Chances are, you’ve wondered at some point whether you’re paying the right amount for billing services if you run a small medical practice. Or you might currently be doing all of your medical billing and coding in-house and are wondering whether it’s worth partnering with a specialized medical billing and coding company. 

Medical billing fees aren’t always easy to figure out, given how many variables your specific bills will depend on, such as:

– Model

– Specialty

– Claim volume

– Practice size

So, direct comparisons are tricky. What you can do, however, is know what goes into the specific fees you’re given. We break it all down throughout this guide so you know what to expect.

What Do Medical Billing Services Actually Cost?

It’s entirely dependent on the pricing model. Most billing companies use one of three structures – percentage-based fees, flat fees or per-claim fees. Each of them comes with its own trade-offs, and we’re going to take a look at them all here:

Percentage-Based Fees

This is the most common model. The billing company takes a cut of your net collections – typically somewhere between 4% and 10%, depending on everything from your specialty and claim volume to how complex your billing tends to be. 

So for smaller, solo practices, that rate often sits closer to the higher end of the range. According to a survey by the American Medical Association, solo practices pay an average of around 10.9% of their total collections for outsourced billing services.

Now, the upside of percentage-based billing is that the company’s incentive is directly tied to yours – they only earn more when you collect more. That said, if your revenue grows significantly, the cost can start to feel less proportional to the actual work being done.

Flat-Fee and Per-Claim Models

Flat fees are less common but do exist, particularly for larger practices that process high claim volumes. Monthly flat fees can range from as little as $1,000 to well over $100,000, depending on what’s included. Per-claim fees generally run between $4 and $10 per claim submitted.

Worth knowing here that most billing services also charge a one-time setup fee when you onboard, typically somewhere in the $500 to $1,500 range. 

What About Additional Fees?

Beyond the base pricing model, some billing companies charge separately for things like:

– Denial Management and Appeals: Handling rejected claims takes time, and not every provider includes this in their standard rate

– Patient Statement Processing: Generating and sending statements to patients may be billed separately

– Software and Reporting: Some platforms charge for access to dashboards or analytics tools

– Coding Services: If the company also handles your coding, that may come at an additional cost

It’s worth asking any prospective billing partner for a full breakdown before signing anything. Some companies quote low headline rates and make up the difference with add-on fees.

Why Claim Denials Make Your Billing Fees Matter More Than You Think

The cost of your billing service is also things like the revenue you lose when claims don’t get paid. It’s not just the fee you pay. Initial claim denials hit 11.8% in 2024, up from around 10.2% just a few years prior. For private payers specifically, nearly 15% of submitted claims were initially denied.

What that means in practice is that billing errors and poor claim submission costs your practice real money. Not just in time spent chasing denials, but in revenue that simply doesn’t come back. 

Missing or inaccurate data is the leading cause of denials, but these are largely preventable problems with the right billing support in place!

A billing partner that submits clean claims consistently is worth significantly more than one that quotes a slightly lower rate but regularly triggers rework cycles.

Why Small Practices Should Consider Outsourcing Billing to PMN

For small and independent practices, the administrative side of billing can easily eat into your capacity. Between keeping up with constantly changing payer policies, managing denials and ensuring claims go out accurately and on time, it’s a significant operational burden.

That’s exactly what PMN specializes in. With over 20 years of experience handling medical billing and coding across a range of specialties, PMN manages the full administrative picture so your team doesn’t have to. 

We’re focused on clean claim submission – we bring a 99.98% first-time claim acceptance rate – which means fewer denials and faster reimbursements. This directly affects your bottom line. 

For small practices in particular, that kind of consistency makes a meaningful difference, because every delayed or denied claim has an outsized impact compared to a larger system with more volume to absorb.

Our rates start at just 3%, and our team can provide free on-site training and superbill revisions.

Interested in learning more about how it works? Get in touch by calling (949) 215-5055 or visiting our office in Laguna Hills, Orange County, California!

FAQs

How Do I Know If I’m Overpaying for Medical Billing Services?

Considering percentage-based fees for small practices are generally around 7% – 10% of your net collections, anything higher than that would be overpaying. So, if you’re near the top of that range, you’ll want to compare what’s included. Especially whether denial management and appeals are covered. You’re likely not getting what you’re paying for if you’re paying 9% but still handle most of your denials in-house.

Is a Lower Billing Fee Always Better for My Practice?

Not necessarily, because you’re wasting revenue if you go with the company charging 5% if they’re constantly submitting error-prone claims. A medical billing and coding company that charges. Say, 8% but has a high clean-claim rate is technically cheaper. You’re best off asking prospective billing partners about their first-pass acceptance rate and how they handle denials before focusing on the percentage alone.