Is Outsourced Billing Right for Your Homecare Agency?  

For homecare agencies operating on thin margins, revenue cycle management (RCM) is more than an operational task—it’s essential to survival. You might be delivering excellent care and growing fast, but if you’re not collecting the revenue you’ve earned, your agency simply won’t thrive.  

If your agency is under pressure, you may be scrutinizing your RCM processes and wondering if there’s room for improvement. But here’s the dilemma: the more time you and your team spend managing billing operations, the less time you have to focus on other critical parts of your business. It’s a common crossroads for agency leaders—and one that often sparks the question: Is outsourcing RCM the right move for us?  

This guide walks you through how to evaluate that decision, from identifying internal challenges to performing a cost-benefit analysis, to selecting and managing the right outsourcing partner.  

Why Your Revenue Cycle Deserves Strategic Focus  

A homecare agency’s revenue cycle—the series of steps from intake to reimbursement—is its financial lifeblood. When performance falters, agency leadership often gets pulled into the weeds. But that attention comes at a cost: less focus on client care, strategic growth, and organizational development.  

Today’s homecare environment offers both challenges and opportunities. But only agencies that think strategically, not reactively, can capitalize on them. Overcommitting leadership bandwidth to in-house billing risks missing those opportunities altogether.  

Consider the dynamics outlined in the chart below. Industry-wide trends like EVV mandates, payer diversity, and value-based payments can either be disruptive or a growth lever—depending on how much time and energy you have to respond.  

Agencies that manage reactively instead of strategically risk missing these key opportunities especially if too much time is spent chasing revenue cycle issues.   

From Headaches to High Stakes: Internal Billing Challenges  

There are challenges, risks, and costs associated with managing billing in-house (especially if your team is not well-equipped to do so) including:  

• Performance: Even small dips below optimal collections can cause major financial damage.  
• Productivity/Staffing: Turnover, PTO, training gaps, weather delays, and poor hires may disrupt workflow.  
• Cost Burden: The cost of salaries is only the beginning, there is also overtime, taxes, insurance, benefits, HR admin, timekeeping software, and the cost of replacing staff.  
• Turnover Expenses: Hiring, onboarding, training, and correcting mis-hires cost time and money.  
• Overhead: Rent, supplies, tech, and training costs add up. 
• Expertise: Staying ahead of payer rules, mandates, and denials requires specialized knowledge.  
• Technology: Managing electronic visit verification (EVV), electronic data interchange (EDI), electronic remittance advice (ERA), and electronic funds transfer (EFT) efficiently is essential—but labor-intensive.  
• Analysis & Reporting: Identifying issues and root causes requires time, focus, and data literacy.  
• Focus Drain: Managing RCM takes ongoing leadership time that could be spent on care and growth.  

The Value of Outsourcing: A Strategic Shift  

Outsourcing RCM can help agencies:  

• Improve cash flow and reduce uncollected revenue  
• Scale with fewer HR headaches  
• Gain access to specialized billing expertise  
• Free leadership to focus on care delivery and business strategy  

But outsourcing isn’t an all-or-nothing decision; it’s about balance. The below diagram presents this clearly: concerns like cost, control, and service must be weighed against gains in scalability, performance, and expertise.  

Thankfully working with the right RCM partner will alleviate many of these concerns.  

Are There Any Benefits to Insourcing? 

Outsourcing isn’t the right fit for every agency. In some cases, insourcing can be the more practical and cost-effective option, especially if you already have a very capable team in place and aren’t facing challenges in other areas of the business. 

Pros of Insourcing: 

• Potentially lower cost if your internal team is already in place and operating efficiently with optimal cash flow performance 
• Direct control over processes and workflows without relying on a third party 
• Makes sense for stable agencies with fewer payer types, minimal staffing turnover, and the capacity to manage billing internally 

If your agency chooses to keep billing in-house, there are powerful billing tools and systems available that can help make that choice more manageable. From automated claims management to real-time reporting dashboards, the right technology can streamline internal workflows and reduce the operational burden. 

The First Step in Evaluation: Know Your Numbers  

Before you decide if outsourcing is the right choice for your agency, you need to assess how your billing operation is really performing.  

Start with a simple analysis:  

Compare total receipts to total net revenue for the year (after adjustments). Then compare how much of that was accurately posted to accounts receivable (AR).   

This can be handled by a junior accounting resource and should highlight your true collection rate. Reviewing revenue billed vs. cash deposits vs. payments applied smooths out monthly anomalies and surfaces key gaps.  

A Real-Life Example: What the Data Reveals  

To understand how internal RCM performance can impact your bottom line, let’s take a closer look at a real-world agency analysis.  

The chart below illustrates an agency which reviewed its revenue billed vs. cash deposits vs. payments applied over a 12-month period. By smoothing out monthly fluctuations, the data painted a clear picture of performance gaps. Here’s what the analysis uncovered:  

• RCM performance came in at just 89.6% of billing, leaving a 10.4% shortfall in collections. In the homecare space, where margins are already razor-thin, this kind of gap can be financially devastating.  
• Adjustments made up 5.6% of total billing, which is significantly high. Some months had unusually large adjustments, raising questions:  
  • Were these correcting prior years?  
  • Were claims consistently being submitted accurately the first time?  
  • What’s the root cause behind this volume of adjustments?  
• Payments applied didn’t match deposits received, both on a month-to-month basis and in total for the year. Ideally, payments should be applied within 72 hours of receipt to maintain an accurate AR and enable timely problem resolution. Delays here indicate process breakdowns and can skew visibility into cash flow and collections.  
• The billing accuracy was also in question. The report didn’t reveal whether claims were being billed at the correct rates. That matters:  
• Overbilling could lead to inflated expectations and understated collection rates.  
• Underbilling means missed revenue opportunities on top of the shortfall in collections.  

All these issues signal deeper inefficiencies and point to the first potential benefit of outsourcing: a knowledgeable partner can identify underlying root causes and recommend process improvements that internal teams may not have the time or expertise to uncover.  

Internal Fix or Outsourcing? 

Once you’ve identified the problems, it’s time to evaluate how best to fix them. Is your agency better served by diverting management to internal remediation, or by handing it off to experts?  

A cost-benefit analysis makes this comparison clear.  While outsourcing fees may come in higher than internal costs (make certain you include ALL internal costs in this analysis), the increase in cash flow performance might eclipse that cost difference, making outsourcing a reasonable investment.   

And that doesn’t account for the added value of leadership refocusing on care, growth, and strategy.  

“Why Do I Still Need Internal Staff?”  

Great question. Even with full outsourcing, you’ll still need infrastructure for tasks like:  

• Authorization processing  
• Contract updates  
• Operational coordination with partner  
• Documentation and remittance support  
• Oversight of outsourced partner performance  

Outsourcing is delegation, not abdication.  

Selecting the Right RCM Partner  

Not all outsourcing vendors are created equal. Your partner must:  

• Specialize in your services and payer mix  
• Be able to scale with your agency  
• Provide frequent, actionable feedback and reports  

The three major vendor qualification areas are as follows:  

Your potential vendor should be able to demonstrate their qualifications in each of these areas and elements.  That will come from interviews, references, and industry reputation.  Additionally, ensure contracts include:  

• Business Associate Agreement (BAA)  
• Non-Disclosure Agreement (NDA)  
• Clear Statement of Work (SOW) and service level agreement 
• Payment terms, termination clauses, and intellectual property ownership  

Managing the Vendor Relationship  

Outsourcing doesn’t end with onboarding. The vendor management process is a cycle that includes the following processes:  

1. Assessment: Identify performance gaps and contract alignment  
2. Planning: Define responsibilities and billing cycles  
3. Communication: Daily to monthly touchpoints for claims, edits, and denials  
4. Reporting: Claims submitted, denials, aging, and cash reconciliation  
5. Feedback: Two-way dialogue to surface issues and drive results  
6. Reassessment: Continuous improvement of the process and outcomes  

Even with a great vendor, your agency must stay involved to ensure goals are met.  

Is Outsourcing Right for You?  

Whether you manage your billing in-house or outsource it, the decision must be deliberate and data-driven. Use real performance metrics, weigh the tradeoffs carefully, and choose a partner that fits your agency’s goals and growth path.  

HHAeXchange offers a free RCM performance review and outsourcing ROI analysis. Ready to explore if it’s right for you? Reach out—we’re here to help.