Calculating Medical Billing Service Costs

How do Medical Billing Services Charge Customers?

With many billing services, customers don’t really know how they charge. So let’s answer the question: how do medical billing services charge customers?

Let’s face it. Healthcare providers rely on medical billing services to file claims and bring in funds. But many of their customers don’t really know how they charge for their services.

So we decided to break it down for you.  Here’s a review of common ways that medical billing services charge their clients.

Medical Billing Services — How they Charge for Services

One of the open secrets of medical billing services is that they vary fees and percentages depending on the type of healthcare practice they are dealing with.


Simply put, some specialty medical practices are more time-demanding or complex than others. A neurologist may see only a handful of patients a day but the medical coding is complex and the claims issued are often in the four or even five-figures. So medical billing services may charge a higher percentage for this time-demanding work.

A popular family practice, on the other hand, may see a high daily volume of patients. But the coding is basic and the claims are typically small. So a medical billing will charge at a much smaller rate.

Setting Medical Billing Fees, Some Popular Practices

When it comes to medical billing fees, there are basically three ways a healthcare provider can be charged: by a percentage, per each claim or through an hourly fee.

Good medical billing services will spell out their method of collecting fees both in person and through the contracts that sign with their clients.

Let’s take a look at these three popular methods.

  • Percentage-based
  • Claim-based
  • Hourly Fees

Percentage-Based Medical Billing Fees — What to Look Out For

In the percentage-based scenario, a medical billing service charges a client a percentage based on the revenue a healthcare provider collects each month.

As stated above, this can vary tremendously depending on the services provided by the clinic or hospital, its number of patients and even the location of the facilities.

Typically, the percentage charged is between 5 and 7 percent. But in practice, the range can vary from 3 to 10 percent.

Any company charging at the extreme of this range should warrant a double-take. A 3% charge may arise from a company offer an incredibly stripped-down version of medical billing. Or they might be an upstart medical billing service trying to get a foot in the front door.

A higher percentage may be charged for a specialty practice firm whose submitted claims tend to be a high price point. Or it may mean the medical billing services offers a robust, wraparound service that warrants the higher charge.

Per Claim Fees – Convenient

Some medical billing services will only charge per insurance claim filed, typically for a few dollars per claim.

This arrangement makes sense for healthcare practices that are only submitting claims and who don’t have an in-house staff member to handle claims.

Per Hour Fees — Perfect for Smaller Practices.

Hourly fees may make better sense for smaller healthcare outfits who don’t see a lot of patient visits. In those cases, a medical billing service would not make enough money from charging a percentage rate or per-claim fee to justify this service.

Don’t Forget About Start-Up Costs

Medical billing services typically charge their new clients a start-up fee. According to our guidelines, many charge around $300 per doctor. Though for larger practices, there will be a cap after a certain number of physicians. In those cases, a comprehensive start-up fee, ranging from $1,000 to $1,500 is the norm.

Questionable Costs that Should Raise Red Flags

Some fees are simply bad news. They are add-ons pushed by medical billing services seeking to increase their take without adding anything of value to the healthcare provider client. Some of these questionable fees include:

  • Post-sale customer support expenses
  • Hardware fees and installation charges
  • Upgrade Charges
  • Hidden “fine print” costs buried in the contract.
  • Costs for each statement mailed to a patient
  • Clearinghouse Fees

Couldn’t medical billing just be handled in-house?

Plenty of companies have crunched the numbers. In-house billing is technically cheaper.

There’s no getting around it.

But most healthcare providers prefer to outsource their medical billing, otherwise they would have to hire and train in-house staff to handle their medical billing. On top of that, these in-house medical billers would need yearly certified training to keep up on the industry’s frequent changes.

For example, at the start of 2017, ICD-10 coding has largely been implemented across the industry, forcing healthcare providers to change how they clinical documentation.

Sound like a mouthful? It is. And if you don’t keep up, you don’t get paid for your insurance claims.

So while using a medical billing service costs more in the short-run, in the long-run it saves healthcare providers from the headaches and hiring problems of managing their billing in-house.

Compare up to 6 Quotes on Medical Billing Services — For Free

One of the fastest ways to learn about medical billing costs for your healthcare practice is to get a quote. Our automated, online system offers you up to 6 quotes on medical billing — in just minutes.

Just specify whether you are looking for medical billing services, medical coding services or obtaining practice management software. From there, our automated survey will ask a few more questions about your practice and guide you to some well-reviewed medical billing service companies.

But how do I know if a medical billing service is right for me?

Our company specializes in vetting and reviewing medical billing service companies. We have reviewed over 100 medical billing companies, keeping tabs on their service quality and breadth.

We also review medical billing software, explaining what the pros and cons of each feature. You can compare providers, using a side-by-side chart that displays prices and offerings.

Remember, you’ve already got a leg up. Because now you understand how medical billing services charge their customers and price their services.  (Plus, you know what “red flag” charges to be on the lookout for.)

Choosing the right billing service is no joke.

A quick, haphazard choice means lost revenue, slow claims filing and a backlog of paperwork.

An informed choice of medical billing services provider can deliver timely claims filing, eliminate paperwork and deliver increased revenue to build your healthcare business.

With our service provider reviews, you have a good chance of finding one that suits your needs.