Choosing a medical billing partner is one of the most important decisions a practice can make. Respondents in a survey by Experian indicated that 10% or more of claims are denied for a growing number of providers.
Each denial could mean thousands of dollars of revenue compromised, leaving the practitioner or practice in financial strain. Knowing the right questions to ask a medical billing company before partnering with them is a crucial step.
The right questions help healthcare providers evaluate billing companies and make a more informed decision. Most healthcare providers maintain long-term relationships with a single medical billing company.
Therefore, if your practice is just getting started, you should know what to ask the billing company.
We will cover all questions from the clean claim rate to the fee structure of the billing company, ensuring you inquire about every crucial detail before signing up with them.
- 10 Questions to Ask Before Hiring a Medical Billing Company
- 1. What Is Your Clean Claims Rate?
- 2. What Is Your First-Pass Resolution Rate?
- 3. How Do You Handle Claim Denials and Appeals?
- 4. Which Specialties Do You Have Experience Billing For?
- 5. What Billing Software and EHR Systems Do You Integrate With?
- 6. How Do You Ensure HIPAA Compliance and Data Security?
- 7. What Does Your Onboarding Process Look Like and How Long Does It Take?
- 8. How Transparent Are Your Reporting and Performance Metrics?
- 9. What Are Your Fees and How Are They Structured?
- 10. Do You Offer Dedicated Account Management or a Shared Team Model?
- What to Look for in the Answers?
- Final Thoughts on Choosing the Right Medical Billing Company
10 Questions to Ask Before Hiring a Medical Billing Company
Hiring a medical billing company has a long-term impact on your finances and operations as a healthcare provider. The right partner offers several benefits, such as:
- Tightening compliance
- Accelerating reimbursement
- Freeing clinical staff from claim rework
Conversely, partnering with the wrong company drains revenue because of rework, denials, and compliance exposure that may not show up for years. Therefore, you should seek concrete answers to the questions below.
1. What Is Your Clean Claims Rate?
Clean claim rate (CCR) measures the percentage of error-free claims that are accepted for processing on the first submission. In other words, this is the percentage of claims that did not face any:
- Additional information requests
- Edits
- Rejections
A consistently high clean claim rate is one of the strongest indicators of a disciplined billing company and effective front-end billing processes, including:
- Eligibility verification
- Accurate coding
- Complete documentation
The Healthcare Financial Management Association (HFMA) has set a 98% benchmark for CCR. Typically, if a vendor does not offer a verifiable CCR or hedges it with “it depends”, it could be a major red flag.
A serious billing partner should ideally offer 12-month CCR data categorized by specialty and payer.
2. What Is Your First-Pass Resolution Rate?
Although first-pass resolution rate (FPRR) and CCR are closely related, they measure different aspects of billing performance. The CCR indicates the percentage of claims that were submitted without any errors.
However, the FPRR indicates whether or not the claim was paid or otherwise finalized on the initial submission without:
- Resubmissions
- Appeals
- Manual follow-up
Industry benchmarks for FPRR are relatively high for well-managed billing partners. However, if a partner has an FPRR rate less than 75%, it may require immediate process review.
Moreover, according to HFMA’s survey, FPRR is rated as a crucial key performance indicator (KPI) for claim denials by around 18.7% of the respondents.
When choosing a partner, ask the medical billing company to report FPRR separately. The potential partner should segment the FPRR by payer, and if they provide data on only one of these metrics, it could be a red flag.
3. How Do You Handle Claim Denials and Appeals?
No medical billing company should claim a zero-denial rate, as claim denials are an unavoidable part of the revenue cycle. However, the denial management workflow of a billing partner separates a novice from an experienced one.
An effective denial management process depends on how quickly denials are addressed:
- Identified
- Categorized
- Worked
- Resolved to avoid repetition
The majority of the U.S. healthcare organizations reported denial rates exceeding 10%, according to MGMA’s 2024 benchmarking report on denials and appeals.
Moreover, eligibility and coverage issues are consistently identified by the Centers for Medicare & Medicaid Services (CMS) as a primary driver of payment issues.
With strong front-end processes and real-time eligibility verification, a billing company can significantly reduce avoidable claim denials.
When choosing a billing partner, always inquire about their:
- Average appeal turnaround time
- Denial rate
- Root-cause trend analysis
If you’re unsure about how this works, our blog on the most common claim denial codes covers denial categories and prevention steps.
4. Which Specialties Do You Have Experience Billing For?
Billing requirements, CPT and ICD-10 coding conventions, prior authorization rules, and payer-specific edits are constantly evolving.
These requirements can vary significantly by specialty, making specialty-specific expertise essential. If a billing partner has substantial experience in primary care, they may not understand:
- ASC facility billing
- Orthopedic modifiers
- Behavioral health carve-outs
A billing company’s experience with your specialty can have a direct impact on billing accuracy and reimbursement.
Although performance benchmarks vary somewhat by specialty, general industry benchmarks still provide a useful reference.
A net collection rate of approximately 95% or higher is generally considered strong according to the American Academy of Family Physicians (AAFP).
It is important to note that procedures with a higher complexity may have different baseline expectations.
Healthcare providers should always inquire regarding the partner’s:
- Denial trends for the targeted specialty
- Specialty-specific references
- Relevant certifications (CPC, CCS, or specialty-specific credentials from AAPC or AHIMA)
5. What Billing Software and EHR Systems Do You Integrate With?
An underlying challenge with outsourced medical billing is the integration of billing and EHR systems. If the clearinghouse or practice management platform fails to integrate with your practice’s EHR, you may have to deal with:
- Manual data entry
- Duplicate work
- Higher error rate
- Lower billing efficiency
Always ask the billing company regarding:
- EHR vendor integration history
- Data transmission method (direct interface, HL7, API, or manual export)
- Requirements for EHR systems
A billing company that can identify its supported EHR integrations and clearinghouse relationships is generally more reliable than one that simply claims it can work with all systems.
6. How Do You Ensure HIPAA Compliance and Data Security?
When you partner with a service provider, you share protected health information (PHI) with them. Therefore, the partner qualifies as a business associate.
However, this also means that if the billing company’s data security is weak, it could be a point of failure.
According to HIPAA Journal, healthcare remains the costliest industry for data breaches, with an average cost of $7.42 million. A single breach can have long-term financial and operational consequences.
When choosing the right billing partner, inquire regarding their:
- Encryption standards for data
- Previous reportable breaches
- Latest HIPAA risk assessment date
- Business Associate Agreement (BAA) compliance
If the partner hesitates to answer these concerns, it could be risky to collaborate with them.
7. What Does Your Onboarding Process Look Like and How Long Does It Take?
A rushed onboarding can be a common reason for a temporary dip when switching billing vendors. There are various triggers for this, including:
- Data migration
- Payer credentialing verification
- Staff training
- Parallel testing period
Delays during onboarding can also disrupt cash flow during the first few months after the transition. When choosing a medical billing company, always ask for a:
- Written onboarding timeline and its milestones
- Owner of each step
- Accounts receivable (A/R) management from your previous system or in-house team
The ideal billing company should have:
- Week-by-week plan
- Structure
- Operational maturity
8. How Transparent Are Your Reporting and Performance Metrics?
Transparency is imperative for a medical billing partnership, which shouldn’t be limited to an update when demanded.
The right billing company should provide real-time dashboards that cover FPRR, CCR, days in A/R, net collection ratio, denial rate, and other essential metrics.
The performance benchmarks your billing company tracks serve as an early warning system for potential revenue cycle issues.
If a set metric seems to be failing, it should be resolved immediately. Billing companies shouldn’t wait for the quarter to end to review these KPIs.
When you choose a billing partner, demand a:
- Sample dashboard
- Metrics updates
- Named point of contact to cover anomalies
9. What Are Your Fees and How Are They Structured?
Medical billing companies commonly charge a percentage of collections. In other cases, they may also charge a flat fee per claim or offer hybrid payment plans.
More importantly, percentage-of-collections pricing is performance-based. Therefore, the billing companies are paid only when you collect payment. However, their share varies depending on:
- Claim volume
- Specialty complexity
- Services included
When you pick a medical billing company, always consider their:
- Credentialing support
- Charge entry
- Denial management
- Coding
- Patient statements
Additionally, inquire about:
- Contract length
- Onboarding or data migration fees
- Termination clauses
A reputable billing company should provide transparent pricing with no ambiguous fees or hidden charges.
10. Do You Offer Dedicated Account Management or a Shared Team Model?
Sometimes, billing companies assign an account manager and a coding/billing team for your revenue cycle management.
Over time, dedicated account teams become more familiar with a provider’s documentation and billing workflows. For this reason, the rate of clean claims improves over a period of time.
Shared-team models may be more cost-effective, but they can result in slower issue resolution and less continuity. When you choose a billing partner, inquire regarding:
- Point of contact
- Average caseload per account manager
- Escalation paths outside working hours
What to Look for in the Answers?
We’ve covered all the crucial questions to ask a medical billing company and their correct answers. However, all this info can be hard to retain. Therefore, the following table covers the details:
| What to Evaluate | Correct Answer | Red Flag |
|---|---|---|
| Data & Benchmarks | Uses specific metrics backed by sources like MGMA, HFMA, or CMS. | Unclear, unsupported claims or percentages. |
| Performance Metrics | Shares documented KPIs with annual trends. | Fails to explain metric calculations. |
| HIPAA Compliance | Provides a recent risk assessment date and a standard BAA. | Vague statements with zero documentation. |
| Reporting | Includes a live dashboard with regular KPI reporting. | Shares reports only when demanded. |
| Pricing | Fully transparent before signing. | Unclear or incomplete pricing. |
| Transparency | Confidently shares methodology, data, and references. | Avoids sharing evidence or reports. |
Final Thoughts on Choosing the Right Medical Billing Company
If the medical billing company you choose answers our ten questions with specific, sourced, and verifiable data, it is the right choice. It must assess practice performance against MGMA and HFMA benchmarks, i.e., a:
- Clean claim rate 95% or above
- First-pass resolution rate between 80% and 90%
- Denial rate under 5%
Our team ensures accountability, real-time reporting, and specialty-specific coding expertise. Explore our medical billing services to evaluate how we measure up against the questions in this guide.
