Introduction
Two medical billing proposals can show similar fees and cover very different work. One may include denial follow-up and insurance A/R; another may stop after claim submission. Coding, patient statements, software and older unpaid claims can change the total cost again.
Before comparing prices, establish what your practice needs, who will do each task and how you will check the results. This guide walks through those decisions, from billing service models to the contract and data handoff.
What Do Medical Billing Services Include
Medical billing connects documented care with claims, payment processing and follow-up. Coding assigns the diagnosis and procedure codes supported by the clinical record. Billing uses that information to prepare and submit claims, review payer decisions and resolve outstanding balances.
A complete revenue-cycle workflow covers:
- Registration: collecting accurate patient, guarantor and insurance details
- Eligibility and benefits: checking coverage and relevant plan requirements
- Authorization and referrals: identifying requirements and tracking the payer's response
- Documentation and charge capture: recording the care provided and capturing reportable services
- Coding and claim preparation: reviewing supported codes, modifiers and claim information
- Submission and acknowledgment: sending claims and checking whether they were accepted
- Adjudication review: reading the payer's payment, adjustment or denial decision
- Posting and reconciliation: matching payments and adjustments to accounts and deposits
- Follow-up: addressing denials, underpayments, insurance A/R and appropriate patient balances
CMS publishes the standards for electronic healthcare transactions, including eligibility, claims, claim status and remittance advice. A service agreement should identify which parts of this workflow the vendor actually performs.
Choose The Billing Delivery Model That Fits Your Operation
In-house billing
Your employees manage billing and follow-up. Budget for compensation, supervision, training, software and coverage during absences. This approach can work well when the team has the capacity and specialty knowledge to manage the workload consistently.
Outsourced billing
A billing company performs the functions named in the agreement. Evaluate its staff coverage, payer experience, technology access and reporting. Your practice still needs an internal contact who can resolve documentation questions and oversee the relationship.
For a solo or small group practice, Dastify's small-practice billing service provides a starting point for discussing the work your team needs covered.
Hybrid billing
The practice and vendor split responsibilities. You might retain registration and coding while outsourcing claims and payer follow-up, or use outside help for a defined A/R backlog. Make the handoffs explicit so an unresolved account cannot sit between two teams.
If you are weighing staffing capacity and potential financial benefit for a smaller practice, use the separate small-practice outsourcing decision guide.
How Medical Billing Fees are Calculated
Percentage of collections
The fee equals the agreed rate multiplied by the collections included in the contract. Ask whether that includes insurance receipts, patient payments collected at the front desk, capitation, recovered old A/R or payments for claims submitted before the engagement. Specify how refunds, recoupments and reversals affect the invoice.
Illustration only: a hypothetical 5% fee on $100,000 of eligible monthly collections is $5,000. Adding $400 in separately priced services makes the vendor invoice $5,400, before any software or retained practice costs. These figures demonstrate the calculation; they are not Dastify pricing or a market benchmark.
Per-claim pricing
The fee depends on the number of billable claims. Define whether a corrected claim, secondary submission or resubmission creates another charge. Confirm whether appeals and follow-up are included.
Flat monthly pricing
A fixed fee covers an agreed workload. Check volume bands, provider limits, overage charges and what happens when the practice adds a location or specialty.
Hourly, project and hybrid pricing
Time-based or project fees can cover audits, temporary help or a backlog. Define deliverables, approval limits and completion criteria. Hybrid arrangements combine a base fee with another charge, so test the entire formula.
For Dastify, review billing pricing and service scope and request a written proposal for your practice. Confirm the applicable fee basis, optional work and third-party charges before making a comparison.
Compare The Full Scope and The Costs You Keep
Ask each vendor to complete the same included/excluded list:
- Coding: review of supplied codes, or code assignment directly from documentation?
- Authorization and enrollment: included, limited to status checks, or separately contracted?
- Denials: correction, appeals, clinical documentation coordination and deadline tracking?
- A/R: new claims only, or opening balances too? Any age, payer or dollar limits?
- Patient billing: statements, postage, calls, payment plans and complaint handling?
- Technology: EHR/PMS licenses, clearinghouse, interfaces, portals and transaction charges?
- Other work: reporting, implementation, refunds, credit balances and exit support?
Dastify's published scope treats prior authorization, credentialing, coding directly from documentation, patient statements and patient-balance calls as separately scoped work. Have the proposal settle any differences between plan descriptions and the services your practice needs.
Registration, scheduling and general front-desk work remain practice responsibilities under Dastify's published scope. Your clinicians also need to complete documentation and answer clinical questions. Assign practice approval for write-offs, refunds and patient financial policies, and retain oversight of deposits and reconciliation.
Compare total cost using:
Billing-company fees + optional services + third-party charges + retained internal work + transition costs.
Run each proposal against the same recent collections and claim volumes, including a lower-volume month. Treat staff hours that become available as capacity; count them as cash savings only when an actual expense will fall.
Require Reporting You Can Reproduce
Agree on the data source, time period, calculation and exclusions before setting a target. Ask for a sample report and the claim-level detail behind it.
- Submission turnaround: measure from complete, released documentation to submission. Report documentation holds separately
- First-pass acceptance: claims accepted at the specified clearinghouse or payer checkpoint on the first attempt, divided by first submissions. Identify the checkpoint; acceptance does not establish payment
- Initial denial rate: for a defined first-adjudication cohort, claims with at least one denied line divided by all claims in that cohort. Keep claim-count and dollar-based measures separate
- Days in A/R: outstanding receivables divided by average daily charges for the selected period. Document how credits and excluded balances are treated
- Aged A/R: balances over a stated age divided by total A/R. Specify whether aging starts at service date or another date and separate insurance from patient balances
- Adjusted collection rate: payments net of credits divided by charges net of approved contractual adjustments, multiplied by 100. Review noncontractual write-offs separately
The AAFP's practice-finance guidance explains days in A/R and adjusted collections, including how credits and write-offs can distort results. Use consistent periods and account for payment lag.
If a vendor reports a clean-claim rate, ask exactly what it measures. Pair front-end acceptance with payment outcomes, denial resolution and underpayment follow-up.
Payer adjustments need the full remittance context. CMS explains the roles of group codes, CARCs and RARCs. For practical examples, see our denial-code guide for small practices.
Evaluate The People, Systems and Contract
Test the working relationship
Ask who will manage your account, who covers absences and how urgent problems are escalated. Request examples of work involving your specialty, payer mix and systems. During a demonstration, follow one unpaid claim from acknowledgment through work notes and its next action.
Discuss how automated edits or AI suggestions are reviewed, who handles exceptions and where human approval is required. Confirm what your practice can see directly in its existing systems.
The AMA recommends ongoing oversight of third-party billers, with clear contracts, service expectations and regular review of receivables. Put the meeting schedule and escalation process in writing.
Review data protection before access
A billing company handling protected health information for a covered provider generally acts as a business associate. Establish the required business associate agreement before that access begins.
Ask about workforce access, subcontractors, security-risk assessments, incident reporting, backup and recovery. HHS describes the administrative, physical and technical safeguards that protect electronic PHI. Have qualified compliance and legal reviewers assess the proposed arrangements.
Plan entry and exit together
Before signing, answer these questions:
- What is the initial term, renewal process, notice period and termination cost?
- When does responsibility begin for new claims, and who owns the opening A/R worklist?
- What service deadlines apply, what inputs must the practice provide, and how are missed standards addressed?
- Who controls payer, clearinghouse and system accounts, and who receives payments?
- What records will be exported, in which usable formats, at what cost and by when?
- Who finishes open appeals and tracks filing deadlines during the transition?
- Are fees due on collections received after termination, and for how long?
- What happens to PHI and subcontractor-held copies after the relationship ends?
Include claims, remittances, attachments, correspondence, work notes and reporting history in the handoff discussion. HHS's business associate contract guidance addresses return or destruction of PHI, where feasible, and continued protection when retention is necessary.
Bring a Defined Scope To The Next Conversation
Prepare a recent A/R aging report, claim volumes, payer mix, current staffing costs and a list of unresolved workflow problems. Start with summary information; arrange approved secure access before sharing patient-level data.
Then request a scoped billing discussion with Dastify. Ask for a proposal that makes the fee, responsibilities, reporting and transition terms easy to compare.
Frequently Asked Questions
How much should a practice budget for medical billing
Use a scoped quote and your own workload. Add vendor fees, optional work, software and retained internal costs. A headline percentage alone cannot establish the total.
Does full-service billing include coding and credentialing
Read the agreement. Code review and coding from documentation are different tasks; credentialing may have its own scope. Identify each explicitly.
Can a billing company guarantee payment
No vendor controls every coverage decision, payer rule or documentation issue. Evaluate documented results and measurable service commitments, with their definitions and exclusions.
Will we need to change systems
Confirm compatibility, required access, interfaces and reporting during discovery. Include any migration or integration cost and ownership in the proposal.
General educational information, not advice on a specific claim, contract or compliance obligation. Verify current payer requirements and obtain appropriate professional review.
