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Pros and Cons of In-House & Outsourced Billing for Behavioral Health

For healthcare providers in the behavioral health sector, billing can be quite a headache. Medical billing is much more involved than typical business billing, involving complicated insurance arrangements and a great deal of government regulation.

Billing at behavioral health facilities is also incredibly important because the stakes are so high. In some other business sectors, a payment mixup may cause a delay in product shipment or a missed deadline; for a behavioral health facility, if something goes wrong, the health and well-being of patients could be jeopardized.

As with any other complicated system, problems can and do arise during the billing process. Behavioral clinics can choose to have their own in-house billing staff, or they can outsource their billing work. We’ll consider the advantages and disadvantages of both in this article.

outsourced billing

What is in-house billing?

In-house billing usually involves a team of Certified Medical Coders who handle the billing processes for a behavioral health provider. They work on-site directly for the provider to foster effective customer relationships and handle all of the claim submissions to health insurance agencies as well as to self-payers.

Not all behavioral health providers will have their own in-house staff. When deciding whether in-house billing makes sense, the answer will differ from practice to practice.

Some companies will have access to a strong pool of applicants who know how to handle the technicalities that arise during medical billing. They may have the funds to hire their own in-house team.

In other cases, it will make more sense to outsource medical billing to a firm that specializes in it. This approach is normally best for providers that don’t have lots of cash to spend on dedicated staff or who don’t have the systems in place to support it.

What are the advantages of in-house billing?

Behavioral health centers that can afford to have an in-house billing staff will have several advantages. These include:

Dedicated Staff Trained Specifically on the Provider’s Services

Since an in-house staff will work directly for the behavioral firm, they will know all of the services that the practice provides.

Once they have been trained to understand the specific billing codes for each service and how they must be transmitted to insurance providers and individuals who self-pay, they will be in a good position to submit correct claims.

In addition, physician staff will appreciate the connection that they have to the billers and can approach them when something appears incorrect.

Potential for Increased ROI

Once the medical billing team has been established, it’s difficult to move to an outsourced model. Doing so can result in lost expertise and the original investment in the computer software technology needed to produce accurate medical billing.

When an existing team is in place, it can be easier to refine processes when required rather than starting over from scratch with an outsourced team.

For larger companies, in-house billing can make particular financial sense by allowing the company to retain a larger percentage of collected revenues. Outsourcing generally means giving up a percentage of collected revenue, so it may be less cost-effective for a larger firm.

Proximity of Medical Billing Team

Having an on-site medical billing team allows for quick interaction to answer questions when required. You won’t need to reach out to a team that is located in an entirely different office that may be in another city or a completely different state. Instead, you can resolve issues by speaking directly with your on-site medical billing team.

What are the disadvantages of in-house billing?

Behavioral centers that choose to use an in-house team are also subject to several drawbacks. These include:

Higher Costs

To have an in-house billing team, you will need to provide them with salaries and employee benefits. If you have several people on your team, the costs can add up quickly. You’ll also need to invest in software that is appropriate for handling medical billing for behavioral health centers.

Potential for Lost Employees

If your team comprises only a few medical billers, should one of them decide to leave, you’ll lose a significant investment.

A medical biller who has been a part of the team for a while will take with them their expertise, leaving you to train another individual to take their place. This process can result in reduced operations and even a stalled cash flow until the new team gets up to speed.

What is outsourced medical billing?

Outsourced medical billing involves hiring a company that specializes in medical billing to handle your own processes. In an outsourced model, the outsourcing company will have its own dedicated software that it uses to bill patients and insurance providers for services.

An outsourced company will also have a number of medical billers, some of whom may work on a behavioral health center’s account. In addition to your health care center, the team may work on other accounts as well.

The outsourced team will be employees of the outsourcing company and not your practice. They may have a number of accounts they oversee. It’s possible that they may be located in another city or state and not in the region of your firm.

What are the advantages of outsourced medical billing?

There are a number of advantages to hiring an outsourced medical billing team. A few include:

Specialized Knowledge


An outsourced medical team is typically very knowledgeable on all billing practices. Depending on the size of the firm, they may have dedicated billers who specialize in certain health care areas, such as behavioral health or nursing homes.

Since these teams are highly specialized, they’ll have the expertise necessary to perform your medical billing.

Less Expensive


Since you won’t have employees in the medical billing function, you won’t need to pay their associated salaries and benefits. You also won’t need to invest in specialized medical billing software. Instead, you can rely on an outsourced team to handle your billing functions. This price can be a fraction of the cost of hiring in-house.

Reduced Risk

An employee may decide to leave your firm in search of other opportunities. If this occurs, you will be faced with hiring another employee right away and ensuring that they are trained properly.

This process can be risky for a behavioral health provider that doesn’t have a large medical billing team, as it has the potential to interrupt the revenue cycle management process.

If an employee of the outsourced company that you use to handle your medical billing leaves, it is not as risky to your firm. The chances are that the outsourced business has other employees who can step in to fill any gaps. Outsourced medical billers are often cross-trained in multiple billing processes, allowing for greater flexibility.

What are the disadvantages of outsourced medical billing?

There are several disadvantages of using outsourced medical billing companies. These include:

Less Control Over the Process

While managers can follow up with their employees when something goes wrong, they relinquish control when they decide to outsource the medical billing function.

Thus, they’ll need to rely on the outsourcing team to ensure that the billing is handled accurately. If questions come up, they’ll need to wait for answers until the outsourced team can respond.

Cost Variability

The fees associated with hiring an outsourced firm will vary. Typically, they will charge a percentage of the medical collections that they handle for your firm. If your behavioral health practice has swings in its revenue, your costs may fluctuate. This fluctuation can result in an unpredictable monthly expense for your outsourced firm.

Software for Medical Billing in Behavioral Health Settings

Finding software appropriate to handle medical billing for behavioral health or substance abuse centers can be difficult, but very important in increasing certain KPI’s.  Sunwave Health has designed revenue cycle management software that can assist your practice in managing its medical billing processes. Contact us to learn more and schedule a free demo.