How much do medical billing companies charge?

Most medical billing companies charge a percentage of what they collect for you, usually somewhere between 4% and 9% of monthly collections. Practices with low claim volume, high patient balances or complex specialties often see quotes at the higher end or above it, and some companies use flat per-claim or monthly fees instead. The percentage alone does not tell you the real cost. What the fee covers, what counts as a "collection" and which services are billed separately matter just as much.

This guide explains the common pricing models, what moves the rate up or down, the extra fees to look for in a proposal, and how to compare the cost against keeping billing in-house.

The four common pricing models

Percentage of collections

This is the most common model because it ties the company's income to yours. If a claim is never paid, the biller earns nothing on it, which gives them a reason to work denials and follow up on aging A/R. The tradeoff is that you pay more in dollars as your collections grow, even if the work does not grow at the same pace.

Per-claim pricing

A flat fee per claim is easy to predict, and it can be cheap for practices that send many simple claims. The risk is that the biller earns the same fee whether or not the claim is ever paid. Ask how denials, corrected claims and appeals are priced, because some per-claim contracts charge again for each resubmission.

Flat monthly and hybrid fees

Flat fees suit practices with steady volume and a narrow scope. Hybrid pricing shows up most with new practices, where collections are low in the first months and a pure percentage would not cover the work involved in setup and credentialing.

What moves the percentage up or down

• Collection volume. A practice collecting $150,000 a month usually gets a lower percentage than one collecting $20,000, because the fixed work of each account is spread across more revenue.
• Specialty. Anesthesia time units, surgical global periods, behavioral health authorizations and infusion drug billing take more work than routine office visits.
• Payer mix. Medicaid managed care and workers' compensation claims tend to need more follow-up than Medicare and large commercial plans.
• Patient balance work. Statements, payment plans and patient phone support add labor.
• Scope. Coding, credentialing, eligibility checks, prior authorizations and reporting may be included or priced separately.
• Old A/R. Work on claims from before the start date is often priced at a higher percentage, since those claims are harder to collect.

Hidden fees to look for in a proposal

Two proposals at 5% and 7% can end up costing the same once the extras are added. Read the fee schedule line by line and ask about each of these:

• Setup or onboarding fees
• Monthly minimums, which can turn a 5% rate into 10% or more for a small practice
• Credentialing and payer enrollment, often charged per provider per payer
• Clearinghouse fees, patient statement printing and postage
• Software or license fees if the company requires you to use their system
• Charges for coding audits, appeals, or financial reports
• Termination fees and how much notice you must give
• Fees for returning your data at the end of the contract

What counts as a collection

This clause is where pricing disputes usually start. Ask whether the percentage applies to:

• Insurance payments only, or patient payments as well
• Copays collected at your front desk, which the billing company did nothing to collect
• Refunds and recoupments (a good contract credits back fees on money the payer takes back)
• Capitation payments, value-based incentive payments and grant income
• Payments on claims filed before the contract started

There is no single right answer, but the contract should state it plainly so your monthly invoice can be checked against your deposit reports.

A simple cost example

Take a two-provider practice collecting $70,000 a month. At 6%, the billing fee is $4,200 a month, or about $50,400 a year. If the same contract adds a $250 monthly clearinghouse fee and charges $300 per payer for credentialing, the real cost is higher than the headline rate suggests. Run each proposal through your actual monthly collections, provider count and payer list before comparing them.

Comparing the fee to in-house billing

The Bureau of Labor Statistics reports a median annual wage of $51,140 for medical records specialists, the job category that includes billers and coders (May 2025 data). Add payroll taxes, health benefits and paid time off, and one full-time biller usually costs well above the base salary. You also pay for the clearinghouse, practice management software seats, training, coding resources and someone to cover the work during vacations or turnover.

For a small practice, one biller is a single point of failure. When that person leaves, claims stop, denials pile up and A/R ages while you hire and train a replacement. A billing company spreads the work across a team, so a fair cost comparison adds the money lost during those gaps to the salary. We cover the full tradeoff in our guide to in-house vs. outsourced billing.

Questions to ask before you sign

1. What exactly is included in the percentage, and what is billed separately?
2. Is there a monthly minimum, setup fee or termination fee?
3. Which payments count toward the fee?
4. Do you work in our current practice management system, or do we have to switch?
5. How quickly are claims submitted after the visit?
6. Who works denials and how quickly?
7. What reports will we receive each month, and can we see our own data at any time?
8. Will you sign a business associate agreement under HIPAA?
9. What happens to our data and open claims if we end the contract?

A cheaper rate is worth little if collections drop. Ask for the company's first-pass acceptance rate and denial rate, and compare them against your own numbers. A billing audit of your current A/R and denials gives you a baseline, so you can judge whether a new partner actually improves results.

Red flags in billing company pricing

• A quote given before the company asks about your specialty, volume or payer mix
• Rates far below the usual range with a long minimum term
• Contracts that auto-renew for multiple years
• No clear answer on who owns the data
• Fees on money you collect at the front desk without any billing work involved

What a fair fee should cover

For a full-service percentage, a small practice should reasonably expect the following without extra line items:

• Charge entry or charge review, and claim submission within a day or two of the visit
• Clearinghouse rejection work, so rejected claims are corrected before they age
• Payment posting from ERAs and paper EOBs, including underpayment flags
• Denial follow-up and appeals with the payer
• Insurance A/R follow-up on unpaid claims at 30, 60 and 90 days
• Patient statements and answers to patient billing questions
• A monthly report showing collections, A/R by age, denials by reason and payer trends

Coding from scratch, credentialing, prior authorizations and work on old A/R are the services most often priced separately, so ask about each one before comparing quotes.

How SFA can help

SFA prices its medical billing and full revenue cycle management by practice size, based on monthly insurance collections: a flat $500 a month for practices collecting under $15,000 a month, a flat $1,000 a month for practices collecting $15,000 to $30,000, and 3.5% of insurance collections above $30,000 a month. Patient statements are complimentary, there is no fee on patient payments, and our pricing is flexible. There are no long-term contracts, and credentialing is included free in the Growth plan. You can see how our plans are structured on the pricing page, or start with a free practice audit, where we review your billing, walk you through where revenue may be slipping and quote based on your own numbers.

Frequently asked questions

What percentage do medical billing companies take?

Most charge between 4% and 9% of monthly collections. Low-volume practices, complex specialties and work on old A/R are often priced higher, and some companies add monthly minimums.

Is a per-claim fee cheaper than a percentage?

It can be for practices with many simple, low-dollar claims. The downside is that the biller is paid for submitting claims rather than collecting them, so ask how denials and resubmissions are handled and priced.

Should a billing company charge on copays collected at the front desk?

Contracts differ. Many practices negotiate to exclude front desk collections since the billing company did not do that work. Whatever the answer, it should be written clearly in the contract.