Sep 253 min read

In-House vs. RCM: Choosing a Mental Health Billing Model

One of the most important decisions a practice owner has to make is whether to handle their billing in-house or hire a mental health billing (also known as RCM, or revenue cycle management) service. Choosing between managing billing internally or seeking external expertise can significantly impact a therapist's responsibilities and workload.

In this article, we'll explore various considerations for both approaches and provide recommendations for therapists to make an informed decision.

The Case for In-House Billing: Cost-Effectiveness (for the Right Practice)

A female therapist examines a bill from an insurance company. Handling mental health billing in-house may be appropriate for smaller clinics with straightforward claims.

Cost control

Therapists who manage their billing internally have the advantage of controlling costs. This eliminates external service fees, allowing therapists to retain a larger portion of their revenue. However, it necessitates a significant investment in time and resources to stay updated on billing codes, compliance regulations, and insurance requirements.

Direct oversight

Handling billing internally gives therapists direct oversight and control over the entire process. This can lead to a more intimate understanding of their practice's financial health but may also stretch therapists thin as they balance client care and other administrative tasks.

Data security

In-house billing offers therapists control over client data security. However, it requires an investment in robust cybersecurity measures to prevent data breaches, adding another layer of complexity to practice management.

If your practice can afford to hire an admin dedicated to billing and claim management, or if your clients' billing is relatively straightforward, keeping billing in-house may be right for you.

The Case for Revenue Cycle Management: Do More of What You Love

A woman speaks with a client and writes something down on her notepad. Mental health billers can save clinics time and money.

Expertise and efficiency

Outsourcing billing to an RCM specialist ensures that professionals with expertise in mental health billing handle the intricacies. This can lead to increased efficiency and a reduction in billing errors.

Focus on client care

Outsourcing allows therapists to redirect their time and energy toward providing quality client care, enhancing overall satisfaction. Regular communication with your biller is essential to align with practice values and prevent potential issues.

Adaptability to changes

The dynamic nature of healthcare requires frequent adjustments to billing codes and regulations. Outsourced billing services are better equipped to adapt to these changes, ensuring ongoing compliance.

Thinking long-term

Most billers will collect a percentage of what is allowable from an insurance payout, typically ranging from 3-7%. While hiring a biller is an additional business cost, it may save your practice time and money in the long run by minimizing or eliminating errors, internal security upgrades, staff training, and other direct and indirect costs.

If handling billing in-house impacts your staff's ability to see and treat clients, consider hiring an RCM expert.

Choosing the Right Model for Your Practice

A therapist engages in play therapist with her client, a young African-American girl. Hiring a mental health biller can free up time to see more clients.

When deciding which model to adopt, practice decision-makers should take the following actions:

Consider practice size and billing complexity

Smaller practices with simpler billing needs may find that handling billing in-house is a viable option. Larger practices or those dealing with complex insurance structures may benefit from the expertise of an external billing service.

Assess time and priorities

Therapists should realistically assess how much time they can allocate to billing tasks while providing quality client care. If the administrative burden becomes overwhelming (or you simply dislike doing billing), outsourcing may be a strategic move that allows therapists to focus on their core responsibilities.

Evaluate potential savings

Conduct a thorough cost-benefit analysis that includes direct and indirect costs associated with in-house billing. Remember that while RCM is an expense, there is potential for increased revenue through improved efficiency and reduced billing errors. Additionally, improved billing and administrative efficiency opens the door for your practice to expand.

Therapists must weigh the advantages and disadvantages of each option in the context of their specific practice needs, size, and long-term goals. The ultimate goal is to strike a balance that ensures both financial success and exceptional client care.

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