Why More Practices Are Utilizing Medical Factoring
As the healthcare system and laws regarding insurance companies continue to grow in size and complexity, more practices are moving towards working with medical factoring agencies to mediate their interactions and to increase the responsiveness and efficiency of payment systems. It is easy to get lost and overlooked by large scale conglomerate insurance companies. A payment delay of three to six months after the completion of care is typical of insurance claims. Though this has become a well accepted reimbursement schedule, it can create budgeting and cash flow difficulties which are especially difficult to overcome for smaller and newly established practices.
Along with this payment delay comes an incredible variability in actual expected payment date. Without the ability to determine expected income on a month to month basis, managing a budget becomes nearly impossible. As both healthcare providers and insurance companies have increased in their own specialization, it has been increasingly necessary for a third party mediator to step in and bridge this gap.
Many practices are moving towards medical factoring companies, who issue short term, low interest loans within one to three days after services are administered, allowing practices to rely on a regular payment schedule and maintain a positive cash flow. Once the insurance payment is cleared, the full balance of the loan is automatically remitted back to the factoring agency without affecting the account balance of the medical provider.
Factoring does three essential things. First, it simplifies the entire process of generating income, and removes the DMV like wait experience. When you provide care, you know you will be paid within a matter of days. Next, it takes the onus of following precise and constantly fluctuating coding rules and regulations off of you and your staff. Third, it translates the services you provide into a language insurance companies will recognize, allowing you to spend your time growing your business.
Medical factoring companies also serve as subject matter experts in coding and medical billing. With the recent expansion of the international coding system which insurance companies use to issue payments, the potential codes practices are required to submit has exploded from 17,000 to a staggering 155,000, along with with annual revisions and updates. Allowing a factoring company to translate the work conducted in a medical facility into the language of insurance companies reduces risks of expensive coding errors and frees up providers and their employees to focus their attention on patient care.
Practices who utilize medical factoring are able to streamline and regulate their lines of income and significantly reduce paperwork and back-and-forth interactions with insurance companies. By outsourcing the most technical aspects of coding, health care providers can reallocate their time back to growing their business.