Medical billing companies charge in one of three ways: a percentage of what they collect for you, a fee for each claim they send, or a flat monthly fee, often set per provider. Tebra's guide to billing rates says many billing teams quote 4–10% of collections and per-claim fees of $3 to $10, and its billing industry report found that 24.5% of billing companies using the percentage model charged 6–7% in 2022. Those are commonly quoted ranges, not a price list. What you'll pay depends on your specialty, your volume and, above all, what the fee covers.
So the useful question isn't only "what's the rate?" It's "what does this fee pay for, what does it leave out, and what will it cost us in a year?"
The three pricing models, and what each one rewards
What a model pays for tells you where the billing company's attention will go.
Model | You pay | What it rewards | Watch for |
|---|---|---|---|
Percentage of collections | A share of the money collected each month | Collecting money: follow-up, denials, old claims | Which payments count, and a monthly minimum |
Per claim | A fixed amount for each claim sent | Sending claims | Whether denial work and resubmissions are included |
Flat monthly or per provider | The same amount each month | Predictable work for both sides | What happens when volume grows or work falls outside the scope |
Percentage of collections
The billing company takes a share of what it collects for you each month. Its pay rises when your collections rise, so it has a reason to chase unpaid claims, work denials and appeal underpayments. That is the model's strength.
Its weakness: your fee grows with your revenue even when the work doesn't. Read exactly which money the percentage applies to. Insurance payments only, or patient payments too, including those taken at your front desk?
Per claim
You pay a fixed amount for each claim the company sends. It's simple to budget, and your fee doesn't rise when a payer raises its rates.
The catch is that the fee pays for sending claims, not for collecting on them. Ask whether a corrected claim, a resubmission or an appeal counts as a new claim. If follow-up and denial work cost extra, or aren't included at all, the low per-claim number may cover only part of the job.
Flat monthly or per provider
You pay the same fee each month, sometimes set per provider. It's the easiest to forecast. The questions are about scope: how many claims, providers and locations the fee assumes, and what triggers a price change.
Collections versus charges: what the percentage is a percentage of
A percentage quote means nothing until you know the base.
- Charges are what you bill, at your own fee schedule.
- Collections are what actually comes in: what payers allow under their own rates and contracts, less denials and unpaid patient balances.
The same rate on a different base is a very different fee. If a practice bills $90,000 in a month and collects $40,000, 6% of collections is $2,400, but 6% of charges would be $5,400. Confirm the base in writing, and confirm whether refunds and payer take-backs reduce it.
What's included, and what often costs extra
Two quotes at the same rate can buy very different services. Ask about each of these by name:
- Eligibility checks before visits.
- Coding from the provider's notes, or only claim entry from codes your providers pick.
- Denial management and appeals.
- A/R follow-up on unpaid claims, by phone and portal.
- Patient statements, including printing and postage, and whether the company takes patients' billing calls.
- Credentialing and payer enrollment, for new providers and revalidations.
- Old A/R left from your previous biller: whether they'll work it, and whether it's priced the same as new claims.
- Setup or onboarding fees, and any monthly minimum.
- Software and the clearinghouse: whether you keep paying for your own, or the company's are included.
- Reports: what you'll see each month without asking. Our page on reporting and analytics lists the numbers worth seeing.
A worked example: the same practice, three quotes
These figures are an illustration, not market prices or Beeline's prices. They show how to compare quotes once you've converted them to the same basis.
Say a two-provider practice sends 400 claims a month and collects $40,000 a month ($480,000 a year). It has three quotes, each covering the same work:
Quote | Monthly fee | A year | As a share of collections |
|---|---|---|---|
A: 6% of collections | $2,400 | $28,800 | 6.0% |
B: $5 per claim | $2,000 | $24,000 | 5.0% |
C: $1,200 per provider, flat | $2,400 | $28,800 | 6.0% |
The last column is the one to compute for every quote you get: yearly fee ÷ yearly collections. It's your effective rate, and it lets you compare a per-claim or flat quote against a percentage quote fairly.
Now change the practice:
- Collections rise to $50,000 a month on the same 400 claims (better follow-up, or a payer raising its rates). Quote A rises to $3,000 a month. B stays at $2,000 and C at $2,400.
- Volume grows to 500 claims and $50,000 a month without a new provider. A rises to $3,000, B to $2,500, and C stays at $2,400.
- Collections fall to $32,000 a month while a big payer is slow. A falls to $1,920. B and C don't move.
None of the three is cheapest in every case. Percentage pricing shares your ups and downs. Per-claim and flat pricing cost the same whether the money comes in or not, so check who is responsible for chasing it.
Before you choose on price alone, check that the quotes really are for the same work. If quote B charges extra for denial work and patient statements, its 5.0% may turn out to be the most expensive of the three.
Comparing a quote with keeping billing in-house
Your in-house team has a cost too, and the same arithmetic applies: yearly in-house billing cost ÷ yearly collections gives your break-even rate. A quote below it costs less on paper.
For a reference point on wages, the Bureau of Labor Statistics puts the median pay for medical records specialists, the occupation that includes medical coders, at $51,140 a year in May 2025. For the example practice above, one employee at that wage would be 10.7% of its $480,000 in collections, before benefits, software and the clearinghouse. Your own payroll is the better number, and count who does the work when that person is out.
The tool on our Why Beeline page does this comparison with your own staff, salaries, benefits, software and collections. Our post on when outsourced billing pays off walks through a full break-even example.
Medicare's rule on percentage fees
Percentage pricing is common, but Medicare limits it in one specific arrangement: when the billing company receives your Medicare payments itself.
Under 42 CFR 424.73(b)(3), Medicare may pay an agent that provides billing and collection services only if, among other conditions, the agent's compensation "is not related in any way to the dollar amounts billed or collected" and doesn't depend on actual collection. Payment is always made in the provider's name, and the provider must be able to change or revoke the agent's payment instructions at any time. 42 CFR 424.80(b)(5) applies the same conditions to suppliers, which Medicare defines to include physicians and other practitioners.
The Medicare Claims Processing Manual, chapter 1, section 30.2.4 explains the limit: those conditions do not apply when the agent "merely prepares bills" and does not receive and negotiate the checks payable to the provider. Section 30.2.5 adds that Medicare payments may go to a bank account in the provider's name only, under the provider's sole instructions.
In practice, that means:
- A billing company paid a percentage should not be the one receiving your Medicare money. Medicare's payments should go into your practice's own account, and your practice should control it.
- A company that receives Medicare payments on your behalf has to be paid in a way that isn't tied to what is billed or collected.
- Medicaid has a parallel rule. Under 42 CFR 447.10(f), a billing agent that receives Medicaid payments in the provider's name must be paid based on the cost of processing the billing, not a percentage of the amount billed or collected.
The government has also flagged a risk in percentage fees. In its 1998 compliance guidance for third-party billing companies, the HHS Office of Inspector General noted a longstanding concern that percentage billing arrangements may increase the risk of upcoding. That's a reason to keep reviewing how your claims are coded, whichever company bills them. For a contract you're unsure about, ask a healthcare attorney.
Medical billing contract terms to read before you sign
These terms decide what staying, or leaving, will cost.
- Term and renewal. How long the first term runs, and whether it renews automatically.
- Termination. How much notice either side must give, and whether there's a fee for leaving early.
- Who works open claims after a switch. When you leave, claims already sent are still being paid and denied. Agree in writing who works them, for how long, and whether the old company is still paid a share of what comes in.
- Your data. You should get your claims, payment and A/R history back in a usable format when the contract ends. A billing company handles patient information for you, so HIPAA treats it as a business associate and requires a written business associate agreement. That agreement has to say what happens to patient information at termination: under 45 CFR 164.504(e)(2)(ii)(J), it is returned or destroyed where feasible.
- Where payments go. Payers should pay into your practice's account. Check who can see and move the money.
- What triggers a price change. A new provider, a new location, a volume threshold, an annual increase.
- Reporting. Which reports you'll receive each month, and whether you can see your claims in the system yourself.
Where Beeline fits
Beeline is a US company with a dedicated billing team that handles eligibility, coding, claims, denials, A/R follow-up, payment posting, credentialing, audits and reporting. Our claims submission page shows each stop a claim makes on its way to the payer. We don't publish a price list: a quote for your practice comes from the free consultation, where we look at your volume, payers and what you need covered.
Frequently Asked Questions
What percentage do medical billing companies take?
There is no standard rate. A guide from Tebra says many billing teams quote 4–10% of collections. Your rate depends on your specialty, volume and what the fee includes, so compare quotes on the same basis.
Is percentage-of-collections or per-claim billing cheaper?
It depends on your volume and your payers. Convert each quote into an effective rate, yearly fee divided by yearly collections, and check that each covers the same work. A per-claim quote that leaves out denial work can cost more than a percentage quote that includes it.
Can a billing company charge a percentage for Medicare claims?
Yes, with one limit. Under 42 CFR 424.73(b)(3), if the billing company receives your Medicare payments itself, its pay can't be tied to the amounts billed or collected. When Medicare pays into your own account and the company doesn't receive or negotiate those payments, Medicare's claims processing manual says the conditions don't apply.
What is usually not included in a billing company's fee?
It varies by company. Credentialing, patient statement printing and postage, work on old A/R from a previous biller, setup fees and the clearinghouse are the items most worth asking about. Ask for the list of what's included in writing.
What should happen to our data if we leave a billing company?
You should get your claims, payment and A/R history back in a usable format, and the business associate agreement must provide for patient information to be returned or destroyed where feasible.