Choosing the Right Medical Billing Software for Your New Billing Business

When evaluating Medical Billing Software, Practice Management Software, or even Electronic Medical Records Software, there are key features you need to look for and there are some things you need to avoid.

(This recent article discussing the amazing growth of the Revenue Cycle Managment (RCM) industry also lists web-based or cloud based software as the way most doctors are going these days. The article states that “web and cloud-based RCM solutions are growing at double digit CAGR from 2016 to 2021.” So, we felt it appropriate to re-publish this article.)

By: Patrick Phillips, Founder/CEO American Business Systems, LLC

(Originally Published in BC Magazine – Oct 2013)

Having worked with some of the major technology companies to find the ideal software to maximize the revenue of a medical practice, let me share with you, first, a warning about server-based software systems.

medical billing software

Server-based refers to software that is literally installed from a CD or DVD onto the hard disk of your computer-the “server.” This is old-school technology and should not even be considered for a modern medical practice. Especially in light of the HIPAA rules for patient privacy.

Imagine having a computer in your office, with all your patient records, stolen and sold on the open market! Even if you had a backup (another problem with server-based software!), your patient data is now in the hands of someone who could post it all on the Internet for the whole world to see (or sell it to some nefarious individual wishing to market some medical quackery to the patients).

And then there is the problem of hardware failure. It is not a matter of IF your hard disk will fail, but simply WHEN it fails. Then what? How many people make regular (read daily) backups of their hard disk data? And when a computer crashes, there goes all your patient history, including balances owed, and all your claims history, including insurance information.

And, if you are using a scheduling program, now you do not know which patients will show up when. It is a nightmare not worth even considering in today’s cloud-based environment.

There is even server-based software that can be installed on a VPN (virtual private network) to share the data between an outside medical billing company and your office. A piece of software is used to bridge between the medical biller and your computer. This is a huge HIPAA privacy risk, as well as a synchronization nightmare. Bottom line: Don’t even think about server-based software if you are currently shopping for practice management and Medical Billing Software.

And if you are currently using server-based software, you need to start shopping for a cloud-based practice management system that is hosted on a software provider’s server and accessed via the web using any browser. If you are looking for a billing company, make sure you ask if they use a server-based system or if you can access the system through an Internet connection from anywhere, 24/7.

Here are some other things you need to check before outsourcing your billing or buying a practice management system for your office:

First and foremost, ask about the security of your data. If your patient and billing data is out there in “the cloud,” how secure is it compared to having your data stored on your own computer or server?

What you want to ask the Medical Billing Software provider is this: “Are your servers HIPAA-compliant?” If the answer is yes, ask for proof. If the answer is “not sure,” run as fast as you can.

Most systems that are cloud-based are HIPAA-compliant. Which means, they are in a secure facility with redundant backup servers (the data is stored on more than one physical server). These servers may be in the same physical location, so make sure there is at least one other physical location (preferably in a different electrical grid somewhere else in the country). That way, if one server crashes or there is an electrical outage, the other server will kick in, and you, the user, will not even be aware there was a problem.

Make sure that the data on all the servers is backed up, daily, onto other media and stored in a separate, secure location. This is something that needs to be automated and happens “behind the scenes” at least once a day. Again, what if the server in one location blows up or the building it is in burns down, and the other server malfunctions and the hard disk crashes? Your provider needs to be able to restore the backup data to new servers and get you up and running within 24 hours. Ask specifically for their backup protocol.

Next, ask about specific features.

System Features. Is the system truly cloud-based? That is, can you access the system from any computer with an Internet connection? (One way you can tell is to ask if there is any software that needs to reside on the computer you are using in order to access the system.)

Is the system accredited by EHNAC (

Is the system connected to a certified CAQH COR Phase 1 Clearinghouse? (Google any of these terms you are not familiar with.) Is the system totally integrated with a clearinghouse, the billing system, scheduling, and clinical (including EHR)?

Is the EHR compliant with the data standards that are mandated by Meaningful Use?

Does the system automatically post payments and adjustments to the patient ledgers from electronic EOBs (ERAs) from payers?

Does the system have a Patient Portal that is integrated (all data entered by the patient is immediately available in all parts of the system)? Will the software provider assist with seamless data interchange with other healthcare systems?

Some of the standards that assist with integration and that you should ask about include Health Level 7 (HL7), ANSI X12 (the HIPAA Standard), Secure FTP (File Transfer Protocol), and HTTPS. You may not understand what all these mean (Google them!) but your software provider will know.

System Users. How many users can you put on the system? Is there a charge for additional users? Can each user be assigned limited access to certain parts of the system? You may have a data entry clerk who only needs to be able to add patient and insurance data. Another may just need to process the insurance claims. Another may be in charge of patient billing. And, of course, you will need full access for any person authorized to administer the system (adding and deleting users, setting their access level, running reports, etc.).

Billing. What is the average claims rejection rate from all payers (some systems average less than 2% rejection)? Can you place a claim on hold if more data is required? Can you print in PDF format or directly to CMS 1500 forms? Can you track your claim (like you can a FedEx package)? Can you create secondary claims to payers? Can the system email you if a claim is rejected? Can the system automatically, on a periodic basis, report on the first pass of all claims, total rejects, rejection categories, reworked (resubmitted) claims, and transaction summaries? Does the system have the ability to show reports as multi-colored bar charts, suitable for printing?

Reporting. What specific types of reports can be generated? Can you create your own reports? If not, can the software developer create reports for you, and, if so, is there a charge for this? Can the reports be exported to Excel or PDF format as well as being viewed on the computer? Can the reports be restricted to certain users only?

Eligibility checking. Can the system run eligibility checks on any patient at any time? Is this done in real time, checking the insurance company’s database and reporting back to your system immediately and accurately? Can the system automatically re-check the patient’s eligibility a day prior to every patient’s visit? Is there a charge for each eligibility check or is this covered in the monthly access fee for the system (or included in the percentage charged by the billing company)? Upon a successful eligibility check, does the patient data import from the insurance payer directly into the system?

Scheduling. Does the system have a web-based scheduler, available from any web-connected device, including smartphones, iPads, and tablets? Will it accommodate multiple providers and their appointments? Is it integrated with the eligibility feature?

Codes. Are all CPT and ICD-9 codes built into the system? How often are they updated, and is there a charge for updating the codes? Is the system ICD-10 ready?

Training. Is there live training available via GoToMeeting or live on-site training? How many hours of training will be given to our practice? Can as many staff members be trained as needed or is there an extra charge for additional users or hours of training? Are there recorded training modules available via the Web? Can all users access this training?

Support. Is support available 24/7, and, if not, what hours is it available? Is support by phone, live chat, email, or all three? How many support personnel are available and at what times? Is support available to all users or just the Administrator? Has the company won any awards for their customer support? Are there any references I can call to verify the level of support they get?

In summary, ask lots of questions, even if you don’t know exactly what they mean. Your Medical Billing Software rep will know what they mean and will get you the answer if they don’t know the answer. Write these down and hold them to getting you the answers or tell them you are not going to consider their software/system.

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