Is outsourcing billing cheaper than hiring a biller?

Often, once the full employment cost is counted — taxes, benefits, software, clearinghouse fees, training and coverage for leave. The comparison in this article lists the items practices most commonly forget.

Are there setup or onboarding fees?

Sometimes. Enrollment work, system setup and backlog cleanup may be charged as one-time items. Ask for them in writing before signing so the first invoice holds no surprises.

Does the billing fee include patient billing and statements?

Not always. Some companies include patient statements and phone support; others charge per statement or leave patient billing with the practice. Confirm it explicitly — patients judge your practice by these interactions.

How Much Does Medical Billing Cost?

Q: What percentage do medical billing companies charge?

It depends on specialty, volume and scope. Percentage-of-collections quotes in the market commonly range from the mid-single digits to around ten percent or more for smaller or more complex practices. Any company quoting without reviewing your payer mix and volume is guessing.

There is no single price tag for medical billing — there are pricing models. This guide explains how each one works, what drives your quote, and the costs that never appear in a proposal.

"How much does medical billing cost?" has an honest but unsatisfying answer: it depends on the model, your specialty, your claim volume and how much of the work you hand over. What we can do — and what this guide does — is explain each pricing model clearly enough that you can compare quotes intelligently. For the short version, see our pricing page; this article is the long version.

Model 1: Percentage of collections

The most common model for outsourced billing. The billing company charges a percentage of the money it actually collects for you — not of what is billed. If nothing is collected, nothing is charged on that claim, which aligns the company's incentives with yours. Market rates vary widely: specialty, monthly volume, average claim value and scope all move the number, and quotes commonly land anywhere from the mid-single digits to around ten percent or more for small or complex practices. When comparing percentage quotes, always ask what is included — credentialing, patient statements and denial appeals are sometimes priced separately.

Model 2: Per-claim or per-transaction pricing

Some services charge a flat fee per claim submitted, sometimes with separate fees for eligibility checks, ERA posting or patient statements. Per-claim pricing is predictable and can suit high-volume, low-complexity practices. The trap is scope: a cheap per-claim fee that excludes denial follow-up means the hardest part of billing is still on your desk.

Model 3: Hourly or FTE-based pricing

A dedicated biller or billing team is priced by the hour or as a monthly full-time-equivalent fee. This suits practices that want named staff working in their systems all day. Compare it honestly against employment cost — salary is only part of what an in-house biller costs, as the next section shows.

The real cost of in-house billing

Practices often compare an outsourcing quote against a biller's salary and stop there. The full in-house cost also includes: payroll taxes and benefits; billing software and clearinghouse fees; a computer, phone line and workspace; training and keeping up with payer rule changes; coverage during holidays and sick leave; and the management time spent supervising, hiring and replacing billing staff. Add claim errors and slow follow-up during busy periods — the revenue cost — and the in-house option is frequently less cheap than it first looks. Our side-by-side of outsourcing vs in-house billing works through this comparison in more depth.

What drives your quote up or down

Specialty complexity — surgical, behavioral health and multi-modifier specialties take more work per claim than simple office visits.
Claim volume — higher steady volume usually earns a lower percentage.
Payer mix — heavy Medicaid or workers' comp mixes involve more authorizations and follow-up.
Scope — billing only, or billing plus credentialing, eligibility, patient calls and reporting?
Current AR health — cleaning up a neglected backlog is extra work, sometimes priced as a one-time project.
Software — working in your existing system is standard; migrating systems is a project of its own.

Questions to ask any billing company before signing

Exactly which tasks are included in the rate — and which are billed extra?
How are denials and appeals handled, and by whom?
What reporting do I receive, and how often?
What is the contract term, and what happens to my data and AR if we part ways?
Who answers patient billing calls — your team or mine?

How to compare two quotes without being misled

Say one company quotes a lower percentage than another. Before deciding, normalize the comparison: list every task your billing actually involves — eligibility checks, authorizations, coding review, claim submission, posting, denial appeals, patient statements, patient phone calls, credentialing maintenance, reporting — and mark which quote includes each task and which charges extra. A lower headline rate that excludes denial work and patient billing can easily cost more in total than a higher all-in rate, because the excluded tasks either come back to your staff or quietly do not get done. Also compare what happens with your existing AR: some partners work the old backlog as part of onboarding, others start from day one and leave the backlog to age.

Finally, weigh the cost of not collecting. A billing arrangement that is two points cheaper but leaves claims unworked is the most expensive option on the table — the fee difference is small next to revenue that never arrives.

A reputable medical billing outsourcing partner will answer all five without hesitation — and will ask you just as many questions back, because a fair quote requires understanding your practice first.

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