You almost certainly did not open a practice because you wanted opinions about clearinghouses. But here you are, staring at an aging report where the 90-plus column keeps quietly fattening, watching your front desk lose another afternoon to hold music, and doing the arithmetic on what you collected against what you billed.
That gap is usually where this decision starts. And it is worth knowing, before you start taking sales calls, that most of what goes wrong in that gap is not clinical. In KFF’s analysis of federal marketplace transparency data for 2024, insurers denied roughly 19% of in-network claims. Only about 5% of those denials were for lack of medical necessity. A quarter were administrative, and another third were filed under a reason category so vague it is labeled “other.” That data covers HealthCare.gov plans rather than every payer you deal with, so treat it as directional rather than definitive. But the direction is clear enough: a large share of denied money is lost to process, not to medicine. Process is exactly what you are shopping for.
Sales Calls All Sound The Same
Fewer denials. Faster payments. Less work for your staff. By the fourth call, the decks have blurred into one deck.
They blur because everyone is describing outcomes rather than method. Outcomes are easy to promise and hard to verify for six to nine months. Method is answerable on the call.
It helps to be precise about what you are buying, because the term covers more ground than most people assume. Medical billing can include charge capture, coding, claim scrubbing, submission, remittance posting, denial work, appeals, patient statements, payment plans, and the slow grind of aged accounts receivable that nobody enjoys touching. Plenty of companies do the first half of that list well and quietly leave the second half alone. Ask which parts of the list they own and which parts stay with you, and get the answer in writing before you get it in a contract.
Real Problems Show Up Later
The failure modes that actually hurt tend to be specific and slow.
A one-size-fits-all workflow that does not match how your specialty codes. Behavioral health parity rules, orthopedic global periods, and device or implant billing all break generic processes in different ways.
Denial patterns caught late. The same reason code repeating for four months across one payer is not a billing problem by month four. It is a revenue problem with a date attached.
Integration that turns out to be a person retyping. If charges leave your system and get keyed into theirs, you have not removed work from your staff, you have added a transcription step and a new place for errors to enter.
Credentialing that fell through a crack. Your new associate starts in March, nobody completed payer enrollment, and by August you are looking at months of claims that were never billable in the first place. This is often sold separately from billing, and the assumption that it is included has cost practices real money.
The accounts receivable tail going untouched. Fresh claims pay quickly and aged claims do not, so a vendor with limited capacity has an obvious incentive about where to spend the hour. Ask directly how old accounts get worked and by whom.
And one that rarely makes these lists: tone. Your patients will call this company about their bills. Whoever answers becomes, for that conversation, your practice. Ask to hear a recorded patient call, or at least ask what their script is when someone says they cannot pay.
Why This Deserves Real Scrutiny
Two pieces of research are worth having in your head before you negotiate.
The first is a study of a large academic health system with a certified EHR, which used time-driven activity-based costing to trace what a claim actually costs to process. The researchers estimated billing and insurance-related costs of about $20 for a primary care visit and roughly $215 for an inpatient surgical procedure. Whatever you are paying now, in salary or in fees, this is not a rounding error on your P&L.
The second explains why vendor averages can mislead you. Economists analyzing remittance data from around 90 million visits found that physicians lose an estimated 18% of Medicaid revenue to billing problems, compared with 4.7% for Medicare and 2.4% for commercial insurers. A company with excellent numbers on a commercially insured book may struggle badly with yours if you carry heavy Medicaid volume. When they quote you a performance figure, ask what payer mix produced it.
There is also a point about liability that gets glossed over on sales calls. Outsourcing the work does not outsource your position. You remain the covered entity. If claims go out wrong under your NPI, they are your claims.
Specialty Experience
“Sure, we’ve done that” is not an answer. These are:
Name three practices in my specialty that you bill for now. What were your top denial reasons for them last quarter, and what did you change in response to each one?
Who does the coding, and what are their credentials? Certified coders and general billers are not interchangeable, and the difference shows up in E/M level distribution and modifier use. Ask whether coding is included in the fee or billed as a separate line.
How do you keep current with code set updates and payer policy changes in my specialty, and who is responsible for pushing those changes into the workflow?
Transparency Around Performance
A capable partner can produce first-pass acceptance rate, days in accounts receivable, denial rate broken out by payer, net collection rate, and the share of AR sitting past 90 days. Vagueness here usually means they are not tracking it closely enough to improve it.
But ask for definitions as well as numbers, because these metrics are quietly gameable. A clean claim rate measured at the clearinghouse edit, before a payer has seen anything, is a very different number from one measured at adjudication. Rejections and denials are often counted differently by different companies. Written or resubmitted claims can be excluded from a denominator to flatter a percentage. None of this is necessarily dishonest, but you should know which version of the number you are being shown.
Then ask two follow-ups. Can I pull these reports myself, or do they arrive when you choose to send them? And what does your reporting look like at the payer and reason-code level, not just in aggregate? An overall denial rate of 8% can hide one payer running at 25%.
Communication Style
Ask who your named contact is, what happens when that person leaves, and what the escalation path looks like when the named contact is not solving the problem. Ask for response times in writing rather than in adjectives.
Ask about cadence. Some companies surface only when something has already broken. Others hold a standing monthly review with an agenda. The second costs more to deliver, which is part of why it is less common.
And ask how they deliver bad news, because every billing relationship eventually contains some. A partner who tells you in month two that your documentation will not support the codes you have been using is worth considerably more than one who bills them quietly and lets you find out during an audit.
Technology And Integration
Ask how the medical billing service connects to your practice management system or EHR, and insist on specifics. Is the interface bidirectional? Do charges flow automatically, or does someone export and import? Do remittances post automatically, and what happens to the exceptions? Who owns the fix when the interface breaks at 4pm on a Friday, and who pays for it?
The stakes here are measurable. The CAQH Index, which tracks electronic adoption across hundreds of provider organizations and health plans, consistently finds billions of dollars of annual savings still sitting in the gap between manual and automated transactions. Manual workarounds are where time and money leak out of a revenue cycle.
There is now a second question in this category that would have sounded paranoid a few years ago and is simply prudent today. The February 2024 ransomware attack on Change Healthcare, which handled roughly a third of US claims traffic, froze billing for months. AMA survey data from that period found that 80% of responding practices lost revenue from unpaid claims and 32% could not submit claims at all, with small practices hit hardest.
So: which clearinghouse do you use? Do you have a second one configured? What is your plan if the primary goes dark for four weeks, and how quickly can you switch? Ask it plainly and watch whether the answer is a real plan or a reassurance.
Compliance Standards
A signed business associate agreement is a legal requirement, not paperwork. HHS sets out the terms a BAA must contain, including permitted uses of protected health information, required safeguards, breach reporting obligations, and what happens to your data when the contract ends. Read theirs rather than accepting that they have one.
Ask for their subcontractor list. BAA obligations flow downstream, offshore processing is common in this industry, and you should know where your patients’ records physically go.
Ask whether they operate a compliance program aligned with the OIG’s compliance program guidance for third-party medical billing companies, which has set the baseline expectations for this sector since 1998. Ask who their compliance officer is, how often they audit their own coding, and what they do when an internal audit finds that you were overpaid. The correct answer involves identifying and refunding the overpayment. Watch closely for hedging on that one, because the hedge is the answer.
Finally, ask about cyber liability insurance, the limits on it, and who bears the cost of breach notification if the breach originates with them.
Contract Terms
Look at the term length, the notice period, and the penalties for leaving early. A company confident in its own retention tends to be relaxed about this. A company that needs three years and a termination fee is telling you something.
There is one pricing issue that almost never comes up on a sales call and genuinely should. Percentage of collections feels aligned, and it is the industry norm. It is also legally complicated. The OIG has held a long-standing concern that percentage-based billing arrangements increase the risk of upcoding, and several states treat a percentage paid to a billing company as prohibited fee-splitting. The AMA’s Journal of Ethics lays out the landscape, noting that Illinois has historically treated percentage-of-collections payment as illegal fee-splitting absent a specific statutory exception, and that Florida restricts these arrangements even for Medicaid funds. New York’s rules are similarly restrictive.
None of this means percentage pricing is off the table. It means the question “flat fee or percentage” is not purely a commercial one where you practice, and the answer should come from your health care attorney rather than from the vendor’s contract template. Ask counsel before you sign, particularly if Medicaid is in your payer mix.
Then look at the exit clauses, which people skim and later regret. Who works your open accounts receivable after termination, and for how long? In what format do you get your data, and does that include payer correspondence and appeal documentation? If those answers are missing, you are not signing a contract so much as a hostage arrangement.
A Few Direct Questions
- How long have you billed my specialty, and may I speak to a current client and to one who left you?
- What is your first-pass acceptance rate, how exactly do you define it, and at what point in the claim’s life is it measured?
- What were your top three denial reasons across your book last quarter, and what did you change?
- How quickly will I hear about a denial pattern, and who contacts me?
- Who does the coding, what credentials do they hold, and is coding inside the fee?
- Do you handle credentialing and payer enrollment, or does that stay with me?
- Which clearinghouse do you use, and what is the backup?
- Is the integration bidirectional, or will my staff be re-keying anything?
- Flat fee, per claim, or percentage? If percentage, has counsel confirmed it is permissible in my state and for my payer mix?
- What happens to my open AR if I leave, and in what format do I get my data back?
- Who is my named contact, and what is the escalation path above them?
- May I see your BAA and your subcontractor list before we go further?
Comparing A Few Options
Build the shortlist from people who practice the way you do rather than from a page of search results. Your state and specialty societies, your EHR vendor’s certified partner list, and the practice administrator two floors up will all give you better names than an ad will. Three to five candidates is plenty.
Capline Healthcare Management is one of the options practices come across in this category. Like every other name you will consider, including the one a colleague swears by, it deserves to be measured against the questions above rather than against its own marketing.
When you take references, be specific about who you want to talk to. A reference in your specialty, at roughly your size, on your EHR, with a payer mix resembling yours, is worth ten glowing calls from practices that look nothing like you. Ask for one former client as well. Companies that will not produce one are telling you how those separations went.
Making The Call
Do not rush this, even when the current situation feels like a fire you need out today. Switching billing companies mid-crisis and switching again nine months later costs far more than spending an extra two weeks now.
Pay attention to how the sales process itself is run. Whether they answer the hard questions or route around them, whether they follow up when they said they would, whether the person who impressed you on the call is the person who will actually handle your account. That is a fairly reliable preview.
One last thing, offered in the spirit of saving you disappointment. No billing company can fix a practice whose front-end intake is loose. Eligibility and registration errors are among the most common upstream causes of denials, and they happen at your front desk before anyone bills anything. If your check-in process is not capturing accurate insurance information, tighten it in parallel with this search rather than expecting the new vendor to absorb the consequences. The best partnerships in this industry tend to be the ones where both sides fixed something.
Define what success looks like before you sign. A 90-day scorecard with agreed metrics, agreed definitions, and an agreed review date turns a vague relationship into a measurable one, and it is much easier to negotiate before the contract than after.
Disclaimer
This article is for general information only. It is not legal, financial, tax, or compliance advice, and it cannot account for your practice’s specific circumstances. State laws governing fee-splitting, corporate practice of medicine, and billing arrangements vary considerably and change over time. Benchmark figures and study findings cited here reflect the populations and periods studied and may not describe your specialty, payer mix, or region. Before signing any billing agreement, and particularly before agreeing to percentage-based compensation, consult a qualified health care attorney licensed in your state.
References
- Kaiser Family Foundation. Claims Denials and Appeals in ACA Marketplace Plans in 2024. KFF, March 2026. https://www.kff.org/patient-consumer-protections/claims-denials-and-appeals-in-aca-marketplace-plans-in-2024/
- Tseng P, Kaplan RS, Richman BD, Shah MA, Schulman KA. Administrative costs associated with physician billing and insurance-related activities at an academic health care system. JAMA. 2018;319(7):691-697. doi:10.1001/jama.2017.19148
- Dunn A, Gottlieb JD, Shapiro AH, Sonnenstuhl DJ, Tebaldi P. A denial a day keeps the doctor away. The Quarterly Journal of Economics. 2024;139(1):187-233. doi:10.1093/qje/qjad035
- Dunn A, Gottlieb JD, Shapiro AH. A denial a day keeps the doctor away. National Bureau of Economic Research Working Paper 29010, 2021. doi:10.3386/w29010
- Gottlieb JD, Shapiro AH, Dunn A. The complexity of billing and paying for physician care. Health Affairs. 2018;37(4):619-626. doi:10.1377/hlthaff.2017.1325
- US Department of Health and Human Services, Office for Civil Rights. Business Associate Contracts: Sample Business Associate Agreement Provisions. HHS.gov. https://www.hhs.gov/hipaa/for-professionals/covered-entities/sample-business-associate-agreement-provisions/index.html
- US Department of Health and Human Services, Office of Inspector General. Compliance Program Guidance for Third-Party Medical Billing Companies. 63 Fed. Reg. 70138 (December 18, 1998). https://oig.hhs.gov/documents/compliance-guidance/805/thirdparty.pdf
- American Medical Association Journal of Ethics. Splitting Fees or Splitting Hairs? Fee Splitting and Health Care. AMA Journal of Ethics. 2009;11(5):421-424. doi:10.1001/virtualmentor.2009.11.5.hlaw1-0905
- American Medical Association. Change Healthcare Cyberattack: Survey Findings and Practice Resources. AMA, 2024. https://www.ama-assn.org/practice-management/digital-health/change-healthcare-cyberattack
- CAQH. 2025 CAQH Index Report: Tracking Adoption of Electronic Administrative Transactions. CAQH, 2026. https://www.caqh.org/insights/caqh-index-report
- Federal Register. Publication of the OIG Compliance Program Guidance for Third-Party Medical Billing Companies. 63 FR 70138, December 18, 1998. https://www.federalregister.gov/documents/1998/12/18/98-33565/publication-of-the-oig-compliance-program-guidance-for-third–party-medical-billing-companies