Medical Billing - How Bad Are Things Really?

Everybody hears about how the medical billing industry is robbing us blind. Medical costs are out of control, or at least so they say. Medical billing software, just to be able to run your medical billing practice, costs an arm and a leg. Medical billing agencies like Medicare and Medicaid, Blue Cross, Blue Shield and even private insurance companies are ripping us off left and right. Nobody wants to pay claims, or at least that's the perception. But what's the reality? Does anybody who is doing the complaining really know? Medical billing statistics are posted all over the place, especially with the Internet being so filled with information. But does anybody really take the time to look up the stats to see how bad things really are?

For example. Did you know that it costs between $8 and $10 to process the average medical claim? Now maybe if you're charging a procedure that costs thousands of dollars, that's not such a big deal. But what if you're putting in a claim for a $50 walker. That's almost 20% of the total cost of the item, which is absolutely absurd. So yes, in this case, costs are crazy. And the problem is very simple. To process a claim, the same procedure must be followed, regardless of what the service being billed is. If the walker could be processed at a cheaper cost, no problem. But that is just not the reality of it.

Forgetting about claim processing costs, what about salaries? Well, for the fortune 500 company like Prudential, paying a salary of $35,000 a year for a claims processor is not such a big deal. But when you're talking about a non profit organization like Medicare, which is actually running in the red and in danger of shutting its doors, paying these people that same $35,000 a year is insane. But they have to. Why? Because if they don't, where do you think they're going to go? To the private sector of course. So salaries must be competitive.

What about turnaround time for claims. Yes, we all complain that our claims take forever to get paid. But what we don't understand is that the people who are really getting killed are not the patients, because they will eventually have their claims paid, but the billing companies. Turnaround time for paper claims can be anywhere from 30 to 90 days or more and this really puts a strain on a company and its cash flow. So as bad as the patient may be having it, the medical billing company is suffering big time.

When you add all this to the cost of just starting a medical billing agency, you can see that the industry itself is behind the 8 ball before it even begins. Throw into this mix doctors who back in the 60s charged $15 for a doctors visit, now charge anywhere from $50 to $100 for a visit and what you end up having are costs that are totally out of control.

This is a spiral that is most likely to continue until people can no longer afford to get sick.