Medical Billing Forum
Starting a Medical Billing Business => Starting Your Own Medical Billing Business => : Keis1225 December 28, 2016, 05:59:19 PM
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:-\ So I'm looking to start my own billing company next year and to be quite honest I really afraid of the unknown. I've been doing billing for several years and now work as an Office manager for a PCP so I'd like to combine my experience in both but I just don't know what my first step should be. I don't know if I should do a LLC or Sole proprietor and don't know where/how to register my company thru the state of New Jersey. I was going to go thru Legal Zoom but I know I'm going to spend more money than I need to. Should I invest in software? Do I need a lot of space in my home to start? Do I need an Operating agreement? I just don't know where to start :'(
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Hello - Starting a business is usually both thrilling and frightening. I don't have all your answers, but here are a few thoughts: Regarding decisions of becoming a sole proprietor, LLC, and registering your company, I would direct these questions to a professional, these are big decisions so go to a CPA, Tax Attorney, or trusted financial adviser. Software? Probably not necessary to start, since you can normally log in to your clients existing system and submit claims from there, but if you do need software, Office Ally is a good one...and it's free. Service agreement: Yes! Don't start work for a client without a signed agreement, each party must know their duties and obligations. You can save $$ by finding an existing agreement on the internet, modify it to fit your needs, then have an Attorney review it, this saves the cost of drafting a new agreement. Office space? You won't need much to start, maybe 60 - 80 sq ft. You'll find freelance Medical Billing is nice work, and you seem well qualified for it, but be prepared to market your services consistently. There are far more medical billers than there are doctors looking for them. Best of luck! :)
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:-\ So I'm looking to start my own billing company next year and to be quite honest I really afraid of the unknown. I've been doing billing for several years and now work as an Office manager for a PCP so I'd like to combine my experience in both but I just don't know what my first step should be. I don't know if I should do a LLC or Sole proprietor and don't know where/how to register my company thru the state of New Jersey. I was going to go thru Legal Zoom but I know I'm going to spend more money than I need to. Should I invest in software? Do I need a lot of space in my home to start? Do I need an Operating agreement? I just don't know where to start :'(
First, stop and take a deep breath.
Part of the reason you are so scared is because you are looking at everything all in one step. You need to break this down. Make a list of the things you need to do and decisions that need to be made. Then start to tackle them one at a time. Everything is always scarier when it seems huge. Break it down into smaller more manageable pieces and it won't be so scary. Take control, don't let it control you.
OK, so now, one thing at a time:
Williamportor gave you some great advice. Make your list, then go back and jot down the suggestions next to the appropriate items. Deciding on what type of entity you want to be is a personal choice. What protection do you need? Will you be getting E&O insurance? (Good idea to have - but some people who incorporate will say you don't need both. I personally think you should have it because if you run into a problem without it you can lose your business.) How big do you plan on becoming? Just you or will you be hiring others? These all may affect your decision.
Office Space - you may want to start from your home (check your laws to make sure you can operate a business from your home). This will save on expenses. Or you may want a small office. As Williamportor said, you don't need a lot of space when starting.
Software - You may be able to use the provider's software in many situations. Some may require you to have some. Office Ally does have a free version. Williamportor seems to be ok using it. I personally didn't care for it. I would try out some demos though so that if you decide to purchase you have a little research done. Also, it will be helpful to you to know the differences.
Contract - A DEFINITE. You need to spell out exactly what you expect from the provider and what you will be doing. If you run into any issues your contract will be what saves you.
Compliance Plan - You should have one of these as well. Many providers do not ask for them, but they should. A compliance plan just spells out your responsibilities and what you have in place to deal with any violations.
Again, the important thing is to break all of this down into manageable pieces. Then tackle them one at a time. And breathe!
You got this!
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:-\ So I'm looking to start my own billing company next year and to be quite honest I really afraid of the unknown. I've been doing billing for several years and now work as an Office manager for a PCP so I'd like to combine my experience in both but I just don't know what my first step should be. I don't know if I should do a LLC or Sole proprietor and don't know where/how to register my company thru the state of New Jersey. I was going to go thru Legal Zoom but I know I'm going to spend more money than I need to. Should I invest in software? Do I need a lot of space in my home to start? Do I need an Operating agreement? I just don't know where to start :'(
Being afraid of the unknown when you start your own business in any industry is justified. It's a big leap. Many of us started and it took a while to reclaim the lost income from a full time job. I, myself actually worked full time when I started my business and left that job after I had 2 clients and signed a third.
I'm also from NJ (now in NY) NJ is unique in that it requires registration of any/all third party medical billing companies doing business in NJ. You do this through the department of banking and insurance. I will warn you that it is NOT an easy task and the paperwork and scrutiny has gotten stricter over the last few years. Once you obtain approval you then get listed on their site as a registered third party billing company. NJ now also sends this information to providers across the entire state so they know that when they are looking for a billing company in NJ they have to be registered. The link you would find this information at is at: http://www.state.nj.us/dobi/division_insurance/managedcare/tpapage.htm#tpb (http://www.state.nj.us/dobi/division_insurance/managedcare/tpapage.htm#tpb)
You must do all the paperwork exactly as required. Here is a breakdown with my notes in red. You can find the formal verbiage of requirements at the link above under requirements. I just broke them down for better understanding as they can be extremely confusing to someone new to the business.
1) Complete the application filing requirements for license or registration of third party. (application is at the link above)
2) The applicant shall certify that the application is complete, the applicant is familiar with all the statutory and regulatory requirements applicable to third party administrators and that the applicant has met or exceeded those requirements. (certification requirements are also in the registration form)
3) requires a copy of the applicants basic organizational documents which include articles of incorporation, partnership agreement(s), management agreement, trust agreement or any other documents governing the operation of the applicant that are applicable to the business organization. (this means you will need to have this setup first, LLC, INC, LLP, etc)
4) copy of executed bylaws and regulations or other documents relating to the operations of the business (considered a P&P (Policies and procedures)
5) biographical affidavit on the form provided by the department (at the link I posted above)
6) Statement of any criminal or civil conviction, enforcement or regulatory actions against the business owners, partners, share holders, investors, etc.
7) Copy of the most recent financial statement audited by an independent certified public accountant (if just starting you can use initial startup costs/funds/loans, grants, etc.)
8) Copy of applicant's business plan including statement describing the applicant, facilities and personnel as well as all services to be provided by the applicant's business. Plan should also include all applicable experience, training of employees, training plans, etc.
9) Copy of the fiduciary bond (only necessary if you will be collecting payments on behalf of your clients, this is mostly for collection services unless you as the billing company will be using a lock box or collecting funds, processing payments for your clients, etc).
10) statement of marketing plan. How you will be marketing in the state of NJ. (If you are marketing in or outside of NJ you can just send in your general marketing plan)
11) statement of how you will be billing your clients (how you will be paid; % of collections, per claim, monthly fee, hourly, etc)
12) method/plan of dealing with complaints/appeals, etc (This can be included in your P&P, it's basically procedures you will take when there is a conflict between you and a client, sub-contractors, etc.)
13) Three year projections of anticipating operating results. Should include the assumptions used in the projections that include an explanation on each line item.
14) Statement of the sources of working capital and any other sources of funding.
15) Description of the provisions for contingencies that will enable the applicant to perform the work contracted (contingency plan for if something happens to the business owner/partners, etc.) For example, if you had a fire in your office (home or elsewhere) steps taken to protect the interests of your clients in the event you cannot continue, or actions you will take to honor all contracts.)
16) List of payers (clients) under contract with the applicant (if you are starting with a client or client(s)) List should include contact name, address, etc.
17) Copy of all contracts to be used for clients (you will want to include any contracts you currently have signed or a general contract to be used in your business, recommend an attorney to help with this).
18) List of any sub-contractors or remote employees and any/all contracts with said contractors/employees (basically a list of any and all companies, individuals, etc that you will be paying/contracting with to help you in your business, this actually includes clearinghouse to which you may use to submit claims electronically, courier services if used, etc.)
19) list of reinsurers with whom the applicant does business with and any applicable contracts/policies (This is a list of policies you might have for your business including Errors and Omissions insurance, business liability, business equipment coverage, etc., list names and policies.)
20) List of all administrative, civil or criminal actions and proceedings to which the applicant or any of it's affiliates have been subject to and the resolution(s)
21) Power of attorney, duly executed by the applicant if not domiciled in the state of NJ that appoints the commissioner and it's successors as the true and lawful attorney of the applicant in and for this State upon whom all lawful process in any legal action or proceeding against the organization on a cause of action arising in this state may be served. (This is only required if you are NOT in NJ but working with clients in NJ)
Some of the above can all be arranged in a business compliance plan and your policies and procedures. While all of this seems like a LOT of work, it is required in the State of NJ but it's advisable for all medical billing companies to have all of this in line when starting, so think of it as just the State of NJ making sure your ready to go and prepared. You want to make sure all steps are completed properly and completely because the state WILL return them to you. They will only issue a temporary license if there are just some things missing, in the requirement document at the link I posted above you will find a more detailed explanation of what is necessary to receive even the temporary license.
When these requirements all came out in 2005, I wondered if they really were going to keep up with this and have the staff to actually review all the required documents/info, but they do and I've seen NJ businesses getting frustrated over missing one or more of the required documents. I also seen flat out denials of registration due to other issues like criminal or civil actions pending or in direct violation of the licensing requirements.
One final but important note, it's tempting to say to hell with all of the above, but you run the risk of doing a client proposal only to have them check the published list for your registration and not find you on it. You also run the risk of getting into trouble with the dept of banking and insurance which could have a permanent affect on the future of your business. I know it's all very overwhelming but if you take the time to complete all of these steps before submitting your registration you will be fully ready! Even if you don't plan to take NJ clients you must still complete all steps because you will be domiciled in NJ.
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Why would anyone want to start a business in New Jersey; or for that matter want to live there?
Texas, Florida and a dozen other states have much better business environment, and also plenty of sunshine.
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Home is home. If their home is in NJ then that is why they want to live there. I personally am not a NJ fan but I have a cousin who loves it there. She moved here (Rome, NY) where she actually grew up, met her husband and had children. She hated it here even though this was her first home. Her heart is in NJ. I love Rome, but not everyone does. My heart is here. I hate to hear people talk bad about my home, and people who love NJ probably feel the same.
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I cannot recommend highly enough Alice and Michele's book " How to write a Kick Butt Contract for Medical Billing Business." I read it cover to cover and highlighted all the things I wanted in my contract and then made an outline.
I presented my outline to an attorney and she easily transposed it into a legal contract for me. She is a contracts attorney , but knew nothing about medical billing, so we could not have done it without that awesome book!
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Why would anyone want to start a business in New Jersey; or for that matter want to live there?
I didn't look at it that way. I looked at it as an opportunity to work/live in a state that cared about my business or industry. Not to mention it gave billing company's the opportunity to not just jump in the water but to learn to swim with the bigger fish. I like the NJ requirements as they created a more professional view of medical billing. Unfortunately only one in six billing companies really survive, so IMHO the cream of the crop was / is NJ :) :)
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Thank you Christy! We appreciate your kind words. :-[
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Wow so much useful information! Thank you all so much! I'm going to look into all of it. I was thinking of going to legal zoom to do the paperwork as I'm so intimidated by the whole process and I want to make sure it's done correctly. I THINK I'm going too do an LLC and I won't have any employees to start off but I need to know what the tax ramifications are. I'm so ignorant to this whole process but I don't want my ignorance and fear to stop me. I'm 40 years old and tired of working to make other people rich. I don't have to be rich but want to be comfortable and enjoy what I do. I'm definitely going to get the book on contracts and this weekend I'm going to work on a business plan. Once I'm registered in NJ I can start marketing and looking for clients right? I want to start off with one and still keep my full time job for now and God willing have enough clients by the end of this year to quit my job and work full time from home.
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You can actually market and work in NJ as long as you have started the process. Just make sure potential clients know that you have begun the process to become registered in NJ.
I do an LLC but I have two other businesses. You will pay more in taxes, no doubt about that. NJ though is one of the states where you can do a one owner LLC.
As for a business plan.. go register with the SBA at www.sba.gov and you can actually do your business plan right on line.
Our members only area also has some great resources for medical billing companies in our getting started area. We also provide a checklist to help you create your contract. www.billerswebsite.com
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Should I go thru Legal Zoom or some type of legal service to help me with the paper work, registering my company, filing etc.?
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I am not familiar with Legal Zoom personally so I really can't recommend them or comment on them. You don't need to have a professional write your documents but you should have it reviewed by someone such as a lawyer. It is best to get one that is familiar with medical.
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I have no clue about doing the documents that's why I was going to go thru this legal service and you have lawyers to answer any of your questions and help with the paper work for like $35 a month and can cancel it at anytime so I'm just going to use them to get the service started and have the lawyer review my contracts and answer any questions
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Good luck!
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I have no clue about doing the documents that's why I was going to go thru this legal service and you have lawyers to answer any of your questions and help with the paper work for like $35 a month and can cancel it at anytime so I'm just going to use them to get the service started and have the lawyer review my contracts and answer any questions
Being from NJ and also with our NJ members a LOT of them will tell you they reject a LOT of applications.. I've seen some use professional services and still have rejections and others that do it themselves and it goes right through.. they are VERY through in the process of reviewing. I was very skeptical when they started this a few years ago, but they have been really good about professionally reviewing these registrations.
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Hello Keis1225,
There is a Small Business Mentoring organization that provide assistance with starting your business. There website is www.score.org. You are assigned a mentor who will assist you with the business structure, writing your business plan, marketing and much more. The service is free. So I would recommend before you payout any monies, contact them.
Best of luck.
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LLC Paper work is in and has been approved by the state of NJ, I'll have my EIN in several days and working on my contract(s) with the help of your book "Write a kick butt contract for your Medical Billing Service". I'm making notes and documenting EVERYTHING I do and don't want to happen in my business and your book and this website is so phenomenal at helping people to work towards their goals! Waiting for my EIN so I can apply for a business credit card to help with the start up expenses and I can officially say with the help of my amazingly supportive husband and you guys my fear had turned into excitement and aspiration for greatness! Doing my part and leaving the rest to God!. Thank you all so much.
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Your excitement is contagious! I'm excited for you and praying for your success. Please keep us posted! I'm sure you'll do great. ;D
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I have a question for PMRNC. You said you quit your full time job after signing 2 or more physicians. Were their any issues when you informed them that you had a full time day job?