7 Essential Guidelines on How To Best Manage Your Outsourced Medical Billing Service

The secret is out.

More and more medical providers are discovering the benefits of outsourced medical billing processes every year, and the research proves it. The medical billing outsourcing market size is currently valued at $11.1 billion and is expected to grow at a compounded growth rate of 12% from 2022 to 2030.

The growth is primarily fueled by factors such as new technological solutions, bad debts, and changing regulatory requirements, but there are many other reasons to consider outsourcing medical billing services.

There is no longer a need to persuade small-to-medium medical practices to outsource medical billing services. Instead, this article will explore the best ways to manage your outsourced medical billing service so you can experience the highest return on investment on your time and money.

How to manage outsourced medical billing services

Certain medical providers resist the idea of outsourcing their medical billing operations as they perceive it as relinquishing control. This couldn’t be farther away from the truth, and you can still provide input and optimize the outsourcing function that will allow you to sleep peacefully at night.  

It should be seen as a collaboration toward a mutual goal, and the optimal results can be achieved only through transparency from both ends. This section provides suggestions on how you can influence the successful outcome of outsourced medical billing services. 

Identify quantifiable metrics 

You know your practice better than anyone else. When it comes to the metrics that you use to measure the success of your practice, they might differ from the practice around the block. The same applies to medical billing services. 

When you outsource certain services, experts in the fields can immediately make suggestions and provide their proven boilerplate metrics landscape. Still, you can also make additional suggestions or requirements regarding the metrics you prefer to keep an eye on.  

Here are some suggested KPIs used in the Industry. Note that some of them may not be easily measured in your EHR/ Billing system and may need to be manually tracked by the billing team: 

Metric Type 

Key Performance Indicator (KPI) 



Time to File a Claim 

Average time taken to code a charge and submit a claim 


Time to Resolve Denials 

Average time taken to resolve denied claims 


Time to post a Payment  

Average time taken to apply checks/ ERA’s 


Clean Claims % 

% of claims that get paid in the first submission 


Quality of Payment Posting 

Number of defective Payments posted in a month 


Denial Resolution Effectiveness 

Aging of Unpaid claims based on Date of Service (Note that the Outsourced billing company may not be able to manage this on their own) 


No Response Claims Resolution 

One on One reconciliation and RCA on Claims older than 30 days on which no response has been received 


Revenue Collected 

Revenue Collected in a period. Trend 


Accounts Receivables Ageing 

Outstanding Revenue $ split by amounts & % into 0-30 Days, 31-90 days and >90 days buckets 

Once the metrics are identified and agreed upon, you need to determine your current baseline and the service level agreements (SLAs), or in other words, the standards or targets that these metrics should adhere to.

Identify your current baseline and SLAs

Once you have identified and established key quantifiable metrics, you need to determine your practice’s current level of performance. Use this current level of performance as a benchmark and then determine the minimum acceptable performance delivery you expect from the supplier. This may lead to detailed commercial discussions but could be well worth the effort. 

For example, what is the frequency of submitting claims? You could insist on everyday submission or once a week, depending on the volume and your preference. What is the payment posting turnaround time? In other words, how quickly are payments posted once received by the biller? And what about accounts receivables? 

Remember that certain KPIs are beyond the control of the supplier. For instance, denial resolution effectiveness. The supplier may act immediately and request information about the claim, but the turnaround time of the insurer is out of the supplier’s control. 

Instead of basing the SLA on denial resolution effectiveness as a whole, you can sub-categorized SLAs. In this example, you can create SLAs for the allowable timeframe for requesting feedback or follow-up protocols to follow. 

SLAs for your own team should also be laid on the table. For instance, how fast should your team respond when a query is passed on to them? Who and how will these queries be tracked and managed?

Don’t let all of the above become empty promises. Proper governance is the only way to ensure everything is going according to plan.

Establish a Governance Structure & Process  

Identify the key players in the process on both sides. Identify the key people and their specific roles and responsibilities on both sides of the screen and ensure they understand where they fit in and know who works with what. 

Determine mitigation strategies for when the going gets tough. It is during challenging times that a plan’s true success is tested. A good place to start is by putting mitigation strategies in place for when operational bottlenecks occur. What would happen if, for some reason, a key person on your side is swamped with work or absent for an extended period of time? 

Typically, try and include someone in your team who interacts with patients in regards to outdated insurance cards, balance collection queries, etc. Someone who is also responsible for credentialing who can jump into action when claims are denied due to credentialing issues, and someone who can speak to providers on specific issues surrounding codes or clarify notes.  

Setup Review Rigor: Plan frequent meetings  

To ensure that the machine is well oiled and running smoothly, review meetings need to be conducted where both parties provide and discuss transparent feedback. In general, once a month would suffice, except if there are pressing issues at hand that require operational improvement mitigation.  

You should have the power to instigate review meetings and adapt their frequency as you see fit. 

These monthly meetings usually entail reviewing the operational performance of the previous month. Ensure that voices from both sides are welcome at the meetings to ensure optimal information disclosure. Actions should be minuted and reviewed at the next scheduled meeting. 

Monthly or bi-weekly meetings are great for on-the-go fixes, but it is also essential to consider long-term trends. Schedule quarterly and annual meetings to review the long-term progress and use the information to plan for future strategy formulation.  

Make sure you keep the supplier team motivated  

Outsourcing can be compared to a team sport. When the team functions as a unit, synergies are created. Therefore, you must treat all the ‘players’ with the same amount of respect, regardless of their position on the field.  

You might never have met the supplier’s employees in person or established personal relationships with them like your permanent in-practice employees, but they are people too. Treating them with respect and keeping them motivated will make them feel part of something great and perform better, which means that the practice as a whole will improve.  

Understand errors 

Even vehicle manufacturers that use robotic technology to assemble cars have an acceptable error rate on their assembly lines. Therefore, expecting humans to perform 100% error-free all the time is an unrealistic expectation. 

Billing is a manual process, and errors will occur, but getting caught up in a single mistake is not constructive. Instead, use the metrics to measure the number of errors in relation to the volume of transactions. These quality measures can be established and reported, and discussed during the monthly or quarterly meetings.  

If there are certain reoccurring trends, the cause of the continuous errors should be investigated, and resolutions sought. If there is already a healthy, transparent platform for communication where workers on both sides feel empowered to contribute, finding solutions to reoccurring problems would come easy.  

Establish SLA penalties and incentives 

Supplier teams should deliver to the level of performance agreed to at the beginning. If you are particular about process performance and would feel more at ease knowing there are consequences for sub-par delivery, establishing SLA penalties could be an option for you to consider. 

Motivation sometimes proves to be more effective than threats. You could consider incentives to motivate suppliers to perform better. It could also happen that suppliers will agree to penalties on the condition that incentives are provided for superior performance. 

This is a commercial discussion that might take up time to establish the exact perimeters and protocols, but it could be something to consider if you want guaranteed top-notch performance. Discuss it with your supplier before commencing with the contract.  


  • The benefits of outsourcing medical billing are discovered by more and more small-to-medium medical practices that join this trend across America. Research shows that the market has been expanding and will continue at least until the end of the decade. 
  • Managing outsourced medical billing services successfully starts with establishing key quantifiable metrics that should be communicated clearly to the supplier. Using these metrics, practices can determine and benchmark their own performance and decide on the level of future performance they expect from the supplier. Determine SLAs and, if need be, discuss the provision of penalty clauses for sub-par performance or incentives for superior performance.  
  • Proper governance is required to monitor and improve the performance of outsourced medical billing. Schedule monthly, quarterly and annual meetings to discuss short-term and long-term observations. 
  • Treat the supplier’s teams with the equal amount of respect you would do for your own team. Always remember that humans aren’t perfect and that errors will always occur. Instead of focusing on a single slip-up, monitor and identify trends and disclose them to the teams in a transparent manner.  

Neolytix has been focusing on providing a-la-carte services to small-and-medium practices for over a decade. Whether you need help creating an outsourcing strategy or improving your existing outsourcing initiatives, our experts, from billing to marketing and more, can assist you.  

Complete the box below to schedule a free no-obligation consultation. Let us show you how you can better manage your outsourced services.  

Medical Billing Contact Form

"*" indicates required fields

Your Name*