According to a 2022 survey by the Healthcare Financial Management Association (HFMA), more than 63% of healthcare providers have now adopted automated billing systems. It has resulted in an 85% increase in claim accuracy. A 20% reduction in claim denials is also seen.
Even after these clear advantages of automation, many providers are still hesitant to adopt automation and they still rely on manual billing. Some providers don’t switch to automation because they are habitual of manual systems. In this guide we will compare manual and automated billing processes. We will also explain how they work, how manual billing drains revenue while automation is preferred by more than half of the providers.
Let’s start with the basics, what manual billing actually is. As the name explains manual billing is the traditional approach of handling claims. Manual billing involves series of tasks which are performed by medical or admin staff such as
Although manual billing has been in practice for a very long time, it is quickly being replaced by automated billing systems. Automatic billing system comparatively provides better efficiency and accuracy.
Automated billing uses specialized software and technologies to manage the entire revenue cycle (RCM). This includes everything like data entry, claim submission, payment processing and denial management. Automated billing systems typically offer the following features:
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Although manual billing looks easy but it comes with many hidden costs that can affect your revenue cycle. You may not see these hidden costs immediately. But they can collect over time, which will eventually reduce profit and slow the growth.
Manual billing requires human efforts which eventually means higher labor costs. According to MGMA which stands for Medical Group Management Association, manual billing system adds upto 30% more expenses as compared to automation. These expenses are because of:
Manual billing is also prone to human error particularly when numerous claims are involved. In a 2021 study was conducted by the American Health Information Management Association (AHIMA). In the study it was found that manual billing systems cause more than 40 percent of claims to be denied because of inappropriate coding, lack of matching patient data, or errors in submissions. These errors result in:
Delayed payment is one of the most acute problems in manual billing. A number of bottlenecks can be brought to the process, e.g. the wait of physical mail or faxed claim response, which seriously slows down the reimbursements. Research has revealed that manual billing can slow the number of claims being submitted to up to 40 percent, which leads to a long cash flow cycle. This has an effect on the financial wellness of the healthcare practices by:
Manual billing systems are not able to conduct real-time analysis of data. Practices have less visibility of their financial performance because they do not have access to key performance metrics like claim rejection rates or cash flow projections. This leads to:
Healthcare providers have to comply with some strict rules including HIPAA, ICD-10, and CPT codes. Manual billing exposes the organization to the risk of compliance problems, because:
Considering the underestimated costs of manual billing, automated billing systems are now the most preferred option by most healthcare providers. Here’s why:
Automation minimises human errors as data validation is done in real-time and correct claims are submitted before, as they are sent. This results in 25-30% claim denials reduction which has been experienced in most practices that have been shifted to automation.
Automated billing systems save a lot of time by meaning that it takes relatively little time to submit claims and get the payment using automated billing systems because claims are submitted electronically. The improvement of the cash flow cycle by 50 percent is achievable, which will enhance the business and decrease the financial load of the practice.
Automation also liberates those in the administration to concentrate on other more critical issues like attending to the patients or other income generating processes. This maximizes labor and this ensures that the staffs work at the optimum level other than incurring time in uneconomical and low-value jobs.
Automated billing enables practices to have access to real-time claims status, financial performance, and denials reasons. This enables them to respond rapidly to the problems, monitor the revenues and enhance their revenue cycle management.
Compliance checks and audit trails are incorporated into automated billing systems to help in checking the compliance with regulations. These systems are updated automatically with the newest rules of coding and billing which minimizes the chances of being non-compliant and data breaches.
Manual billing can have worked several years ago, but nowadays, automation has become the most reasonable option when healthcare practices aim at increasing efficiency, minimizing errors, and boosting profitability. By switching to an automated system, the cost that is not shown in the manual billing, which would involve adding more labor, errors, late payments, and compliance risks, would be avoided.
Through the ever-changing landscape of the healthcare industry, automated billing does not represent a luxury anymore, but it is an absolute necessity of the practices that want to remain competitive and financially viable in the rapidly developing and changing environment.
With the adoption of automation, the healthcare providers will be able to simplify their billing schedule, enhance management of the revenue cycle, and devote more of their time to the high-quality patient care provision. Medical billing is a field whose future is evident and is through automation.
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