The Guide to Medical Billing Companies in 2024
Get clarity before you choose a medical billing company
Choosing a medical billing partner can be a challenging process, in part because most independent practices don't know what to look for.
For independent medical practices, choosing a medical billing company can be a confusing process.
One important step to gain clarity is to understand the structure of the medical billing industry. In general, there are three categories of independent medical billing companies:
Large companies with more than 100 clients
Mid-size companies with 25-100 clients
Smaller companies with less than 25 clients
How to choose the best billing partner for your practice
Viewed from this perspective, it’s easier to see patterns in the industry. In each tier, a medical company will be more likely to have certain strengths as well as corresponding weaknesses. Companies at each tier will also be more likely to offer certain services, and less likely to offer others. Once you know what to look for, you’ll be in better position to select the best billing partner for your practice.
With that goal in mind, let’s get started.
Large medical billing companies
Medical billing companies with over 100 individual clients benefit from economies of scale and big data, as well as access to higher tiers of service from other providers.
According to a recent industry survey, about 15% of all medical billing companies serve over 100 individual clients, representing over half of all practices that outsource their billing. These larger companies are highly likely to serve clients across a wide geographic area and a wide range of specialties. Larger companies are also far more likely than smaller companies to utilize support services outside the USA.
Characteristics of larger medical billing companies
Over 90 percent of large medical billing companies have a regional or national focus
Only 50 percent focus on clients in a particular specialty
Over 70 percent utilize offshore services
Companies with a geographic focus will be familiar with state or regional insurers, as well as state policies and regulations. If a company already serves clients in your state, you can be more confident they’re familiar with the regulatory landscape. Regardless, you should ask about their process for keeping up to date with changes in regulations.
Some medical billing companies prefer their clients utilize a particular practice management software, but since larger companies serve so many different practices, they are usually experienced with many different technologies and platforms, and thus easily able to work with clients who utilize different practice management software. Make sure inquire about the company’s experience with different software platforms.
One major advantage of larger medical billing companies is that in many cases, their economies of scale mean they are able to offer lower rates for their services. Indeed, part of the attraction of working with a larger company is the prospect of saving a significant amount of money by paying a lower percentage of collections.
However, you’ll only realize increased revenue if the company maintains your net collection rate at or near its current level. If your net revenue declines, your overall revenue may decrease even with lower fees. Also, a decrease in clean claim rate may cause cash flow difficulties, even if you eventually do collect those payments..
In part due to their scale, larger companies may be less able to provide personalized service and support than their smaller, more focused competitors. Those that do provide good support will generally connect each client with a dedicated support representative, who will commit to learning about the client’s needs and doing the legwork internally to find answers to the client’s questions and solutions for issues that may arise.
It’s important that your support rep be willing to do this extra work, because in larger companies, staff may operate in “silos,” with different teams addressing different component of the medical billing process. Uncovering the root of a problem may require communicating with several different teams, which can be challenging because in such a setup those teams don’t communicate with each other. If you’re considering working with a larger company, make sure to ask how they ensure clear lines of communication throughout the billing process.
Larger companies often serve a wide range of specialties, with no specific focus. While the greater resources of a large company may equip them to solve a wide range of problems, if the company isn’t experienced in a particular specialty, they will often encounter quirks and odd situations that need to be addressed. Even if they eventually solve the issue, your payments could be delayed in the meantime.
On the other hand, a medical billing company that focuses on serving practices in a particular specialty - regardless of whether it’s a large or small company - will be deeply familiary with the quirks and requirements of billing in that specialty. That’s why, in many cases, it can be more cost effective to work with a specialized billing company, even if their fees may be higher, your clean claim rate, net collections rate, net revenue may be higher as well.
Key Questions to Ask
If your practice is exploring working with a larger billing company, be sure to inquire about the following points:
Does the company focus on a specific specialty?
Do they focus on a geographic area or region?
Does the company have experience working with your practice management software?
Do they provide a dedicated support representative for each client? How much experience does each support rep have?
What is their process for ensuring clear lines of communication within their team to solve client issues?
It should also be noted that sales reps at larger medical billing companies probably have a lot of experience. Make sure you take the time you need, ask appropriate questions, and are satisfied with the answers.
2. Mid-sized medical billing companies
Mid-sized medical billing companies, meaning those with approximately 25-100 clients, tend to be highly focused on a particular specialty. They also are more likely to focus on local or regional clients, and are much less likely to utilize offshore services and support.
CHARACTERISTICS OF Medium sized MEDICAL BILLING COMPANIES
50 percent of companies at this scale serve a local or regional client base, while 50 percent serve clients around the country
Over 90 percent of medical billing companies at this scale were either “highly focused” or “somewhat focused” on a specific specialty, as opposed to only 50 percent of larger medical billing companies
70 percent of mid-size medical billing companies have entirely USA-based operations
Dedicated service to practices in a particular specialty has many advantages. Billing in each specialty has its own quirks and unique features, and a company focused on a certain specialty is better positioned to stay ahead of new developments that may affect claims. For example, medical labs that perform COVID testing saw rapid changes in billing policies over the course of the pandemic, and only billers that paid close attention were able to keep abreast of these changes to ensure their clients obtained full reimbursement for services.
Companies at this scale are the most likely to recommend a specific practice management software to their clients. Over 80 percent of medium sized medical billing companies recommended a particular software solution, although the great majority of these do accommodate clients who utilize other solutions. While there are only a few practice management software suites that are truly focused on particular specialties, there are many ways in which general software can be customized to be more effective for specific use cases. Given the highly specialized nature of companies at this scale, medium sized medical billing companies are well positioned to help their clients improve their use of software to realize efficiencies and cost savings.
Medium sized medical billing companies may not be able to achieve the economies of scale that are accessible to larger companies. Furthermore, only 30 percent utilize offshore support services. Thus, their internal costs may be somewhat higher, and their rates may be higher in proportion. However, companies at this scale should be better able to focus on quality of service, both in terms of net collections and also in terms of communication with clients. Remember, if you pay a higher percentage fee on larger total collections, your practice will make more money overall! An efficient billing may also be able to reduce your days in accounts receivable, which will improve your practice’s cash flow.
Due to their smaller scale, medium-sized billing companies are more likely to maintain strong communication within their staff, and less likely to have different teams “siloed” apart from one another. This increases the likelihood that customer service will be able to get to the root of issues and answer your questions quickly.
Key questions to ask
If your practice is exploring working with a mid-sized billing company, be sure to inquire about the following points:
To what extent does the company focus on practices within a specific specialty or range of specialties?
Does the company focus on a specific geographic area or region? Do they have particular experience with certain insurers in that region?
Does the company recommend a specific practice management software?
Do they have experience working with other practice management software solutions?
Does the company utilize offshore support services?
What is the company’s customer service process? How do they ensure client questions and issues are addressed quickly and thoroughly?
If their rates are higher than others, do they have data to show that clients realize higher revenue and/or improved A/R through their services?
As you explore working with a company, pay close attention to how sales reps from each company interact with your practice. Mid-sized companies may have only one or two dedicated sales reps, or perhaps sales is a shared responsibility for those who also have other responsibilities. If you’re interacting with company management directly, you will likely get a good sense of how the company will attend to your practice if you do become a client.
3. Small Medical Billing Companies
Small medical billing companies, meaning those with fewer than 25 clients, are more mixed than mid-sized or large billing companies in their characteristics.
Many small billers are extremely dedicated and conscientious, highly focused on maximizing revenue for their clients, and provide personal service than their larger competitors can’t match. However, there are many small billers who are inexperienced and unable to keep up with the rapidly changing world of billing. If you’re thinking of working with a small billing company, it’s important to be able to tell the difference.
CHARACTERISTICS OF Medium sized MEDICAL BILLING COMPANIES
As you might expect, small companies tend to focus on local or regional clients in specific specialties, and are the least likely to employ offshore support contractors.
About 75 percent of companies at this scale serve a local or regional client base, while only 25 percent serve clients around the country
About 80 percent of small medical billing companies were either “highly focused” or “somewhat focused” on a specific specialty or set of specialties
Less than 15 percent of companies at this scale use offshore workers
Just as with medium-sized billing companies, dedicated service to practices in a particular specialty has advantages. By developing expertise in certain specialties, a small company can often provide exemplary service and collect a high percentage of claims.
Companies at this scale are the most likely to recommend a specific practice management software to their clients. Over 80 percent of small medical billing companies recommended a particular software solution, although the great majority of these do accommodate clients who utilize other solutions. Once again, the depth of expertise in particular specialties and use cases is where the value is. A savvy small medical billing companies can be well positioned to help clients realize efficiencies and cost savings through their practice management software.
Small medical billing companies do not have access to the economies of scale that are accessible to larger companies. Furthermore, only 14 percent utilize offshore support services. Thus, their internal costs are generally higher, and their rates may be higher in proportion. However, small companies can be better able to focus on quality of service, both in terms of net collections and also in terms of communication with clients. Remember, if you pay a higher percentage fee on larger total collections, your practice will make more money overall! An efficient billing may also be able to reduce your days in accounts receivable, which will improve your practice’s cash flow.
Due to their smaller scale, these companies are more likely to maintain strong communication within their staff, and less likely to have different teams “siloed” apart from one another. This increases the likelihood that customer service will be able to get to the root of issues and answer your questions quickly.
However, one common issue with small medical billing companies, particularly those that serve fewer than 10 clients, is that they may have very little experience. A quick search on Google or YouTube will bring up dozens of courses and ebooks with taglines like “Start a medical billing company in 6 weeks!” There are literally thousands of very small billing companies that have gotten their start this way, and many serve only a handful of clients. While these companies may provide great customer service, their small scale limits their access to many technologies and platforms used by larger companies, and with only 1 or 2 clients they will have very limited experience overall. From what we’ve seen, practices that work with these very small billing services are generally leaving money on the table due to the limitations of their billing partner.
Key questions to ask
If your practice is exploring working with a small billing company, be sure to get clarity about the following points:
Does the company focus on a particualar specialty or set of specialties?
Does the company have a local or regional geographic focus? Do they have a depth of experience with insurers in that region?
Does the company prefer a specific practice management software? Can they work with other practice management software as well?
Does the company utilize third party vendors and/or offshore support services? If so, how do these integrate with the main team
How does the company address issues and questions from clients? What is the availability of their support team? What is their average time to resolution of issues?
Do have data related to revenue and/or A/R for their clients?
Again, pay close attention to how sales reps treat you. Smaller companies may not have any dedicated sales reps, and the sales team is more likely to be a manager of the business, who also does other things. If you’re interacting with company management directly, you may have an opportunity to assess how the company treats their clients.
What type of billing company is best for your practice?
When you’re evaluating potential medical billing partners for your practice, some of the most important factors to consider are:
Maximizing net collections
Maximizing final net revenue for your practice
Improving collection time and reducing A/R
Solving problems proactively to reduce the time your staff spends on support
Attentive and pleasant customer service
When you’re talking with salespeople, it can be difficult to tell which company will provide the best service for your practice. However, some of the things you can consider are:
Does the medical billing company focus on practices in my specialty?
How do the salespeople talk about the importance of customer support?
Do they prioritize problem solving for individual clients?
Do the salespeople emphasize the importance of overall net revenue for your practice?
What do they say about their process for addressing unpaid claims and billing errors?
What is their process for identifying and solving recurring problems with claims?
These are perhaps the most important overarching questions you should ask, and the answers will tell you a lot.
For example, our own company is a mid-sized medical biller with close to 100 clients. We primarily serve post-acute physicians and rounding groups along with a range of specialty practices, including physiatrists, cardiologists, pain and personal injury physicians, podiatrists, nephrologists, and mental health practitioners, as well as a number of medical labs. Unlike most companies at our scale, we have developed an extremely well trained and efficient offshore team to complement our USA-based staff. We have several team members dedicated to customer service, and our tight internal communication across all stages of the billing process allows them to resolve client issues promptly and with a minimum of hassle for the client. For many practices, we might not be a good fit, but if your practice is in one of the specialties we serve, get in touch to see if we might be able to help you.
Regardless, whether you’re just starting your practice or planning to transition to a new billing company, make sure you invest the time in choosing the right billing partner. This is a major decision that will have a significant impact on your finances and operations. Visit our Medical Billing Resource Hub to learn more.