PVR

Medical Billing & RCM — Checklist

Medical billing vendor evaluation checklist

Take this checklist into every vendor demo. If a vendor cannot say yes to at least 80% of these items in writing, they are not a fit for an independent practice.

By Jordan Alderman, MBA, CMPE · Reviewed by Rania Hassan, JD, CHC · Last reviewed · Methodology

Disclosure: Independent editorial. No pay-for-placement, no affiliate rankings. Full editorial standards.

Use one copy of this checklist per vendor you evaluate. Mark items yes / no / conditional and require written confirmation for anything a rep answers verbally.

Company & references

  • At least 5 years operating history under current ownership
  • 3+ reference clients in your specialty at similar size
  • Named account manager with tenure disclosed
  • Disclosed offshore vs onshore mix for every function
  • Errors & omissions insurance $2M+

Performance & reporting

  • Discloses average denial rate, first-pass acceptance, and days-in-AR by client
  • Practice-level dashboard with daily refresh
  • Monthly review cadence with named leader (not just PDF)
  • Willing to sign performance SLA with credits for miss
  • Reports include payer-mix, denial reasons, and top 20 denied CPTs

Technology & integration

  • Native integration with your EHR (not manual CSV export)
  • Direct clearinghouse access retained by practice
  • Read/write API or SFTP access to your data
  • HIPAA BAA in place, SOC 2 Type II report available
  • No dependence on RDP/screen-share for daily work

Contract & offboarding

  • 30-day out clause, no penalty
  • Practice retains ownership of all data and payer contracts
  • Data export in machine-readable format free of charge
  • No claim on trailing collections after termination
  • Written credentialing handoff process

Pricing transparency

  • Written definition of 'net collections' in scope
  • All add-on fees enumerated (statements, denials, appeals, custom reports)
  • Aged A/R takeover pricing quoted separately
  • Setup / implementation fee itemized
  • Annual price escalator disclosed, capped at CPI+2%

Print-optimized — the browser Print (Cmd/Ctrl+P) will render as a single one-page-per-section PDF for use in vendor meetings.

Evidence & sources

Every recommendation on this page traces back to a primary reference — federal regulation, an industry benchmark, or peer-reviewed literature. Follow the links to verify claims independently.

  1. [1]Cost Survey for Physician-Owned Practices

    Industry benchmark

    Medical Group Management Association (MGMA) · 2024

    Supports: Baseline cost of collection benchmarks for independent physician practices (typically 6%–12% of net collections).

  2. [2]Medicare Claims Processing Manual (Chapter 1)

    Regulatory

    Centers for Medicare & Medicaid Services (CMS)

    Supports: Federal guidance on claim submission, timely filing limits, and clean-claim standards used to define first-pass acceptance targets.

  3. [3]National Health Expenditure Data — Physician & Clinical Services

    Primary source

    CMS Office of the Actuary

    Supports: Aggregate reimbursement and payer-mix data supporting the range of average reimbursement per claim used in cost modeling.

  4. [4]HIPAA Security Rule

    Regulatory

    U.S. Department of Health and Human Services (HHS)

    Supports: Basis for Business Associate Agreement (BAA), breach notification, and offshore staff safeguard requirements referenced in vendor compliance criteria.

  5. [5]HFMA MAP Keys

    Industry benchmark

    Healthcare Financial Management Association

    Supports: Industry-standard KPI definitions for days in AR, net collection rate, and denial rate used in the vendor scoring rubric.

Frequently asked questions

What percentage do medical billing companies charge?+

Most percentage-of-collections billing companies charge between 4% and 9% of net collections. Small practices and low-reimbursement specialties trend toward the higher end; large-volume or high-reimbursement practices negotiate to the lower end. Per-claim pricing typically runs $4–$8 per claim depending on complexity.

Is outsourced billing cheaper than in-house?+

It depends on volume. Below roughly 3,000 claims per month, outsourcing is almost always cheaper than a full-time in-house biller once you include salary, benefits, software, and the cost of coverage during time off. Above that volume the math tightens and depends on your specialty's reimbursement and your current cost of collection.

What is a good first-pass claim acceptance rate?+

For most specialties, 95% or higher on first-pass acceptance is the mark of a competent billing operation. Below 90% signals rushed submission, weak scrubbing, or credentialing gaps. Ask any prospective vendor for their book-of-business average, then for your specialty's average within that book.

How long does a billing vendor switch take?+

Plan for 60 to 90 days from contract signature to steady-state. Weeks 1–4 cover credentialing verification, fee schedule loading, and clearinghouse setup. Weeks 5–8 run parallel processing on new claims. Legacy accounts receivable — who works claims filed before go-live — is the single most negotiated point; get it in the contract.

Should I let the billing company use their own practice management system?+

Only if the contract guarantees daily data exports, that you own the payer credentialing and clearinghouse account, and that data at contract end is delivered in a portable format at no cost. Otherwise the switching cost of leaving that vendor becomes a soft lock-in.

What's the difference between medical billing and revenue cycle management?+

Medical billing is the narrower activity of coding, submitting claims, posting payments, and working denials. Revenue cycle management (RCM) covers the full arc from patient scheduling and eligibility verification through final collections and reporting. Most modern billing vendors offer RCM; the label matters less than the scope of the statement of work.

Keep going

Related guides & tools

Billing & RCM guides

Decision tools