clearinghouses. 

Any billing process starts with patient registration and verification of their insurance coverage. Then, once the appointment is complete, medical services rendered are translated into standardized healthcare codes, which are sent to clearinghouses and, eventually, insurance providers. 

In the best-case scenario, the claim is approved, and the patient can be charged for any outstanding balances. 

Challenges of using traditional medical billing to complete this process include: 

• Error-prone manual processes: Misinterpreting codes or entry errors can lead to claim rejections or delays, affecting your practice’s cash flow. 
• Compliance issues: Billing regulations and insurance policies are always evolving. Additionally, inadvertently violating obligations around patient data security can have far-reaching implications, such as professional censure and heavy fines. Cumulatively, maintaining compliance can become a major pain point. 
• Inefficiency: Manual billing processes result in slower payments and a far-reaching ripple effect. 
• Limited scalability: Manual medical billing processes can be resource-intensive. If patient volume increases significantly, your practice could struggle to keep pace. 

An Introduction to the FTE Model

If you outsource your medical billing, you might use the transaction-based model, in which the company charges you a fee for each transaction it processes. The alternative to this is the FTE model. 

The FTE model involves employing billing assistance using anywhere from a single full time employee to a dedicated billing team of healthcare billing professionals that add up to the hours of one full-time employee. This outside assistance model includes fully-trained medical billing specialists, coding experts, and administrative support staff focused on supporting your billing staff with the tools and technology needed. 

Completely outsourcing your billing team would exclude you from managing any aspect of the billing process, taking it completely out of your hands. 

RELATED ARTICLE: 5 Ways Partnering with a Medical Billing Vendor Grows Your Practice 

The FTE model offers several advantages: 

• Control and authority: You benefit from outsourcing but still oversee every aspect of billing, which reflects your practice’s quality standards. Maintaining oversight can also cut down on errors that lead to claim denials. 
• Cost-effectiveness: FTE medical billing approaches can save you money, which is a major benefit if your practice’s patient volume varies significantly. 
• Flexibility: You can adjust staffing levels based on your needs, giving you a scalable solution to manage fluctuations in patient load. 
• Enhanced communication and accountability: A dedicated outsourced billing team can make collaboration and communication easier. There’s more accountability within the billing process, which may help boost overall efficiency. 
• Expedited problem-solving: With your dedicated team of specialized billing staff on call, issues can be addressed promptly, minimizing downtime and giving you the resources to deliver exceptional patient experiences. 

Despite the benefits, the FTE model comes with its own set of challenges. The big one is operational risk. 

If the medical billing vendor goes out of business, you’re left to your own devices. Your practice and patients suffer if they are involved in a breach or fail to comply with medical rules and regulations. These outcomes can be extremely detrimental to your practice’s reputation and success. 

FROM ONE OF OUR PARTNERS: Pros and Cons: Should Your Practice Outsource Medical Billing? 

Traditional Medical Billing vs. the FTE Model: Comparing Efficiency and Control 

Let’s break down key aspects of each system to help you weigh which might be the best fit for your independent practice. 

Control 

In-house operations can certainly give you full control over medical billing processes. However, the efficacy of this control is dependent on your staff’s skill level and engagement. 

In contrast, the FTE model offers an outsourced solution that helps you maintain your position in the driver’s seat. 

Cost 

Traditional in-house billing demands high ongoing costs such as employee salaries, training, and technological updates. These expenses can fluctuate, particularly during periods of staff turnover or when scaling operations. 

The FTE model streamlines your financial commitments with a predictable cost structure based on hourly rates. 

Moreover, an outsourced team’s high level of specialization can reduce revenue leakage, further strengthening your practice’s financial health. 

Compliance 

With traditional in-house billing, maintaining compliance with security laws can be a constant challenge. 

The FTE model offers a more robust solution with a dedicated team focused entirely on medical billing. They are always current on the latest rules and security regulations and remain closely aligned with your operational standards. 

Communication 

Internal billing teams can sometimes suffer from communication silos due to the size of the practice, outdated software, or poor systems and processes. 

Outsourcing to an FTE provider enhances communication by centralizing it through a dedicated manager. This manager connects your practice and the billing team. 

The results are faster resolution of issues and more effective billing process management. You can focus your team more on patient care and less on administrative burdens. 

FROM ONE OF OUR PARTNERS: 6 Reasons to Outsource Your Revenue Cycle Management 

How You Can Start Deciding Between Traditional Medical Billing and Outsourcing RCM/the FTE Model Right Now 

Your billing model impacts your practice’s efficiency and profitability, in turn affecting patient experiences and outcomes. 

Here are practical steps to help you decide whether traditional medical billing or the FTE model is the most appropriate choice for your practice: 

• Assess your current billing efficiency. Track the performance of your current billing system. Look at the error rate, the average time to close bills, and the rate of denied claims using resources like the American Medical Association’s point-of-care pricing toolkit. Can you make any quick, impactful changes? If not, you may need to overhaul your billing model. 
• Consider your staff’s expertise and availability. Do you have the resources to train and maintain an in-house billing team? Do you currently have staff with the expertise to manage a complex billing system, or would you need to invest in training and hiring? The answers to these questions should inform your final decision. 
• Calculate the potential costs. Compare the costs of an FTE system with an in-house approach, including expenses like software, training, salaries, and potential lost revenue during the transition period. 
• Identify your control and flexibility needs. Determine how much control and flexibility you need over billing processes and whether your practice can handle additional financial responsibilities. Consider how each might interfere with patient care or experience. 
• Consider your growth plans. Review your practice’s growth trajectory. Will you expand your services or patient load in the coming years? The scalability of your billing system should align with your growth plans.