Jun 13, 2022

In-House Medical Billing Software vs. Outsourced Billing Services: Pros, Cons, & Best Solutions

Updated June 13, 2022  |  Published June 13, 2022 by Hannah Orlousky

RXNT In House Vs Outsourced Billing Blog V3

According to practitioner polls, 83% of small to medium-sized practitioners said that slow payments are their top practice challenge, while 81% said that the second-highest challenge was proper communication of patient payment accountability.


To solve the issue of slow payments, patient transparency, and ultimately closing the revenue loop, there are a few options for practices. For example, outsource your medical billing with a third-party managed billing service, or use integrated in-house billing software to take ownership of the process. The right solution for your business depends on a host of factors, but we’ll cover the differences, pros and cons, and cost comparisons so that you can make a billing decision that’s right for you.

What is a Medical Billing Service?

Managed medical billing services allow providers and practices to outsource their revenue cycle management to third-party staff who deftly navigate between patients, healthcare providers, and payers to arrange for collection and reimbursement of medical services. 

Outsourcing work to a third-party medical billing service ensures that your practice has trained staff whose sole commitment is to deal with billing, coding, claims, collections, and more. This relieves practice staff from administrative burden, streamlines workflows, reduces submission errors, and more quickly closes payment cycles. However, medical billing services costs can be difficult to predict. 

Billers must collect and/or verify information including patient demographics, medical history, insurance coverage, and services received, plus manage the processing, tracking, submission, and follow-up on health insurance claims. The billers verify coverage with patient insurance plans and generate and code medical claims, check for accuracy, and submit claims to payers. Once payers approve the claims, the claims are returned to billers. Billers then prepare the patient’s bill by deducting the amount covered by the payer from the cost of the procedure or service, factoring copays and deductibles, and then communicating the outstanding balance with patients. As you can imagine, all of this is not a cheap or easy process!

What is Medical Billing Software?

Medical billing software is typically an automated system—typically cloud-based or server-based—that provides a cost-efficient, transparent way to quickly manage the revenue cycle. Medical billing software is a streamlined way to handle billing in-house while also preventing mistakes (which some studies show occur in 4 out of 5 medical bills), enhancing patient experience, and working within a streamlined, integrated interface. Medical billing software is built to be agile, and integrate with electronic health records (EHR), electronic prescribing (eRx), and other tools so that healthcare data is seamlessly accessible for administrative staff and patients, ensuring better communication and transparency. Both parties can be alerted when accounts need special attention, keeping claims and payments moving while also providing automation and tracking throughout the process. Plus, most software systems offer practice reporting so you can keep an eye on A/R aging, insurance payments, overall revenue, and more.

Medical billing software can simultaneously (and sometimes automatically) capture charges, manage claims submission and scrubbing, maintain an accurate medical billing code database, provide revenue reporting, facilitate reimbursement, and more. Other benefits of billing software include: 

  • Cloud-based data for remote work 
  • Central billing office functionality 
  • Customizable reports 
  • Automated claims scrubbing
  • Real-time claim status
  • Clearinghouse integration
  • Electronic remittance advice 
  • Mobile applications 
  • Online patient bill pay
  • Denial management
  • Sliding scale payment plans
  • No-cost data migration

What are the cost differences between medical billing software and medical billing services?

Costs of Managed Medical Billing Services

Costs can vary drastically with managed medical billing services due to the nature of their payment model. Fees and pricing are dependent on a number of factors, including both the size of your business and the type of medical specialty. 

There are three ways that a healthcare provider may be charged by a billing service: by a percentage, per each claim, or through an hourly fee. Percentage-of-revenue fees can reach 10% or more and are usually based on the monthly revenue that a healthcare provider collects. Percentage ranges can vary depending on the services provided by the clinic or hospital, the number of patients, and the location of the facility. Per claim fees range between $4 to $6 per claim. Per hour fees are often chosen when practices don’t see many patients or need many claims, and can range widely depending on the company. Keep in mind that all of these billing service choices typically require setup, training, licensing, and recurring fees that may range from $1,000 to $1,500. Each physician can also be charged a fee with a cap on the number of physicians that can be serviced. Therefore, when considering billing services, pricing predictability can be difficult to navigate. If you choose this option, make sure to review contracts with a fine-tooth comb for any add-ons or hidden costs. On average, all of these services can range anywhere from $1,000 to $100,000 per month

Medical Billing Software Costs

Inefficient billing systems cost practices billions of dollars a year, with case studies showing that software automation improved patient bill payments by 154%, increased revenue by 24%, and improved claim turn-around time by 75%. While some medical staff express hesitation about the integration and adoption of medical billing software, the investment can be well worth it if it’s right for your practice.

What can you expect when it comes to cost? Typically, software is a much more predictable, budget-friendly way to manage medical billing for practices. This largely depends on the type of software, however—cloud-based solutions can range from $30 up to $500 per user per month, while costs for on-site, server-based solutions can reach $10,000 or more Billing software pricing is dependent upon claims as well as integrations (EHR or eRx).  For example, a practice will pay around $75/month for 50 claims, and $175/mo for unlimited claims. In regard to integrations, e-prescribing software will be a different package than a straightforward basic practice management solution. Overall, however, the beauty is that there aren’t hidden costs or startup fees for implementation and support.

Why is RXNT the Right Software Choice for Your Medical Billing?

Increase revenues, get time back, and supercharge productivity for your practice by making the right choice for a solution that meets your needs. Research shows that intelligent automation relieves administrative stress and allows practices to seamlessly scale front and back-office functions without skipping a beat. In an increasingly remote, over-worked, and inundated healthcare environment, many practices are considering integrated medical billing software to manage their revenue cycle and collections as the “next-generation operating model that can sustain new levels of speed, agility, efficiency, and precision.” 

As practices face mounting expectations for improved patient experiences, accountability, and financial pressure, it’s critical that they have automation in place to streamline tasks, increase software integrations to improve communication, and have predictable pricing. Smart, flexible, and efficient software is the answer. That way, you know exactly where your money is going with more control of your revenue. Automation and integrations provide more transparency and tracking for both patients and administrative staff so that communication is clear and efficient, closing revenue cycles more quickly and with more confidence. 

At RXNT, we customize our software to the practice needs to minimize adoption time and ensure that your practice workflow doesn’t miss a beat. Contact us to learn more about how automation and intelligent billing software can optimize your revenue cycle management.

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