Anyone shopping for a billing service wants the number first. The problem is that the number on the proposal rarely equals the number on your bank statement, because billing companies price the same work in different ways and bury different things inside the rate. Here’s how the pricing models work, what moves them, and what to confirm in writing before you sign.
How Medical Billing Companies Charge
Three structures cover almost every proposal you’ll see.
Percentage of Collections
The most common model. The billing company takes a cut of what it actually collects for you, typically 5 to 10 percent, and up to 15 percent in some regions and specialties.
Note the word collections. Some proposals quote a percentage of charges instead, which is a different and much worse deal, since your charge master is always higher than your contracted rates. Ask which denominator the percentage applies to and get the answer in the agreement.
The advantage of this model is alignment. The billing company only gets paid when you get paid, so unworked denials cost them money too.
Flat Fee Per Claim
Per-claim pricing runs from under $1 to more than $8, with most practices landing between $4 and $6. Rates often differ for inpatient and outpatient claims, so ask whether the quote breaks those out.
The tradeoff is the mirror image of the percentage model: the fee is earned on submission, not on payment. A per-claim vendor gets the same money whether the claim pays or sits in a 120-day bucket. If you choose this structure, the denial and A/R follow-up obligations need to be spelled out explicitly.
Hourly or Dedicated Staffing
Less common for small practices. You pay for hours or for an assigned biller. Budgeting is predictable, but you carry the risk when volume dips.
What Drives the Rate You’re Quoted
Two practices of the same size get different numbers, and the reasons are usually these:
- Specialty. Chiropractic, behavioral health, and surgical specialties each carry different denial profiles and authorization burdens.
- Claim volume. Higher volume generally buys a lower percentage.
- Average claim value. A percentage rate behaves very differently on a $90 encounter than on a $2,400 procedure.
- Payer mix. Heavy Medicaid or workers’ comp exposure means slower, more labor-intensive follow-up.
- Scope. Claims-only pricing sits well below full revenue cycle management that includes eligibility, credentialing, patient statements, and A/R cleanup.
Fees That Don’t Appear in the Headline Rate
This is where budgets break. Before comparing two quotes, confirm each of the following in writing:
- Implementation or setup fees, and whether they’re refundable
- Monthly minimums that apply in slow months
- Clearinghouse fees, and whether they’re passed through or absorbed
- Patient statements and postage, usually billed per statement
- Credentialing and payer enrollment, typically priced per provider, per payer
- Practice management or EHR licensing, if the vendor requires its own platform
- Termination terms and data export, including who owns your data and what it costs to leave
A 4 percent quote with $600 in monthly add-ons is not cheaper than a 6 percent quote that includes everything. Run both against your actual monthly collections before deciding.
Contract Length and What It Signals
Some companies work in 30- or 60-day increments with a setup cost up front. Others want one to three years. Neither is automatically better. Short terms shift risk to you through setup fees and give you an easy exit. Long terms often buy a lower rate and should come with defined performance expectations in return.
Ask what the notice period is and whether the rate is fixed for the full term.
Frequently Asked Questions
What is the average cost of medical billing services?
Most practices pay 5 to 10 percent of collections, or $4 to $6 per claim. Rates outside those bands aren’t automatically wrong, but they should come with an explanation.
Is percentage or per-claim pricing better?
Percentage pricing aligns the vendor’s incentive with yours and suits practices with variable volume. Per-claim pricing is predictable and can be cheaper for high-volume, high-clean-claim-rate practices, but only if denial work is contractually included.
Why is one quote so much cheaper than another?
Usually scope. When comparing medical billing companies, a very low rate often means submission only, with denials, appeals, and aged A/R either excluded or handled minimally.
Can I negotiate the rate?
Often, yes, particularly on volume, contract length, or by narrowing scope to the services you actually need.
Request a Custom Quote
We work with chiropractic, dental, and specialty providers, supporting practices with 1 to 25 licensed practitioners. Pricing depends on your specialty, volume, and payer mix, so the useful next step is a quote built on your numbers rather than an average.
