11 Things to Check Before Hiring Medical Billing Services for Small Practices

Hiring a medical billing company can help a small practice manage claims, denials, and unpaid balances, but the right partner must fit the practice's workflows and financial goals. Before signing a contract, evaluate its experience, services, pricing, security, communication, and performance reporting.

Choosing medical billing services for small practices should involve more than comparing fees. A reliable partner needs clear processes, measurable responsibilities, and the ability to support your practice's specialty and payer mix.

Why Is Choosing the Right Medical Billing Company Important?

Medical billing affects the financial side of patient care. Delays in claim submission, incorrect information, unresolved denials, and weak follow-up can keep earned revenue from reaching the practice promptly.

The Centers for Medicare & Medicaid Services (CMS) reported a 6.55% estimated improper payment rate for Medicare Fee-for-Service in FY2025, equivalent to approximately $28.83 billion. CMS explains that improper payments may involve insufficient documentation or other payment errors and are not necessarily fraud.

Source: CMS FY2025 Improper Payments Fact Sheet.

This is an industry-wide estimate, not a measurement of small-practice billing vendors. It nevertheless illustrates why documentation, accurate claims, and consistent billing controls matter.

11 Things to Check Before Hiring Medical Billing Services for Small Practices

1. Does the Company Understand Your Specialty?

Billing requirements vary across specialties. A practice should look for a company familiar with its procedures, documentation patterns, payer mix, and common claim issues.

Ask:

• Which specialties do you currently support?

• What experience do you have with our services?

• How do you handle specialty-specific coding questions?

• Can you explain common payer issues affecting our practice?

A vendor's general healthcare experience is useful, but relevant specialty experience can be more valuable.

Ask for examples of its processes rather than relying only on broad claims.

2. Which Services Are Included in the Contract?

The term "medical billing" can describe a broad set of activities or a limited package.

Confirm whether the quoted service includes:

• Eligibility verification

• Charge entry

• Claim scrubbing and submission

• Payment posting

• Denial management

• Appeals support

• A/R follow-up

• Patient billing support

• Monthly reporting

• Coding review, if required

Clarify what remains the practice's responsibility.

For example, some vendors may submit claims but exclude detailed denial follow-up. Others may charge separately for credentialing, authorization work, or patient statements.

A written service scope prevents misunderstandings after implementation.

3. Is the Pricing Structure Transparent?

Medical billing vendors may charge a percentage of collections, a flat fee, a per-claim fee, or a customized amount.

Each model has different implications.

Pricing ModelWhat to ClarifyPercentage of collectionsWhich payments count and how adjustments are handledFlat monthly feeWhich services and claim volumes are includedPer-claim feeWhat counts as a billable claim or resubmissionHybrid pricingHow each component is calculated

Ask about setup fees, minimum monthly charges, contract termination costs, and additional fees.

Also clarify whether the fee applies to all collections or only collections associated with services the vendor handles.

Do not assume the lowest advertised price represents the lowest total cost.

4. How Does the Company Measure Performance?

A professional vendor should be able to explain how it tracks billing quality and collection activity.

Ask which reports you will receive and how frequently they will be delivered.

Useful metrics include:

• Clean claim rate

• Denial rate

• Days in A/R

• A/R aging

• Net collection rate

• Claim submission turnaround

• Payment posting turnaround

• Denial recovery results

HFMA's MAP Keys offer standardized definitions for revenue cycle measures across patient access, pre-billing, claims, account resolution, and financial management.

Request sample reports with confidential information removed. Make sure the metrics are clearly defined and useful for decision-making.

5. What Is the Company's Denial Management Process?

Ask the vendor how it handles denied claims from initial identification through resolution.

A useful process should include:

• Categorizing denial reasons

• Assigning follow-up responsibility

• Correcting claim errors

• Gathering supporting documentation

• Preparing appeals where appropriate

• Tracking deadlines

• Monitoring repeat denial patterns

Find out whether the company focuses on preventing recurring denials or mainly works claims after they are denied.

Also ask how it handles disputes that require clinical documentation or input from the practice.

6. How Will the Company Communicate With Your Team?

Even a technically capable vendor can create problems if communication is slow or unclear.

Confirm:

• Who will be your main contact?

• How quickly will urgent issues receive attention?

• How often will performance meetings occur?

• How are missing documents requested?

• How are unresolved claims escalated?

• Who handles patient billing questions?

Ask whether communication will happen through a secure portal, email, scheduled calls, or another documented process.

Clear communication is particularly important for small practices that cannot afford to spend hours chasing updates.

7. Does the Vendor Protect Patient Information?

Medical billing companies may access protected health information to perform their services. Practices should understand how vendors safeguard this data.

Review:

• Access permissions

• Authentication controls

• Encryption and secure transmission

• Workforce training

• Incident response

• Subcontractor access

• Data retention and return procedures

When required under HIPAA, a business associate agreement should define permitted uses of protected health information and applicable safeguards.

Do not rely solely on a vendor's statement that it is "HIPAA compliant." Ask about its actual procedures and documentation, and involve your compliance adviser when appropriate.

8. Is the Company Compatible With Your Existing Software?

Changing billing vendors should not create unnecessary disruption.

Ask whether the company can work with your existing EHR, practice management platform, clearinghouse, and payment systems.

Confirm:

• How data will be transferred

• Whether interfaces already exist

• Who configures access

• How errors during data transfer are handled

• Whether the practice retains access to its records

• What happens if the contract ends

Software compatibility should be confirmed before implementation, not assumed after the agreement is signed.

9. What Is the Onboarding and Transition Plan?

A transition plan should specify the steps needed to move billing responsibilities safely.

A practical onboarding plan may cover:

1. Initial workflow assessment

2. System access and permissions

3. Payer and provider information review

4. Outstanding claim inventory

5. A/R handover

6. Reporting setup

7. Staff training

8. Go-live checks

9. Post-launch performance review

Ask who is responsible for each step and how existing claims will be handled.

The vendor should also explain how it will identify urgent filing deadlines and unresolved accounts during the transition.

10. Can the Company Provide Relevant References?

References can help you understand what working with the vendor is actually like.

Ask for references from practices with similar sizes, specialties, and billing requirements.

Questions to ask include:

• How responsive is the company?

• Are reports easy to understand?

• Are responsibilities clearly defined?

• Does the vendor follow up on unresolved issues?

• How smoothly did implementation proceed?

• Are there unexpected charges?

You can also request anonymized examples of performance reports or workflow documentation.

A reference cannot guarantee future results, but it can reveal important details that a sales presentation may not cover.

11. Are the Contract and Exit Terms Reasonable?

Before signing, review the agreement carefully.

Look for:

• Contract duration

• Renewal terms

• Termination notice

• Fee changes

• Service-level expectations

• Responsibility for claim corrections

• Data access and ownership

• Transition support

• Outstanding A/R handling

• Confidentiality and security obligations

Clarify what happens to open claims and unpaid balances if you leave the vendor.

Consider having legal or compliance professionals review the agreement where appropriate.

A well-written contract should make expectations clear rather than relying on verbal promises.

How Can You Compare Two Medical Billing Vendors?

Use a scorecard to compare vendors against the same criteria.

Evaluation FactorQuestions to AskSpecialty experienceHave they supported practices like ours?Service scopeAre essential billing tasks included?PricingAre all fees disclosed?Denial managementIs follow-up systematic and documented?ReportingAre KPIs clearly defined?SecurityAre safeguards and responsibilities documented?CommunicationIs there a clear escalation process?TechnologyWill the systems work together?OnboardingIs there a written transition plan?ReferencesCan the vendor demonstrate relevant experience?ContractAre exit terms and responsibilities clear?

Give each vendor the same questions. This makes comparisons more objective and helps prevent a persuasive sales presentation from overshadowing practical differences.

Final Thoughts

Choosing a billing partner requires careful evaluation of expertise, pricing, security, communication, reporting, and contract terms. A strong vendor should explain its processes clearly and show how it will support your practice's specific needs.

P3 Healthcare Solutions provides medical billing and revenue cycle support for healthcare providers seeking more organized billing workflows. Follow P3 Healthcare Solutions on Facebook and Instagram for additional healthcare billing insights.

Before signing an agreement, compare vendors using the same criteria and make sure every important responsibility is documented.

Frequently Asked Questions

What Should a Small Practice Look for in a Medical Billing Company?

Look for relevant specialty experience, a clear service scope, transparent pricing, reliable communication, security safeguards, useful reporting, and documented denial management procedures.

How Much Do Medical Billing Services Cost for Small Practices?

Costs vary by pricing model, claim volume, specialty, service scope, and complexity. Request a written quote that identifies included services and additional fees.

Should a Billing Company Guarantee Collections?

Be cautious with broad guarantees. Collections depend on many factors, including payer rules, documentation, coverage, patient responsibility, and the practice's workflows. Ask for measurable service commitments instead.

What Reports Should a Medical Billing Company Provide?

Useful reports include claim status, denials, A/R aging, days in A/R, collection performance, and unresolved account activity. Reporting frequency should be agreed upon in advance.

Can a Small Practice Change Billing Companies?

Yes, but the transition requires planning. Confirm access to records, outstanding claims, payer information, system permissions, and responsibilities for follow-up before changing vendors.