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Pricing Your Medical Billing Business


Pricing Your Medical Billing Business

Pricing your medical billing services can be intimidating and when starting up a common desire is to reduce prices to get your foot in the door which can be a big mistake.  A cheap price can bring in the wrong client who will dump you the first sign of a price increase.  Also if price is the only thing you are competing on, then you are going to have a hard time justifying making anything close to a living at this business.


As a medical billing company, your income is derived from collecting what is owed to your client.  If you can’t get them money you probably won’t get paid, unless you are also providing other services which are detailed in a contract.

You also need to realize that a one type pricing structure doesn’t work for all of your clients, no matter how nicely it fits on your brochure.  You will find that there are no two practices that have the same needs and requirements and this is a way to differentiate yourself from the competition.  A few questions to ask a provider include:

Will there be a lot of new patients?  Established patients cost less in time and money to input as the demographics are already in the system.

  • Will you be required to verify benefits?
  • Will you do appeals?
  • Will you follow up on unpaid claims?
  • Will you credential?

Talk with management and develop a service structure that meets and price it accordingly.

There is no shortage of ways to structure your pricing as you can choose from an hourly rate, per transaction rate, monthly rate, percentage of collections, etc.   Some of the value-added services can be charged separately.  If you bill all providers the same you could end up losing money on one or maybe both if you don’t know your true costs to cover expenses and your time and make a profit.  Nothing is more discouraging than to find out that you are making $5 an hour for your time.

Also remember that billing on a percentage basis is considered illegal fee-splitting in New York, Florida and Illinois, and a few other states are in a grey area.

An area of debate is how much or do you charge a setup fee for a new client in your marketing billing business.  While there isn’t necessarily a right answer here are some pro’s and con’s.


Quick up-front cash that can provide up to $1,000 in many cases, depending on the size of the practice.

Can cover startup costs (such as fixing coding errors or keying demographic data)

Even a modest upfront fee can give you the confidence that the client is serious about beginning has something to lose if they jump to another provider.


Some doctors, when they contact you is because they are one step away from bankruptcy because the last medical billing company did such a poor job that they are out of money.  While these are the ones who should be paying a large upfront fee so you can recover funds and fix coding errors, they are in a bad position to pay and will be the most likely to stick with you for the long haul if you do a good job.

When marketing your medical billing business as a way to save a physician money it can be an uncomfortable conversation to say there is an upfront fee, especially if there is little work in setting them up.

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