Here is a number that will shock you. Every year, physicians and medical practices in the USA lose more than $125 billion due to billing mistakes that could have been easily avoided. What’s even more shocking is that roughly 80% of all the submitted insurance claims have errors in them. Yes, 80%!
If this feels too much, think about the last time a claim came back denied, or you found out your billing team had been under coding a high-volume procedure for six months. From all this, we can make a simple conclusion: medical billing and coding are very hard. Most in-house billing teams can’t handle the sheer complexity of this, even more so when patient volume is high in your practice.
That’s why many practices, regardless of their size, now prefer to outsource medical billing services to specialized companies. However, many of them don’t know how to actually hire a billing company. That’s why we have created a list of essential questions that you must ask a company before hiring them. So, let’s start.
- What Will This Cost, and How Is Pricing Structured?
For most of us, money is the most important thing. So, start from here. That’s fair, also, because pricing gives shape to everything else. The best RCM companies in the market currently charge somewhere between 3-8% of your net collections. However, you should note here that doing this in-house costs about 6–7% of collections before you even factor in the indirect costs of denied claims, delayed payments, and staff turnover.
Percentage-based pricing is generally the smarter model because it aligns the billing company’s interests with yours. When your revenue goes up, theirs does too. So, if a company is asking for a fixed fee, that is a red flag. Also, ask if they have any startup fees, termination fees, or data conversion charges. Most companies don’t have this, or have a very negligible fee.
- What’s Your Track Record With Claim Denials?
Now, the biggest area in medical, where that sucks out your money, is claim denials. The industry-wide denial rate sits somewhere between 6% and 13%, but top-performing billing companies keep that number under 5%.
Well, 86% of the denials are already avoidable. However, you can’t do this with in-house teams. Even small or bad billing companies can’t avoid them. Only the best can keep the denials under 5%. So, don’t just ask, ask them to show you proof of their track record of dealing with claim denials.
Ask any prospective billing company for their first-pass resolution rate. In any case, it should be above 85%.
- What Specialties Do You Have Experience Billing For?
Coding for orthopedics is not the same as coding for behavioral health. Cardiology has its own modifier nuances. Oncology requires specialty-specific documentation. A billing company that mostly handles general practice may not know the payer-specific requirements, common modifiers, or typical documentation patterns for your specialty, and that gap shows up directly in your denial rate and reimbursement timelines.
Ask for proof, not just assurances. Request case studies, client testimonials, or direct references from practices that match your size and specialty. If they don’t have experience in billing you specialty, common sense says to run away.
- Who Owns the Billing Data If We Part Ways?
This is probably the most important question on our list. And quite surprisingly, many practice owners don’t even think of it as important. Owners realize it’s important when it is too late. Your billing data belongs to you. Not to the billing company. Not conditionally. Full stop.
So, before signing any contract, ask how your data is stored, in what format it can be exported, and what the transition process looks like if you switch providers. Bad companies intentionally make the data access difficult, so you think twice before switching. Get specific data ownership and portability language in the contract before you sign.
- What KPIs Do You Track, and How Often Will We See Reports?
The last question, but also the most interesting, is to ask them about the KPIs they track and how they make reports for them. Because, after all, you will judge their performance based on something, right?
A billing company that can’t discuss key performance indicators in detail is a billing company that isn’t monitoring its own performance. And if they’re not watching the numbers, neither are you. Here are the benchmarks your partner should be hitting and reporting on regularly:
- Days in Accounts Receivable should stay below 40 days
- Net collection rate should exceed 95%
- First-pass resolution rate should be at least 85%
Wrapping Up
Finally, we have reached the end of this guide. In this guide, we have provided you with a list of 5 questions that you must always ask a billing company before hiring it. If you don’t, then prepare for a frustrating experience and lots of revenue loss. In case you missed any questions, here they are:
- What Will This Cost, and How Is Pricing Structured?
- What’s Your Track Record With Claim Denials?
- What Specialties Do You Have Experience Billing For?
- Who Owns the Billing Data If We Part Ways?
- What KPIs Do You Track, and How Often Will We See Reports?

