How Can You Start Your Own Medical Billing From Home Business?
If you’re thinking of starting your own medical billing from home business, now may be a good time to pursue a growing sector. According to the BLS, employment of health information technicians is projected to grow 15% from 2014 to 2024. [i]This is due to an aging population requiring more medical services and an increase in individuals who have access to health insurance. [i]One such medical service is medical billing and coding—one of the multiple professions that may be done from the comfort of one’s own home, which might make it a good option to consider if you’re interested in starting your own home businesses.
Choosing a Business Structure
Perhaps the first step in starting your business is to choose a structure. Each structure has its own set of legal and tax implications, so it’s important to do adequate research before making a decision. Are you working by yourself, labeling yourself as an independent contractor? Or do you plan on building out a full team of medical billing and coders as part of your business? The answers to these questions may help make your business structure decision easier. Here are a few business structures you could choose from:
Sole Proprietorship: This is an unincorporated business owned and run by one individual with no distinction between the business and you, the owner. You are entitled to all profits and are responsible for all your business’s debts, losses, and liabilities.[i]
You do not have to take any formal action to form a sole proprietorship. As long as you are the only owner, this status automatically comes from your business activities. But like all businesses, you need to obtain the necessary licenses and permits. Regulations vary by industry, state, and locality.[ii]
Limited Liability Company (LLC): This is a hybrid type of legal structure that provides the limited liability features of a corporation and the tax efficiencies and operational flexibility of a partnership. The "owners" of an LLC are referred to as "members." Depending on the state, the members can consist of a single individual (one owner), two or more individuals, corporations, or other LLCs. LLCs are not taxed as a separate business entity. Instead, all profits and losses are "passed through" the business to each member of the LLC. LLC members report profits and losses on their personal federal tax returns, just like the owners of a partnership would.
Each state has slight variations on forming an LCC. The general guidelines, however, are to first choose a business name, then file the “articles of organization” document, create an operating agreement, and then obtain the appropriate licenses and permits.[ii]
Corporation: This is an independent legal entity owned by shareholders. Corporations are more complex than other business structures because they tend to have costly administrative fees and complex tax and legal requirements. Because of these issues, corporations are generally suggested for established, larger companies with multiple employees.[iv]
To form a corporation, you’ll need to establish your business name and register your legal name with your state government. To register your business as a corporation, you need to file certain documents, typically articles of incorporation, with your state’s Secretary of State office. Contact your state business entity registration office to find out about specific filing requirements in the state where you form your business. Once your business is registered, you must obtain business licenses and permits. Regulations vary by industry, state, and locality.[iii]
Building Out a Medical Billing and Coding Team
If you’re looking to expand your medical billing home business beyond just yourself, you’ll need to look into hiring additional employees. For a medical billing and coding from home business, you may need to hire one or more of the following:
- Medical Records and Health Information Technicians: These employees organize and manage health information data. They ensure that the information maintains its quality, accuracy, accessibility, and security in both paper files and electronic systems. They use various classification systems to code and categorize patient information for insurance reimbursement purposes, for databases and registries, and to maintain patients’ medical and treatment histories.
- Medical Transcriptionists: These employees listen to voice recordings that physicians and other healthcare workers make and convert them into written reports. They may also review and edit medical documents created using speech recognition technology. Transcriptionists interpret medical terminology and abbreviations in preparing patients’ medical histories, discharge summaries, and other documents.
- Medical and Health Service Managers: These employees plan, direct, and coordinate medical and health services. They might manage an entire facility, a specific clinical area or department, or a medical practice for a group of physicians. Medical and health services managers must direct changes that conform to changes in healthcare laws, regulations, and technology.
Medical Billing & Coding Market Research
Before choosing a specific location for your business, you’ll want to conduct proper market research. Research the needs of doctors and facilities in your area, look at competitors, and see which niches or specializations aren’t being focused on. Some places you could look for specific research include the American Academy of Professional Coders (their Healthcare Business Monthly and Work of a Coder Survey are helpful), HMBA’s Billing Journal, and various salary surveys from the APPC or BLS.
Insurance for a Medical Billing & Coding Business
Because of the nature of the healthcare industry, there are a variety of insurance policies business owners will need. These include general and executive liability insurance (for things like property damage or copyright infringement), crime and cyber liability insurance (for businesses that have lots of personal/financial data), and errors and omissions insurance (for professional errors like incorrect billing).
Necessary Equipment and Supplies
Whether you’re planning on being a private consultant or are looking to open a medical billing from home business with 10 employees, you’ll need some standard equipment and supplies. Arguably most important is access to Wi-Fi and high-speed Internet, as well as a secure connection for HIPAA compliance (privacy and security are essential to the duties of medical billers and coders). On that note, you’ll need a reliable computer or computers, relevant medical billing and coding software (such as NueMD, DuxWare, and Kareo), and fax machines/printers. Additionally, you’ll have to pay a clearinghouse (a company that electronically receives and transmits the medical billing claims).
If you’re hiring employees other than yourself, you could need to pay for their training, onboarding, and reference books. If you think you’ll need an accountant or human resources employees, you’ll need to pay for their salaries as well. Then there are the typical office costs, such as furniture, print materials, postage, marketing, and advertising.
Medical Billing & Coding Certification
Employees could become certified by the AAPC. Currently, AAPC has a membership base over 158,000 worldwide, of which nearly 107,000 are certified. They offer certifications including CPB (certified professional biller), CPMA (certified professional medical auditor), CDEO (certified documentation expert outpatient), CPCO (certified professional compliance officer), or CPPM (certified physician practice manager). Additionally, the AMBA and AHIMA offer exams and certifications.
Medical Billing & Coding Business Plan
All of the above components should be laid out in your business plan. Here is a basic outline for a medical billing and coding business plan.
- Executive Summary: This includes the objectives and mission of your business, as well as any goals you have for the future.
- Services: This includes a list of all the services you will provide. These could include additional services beyond the basis, such as electronic claim submission, code optimization, custom reporting, and medical transcription.
- Financials: This section lists the initial expenses to start the business, funding, and liabilities.
- Market Analysis: This section includes an analysis of your competitors, a look into the local market, and similar statistics.
- Marketing Strategy: This section lists out your marketing and promotion strategy. Examples could include local listings, networking with local groups, volunteering at medical fairs, engaging in social networking on LinkedIn and Facebook, and writing expert content on the healthcare field.
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**This information is for informational purposes only and should not be relied on for tax, legal, or accounting advice. You should consult your own tax, legal, or accounting advisors before you act, or fail to act, upon this information.
[i]bls.gov/ooh/healthcare/medical-records-and-health-information-technicians.htm#tab-6 [ii]sba.gov/starting-business/choose-your-business-structure/sole-proprietorship [iii]sba.gov/starting-business/choose-your-business-structure/limited-liability-company [iv]sba.gov/starting-business/choose-your-business-structure/corporation [v]bls.gov/ooh/healthcare/medical-records-and-health-information-technicians.htm [vi]bls.gov/ooh/healthcare/medical-transcriptionists.htm [vii]bls.gov/ooh/management/medical-and-health-services-managers.htm [viii]aapc.com/certification/