How To Hire A Medical Billing Company In The USA | RCM Guide

Ask three medical billing companies to quote for the same practice, and you will usually get three different percentages.

Ask each of them what that percentage actually covers, and the comparison falls apart completely.

One quote includes denial appeals. One does not. One will chase the receivables you have been carrying since last year; the other will only work claims it submitted itself. One treats patient payments the same way it treats insurance payments, and the next quietly leaves them out. The cheapest number on the page is often the most expensive option in the room, and nobody puts that in the brochure.

That gap is what this guide is about. Not a list of vendors, and not a sales pitch with a headline attached. By the end of it you will be able to read a billing quote the way a billing manager does: spot what has been left out, work out what the gap is worth, and ask the two or three questions that make a weak vendor go quiet.

Along the way: what a billing company actually does and what stays on your desk, the signals that you genuinely need one, how the pricing really works, where the money leaks out of a practice in the first place, and how to move without your cash flow dipping while you do it.

If you want the short version, it is directly below. The detail is where the money is.

One thing worth saying up front: we work in revenue cycle management, so we have a commercial interest in this topic. That is exactly why every number and rule below is tied to a public source you can check yourself, and why none of it is a promise about your results.

The Short Answer

If you only read one section, read this one.

• You probably need help if billing is eating your staff's day, your accounts receivable keeps ageing, denials keep recurring, or you are opening a practice from scratch.
• Price is not the deciding factor. A lower percentage with a narrow scope often costs more in the end than a higher percentage that includes denial appeals and old A/R recovery.
• Compare the scope, not the headline rate. Ask for the fee schedule, the responsibility list and a sample report in writing before you sign anything.
• Keep ownership. Your data, your system access and a clear exit path belong in the contract, not in a verbal promise.
• Ask for numbers. A vendor that cannot explain how performance is measured will not be able to prove it later.

If you would rather have someone look at your own numbers than read the rest of this, that is what our free RCM assessment is for: we review how billing runs in your practice today and tell you where the leakage is coming from.

Get a free RCM assessment →

What Does a Medical Billing Company Do?

A medical billing company handles some or all of the administrative work that turns a patient visit into money in the bank. A full-service medical billing or revenue cycle management (RCM) partner typically covers:

• Insurance eligibility and benefits verification before the visit
• Prior authorisation support
• Charge entry and medical coding
• Claim creation, scrubbing and submission
• Claim status follow-up with payers
• Payment posting and reconciliation
• Denial management and appeals
• Accounts receivable follow-up
• Patient statements and balances
• Provider credentialing and payer enrolment
• Revenue cycle reporting

How much of that a vendor takes on depends entirely on the contract. Two companies quoting the same percentage can be selling very different amounts of work, which is the single biggest reason quotes are so hard to compare.

It is also worth knowing how often claims go wrong. Medicare's own audit programme, Comprehensive Error Rate Testing (CERT), estimates the Medicare fee-for-service improper payment rate at 6.55% for fiscal year 2025 — about $28.83 billion — on claims submitted between 1 July 2023 and 30 June 2024. CERT counts a payment as improper when it fails Medicare's coverage, coding or payment rules. In plain terms, a measurable share of claims still goes out with an error that costs someone money, even when experienced billers submit them.

That is the case for treating billing as a process with quality control, rather than a task someone squeezes in at the end of the day.

When Should You Hire a Medical Billing Company?

There is no perfect moment, but there are clear signals. Hiring a billing company tends to make sense in these situations:

1. Billing Is Eating Your Team's Time

When your front desk spends hours on claim follow-up instead of patients, the cost is real even though it never shows up as a line item. Add up the hours, multiply by your staff's hourly cost, and compare that with a billing fee. Many practices are surprised by which number is larger.

2. Denials Keep Coming, and Keep Coming Back

In a 2026 MGMA Stat poll, 48% of practice leaders named denials and appeals as their biggest source of revenue leakage, compared with 23% who pointed to front-end issues (MGMA, July 2026). If denials are a recurring pattern rather than a rare exception, the process is the problem, not the paperwork.

3. Your Accounts Receivable Is Ageing

Look at the share of your A/R sitting over 90 days. Money that old gets progressively harder to collect. If nobody can explain precisely why those claims are still open, that is a follow-up problem — and accounts receivable management is what fixes it.

4. You Are Starting or Growing a Practice

At start-up, or when you add providers or locations, you have two options: build an in-house billing team and train it, or buy a team that is already trained. Outsourcing usually gets you to working claims faster, because you skip the hiring, training and turnover that come with building from scratch.

If any of that sounds familiar, it is worth seeing what a full-service medical billing partner or a dedicated revenue cycle management team would actually take off your desk before you start collecting quotes.

What Is Actually Included in Medical Billing Services?

Vendors describe their work in different words, but it falls into a few clear buckets. Use these to check whether a quote is really full service, or just the easy half of it.

Claim Submission and Clean Claim Management

Charges are entered, coded, scrubbed against payer rules and submitted electronically. Claim submission is the easiest part to promise and the easiest to get wrong. Ask what happens when a claim is rejected by the clearinghouse before it ever reaches the payer — that is where avoidable delays start.

Medical Coding

Codes determine what you are paid. Coding errors cause denials, audits and repayments, and they are hard to spot without a second look. If a vendor does not have certified coders or a coding review process, that is a real gap, and it is one reason many practices separate medical coding services from general billing.

Accounts Receivable Follow-Up

Unpaid claims do not resolve themselves. A/R follow-up means working ageing reports on a schedule, contacting payers, resolving the specific reason a claim stalled, and escalating before it becomes uncollectable.

Denial Management and Appeals

Denials need their own workflow: read the denial reason, correct the claim, resubmit or appeal within the payer's deadline, and then track the outcome. Denial management is where a vendor earns or loses its fee, because every denied claim is money you have already earned once.

Patient Billing and Balances

Patient responsibility is the portion most likely to go uncollected, because it needs statements, reminders and a clear process for questions. Ask how the vendor handles patient calls, statements and payment plans, and what it does with balances that are not being paid.

In 2024, practices collected 72% of copayments at the time of service, but only about 27% of other patient-due balances. What is left moves to statements, reminder calls and older A/R. Source: MGMA 2025 Financials and Operations data report.

Credentialing and Payer Enrolment

A provider who is not credentialed with a payer cannot be paid by that payer. Credentialing runs on its own calendar and paperwork, and a gap here stalls revenue regardless of how good the billing is afterwards.

Reporting and Revenue Cycle Visibility

You should be able to see what is happening without asking. Monthly reporting should show charges, payments, adjustments, A/R ageing, denials by reason, and progress against agreed targets.

How to Choose the Right Medical Billing Company

Choosing a billing firm is not only about finding the lowest percentage or the longest list of services. The right firm for your practice matches your specialty, your payer mix, your technology and your workflow. Here is how to check that before you commit.

Start With Specialty Experience

Billing for a family medicine practice and billing for an orthopaedic surgical group are different jobs. Coding rules, prior authorisation patterns, fee schedules and payer behaviour all change with specialty. Ask for two or three client references in your specialty, and ask those references what the first 60 days looked like.

Write Down Who Does What

The most common source of disappointment is a gap in expectations: the practice assumed something was included, the vendor assumed the practice would handle it. Agree on the split in writing before you start.

Agree on KPIs Before You Start

Without agreed numbers, "we are working on it" is impossible to challenge. Pick a small set of measures, agree the baseline, and ask for them in the same format every month. These are the ones that matter most:

The denominators matter as much as the numbers, so ask how each metric is calculated before you compare vendors. A vendor reporting a flattering denial rate on a different definition is telling you less than it appears to.

Test Technology and EHR Fit

Confirm, in writing, which practice management or EHR systems the vendor works with, and how data moves between your system and theirs. Ask whether the vendor uses a clearinghouse with direct payer connections, and whether you keep access to your own data and reports. The cost of manual, disconnected workflows is not small: the 2025 CAQH Index estimates the industry avoided around $258 billion in administrative costs in 2024 through electronic transactions, with roughly $21 billion more available by automating the manual work that remains.

Agree How You Will Communicate

This is the section most practices forget, and the one that decides whether the relationship works. Decide up front:

• Who your day-to-day contact is, and who covers when they are away
• How quickly questions get answered, and through which channel
• When the monthly performance review happens and who attends
• How urgent issues — a payer holding up a large batch, a credentialing deadline — get escalated
• What you will be told proactively, rather than having to ask

Get the Contract, Data Ownership and Exit Terms in Writing

Before signing, read the contract for the things that are expensive to discover later:

• Term and renewal. How long is the initial term, and does it auto-renew? What is the notice period?
• Termination. Can you leave for cause or convenience, and are there termination or set-up fees?
• Data ownership. Your patient and billing data is yours. Confirm you can export it, in a usable format, when you leave.
• Transition assistance. Is the vendor obliged to help hand over to a successor, and for how long?
• What is excluded. Coding, credentialing, old A/R and appeals are the most commonly excluded items. If they are not in the contract, they are not included.
• Performance expectations. If the vendor mentions specific results, ask what happens if they are not met. Be sceptical of guaranteed outcomes — no honest vendor can guarantee your collections.

Can You Evaluate the Billing Partnership Before a Long-Term Commitment?

Ask whether the provider offers a defined evaluation period or limited pilot. If one is available, agree in writing on its scope, duration, fees, data access and handling, and the criteria you will use to evaluate the workflow. Do not assume a trial is offered.

If no pilot is available, request a walkthrough of representative workflows and reporting. Check relevant references where available, and confirm responsibilities, communication, security expectations, and exit terms before signing.

How Much Does It Cost to Hire a Medical Billing Company?

Here is the honest answer: there is no official price list for outsourced medical billing. Published rate cards from US billing companies commonly fall somewhere between roughly 4% and 10% of collections, but that range is drawn from publicly listed vendor pricing rather than an industry benchmark — so treat it as a sanity check, not a target. The spread is wide because "medical billing services" describes very different amounts of work.

Most vendors use one of four pricing models, or a mix of them:

A percentage of collections is the most common model, and it has one obvious advantage: the vendor only earns when you get paid. That makes scope the critical question. A 6% fee that covers coding, denial appeals and old A/R follow-up can be better value than a 4% fee that covers claim submission alone.

Also ask about costs that sit outside the headline fee:

• Set-up or implementation fees
• Charges for credentialing, coding audits or reporting
• Fees for working old A/R, which is often priced separately
• Clearinghouse or software costs, and who pays them
• What happens to fees if you switch systems or add providers

The right question is never "what is your rate?" It is "what is included at that rate, and what will I be charged for separately?"

Denials and A/R: What Good Follow-Up Looks Like

This is where the difference between vendors shows up in your bank account, because most of the money that leaks out of a practice leaks through unworked claims.

Good denial management has four parts: find the denial quickly, understand why it happened, fix it and resubmit or appeal within the payer's deadline, and stop the same error from recurring. Skipping the last step is how a practice ends up with the same denials every month.

Appeals are worth doing selectively rather than automatically. The numbers show why. Analysis of 2025 payer data by KFF found that insurers denied between 12% and 18% of standard prior authorisation requests, and that denials are rarely appealed — but when they are, a large share is overturned: 67% in Medicare Advantage, 47% in Medicaid managed care and 43% in the ACA marketplace (KFF, August 2026). In other words, a well-chosen appeal has a good chance of reversing a denial, and an ignored denial is money given away.

At the same time, not every denial is worth fighting. Appealing costs money. An analysis in the AHIMA Journal puts the cost of a first-level appeal at roughly $20 to $25 per claim — which is why spending $25 to recover an $11 balance is a loss, not a win. A good partner triages: appeal what is worth appealing, and tell you what it wrote off and why.

Hospitals measure the same problem at a larger scale. A Premier survey of more than 500 hospitals reported that about 15% of claims to private payers were initially denied, and that slightly more than half of those denials were ultimately overturned and paid after appeal (Becker's Hospital Review, reporting Premier's analysis). The pattern holds for practices too: denials are normal, and the difference is whether anyone works them.

On the A/R side, look for a vendor that reports ageing by bucket and can explain its follow-up cadence — how many days before a claim is touched, how many payer touches before escalation, and when a balance is recommended for write-off. If you want a second opinion on where the leakage is, a medical billing audit is a reasonable first step, because it tells you whether the problem is front-end data, coding, or follow-up.

If denials are stacking up while you read this, the fastest way to find out what they are worth is a denial review. We work through a sample of your denials, tell you which ones are worth appealing and which are not worth the cost of the appeal, and show you the patterns behind them.

Request a denial review →

Compliance: What Stays With Your Practice

Outsourcing billing does not outsource responsibility. Your practice remains the covered entity; the billing company acts as a business associate, which means a Business Associate Agreement (BAA) is required before any protected health information changes hands. Never send claims data to a vendor that will not sign one.

Beyond the BAA, check the following before you hand over data:

• Security practices. Encryption in transit and at rest, access controls, audit logs, and a written incident response process.
• Breach notification. How quickly would you be told, and in what form, if data were exposed?
• Coding compliance. Who reviews coding accuracy, and how are overpayments and refunds handled? Errors found in an audit are normally the practice's responsibility to repay, regardless of who made them.
• Documented policies. The HHS Office of Inspector General publishes compliance program guidance, including guidance specific to third-party medical billing companies, and its General Compliance Program Guidance describes the elements regulators expect to see. Ask what the vendor's own programme looks like — and ask to see it, not just hear about it.

No vendor can promise you that a claim is correct, that a payer will pay, or that an audit will never happen. What a good vendor can do is run a documented process, tell you when something goes wrong, and help you fix the cause.

How to Switch Billing Companies Without Losing Revenue

Changing billing partners is not a reason to delay fixing a billing problem, but it does need planning. A switch that is rushed disrupts cash flow for weeks; a switch that is planned does not.

1. Read your current contract first. Check the notice period and any termination fees before you announce anything.
2. Do not leave old A/R behind. Decide who works the existing A/R — your current vendor, your new vendor, or your own team — and make sure it is agreed in writing. This is the most commonly dropped ball in a transition.
3. Get your data out, in a usable format. Patient demographics, claim history, payments and A/R detail should be exported, not just archived.
4. Agree a start date and a sequence. Changing systems, clearinghouses and billing staff all at once creates avoidable denials.
5. Overlap where it helps. A short run-in period, where the new vendor works alongside the old process, is often cheaper than a hard cutover.
6. Re-establish credentialing and payer connections. Confirm EDI enrolment and payer portal access are in place before the first claim goes out.
7. Measure from day one. Agree the KPIs before the switch so you can see whether it worked.

Questions to Ask a Medical Billing Company — and What Weak Answers Sound Like

Use these as a checklist in your first conversation. A clear, unhedged answer is already telling you something useful. So is a dodge.

Scope and services

• Which parts of the revenue cycle do you handle in-house, and which do you not?
• Do you do medical coding in-house, or is it subcontracted?
• Will you work our existing A/R, and is that included in your fee?
• Do you handle credentialing and payer enrolment?
• How do you handle patient statements and patient phone calls?

Pricing and contract

• Can I see a written fee schedule?
• What exactly does your percentage apply to?
• What is billed separately — set-up, coding, appeals, credentialing, old A/R?
• What is the term, does it auto-renew, and what is the notice period?
• Are there termination fees?
• If we leave, how do we get our data, and what does that cost?

Performance and reporting

• What KPIs do you report, and how are they defined?
• What is a typical first-submission denial rate for your clients, and how do you track it?
• What is your average time to submit a claim after service?
• How do you handle a claim that has not been paid after 30, 60 and 90 days?
• Will you tell us when you write off a balance, and why?

Communication and accountability

• Who is our dedicated contact, and who covers when they are unavailable?
• What is your response time for routine and urgent questions?
• Who attends the monthly review, and what is in it?
• What happens if performance falls below the agreed level?

Technology and compliance

• Which practice management or EHR systems do you work with?
• Do we keep access to our own data and reports?
• Will you sign a Business Associate Agreement?
• How do you protect data, and how would you notify us of a breach?
• How do you keep coding accurate, and who audits it?

Take this list into your first call with any vendor, including us. If you would rather hear how we answer them before you go shopping, that is a perfectly good place to start: talk to our revenue cycle team.

Frequently Asked Questions

What does a medical billing company do?

A medical billing company manages the administrative side of getting paid: eligibility checks, charge entry and coding, claim submission and follow-up, payment posting, denial appeals, patient statements, and reporting. How much of that it takes on depends on the contract, so always confirm the split in writing.

Is hiring a medical billing company worth it?

For many practices, yes — especially when in-house billing is consuming staff time, denials keep repeating, or A/R is ageing. The comparison that matters is not "billing fee" against "nothing". It is the billing fee against the true cost of doing it internally, including staff time, systems, training, turnover and uncollected revenue.

How much do medical billing companies charge?

Most charge a percentage of collections, commonly in a wide band, with per-claim and flat monthly pricing also used. Published vendor rate cards often sit between roughly 4% and 10% of collections, but there is no official industry benchmark, so the more useful comparison is what each quote includes at that rate.

What is the difference between medical billing and revenue cycle management?

Billing usually describes the claim side of the process: charge entry, submission and payment posting. Revenue cycle management covers the whole financial journey — from scheduling and eligibility through coding, claims, denials, patient balances and A/R. A billing service can be a subset of an RCM relationship.

What questions should I ask a medical billing company?

Focus on scope, pricing inclusions, contract terms, reporting, communication and compliance. The checklist above covers each area, and the answers matter more than the sales pitch — particularly whether the vendor will work your existing A/R and what it charges for items outside the headline fee.

Which KPIs should I track after hiring a billing company?

Start with first-submission denial rate, days in A/R, net collection rate, A/R over 90 days, and denial reasons with appeal outcomes. Agree how each is calculated before you start, so month-to-month comparisons are meaningful.

What happens if we switch billing companies and it does not work out?

That is what the exit terms are for. Your contract should confirm that your data is yours, that you can export it in a usable format, and whether the vendor must assist with a handover. Review those clauses before signing, not when you want to leave.

Final Thoughts

Hiring a medical billing company is not really a purchasing decision. It is a decision about who touches your revenue, your patient data and your reputation with payers every day.

The vendors that deserve your business are the ones that will put scope, metrics, communication and exit terms in writing before you ask. The ones that will not are telling you what the relationship will feel like after you sign.

Start with your own numbers. Know your denial rate, your days in A/R and the share of A/R over 90 days. Then ask every vendor to explain how they would improve them — and how they would prove it.