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Insights for those starting, managing, and growing independent healthcare practices

A guide to medical billing automation and revenue cycle management for your independent practice

Streamline your billing process and claims management to reduce claim denials, minimize reimbursement delays, and shorten payment cycles.

a provider who uses medical billing automation for clean claims

At a Glance

  • Medical practices can adopt revenue cycle automation, like robotic process automation (RPA), to enhance billing accuracy and operational efficiency.
  • Independent practices struggling with billing processes can either implement in-house automated systems or outsource to specialized medical billing companies.
  • Automation and outsourcing are becoming essential strategies for practices to maintain financial health and allow staff to focus on more strategic, patient-centric tasks.

In recent years, independent medical practices have been pushed to do more with less. Between staffing shortages, cuts to Medicare reimbursement, and prevalent claim rejections, practices are facing tough challengesTo capture more revenue, medical practices increasingly embrace medical billing automation. “When used correctly, digital tools, including analytics and revenue cycle automation, can manage compliance risks, better protect patient and staff data, reduce healthcare costs, eliminate process inefficiencies, and much more,” write the authors of a 2023 PwC report.

Other practices outsource the time-consuming and complex process to medical billing companies, preferring to enlist specialized professionals. 

Independent healthcare practices can reap significant benefits from implementing revenue cycle automation or outsourcing the process. But both options come with considerations. Here’s what you need to know. 

Revenue cycle automation 

Practice management systems that enlist technology such as robotic process automation (RPA) can ease the billing and coding burden. RPA is an automation technology that uses software-script bots to replicate tedious manual front- and back-office billing process tasks — and it’s reshaping the medical billing landscape. One 2021 survey found that 78% of healthcare providers are already using or implementing automation in their revenue cycles, up 12% from 2020. 

If automation’s full potential were achieved, it could have a significant impact on reducing costs and improving affordability of healthcare. ”
Brandon Carrus, Sameer Chowdhary, and Rob Whiteman

As a technology that increases accuracy and can work around the clock, RPA has enormous potential. In a recent IDC survey, 79% of respondents agreed that RPA “reduced errors or mistakes, reducing time spent in rework.” In an article for McKinsey, Brandon Carrus, Sameer Chowdhary, and Rob Whiteman determined that automation can relieve the significant cost burden associated with the administration of the US healthcare system.

“The net result is that if automation’s full potential were achieved, it could have a significant impact on reducing costs and improving affordability of healthcare,” they conclude.

RPA is best used for error-prone tasks, including manual data entry, that don’t require human decision-making. In medical billing automation, RPA can process claims, generate and send patient invoices, process payment, and automate follow-up. Beyond billing, independent practices can leverage RPA to secure prior authorizations, verify insurance, extract data from records or lab results, and more. 

A Deloitte survey found that leaders who had implemented RPA agreed that it: 

  • Improved compliance (92%)
  • Improved quality/accuracy (90%)
  • Improved productivity (86%)
  • Reduced cost (59%)

Benefits of RPA for medical practices

  • More clean claims: RPA automates the most error-prone aspects of medical billing to help you submit more clean claims, reducing denials and getting you paid faster. 
  • Better efficiency: Bots work faster than humans and aren’t constrained by working hours, speeding up the billing process enormously.
  • Higher front office productivity and morale: Bots automate tedious tasks. This frees up staff to focus on more strategic and impactful practice activities, and heightens job satisfaction along the way. Some leaders reported finding greater employee job satisfaction from moving people out of tedious, transactional tasks to more strategic work.
  • More accurate data entry and exchange: RPA enables providers, medical billing companies, and payers to seamlessly and securely communicate patient information. It boosts accuracy, precise data entry, and compliance. 

5 steps to implement medical billing automation

  1. Help staff get on board with the change. It's touch to contend with the fear that robots will replace workers, and so winning over front- and back-office staff is essential to successful implementation. Explain that RPA will not replace staff but rather liberate them from the most tedious aspects of their roles, so they can focus their energy elsewhere. 
  2. Proactively manage the transformation it will bring. Determine how RPA will affect workflows and workplace dynamics, and communicate these changes in advance to your staff. Set expectations and prepare staff to support a smooth implementation. 
  3. Identify where RPA could have the biggest impact. Determine where RPA could be most helpful, and focus there first. This could be billing automation, prior authorization, insurance verification, claims management, or other tasks. 
  4. Demo and select a tool. Consider the areas you identified for greatest impact, and select a tool that provides corresponding functionality. For instance, Tebra’s practice management system provides integrated RPA to help medical practices increase profitability and improve revenue cycle management.
  5. Monitor success post-implementation. Create and install a system to track the progress and success of your RPA tool. Consider post-implementation meetings with your manager to review progress and troubleshoot any hurdles.
5 steps to implement automated medical billing
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Outsource medical billing

Managing the medical billing process can be daunting and time-consuming, especially for independent practices. The intricacies of coding, dealing with payers, and collections are often too much for a growing practice’s staff. Yet in-house billers can be hard to find and expensive to hire. In addition to salaries and benefits, practices must provide the medical billing technology — all of which can cost more than outsourcing. 

For practices without an in-house biller or the budget to support one, outsourcing medical coding and billing is an effective way to navigate the critical but convoluted process.

Billing companies stay up to date on regulations and technology

As dedicated specialists, medical billing companies are well-versed on medical coding and stay on top of the always-evolving requirements to ensure accurate claims submission. Submitting clean claims the first time is critical as a staggering estimated 50% of denied claims are never resubmitted — resulting in significant revenue loss for practices. 

Additionally, medical billing companies offer a comprehensive range of services, including claims management and follow-up communications, like resubmissions, corrections, and appeals. They have established systems and workflows to optimize revenue collection, so your practice can avoid having to hire or train staff. 

Medical billers also leverage the newest technology for medical billing automation, which supports a better first-pass acceptance rate (FPAR). Healthcare business consultant and industry expert Aimee Heckman recommends that practices aim for a FPAR of greater than 95% for the shortest revenue cycles and best profitability. Achieving this prevents practices from front-end rejections; reduces costly follow-ups on accounts receivable, and decreases the labor-intensive need for appeals; claims corrections, and resubmissions.

Benefits of outsourcing medical billing

Engaging a medical billing company is a way to support your practice’s revenue cycle. Doing so allows your practice to:

  • Keep pace with regulatory changes
  • Boost your clean claims rate
  • Reduce claim denials
  • Minimize reimbursement delays
  • Increase net collection and get paid faster 
  • Maximize cash flow and increase margins

Improve your clean claims rate

The more clean claims your practices submits, the more profitable it will be. But the process is rife with the potential for human error given the complexity of medical coding and the accuracy that acceptance requires. 

Clean claims are accurate and timely 

A clean claim is one that contains the complete and accurate information the payer requires, and is submitted and accepted into its adjudication system within the timely filing window. 

Most payers do not allow appeals for claims that have been denied on the grounds of timely filing, so if a claim is denied for another issue, like incorrect demographic info, it’s imperative to correct and resubmit it as soon as possible. 

Practices need standardized claim management systems to handle amends, resubmissions, and claim corrections to capture revenue. But the most effective way to drive revenue is to boost your FPAR. 

How to improve clean claims rates in medical billing 

  1. Determine the top reasons for claim denial. Identify the top 2 denial categories that result in either the largest number of claim rejections or denials, or the largest lost dollar amount.
  2. Investigate the underlying cause of these denials. Examine your in-house systems, tools, and workflows. The cause could be a lack of standardized processes, lagging technology, or skills gaps among the team, for example.
  3. Work with staff to establish new processes. Since your administrative team knows these issues best, get their buy-in from the beginning when designing and implementing new workflows. 
  4. Implement electronic claims processing. Practice management systems with electronic claims submission provide guardrails to boost your FPAR, like built-in scrubbing and precise medical coding.
  5. Consider outsourcing medical billing. Engaging a medical billing company allows you to outsource to specialized professionals who know the intricacies of the complex industry.

Electronic claims processing boosts clean claims rates

By improving accuracy and streamlining and standardizing workflows, electronic claims processing can significantly improve your practice’s clean claims rate. It checks for things like proper setup of providers, payers, patient demographics, and under- or over-coding. 

Electronic claims submission transmits in real time, and gives practices real-time status visibility. Practices can easily track claims and proactively follow-up or resolve issues. This works to ensure speedy claims processing and reimbursement, a shorter revenue cycle, and better cash flow. 

The medical billing landscape is changing

Bringing your independent practice into the future is key for its longevity. With stringent payer requirements and shrinking margins, independent practices must rethink the revenue cycle with a focus on medical billing and claims submission. 

By embracing automation or outsourcing, your practice can streamline the billing process and claims management to reduce claim denials, minimize reimbursement delays, and shorten payment cycles. At the same time, you can liberate staff from the most tedious (and error-prone) tasks of their jobs, allowing them to focus on more strategic revenue generation initiatives. Medical billing automation or outsourcing can ensure your practice’s financial health and support the quality patient care you deliver.

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Catherine Tansey, business writer and reporter

Catherine Tansey is a business and healthcare writer and reporter. She has close to a decade of experience writing and reporting on small business best practices, emerging technology, market trends, and more. Catherine has several family members who own private practices in mental health services, dentistry, and chiropractics, and she’s seen firsthand the pride and privilege practice owners feel to be able to support their communities.

Reviewed by

Elizabeth Woodcock

Dr. Elizabeth Woodcock is the founder and principal of Atlanta-based Woodcock & Associates. She has focused on medical practice operations and revenue cycle management for more than 25 years. She has led educational sessions for a multitude of national professional associations and specialty societies, and consulted for a diverse range of clients.

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