Outsourced Home Health Billing vs In-House Billing

Outsourced home health billing means a billing company runs your agency's Medicare billing work: eligibility checks, notices of admission, period claims, returned-claim fixes, payment posting, adjustments and reports. Your agency keeps the clinical record and stays responsible for every claim sent in its name. This guide sets out the trade-offs, including when in-house billing is the better choice. It is general education, not legal advice.

What does outsourced home health billing include?

Home health revenue cycle management is the full path from a new referral to a posted payment. Outsourced, the work usually runs in this order:

1. Eligibility checks. Confirm Medicare coverage before the first visit and as care continues, and catch a Medicare Advantage plan or another agency serving the same patient (see who is actually the payer).
2. Notice of admission. The agency must submit it to its Medicare contractor within 5 calendar days after the start of care (42 CFR 484.205(j)).
3. Period claims. The agency receives a single payment for each 30-day period of care after the final claim is submitted (42 CFR 484.205).
4. Returned-claim fixes. A claim that fails Medicare's edits comes back. For example, a claim with no matching OASIS assessment is returned to the provider (Claims Processing Manual, chapter 10, section 10.1.19). Someone has to find the cause, fix it and resubmit.
5. Payment posting. Medicare's remittance advice explains each payment and any adjustment, such as a denial, a partial payment or a penalty (Claims Processing Manual, chapter 22, section 10). Posting matches it to the claim and flags anything short.
6. Adjustments. A paid final claim can be adjusted or voided, and services added to a paid period go on an adjustment (Claims Processing Manual, chapter 10, section 40.2).
7. Reports. A regular view of what was sent, what was paid, what came back and what needs an answer from the agency.

Some companies also handle appeals, medical review requests and other payers. Scope varies, so get it in writing.

What stays with the agency when billing is outsourced?

A billing company bills from the record your agency creates. These stay with the agency, whoever does the billing:

• Clinical documentation. The agency must keep an accurate clinical record for every patient it accepts (42 CFR 484.110).
• OASIS accuracy. OASIS data must accurately reflect the patient's status, and each completed assessment must be transmitted within 30 days (42 CFR 484.45).
• Signed orders. Drugs, services and treatments are given only as ordered by a physician or allowed practitioner (42 CFR 484.60). Getting those orders signed and back is the agency's job.
• The face-to-face encounter. It must take place no more than 90 days before or within 30 days after the start of care, and the certifying practitioner documents its date (42 CFR 424.22).
• Timely information. Admissions, discharges, transfers and coverage changes need to reach the billing team quickly.

Outsourcing will not fix unsigned orders or late assessments. It moves the waiting to someone else's desk.

Is home health billing software the same as a billing service?

No. Your electronic medical record (EMR) or billing software turns visits, codes and assessment data into claims, checks their format and sends them. That saves real work, and an outsourced company usually works inside it.

Software does what someone tells it to do. It does not decide what to do when a claim comes back, notice that a patient joined a Medicare Advantage plan mid-period, or call a practitioner's office about an unsigned order. Someone also has to work the contractor's online system, used for claim entry, correction, status checks and eligibility (Claims Processing Manual, chapter 24, section 50.1).

A sent claim is also not a finished one. Medicare uses separate acknowledgment transactions to confirm that a claim was received (chapter 24, section 40.1.2). The payment decision comes later, on the remittance advice.

So the choice is rarely software or a service. The software stays. The question is who works it: your staff, an outside company, or both.

In-house or outsourced billing: how do they compare?

Both can work well. The differences are in where the risk sits.

For in-house cost, the closest occupation in U.S. Bureau of Labor Statistics data is billing and posting clerks, with a national median annual wage of $48,500 in May 2025 (BLS Occupational Outlook Handbook, financial clerks). That is a national figure for a broad occupation. Local pay for an experienced Medicare home health biller may differ, and benefits, payroll taxes and training come on top. Compare an outside fee on the same scope, and count your own staff's time on both sides.

There is also a middle path: keep an in-house biller and use an outside company for backup, follow-up on older claims or a second check. That needs the clearest split of all, because two parties touch the same claims.

If we outsource billing, who is responsible for the claims?

Your agency. Outsourcing moves the work, not the accountability.

• The CMS-855A, Medicare's enrollment form for institutional providers such as home health agencies, says that if you use a billing agency, "you remain responsible for the accuracy of the claims submitted on your behalf" (CMS-855A, Section 8).
• A billing agency does not enroll in Medicare. It submits claims in the name and billing number of the provider (Program Integrity Manual, chapter 10, section 10.6.8).
• A provider that sends claims electronically signs an agreement with its Medicare contractor making it responsible for all claims submitted by itself, its employees or its agents (Claims Processing Manual, chapter 24, section 30.2).
• Medicare pays the provider. It pays a billing agent only under narrow conditions, including that the agent's pay is not related to the amounts billed or collected and that payment is made in the provider's name (42 CFR 424.73).

Privacy works the same way. Under HIPAA, a company that handles patient information for a provider's billing or claims processing is a business associate (45 CFR 160.103). Before sharing patient information, the agency must get satisfactory assurances that the company will safeguard it, documented in a written agreement (45 CFR 164.502(e)) that contains the terms listed in 45 CFR 164.504(e). CMS also treats billing services as provider business associates (chapter 24, section 40.2.2.3).

So choose a company whose work you can see, because you answer for it.

When does it make sense to outsource home health billing?

• One person holds all the billing knowledge, and nobody else can send a claim when that person is out.
• Notices of admission or final claims go out late because billing competes with intake, scheduling or payroll.
• Returned claims sit without an owner, and nobody can say what is open or why.
• The owner or administrator is doing the billing after hours.
• A biller has left, or the position has been hard to fill.
• The agency is new and has no billing staff yet. Our new agency billing guide covers the first claims.
• Claim volume has grown past what one person can follow up.

When is in-house billing the better choice?

• You have an experienced Medicare home health biller, a trained backup, notices of admission that go out on time and a short list of open items. If that works, keep it.
• You want billing next to intake and the clinical team, with answers in minutes.
• Your main problem is documentation: unsigned orders, late assessments or missing face-to-face notes. Fix the clinical workflow first, because a billing company will run into the same gaps.
• Your team cannot commit to answering an outside company's questions promptly. Outsourcing depends on those answers.
• You are not ready to give an outside team access to your EMR and to manage that access.

How does switching to an outsourced billing company work?

The steps are the same from in-house billing or from another company:

1. Sign the business associate agreement first. No patient information should change hands before it is in place (45 CFR 164.502(e)).
2. Give EMR access. Each person at the billing company should have their own login, limited to what the work needs, so access can be removed cleanly later.
3. Set up access with the Medicare contractor. The agency may not share its electronic billing ID and password with a billing agent. The company gets its own, and the agency keeps a signed agreement with it on file. The agency must also tell the contractor in writing, in advance, when it changes billing agents (Claims Processing Manual, chapter 24, sections 30.1 and 30.2).
4. Update the enrollment record. Billing agency details go in Section 8 of the CMS-855A. For home health agencies, enrollment changes of this kind must be reported within 90 days (42 CFR 424.516(e)).
5. List every claim in process. Include notices of admission not yet accepted, claims sent and unpaid, returned claims, pending adjustments and open appeals, and agree in writing who owns each one from a set date. The filing clock keeps running: a claim must be filed within 1 calendar year after the date of service (42 CFR 424.44).
6. Close out the old arrangement. The business associate agreement must require the company to return or destroy patient information when the contract ends, where feasible (45 CFR 164.504(e)). Ask for claim history and the open-item list in a usable form before that happens.

How long a handover takes depends on the agency's size, how fast access and contractor paperwork go through and how clean the open-item list is. Expect some overlap, and follow the old claims until each one is paid or closed.

What should you ask before signing?

Our guide to choosing a home health billing company has ten detailed questions for comparing companies. These six help decide whether outsourcing fits at all:

• Who will work our claims day to day, and who covers when that person is out?
• Will you get your own access from our Medicare contractor instead of using our login?
• Will Medicare deposits keep going to our own account?
• Can you work alongside our in-house biller if we keep one?
• Does your business associate agreement cover any subcontractors who would see our data?
• After the first few months, how will we be able to tell whether this is working?

Related guides

See choosing a home health billing company for the full list of questions, and home health billing services for what LMNS covers. More guides: Medicare home health billing, why home health claims come back, new home health agency billing, the home health notice of admission and home health billing codes. California agencies can also read our Review Choice Demonstration guide.

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