To choose a medical billing company, compare three things before you compare price: the exact scope of work in the contract, the vendor’s measured results for practices in your specialty (clean claim rate, denial rate, net collection rate and days in A/R), and who owns your data when you leave. A low percentage of collections means little if denials, appeals or credentialing are billed separately.
Most practices pick a billing partner from a short demo and a price quote. That is how they end up with a vendor that resubmits easy claims, lets older A/R age out, and sends a monthly report nobody can check. This checklist gives you the 12 questions to ask, the benchmarks to hold a vendor to, and the contract terms that protect you.
Key Takeaways
- Ask for numbers, not adjectives. A credible vendor reports clean claim rate, first-pass denial rate, net collection rate, days in A/R and A/R over 90 days, and shows how each is calculated.
- Compare scope line by line. Denial follow-up, appeals, patient statements, prior authorization, credentialing and payer contract review are often excluded from the headline rate.
- Specialty experience matters more than company size. Ask for references from practices with your specialty, payer mix and EHR.
- Get data ownership, a full export at exit, and a reasonable termination notice period in writing before you sign.
- A solo or new practice needs a vendor that can also handle credentialing and payer enrollment, because you can’t bill a payer until you’re in its network.
The 12-Point Checklist for Choosing a Medical Billing Company
Use these questions in every sales call. Write down each vendor’s answers so you can compare them side by side.
- What exactly is included in the fee? Get a written list covering charge entry, claim scrubbing and submission, payment posting, denial management and appeals, A/R follow-up, patient statements and calls, eligibility checks, prior authorizations, credentialing, and reporting. Anything not listed is an extra cost.
- How do you handle claim corrections and rebilling? Ask how quickly rejected claims are corrected and resubmitted, who fixes coding versus demographic errors, and whether corrected claims carry the right frequency code and original claim number.
- What are your results for practices like mine? Ask for clean claim rate, denial rate, net collection rate and days in A/R for clients in your specialty, not a company-wide average.
- How do you work old A/R? Percentage-based pricing can reward chasing easy claims. Ask how claims over 90 and 120 days are worked, and whether they’ll take over your existing backlog.
- Do you work every denial, and how? Look for a root-cause process that tracks denials by reason code and payer and fixes the cause upstream. See our guide to denial management in medical billing for what good looks like.
- Who does the coding, and are they certified? Ask whether coders hold AAPC or AHIMA credentials, whether they specialize in your field, and whether coding is audited.
- Do you check payments against our contracts? A vendor that only posts what payers send will miss underpayments. Ask whether they load your fee schedules and flag short payments; see our underpayment recovery service.
- Can you handle credentialing and payer enrollment? This is essential for new and growing practices. Billing stops when a provider isn’t enrolled or a CAQH attestation lapses.
- How will we see what you’re doing? Ask for a sample monthly report and whether you’ll have read-only access to the practice management system so you can verify the numbers yourself.
- How do you handle patient balances? Patient responsibility is a growing share of revenue. Ask about statement cycles, payment plans, online payments and how patient calls are answered.
- How do you protect our data? Ask for a signed business associate agreement (BAA), where the work is done, and how access to your EHR is controlled and logged.
- What happens if we leave? Confirm that you own the data, how long the notice period is, and that the vendor will provide a full export and keep working open A/R during the transition.
Benchmarks to Hold a Billing Company To
Ask each vendor for these metrics and the formula behind them. Targets vary by specialty and payer mix, so use the ranges below as a starting point, not a guarantee.
| Metric | What it measures | What to look for |
|---|---|---|
| Clean claim rate | Claims accepted on the first submission with no rejection or edit | 95% or higher |
| First-pass denial rate | Claims denied on first submission | Under about 5-7%. An MGMA family medicine median recently reported was about 7% |
| Net collection rate | Payments collected as a share of what you were contractually owed | 96% or higher. MGMA’s family medicine median was about 97% |
| Days in A/R | Average days from service to payment | Under about 40 days for most outpatient specialties |
| A/R over 90 days | Share of open balances older than 90 days | Trending down month over month, and well below your current level |
Make sure the vendor calculates net collection rate against allowed amounts after contractual adjustments, not against gross charges, and doesn’t hide write-offs. A practice can show a high rate on paper while denied claims are quietly adjusted off.
How Medical Billing Companies Charge
| Pricing model | How it works | Watch for |
|---|---|---|
| Percentage of collections | A share of what is actually collected, often quoted in the mid single digits | What counts as a collection, minimum monthly fees, and extra fees for patient payments or old A/R |
| Flat fee per claim | A fixed amount per claim submitted | Less incentive to chase low-dollar or difficult claims |
| Monthly flat rate | A fixed fee for a defined volume and scope | Overage charges when volume grows |
The headline rate is the least useful number in the proposal. Two vendors at 5% can have very different costs once scope, minimums and add-on fees are included, and a vendor that collects 3% more of what you’re owed is worth more than a lower rate.
What a New or Solo Practice Should Look For
- Credentialing and payer enrollment included, so you’re in network before your first patient.
- No long lock-in. A 30-90 day termination notice is reasonable.
- Eligibility and benefits checks before every visit to prevent front-end denials.
- Help choosing or setting up a practice management system. See our explainer on the types of billing systems in healthcare.
- A named account manager, so you aren’t routed through a general queue.
Red Flags When Comparing Billing Companies
- Results are promised without any baseline review of your current claims and A/R.
- The vendor won’t share metric definitions or give you system access.
- Denials and appeals are an extra charge or are worked only above a dollar threshold.
- There are no references in your specialty.
- The contract has auto-renewal, long notice periods or data-export fees.
- Coding is offshored or uncredentialed with no audit process.
In-House Billing vs Outsourcing
In-house billing gives you direct control but depends on a few staff members, and turnover or leave can stall cash flow. Outsourcing spreads the work across a trained team and usually adds denial and A/R expertise, but you must manage the vendor with clear metrics. Many practices use a hybrid model: front-desk eligibility and collections stay in-house, and coding, claims, denials and A/R go to a billing partner.
Want a baseline before you choose? Steady Medical Billing will review your current claims, denials and A/R and show you where revenue is leaking, at no cost. Request your free RCM audit.
Frequently Asked Questions
How do I choose a medical billing company?
Compare written scope, measured results for practices in your specialty (clean claim rate, denial rate, net collection rate and days in A/R), how they handle denials and old A/R, coder credentials, reporting access, HIPAA safeguards, and exit terms including data ownership. Choose on value collected, not on the lowest percentage.
What questions should I ask a medical billing company?
Ask what is included in the fee, how claim corrections and rebilling are handled, what their denial and net collection rates are for your specialty, how they work A/R over 90 days, whether coders are certified, whether they check payments against your contracts, whether they handle credentialing, how you will see reports, and what happens to your data if you leave.
What is a good denial rate for a billing company?
Most practices should aim for a first-pass denial rate under about 5-7%. MGMA reported a family medicine median of about 7%. Ask how the vendor defines the rate and look for a downward trend after onboarding.
How much do medical billing companies charge?
Many charge a percentage of collections, commonly quoted in the mid single digits. Others charge per claim or a flat monthly fee. Compare total cost after scope, minimum fees and add-ons, and weigh it against how much more of what you are owed the vendor actually collects.
What should a new solo practice look for in a billing company?
Credentialing and payer enrollment support, eligibility checks before visits, no long lock-in contract, help with practice management software, transparent reporting, and a named account manager.
Which billing companies handle claim corrections, rebilling and patient balances?
Full-service billing companies usually handle claim corrections, rebilling and patient balance management as part of revenue cycle management. Confirm it in the written scope, because some vendors charge separately for patient statements and patient calls. Steady Medical Billing includes these in its full-service RCM.
