Direct billing refers to the process of sending bills of a service not to the one who availed the service, but rather to their insurance company. In this sense, the insurance company pays for the services rendered while the beneficiary enjoys the service without the hassle of paying. This means that the benefactor not only has to draft the bill, but also has to code it in order to send it for approval to the company, which then is subject to scrutiny and can thus be accepted or rejected due to different reasons. Often the benefactors hire companies like sybridmd.com to escape the hassle of filing the bill. While many industries use the direct billing service, the healthcare industry is particularly prone to this process due to many reasons. Some of these reasons are listed below:
Marketing feature
Healthcare providers are more likely to use the direct billing method in order to market their services effectively- it helps them stand out in the line of other potential providers. This is important because standing out allows a service to attract more clients, hence increasing the profit margin. While direct billing as a marketing feature is true for other industries like travel and salons as well, it is particularly important for healthcare seekers because it allows a clinic to look more dependable in the eyes of the client- it assures patients that unavailability of immediate cash will not be a hindrance to the healthcare services they require. In other words, patients are more likely to consider those healthcare providers who offer direct billing because it presents the image that their life is no longer dependent on money, as the payment procedure is between the provider and their insurance company. Even if the billing is rejected by the insurance company due to invalid coding, most of the healthcare providers hesitate in reaching out to patients for money and bear the cost themselves. In either case, sometimes the patient is safe from the burden of the cost for the services.
While direct billing as a marketing feature may attract more clients, it is worthy of being noted that the loss that is caused by the excess of patients can be damageable to the clinic or hospital. This is because of the complications of the coding process and the burden of frequent rejections by the insurance companies, which increase the load on the provider. If the healthcare provider bears the loss of all the rejections, it may drive the business to the level of bankruptcy in some cases.
Social policies
Moreover, social policies in the USA have in some ways encouraged the dependency on the direct billing method. A few policies that help veterans gain healthcare services (like Medicare) and enable low-income individuals to be treated medically (like Medicaid) require a contract with insurance companies (in some cases there is the state instead of insurance agencies). This contract enables individuals to not pay for the services they benefited from, and instead demands the insurance companies or the state to pay on their behalf. This is rarely the case in industries other than healthcare, where the benefactors are legally bound to provide services for which they are not immediately paid.
Often the healthcare providers are not paid immediately. For example, some insurance companies do not pay for the services provided until 30 days after the service is rendered. This in many cases hinders the cash flow within the organization, which causes troubles while submitting dues and payments to other individuals linked to the organization. In this sense, the policies that create an environment conducive to the advent of direct billing cause payment issues within the networks of the healthcare provider(s).
More profit
It can also be argued that direct billing is a charm for healthcare providers because it allows them to make more profit. Insurance covered services mean that a lot of patients choose treatments and visits that do not require them to pay, which in turn increases the flow of patients in the clinic. While healthcare providers receive late payments due to direct billing, when they do receive cheques, they are worth more than what they would have been had the patients been paying out of their own pockets. This is seen in the statistics provided by IBID, which note that providers who bill their patients directly need to complete the filing process more than once in one day. This also means that the hospital staff becomes acquainted with the process, which speeds up the billing and filing work, which creates a more learned and experienced staff.
Another reason why direct billing may increase the profit of healthcare providers is that if they do not follow this billing system and require patients to pay through credit card, it means that they are liable to pay the transaction fee which goes out of their profit. If, however, healthcare providers bill directly, they save themselves from the hassle of owing money to the credit card companies for every transaction, which in turn increases their profit margin.
To conclude, direct billing has its own advantages and disadvantages for professional industries. Either way, healthcare providers seem to be more prone to this process due to the reasons mentioned. The cons of this billing system can be reduced by using external companies who file the billings for clinics. This reduces the chance of mistakes and rejections, hence making it less possible for the healthcare providers to suffer a loss and bear burdens which they do not have to face otherwise.