How much does medical billing cost? Percentage vs flat fee, explained

If you’ve asked three billing companies for a quote, you’ve probably heard three different pricing models, and none of them make it easy to compare. This guide breaks down what practices actually pay, what’s usually included, and how to tell whether a quote is fair.

The short answer

Most medical billing companies charge a percentage of what they collect, usually somewhere between 4% and 10%. A smaller group charges a flat fee per claim or a fixed monthly fee. Where you land in that range depends on your specialty, your claim volume and how much of the work the company takes on.

The three common pricing models

Model	Typical range	Usually best for
Percentage of collections	4% to 10% of insurance payments collected	Most independent practices
Per claim	Commonly $4 to $10 per claim submitted	High-volume practices with few denials
Flat monthly fee	A fixed amount, whatever the volume	Practices with very steady volume

Percentage of collections

This is the most common model, and for most practices it’s the fairest. The company only earns when you get paid, so it has every reason to chase denials and underpayments. If a claim is never paid, you don’t pay a fee on it.

The catch is in what “collections” means. Some companies charge on everything that lands in your account, including copays your front desk collected. Others charge only on the insurance payments they worked. Ask which one before you sign.

Per claim

Per-claim pricing looks cheap on paper. The problem is that the fee is earned when the claim goes out, not when it’s paid. A company paid per submission has less reason to spend an hour on a denied claim from three months ago. If you go this route, check whether appeals and follow-up are included or billed extra.

Flat monthly fee

A fixed fee makes budgeting easy, but it rarely stays fixed. Volume grows, the scope creeps, and the price gets renegotiated. It can work for a small practice with a stable caseload.

Why one practice pays 4% and another pays 9%

• Specialty. Therapy and primary care claims are usually simpler than surgical or multi-procedure claims, so rates tend to be lower.
• Volume. The more you collect, the lower the percentage most companies will accept. Very small practices often see a monthly minimum instead.
• Scope. Eligibility checks, authorizations, patient statements and credentialing can be included or charged separately.
• Old AR. Claims that are already 90+ days old take far more work, so they’re often priced separately, at a higher rate.

What an in-house biller really costs

Most practices compare a billing company against hiring their own biller. The salary is only part of that cost.

• Salary. In many US markets, an experienced medical biller earns roughly $45,000 to $55,000 a year.
• Payroll taxes, benefits and paid time off. Often another 20% to 30% on top.
• Software and clearinghouse fees, plus training when payer rules change.
• Coverage. When that one person is sick, on vacation or leaves, claims stop going out.

Here’s a simple example. A practice collecting $40,000 a month from insurance would pay $1,600 a month at a 4% rate. A full-time in-house biller for the same practice typically costs well over $4,000 a month once taxes and benefits are added, before any software.

In-house still makes sense for some practices, especially larger groups that can afford a small team and want billing under their own roof. For most practices with one to ten providers, outsourcing costs less and doesn’t depend on a single person.

Fees to look for in the contract

• Setup or onboarding fees. Some companies charge hundreds or thousands of dollars just to start.
• Long notice periods. A 90-day notice or a 12-month lock-in makes it expensive to leave if things go wrong.
• Charges for appeals. Working denials should be part of billing, not an add-on.
• Exit fees, or holding your data. You should get your open claims and reports back when you leave, at no cost.
• Statement and mailing fees. Paper statements cost money to print and post. Check whether that’s passed on at cost or marked up.

Questions to ask before you sign

1. Is the percentage charged on insurance payments only, or on everything collected?
2. Is there a monthly minimum, and when does it apply?
3. Are denial follow-up and appeals included?
4. How are claims from before we started priced?
5. What does the monthly report show? Can we see a sample?
6. How much notice do we need to give to cancel?

How we price

We charge 4% of the insurance payments we collect, with a $199 monthly minimum, no setup fee and 30 days’ notice to cancel. Denials and appeals are included. Old AR we didn’t bill is 8 to 10% of what we recover, and nothing if we don’t collect. Everything is on our pricing page.

Related: Pricing · Denials & old claims