How much does medical billing cost?

The short answer on medical billing cost

Medical billing cost depends on the pricing model, your specialty, your claim volume and how much work the vendor actually does. Outsourced billing is most often priced as a percentage of collections, which commonly falls somewhere from the mid single digits to around 10 percent. Lower rates usually go with high volume or simpler claims. Higher rates usually go with low volume, complex specialties or a heavy denial workload.

The headline rate is only the starting point. Two quotes at the same percentage can cost very different amounts once you add setup fees, minimums and the services each one leaves out.

Medical billing pricing models

Percentage of collections

The vendor keeps a share of what it collects. It’s the most common model because the vendor earns more when you do, and your cost rises and falls with your volume. The detail to check is the definition of collections. Ask whether the percentage applies only to insurance payments, or also to patient payments, copays your own front desk collects, and payments that are later refunded.

Per-claim fee

You pay a fixed amount for each claim submitted. It’s predictable and easy to audit, and it can work out cheaper for practices with high-value claims. The weakness is that the vendor gets paid when the claim goes out, whether or not the claim gets paid. Ask how resubmissions are charged and what the vendor’s incentive is to work denials.

Flat monthly fee

A fixed monthly price, sometimes tiered by provider count or claim volume. Budgeting is simple. Get the scope in writing, because flat-fee arrangements tend to turn into disputes about what’s included once your volume grows.

In-house billing

Doing billing yourself is priced as salary, payroll taxes and benefits for each biller, plus practice management software, clearinghouse fees, coding education and the management time spent supervising it. Our comparison of in-house vs outsourced medical billing walks through the full cost stack, including the costs that only appear when a biller leaves.

What’s typically included, and what costs extra

Most percentage-based billing services include the core claim cycle:

• Charge entry, or claim creation from your EHR
• Claim scrubbing and electronic submission
• Payment posting from ERAs and EOBs
• Denial follow-up and routine appeals
• Patient statements
• Monthly reporting

These services are often quoted separately, or not offered at all:

• Credentialing and payer enrollment, commonly priced per provider or per application.
• Old A/R cleanup for claims that were already aging when the vendor took over.
• Eligibility and benefits verification before visits.
• Coding from the chart, as opposed to billing the codes your providers select.
• Prior authorizations.
• Patient phone support for balance questions.

Charging for these is reasonable. The problem is finding out about them after you’ve signed.

Why medical billing prices vary by specialty and volume

Billing effort doesn’t track revenue neatly. A practice billing high-value procedures may collect a lot from relatively few claims, while a primary care or therapy practice sends many smaller claims to reach the same total. Vendors price that difference in.

Payer mix matters too. Heavy Medicaid managed care volume, frequent prior authorizations or a high share of patient balances all mean more work per dollar collected. So does the condition of your A/R: a practice with clean, current claims is easier to take on than one with months of unworked denials. A careful vendor will ask about all of this before quoting, and a quote given without those questions deserves a second look.

Hidden costs in medical billing quotes

• Setup or onboarding fees for building your account, connecting payers or migrating data.
• Monthly minimums. A minimum protects the vendor when collections are low. Check it against your slowest month.
• Software and clearinghouse fees. Some quotes assume you’ll use the vendor’s system, others assume you keep paying for yours.
• Statement printing and postage.
• Termination terms. Long notice periods, exit fees, or a charge to hand over your data.
• Tail fees. Whether the vendor keeps taking its percentage on payments that arrive after you leave.

The largest hidden cost never appears on an invoice. A vendor with a low rate that lets hard denials age out can cost you more in lost revenue than a higher-priced vendor that works every claim to a resolution.

How to compare medical billing quotes

1. Ask every vendor to price the same scope. Write down the services you need and have each quote cover that list.
2. Model the cost on your own numbers. Take the last twelve months of collections, apply each quote, and add the fixed fees. Compare the annual totals side by side.
3. Ask how collections are defined. Front-desk payments and refunds can change the effective rate.
4. Ask what happens to denials. Who works them, how fast, and whether anything is written off without your approval.
5. Ask about your existing backlog. Find out whether aged claims are included, priced separately or excluded.
6. Read the exit terms. You should be able to leave with all of your data in a usable format.
7. Ask for a sample monthly report. If you can’t follow it, you won’t be able to hold the vendor to its numbers.

How RCM24 prices medical billing

We don’t publish a rate card, because the right price depends on your specialty, payer mix, volume and the condition of your A/R. We quote after a free A/R audit of your recent claims, so the price reflects the actual work. Claims older than 90 days are worked on contingency through our A/R recovery service, so that part is paid only from what’s recovered.

For a quote built on your own numbers, request your free A/R audit. You keep the findings whether or not you hire us.