Should You Hire a Medical Billing Company? A Practical Guide for Medical Practices 

In addition to seeing patients, running a medical practice means handling your claims, coding, insurance verification, payment posting, denials, patient balances, and accounts receivable. These processes, when done inefficiently, may lead to delays in payments and waste of your time on billing issues.

This is why numerous healthcare practices in the United States choose to hire a medical billing firm or outsource RCM.

However, choosing a billing firm is not only about choosing the most cost-effective percentage and the one who offers a long list of services. The right billing firm for your needs will be the one that meets your specialty, payer mix, technological needs, workflow, and finance-related requirements.

Here is how to select the right billing company, what services to expect from them, how the pricing models work, and which questions to ask.

What Does a Medical Billing Company Do?

A medical billing company manages some or all of the administrative work involved in getting a healthcare provider paid.

The exact scope depends on the company and your contract. A full-service medical billing or RCM company may handle:

• Insurance eligibility verification

• Prior authorization support

• Charge entry

• Medical coding

• Claim creation and submission

• Claim status follow-up

• Payment posting

• Denial management

• Appeals

• Accounts receivable follow-up

• Patient billing

• Provider credentialing

• Payer enrollment

• Revenue cycle reporting

CMS explains that electronic healthcare claims go through multiple edits before payment. Claims that contain errors can be rejected or denied and may require correction or resubmission.

This is why medical billing is more than simply sending claims. A strong billing process follows the claim through the revenue cycle and identifies problems that could prevent payment.

When Should You Hire a Medical Billing Company? 

There isn't a specific practice size that helps decide on the need for outsourcing.

You may consider using medical billing services if:

Billing is consuming too much of your staff's time

If front desk workers or clinical employees keep tracking claim statuses, fixing billing problems or making calls to insurance providers, then billing may take their focus away from their other duties within the practice.

Accounts Receivable (A/R) is aging

The growth of your A/R is an indication that your claims are not being tracked well or that payments are not being fixed fast enough.

It's difficult to control the number of denials

Each denial can be the result of something different. Issues like eligibility, coding, authorization, documentation, payer regulations and many others can influence the payment of your claim.

The medical billing company should find out what the reasons for those denials were instead of simply resubmitting the claim.

You are planning to open a new practice

Your practice needs to start the revenue cycle from scratch since the credentialing process, payer enrollment, billing process, technology implementation, and claims management will have to operate smoothly.

What Services Should You Expect From a Medical Billing Company? 

It is important to know what you want from the firm before hiring a medical billing company.

Just because a firm advertises full-service billing doesn't mean that they offer all these services.

Eligibility verification

The billers verify the patient's insurance coverage and any related benefits.

This will help you to avoid any problems associated with the coverage of the patient.

Medical coding

Coding refers to changing documented medical services into a standard code to facilitate billing and reimbursement.

Depending on your agreement with the firm, they may code, do the coding review, or both.

Claims submission

The billing company generates and submits the claim on your behalf to the relevant payer.

The billing company generates claims electronically for Medicare using an approved system and either through a clearinghouse or a billing service arrangement as per the CMS guidelines on electronic billing and EDI transactions.

Payment posting

The payments and adjustments are posted in your billing system to keep track of the balance.

Denial management

Denial management involves reviewing the denial, analyzing the cause, correcting any problem where necessary, and filing for appeal or resubmitting the claim.

A/R Follow-Up

Accounts receivable follow-up involves monitoring unpaid claims and taking appropriate action based on their status and age.

Ask a prospective billing company how often it works aging A/R and how it prioritizes older or higher-value accounts.

Reporting

Your billing partner should give you understandable reports that allow you to see what is happening with your revenue cycle.

Reports may cover:

• Claims

• Denials

• A/R aging

• Collections

• Payment posting

• Payer performance

• Adjustments

• Outstanding balances

How to Choose the Right Medical Billing Company

When you hire a medical billing company, evaluate more than its website.

1. Check Specialty Experience

Medical billing varies depending upon the specialty.

A vendor that works with behavioral health physicians is likely to have a different experience than another vendor dealing with orthopedic, radiology, cardiology, or primary care physicians.

Consider asking these questions:

What other practices within our specialty do you currently support?

How well do you understand our standard CPT and ICD-10 codes?

Do you work regularly with certain payers?

Who are your client references within our specialty?

Specialty-specific experience doesn’t guarantee excellence in performance, but can definitely help shorten the learning process.

2. Define Who Does What

Create a written list of responsibilities before signing a contract.

For example:

This prevents confusion after implementation.

3. Ask About KPIs

Do not accept vague promises such as "we will improve your revenue."

Ask how performance will be measured.

Important metrics can include:

• Net collection rate

• Days in A/R

• Denial rate

• Clean claim or first-pass performance

• A/R aging

• Payment turnaround

• Outstanding claims

• Denial reasons

• Appeal outcomes

Current vendor-selection guidance also emphasizes evaluating measurable performance, reporting, specialty experience, technology fit, and contract terms rather than relying only on marketing claims.

If you are unsure where your current process is losing revenue, a medical billing audit can show you your baseline numbers.

4. Check EHR and Billing System Compatibility

Your billing company should be able to work effectively with your existing technology.

Ask whether the company supports your:

• EHR

• EMR

• Practice management system

• Clearinghouse

• Reporting tools

Also ask who handles technical issues when data does not transfer correctly.

5. Review HIPAA and Data Security Requirements 

Medical billing firms might be privy to protected health information.

According to HHS, medical billing and claims processing are among the activities that can make an organization a business associate under HIPAA. A covered entity typically requires a signed business associate agreement or any other specified arrangement with a business associate with regard to uses of and protections for PHI.

When considering hiring a firm, ask the following questions:

Are you willing to sign a Business Associate Agreement?

How do you protect PHI?

Who has access to patient information?

How do you transmit and store data?

What happens to our data when the agreement expires?

Do you employ subcontractors that can access PHI?

Don’t rely on the term "HIPAA-compliant." Get the specifics about how the firm will handle its responsibilities and secure the information.

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

There is no single price that applies to every practice.

Common pricing structures include:

Percentage of Collections

The billing company earns a percentage on the funds collected.

This is one of the most frequent methods in outsourced medical billing. The 2026 price range for billing companies that publicize their prices starts at about 4% to 10%, although the exact prices vary according to specialty, number of claims, and services provided.

Don’t compare two companies by the percentages alone.

For instance, inquire about which percentage refers to:

• Payments from insurance companies

• Payments from patients

• Payments from all the practice

• Payments from old A/R

• Payments prior to working with the vendor

The percentage basis may result in a huge difference between two seemingly equal offers.

Per Claim

There are some vendors who set a per-claim flat rate.

While this makes it easier to predict costs, you should inquire whether they will perform denial appeals, payment posting, and other such tasks.

Fixed Monthly Amount

The vendor might also set a fixed amount that you have to pay on a monthly basis regardless of the number of claims collected.

Again, this would give certainty regarding cost, but you must know the level of service involved.

Combined Method

The vendor might use some combination of a percentage, flat fee, or any other pricing method.

However, whatever pricing structure you opt for, make sure to have a written price sheet.

Questions to Ask Before You Hire a Medical Billing Company

Use these questions during vendor calls:

1. How much experience do you have with our specialty?

2. Which billing functions are included?

3. Which services cost extra?

4. What percentage or fee do you charge?

5. What does the percentage apply to?

6. Do you work old A/R?

7. Who handles denied claims and appeals?

8. How often do you follow up on unpaid claims?

9. Which KPIs will you report?

10. How often will we receive reports?

11. Which EHR and practice management systems do you support?

12. Will you sign a Business Associate Agreement?

13. Will we have access to our billing data?

14. Are there setup or termination fees?

15. What happens if we decide to end the relationship?

16. Can you provide references from similar practices?

The answers should be specific. If a vendor cannot clearly explain who owns a particular billing task, that responsibility should be clarified before the contract is signed.

Final Thoughts

By outsourcing your medical billing process, you are doing much more than just paying someone to file your insurance claims. You are actually choosing a company that will potentially handle key elements of your revenue cycle process.

Not only is the cost factor crucial in making the right decision; you must also take into account such criteria as specialization, range of services offered, denial management process, accounts receivable management, reporting tools, technology, compliance, and contract terms.

First of all, you need to define the areas in which your practice currently experiences issues with its billing process. After this step, determine your baseline figures, define your needs, perform an equal comparison of vendors, and set up performance benchmarks.

The following steps should be taken by healthcare organizations seeking outsourced billing and RCM partners.

If you want help reviewing your current billing process, request a free RCM assessment from Dilijent Systems

1. What does a medical billing company do?

A medical billing company can manage services such as coding, claim submission, payment posting, denial management, A/R follow-up, patient billing, and revenue cycle reporting. The exact services depend on the agreement.

2. Is it worth it to hire a medical billing company?

It can be worthwhile when billing takes too much staff time, claims are frequently denied, A/R is aging, or the practice lacks specialized revenue cycle expertise. The decision should be based on the practice's current costs and performance.

3. What questions should I ask a medical billing company?

Ask about specialty experience, services included, pricing, denial management, A/R follow-up, KPIs, technology, HIPAA requirements, reporting, data access, references, and contract termination.

4. What is the difference between medical billing and RCM?

Medical billing generally focuses on billing-related activities such as coding, claim submission, payment posting, and follow-up. RCM is broader and can include eligibility, authorization, credentialing, billing, denials, A/R, patient collections, and revenue reporting.

5. What KPIs should I monitor after hiring a billing company?

Common metrics include net collection rate, days in A/R, denial rate, clean claim performance, A/R aging, outstanding claims, and payment trends.