Key Takeaways
- 01Outsourced billing is usually priced as a percentage of collections. Medtransic charges 4-8% of collections. Per-claim and flat monthly fees also exist and create different incentives.
- 02In-house billing costs more than the biller's wage. Add benefits, payroll taxes, software, clearinghouse fees, training, cover for absences and the hours you spend overseeing billing.
- 03The Bureau of Labor Statistics puts the median wage for medical records specialists, the occupation that includes billing record work, at $51,140 (May 2025). That is before benefits and overhead.
- 04A rate far below other quotes usually means something was left out, most often denial work, A/R follow-up or reporting.
- 05Compare quotes on total annual cost, including every add-on you will use, not on the headline rate.
If you are evaluating medical billing outsourcing, the first question is always about cost. How does the pricing work, and will the math work for a practice your size? Those are fair questions, and they deserve specific answers rather than marketing language.
This guide covers the three pricing models, what is typically included versus billed as an add-on, the full cost of keeping billing in-house, and a way to run the numbers on your own practice. For a broader guide to outsourcing, see our buyer's guide to choosing a billing company.
The Three Pricing Models for Medical Billing Outsourcing
Medical billing companies use three main pricing structures. Each creates different incentives. Two companies quoting the same rate can still cost very different amounts, depending on what is included.
- Net Collections vs. Gross Charges
- Net collections is the money actually deposited into your practice account after payer adjustments and contractual write-offs. Gross charges are the total billed amount before any adjustments. When a billing company quotes a percentage, confirm which one it applies to: the same percentage costs more on gross charges, because gross is always higher than what a practice collects.
- 01Percentage of collections. You pay a percentage of what the billing company collects for you. If they collect $80,000 in a month at 6%, you pay $4,800, and if collections drop, your billing cost drops too. The billing company earns more only when your practice does. Medtransic charges 4-8% of collections.
- 02Per-claim fee. You pay a fixed amount for every claim submitted, whatever that claim collects. Your cost is predictable. But the billing company earns the same on a $50 claim as on a $500 one, so it has less reason to chase what each claim is worth.
- 03Hybrid (base fee plus a smaller percentage). A monthly base fee covers the company's overhead, and a percentage of collections keeps some incentive. Make sure the percentage is large enough that performance still matters to the billing company.
| Pricing Model | Best For | Incentive Alignment | Risk to Watch |
|---|---|---|---|
| % of collections | Most practices | Strong: billing company earns more when you collect more | Confirm it is collections, not gross charges |
| Per-claim fee | High-volume, low-complexity practices | Weak: no incentive to maximize per-claim revenue | Little motivation to appeal denials or pursue underpayments |
| Hybrid (base + %) | Smaller or seasonal practices | Moderate: depends on how much weight the % carries | Make sure the base fee is not most of what you pay |
| Flat monthly fee | Practices that want a fixed budget above all | None: no connection to your revenue | You pay the same whether collections rise or fall |
What's Included vs. What's an Add-On
The headline rate is only useful if you know what it covers. Two billing companies can quote the same percentage while one includes denial work, patient statements and reporting and the other charges for each. Here is what a full-service agreement should include and what is often billed separately.
| Service | Usually Included | Commonly an Add-On |
|---|---|---|
| Claim submission and scrubbing | Yes | No |
| Payment posting | Yes | No |
| Insurance eligibility verification | Yes | Sometimes |
| Denial management and appeals | Yes, in full-service agreements | Yes, at lower-cost companies |
| A/R follow-up (aging claims) | Yes, in full-service agreements | Yes, at lower-cost companies |
| Patient statement generation and mailing | Sometimes | Often |
| Credentialing and re-credentialing | Sometimes | Often |
| Provider enrollment (new payers) | Rarely | Usually |
| Old A/R recovery (pre-existing claims) | Sometimes | Often |
| Prior authorization management | Rarely | Usually |
| Monthly performance reporting | Yes | No (should always be included) |
| Coding audits | Sometimes | Often |
The Hidden Costs of In-House Billing
When practice owners estimate the cost of in-house billing, they often count only the wage. The real cost includes benefits, payroll taxes, software, clearinghouse fees, training, management time, cover during absences, and turnover. Here is what to count.
| Cost Category | What to Count |
|---|---|
| Biller wages | The Bureau of Labor Statistics median for medical records specialists is $51,140 (May 2025). Local pay varies. |
| Benefits | Health, dental, paid time off, retirement |
| Payroll taxes | Employer FICA, unemployment and workers' comp |
| Billing software | Your practice management or billing system subscription |
| Clearinghouse fees | Per-claim or monthly transmission fees |
| Training | Annual code updates, payer policy changes, compliance training |
| Office space and equipment | Workstation, phone, internet, printing, supplies |
| Your oversight time | Hours you or your office manager spend on billing, times your hourly rate |
| Cover during absences | Temp staff or overtime when the biller is out |
| Turnover | Recruiting, training and lost productivity when a biller leaves |
| Revenue lost to unworked denials | Denials nobody had time to appeal |
Add those lines up for the last 12 months. That total, not the wage alone, is what you should compare with an outsourced quote.
In-House vs. Outsourced: How to Compare
The right choice depends on practice size, payer mix and how well billing runs today. A solo provider faces a different equation than a multi-provider group. Rather than rely on a generic table, compare the two options line by line with your own numbers.
In-House vs. Outsourced Billing: The Core Trade-Off
In-House Billing
- Direct control over billing staff and processes
- Knowledge stays within the practice
- No third-party dependency for billing
- Full cost: wages + benefits + software + overhead + turnover
- Single point of failure when the biller is absent or leaves
- Limited time for denial work
Outsourced Billing
- A team, so no single point of failure
- Denial work, A/R follow-up and reporting included in full-service agreements
- Priced as a percentage of collections
- A team that knows your specialty's billing
- No billing staff for you to manage
- Cost moves with your volume
| Line | In-House | Outsourced |
|---|---|---|
| Staff cost | Wages, benefits, payroll taxes | Included in the rate |
| Software and clearinghouse | Your subscriptions and fees | Ask whether included or passed through |
| Oversight | Your hours, times your hourly rate | Time spent reviewing monthly reports |
| Absences and turnover | Temp cover, recruiting, training | The billing company covers staffing |
| Denials and A/R follow-up | Whatever staff have time for | Ask what share of denials they appeal |
Cost is only half the story. Denials nobody works and claims that age past filing limits are revenue the practice never collects. Ask how each option handles them before you compare totals.
The ROI Calculation Framework
The return on outsourcing has two parts: the in-house costs you no longer pay, and any change in what you collect. Count both.
- Billing ROI
- Return on investment for billing outsourcing measures the net financial benefit of switching from in-house to outsourced billing. It is calculated as: (In-house costs eliminated + Additional revenue collected - Outsourcing fees) / Outsourcing fees.
- 01Total your current in-house costs. Use the cost table above and the last 12 months of actual spending.
- 02Price the outsourced option. Multiply your annual collections by the quoted rate, then add any add-ons you will use.
- 03Work out the direct difference. In-house cost minus outsourced cost. It can be negative for a small practice.
- 04Estimate the revenue change. Look at denials you are not appealing, claims past 90 days, and patient balances nobody follows up. Be conservative.
- 05Add the two together. Direct difference plus revenue change is your annual benefit.
- 06Divide by the outsourcing cost. That is your ROI. If the number is small or negative, outsourcing may not fit yet.
What Cheap Billing Companies Cut Corners On
When one quote is far below the others, there is usually a reason. The company is often delivering a different service. Here is what tends to get cut when the price drops.
- No denial management. Claims go out and payments come in, but denials sit in a queue nobody works. Whatever you saved on the fee can be lost on the denials.
- No A/R follow-up. Unpaid claims get no calls, status checks or escalations. The older a claim gets, the harder it is to collect, and appeal windows close.
- No reporting. You get a monthly collections total and nothing else: no denial rates by category, no aging by payer. Problems compound for months before anyone sees them.
- Generalist coding. To hit a very low rate, labor costs must be minimal. That can mean coders spread across many specialties with no depth in yours.
- No credentialing support. When a provider needs re-credentialing or enrollment with a new payer, you are on your own. A lapsed credential means claims to that payer are denied until enrollment is fixed, and credentialing typically takes 60 to 90 days.
- No patient balance follow-up. Statements go out once or not at all. With high-deductible plans, patients owe more of each bill, so unmanaged balances add up.
A rate well below the market usually means the labor-intensive part was left out: working denials, chasing aged A/R, appealing underpayments. Those are the activities that recover revenue. When evaluating medical billing services, the total cost of the relationship matters more than the headline rate.
When Outsourcing Doesn't Make Sense
Outsourcing is not the right answer for every practice. Here are the situations where keeping billing in-house, or using a hybrid approach, can make more sense.
- Very low volume. At low collections, a percentage fee may not support a dedicated team that works denials and follows up on A/R. A part-time biller or a billing-focused office manager may be more practical until volume grows.
- You already have an excellent in-house team. If your team keeps denials low, works A/R steadily and has been stable for years, the case for outsourcing is weaker. The improvement from switching may be small.
- A highly specialized niche. Some practices have payer relationships and billing patterns so unusual that few billing companies have relevant experience. Deep in-house expertise may be the only practical path.
- You need to approve every billing decision. If you want to personally review every appeal, write-off and patient collection action, outsourcing will feel like a loss of control even with good reporting. Keeping that control costs more staff time.
For most practices, the question is whether a billing partner can collect enough more, alongside any cost change, to justify the switch. Run the numbers with your own denial rate, collection rate and staffing. For smaller practices, see our guide to medical billing services for small practices.
Medtransic's Pricing
Medtransic charges 4-8% of collections. The rate depends on specialty, claim volume and the services you need. Our pricing works the way billing should: we earn more only when you collect more.
- Billing: 4-8% of collections, with no long-term contract.
- Credentialing: $150 per application, per provider.
- Account management: every client has a dedicated account manager.
For a quote specific to your practice size and specialty, visit our pricing page or request a free billing review.
Making the Decision: A Financial Checklist
Answer each question with actual numbers from your practice, not estimates. Once the numbers point to outsourcing, our guide on how to choose a medical billing company walks through how to vet the vendor itself.
- 01What is your total annual billing cost today? Add every expense: wages, benefits, payroll taxes, software, clearinghouse fees, training, oversight time, cover during absences, and turnover.
- 02What is your current collection rate? Divide net collections by net collectible charges (gross charges minus contractual adjustments).
- 03What is your denial rate, and how many denials do you appeal? Unappealed denials are revenue left on the table.
- 04What share of your A/R is over 90 days old? If it grows month over month, aging claims are eroding your revenue.
- 05How many billing staff have left in the last 3 years? Count what each departure cost you in recruiting, training and backlog.
- 06How many hours a week do you or your office manager spend on billing? Multiply by the hourly rate and add it to your total.
- 07What would a small improvement in collection rate be worth? Multiply your annual net collectible charges by the improvement you think is realistic.
Outsourcing pays off soonest where in-house cost is high relative to collections and the collection rate has room to improve. It helps least where billing metrics are already strong and staff are stable. If you would like Medtransic to look at the numbers with you, the review is free and there is no obligation.
Sources & References
- Bureau of Labor Statistics, Occupational Outlook Handbook: Medical Records Specialists - median annual wage of $51,140 in May 2025. Checked October 2026.