How much should medical billing cost? The published numbers

Four pricing models, and what each really costs

Medical billing is sold four ways, and the headline number is not comparable across them. A percentage sounds small and is not; a flat fee sounds large and often is not. The only fair comparison is annual dollars against the same collections.

Percentage of collections

The most common model. AdvancedMD publishes its RCM service fee as 4-8% of collections. Neolytix puts the general market band at 4% to 10% of monthly collected revenue, and notes that high-complexity specialties such as cardiology, oncology and orthopaedic surgery can reach 10% to 12%.

On a practice collecting $1,000,000 a year, Neolytix states that band works out at $40,000 to $100,000 per year in billing fees. That is the number to hold in your head, because it is the one that grows every year your practice does. A 6% arrangement on $1M is $60,000; the same arrangement on $1.5M is $90,000 for work that has not changed proportionally.

The second cost of this model is not on the invoice. A vendor paid a share of collections is rationally pointed at whatever collects fastest. The accounts sitting at 120 days are the ones with the worst effort-to-reward ratio for them, and they are usually the ones you most want worked.

Per claim

Simple to reason about and it does not punish growth, but it rewards volume rather than resolution. A claim submitted three times is three claims. Ask specifically how reworks and appeals are billed before this looks cheap.

Hiring in-house

The honest comparison here is not the salary. The US national median wage for medical records specialists — the occupation that covers billing and coding staff — is $51,140 a year, per Bureau of Labor Statistics data. But BLS also publishes what employers actually pay: wages and salaries account for only 69.9% of total employer compensation cost, with benefits making up the other 30.1%.

Applying that, a $51,140 salary is roughly $73,000 a year of real employer cost before you count a desk, a workstation, the management time, and the cost of covering holiday and turnover. That figure is what an outsourced option has to be compared against, not the salary line.

A flat monthly seat

A fixed monthly rate for a named full-time person. The bill does not move when you have a good month, which makes it budgetable, and the incentive is neutral — the person works whatever is on the worklist rather than whatever pays them fastest.

The trade is real and worth stating: you carry the fixed cost. In a month where collections collapse, a percentage vendor bills nearly nothing and a flat seat bills the same as always. If your volume is genuinely unpredictable, that risk transfer may be worth paying for.

How to compare them in one line

Convert everything to annual dollars against your actual collections, then ask what each model does to the accounts you care about most. A practice collecting $1M comparing a 6% vendor ($60,000) against two flat seats is comparing similar money with very different incentives and very different answers to "who works the 120-day pile".

Our own prices are published by role rather than quoted, precisely so this arithmetic can be done without a call. Where we are more expensive than the cheapest offshore option, we say so on the comparison page.