Medical practices & clinics · 25 October 2026

How to Outsource Medical Billing for a Small Practice

A step-by-step guide for owners and office managers of small medical practices and clinics

Most small practices don't decide to outsource billing on a quiet afternoon. It usually happens after something breaks: the biller leaves, a payer starts denying claims nobody understands, or the owner realizes the A/R report hasn't been opened in three months. Outsourcing can solve those problems, but only if the hand-over is planned. A rushed switch can leave claims unsubmitted, denials unworked and payments unposted for weeks.

This guide walks through how to outsource medical billing for a small practice in a way that protects your cash flow, keeps you in control and makes it easy to tell whether the arrangement is working.

Step 1: Get a clear picture of where billing stands today

Before you talk to any billing company, spend an hour gathering the basics. You don't need perfect numbers. You need enough to explain your situation and to measure improvement later.

An A/R aging report from your practice management (PM) system, split by payer and by age bucket (0–30, 31–60, 61–90, 91–120 and 120+ days).
Your monthly charges and collections for the last six to twelve months, so you can see trends.
A denial list or remittance summary showing the most frequent denial reasons, if your system can produce one.
Your payer mix: Medicare, Medicaid and managed Medicaid plans, commercial plans, workers' compensation, auto or personal injury, and self-pay.
Who does what today: front desk eligibility checks, coding, charge entry, claim submission, posting, follow-up and patient statements.

Write down the problems you actually feel. "Claims sit for weeks before they go out," "nobody works denials," or "we don't know what we're owed" are more useful than general frustration, because they tell a billing partner what to fix first.

Step 2: Decide exactly what you want to hand over

"Billing" covers a lot of separate tasks, and you don't have to outsource all of them. Common splits for small practices are:

Full revenue cycle: the billing company handles charge entry or charge review, claim submission, rejections, denials, payer follow-up, payment posting and reporting. The practice keeps scheduling, check-in and clinical documentation.
Back-end only: your staff enter charges and the billing company handles everything after the claim is created.
Clean-up project: the billing company works old unpaid claims (aged A/R) while your team keeps current billing in-house.

Be specific about the edges. Who verifies eligibility and benefits before visits? Who handles prior authorizations? Who answers patient billing questions? Who codes the visits? Many disputes between practices and billing companies come from tasks that each side assumed the other was doing.

Step 3: Understand the pricing model before you compare prices

Billing companies usually charge in one of three ways: a percentage of what they collect, a flat monthly fee, or a per-claim fee. Percentage-of-collections pricing is common because it ties the billing company's income to your payments. When you compare quotes, ask:

What exactly is the percentage applied to? Insurance payments only, or patient payments too?
Are there set-up fees, minimum monthly fees, or separate charges for old A/R, patient statements or credentialing?
How is the fee calculated if a payer takes money back later?
What is the notice period if you want to leave, and how do you get your data and reports back?

A lower headline rate isn't always cheaper if it excludes the work you need most. For reference, MedBill Solutions' ongoing billing starts at 3% of what we collect for you, and we work old unpaid claims for 3% of what we recover, with no fee if nothing is recovered. The exact scope and rate are agreed in writing before onboarding.

Step 4: Put the paperwork and security in place first

Your billing company will see protected health information, so HIPAA applies. Before any patient data changes hands, you should have:

A signed Business Associate Agreement (BAA) that covers how the billing company protects, uses and returns patient information.
A written service agreement listing the tasks, reporting, response times, fees and termination terms.
Individual user logins for the billing team in your EHR, PM system and clearinghouse. Avoid shared passwords so access can be tracked and removed.

Don't send patient details by ordinary email or messaging apps while you're still talking to companies. A good billing partner will ask for business information first and patient information only after the BAA is signed.

Step 5: Plan the transition, especially the claims already in flight

The riskiest part of outsourcing is the hand-over month. Agree a transition plan that covers:

A cut-over date. Charges with dates of service on or after that date belong to the new team.
Claims already submitted. Decide who follows up on claims that went out before the cut-over and how they'll be tracked.
Old A/R. Decide whether the billing company works the backlog, and in what order: usually by deadline and dollar value.
Payer access. Make sure the team can check claim status on payer portals and receive electronic remittances (ERAs). Some payers require enrollment updates for ERA routing.
Fee schedules and contracts. Share your contracted rates so underpayments can be spotted.

It is normal for the first month to be busier than usual as the new team learns your payers and cleans up rejections. Ask for weekly check-ins during that period.

Step 6: Keep working in your existing systems

Switching EHR or PM software at the same time as outsourcing billing doubles the risk. Most practices are better off having the billing company work inside the system they already use, with access the practice controls. That way your records stay in one place and you can see the work being done. MedBill Solutions works in your existing EHR or billing system.

Step 7: Agree how you'll measure success

Decide up front which numbers you'll review each month. Useful ones for a small practice include:

Total charges and total collections for the month
A/R by age bucket, especially the share of A/R over 90 days
Denials: how many, the top reasons, and how many were resolved
Claims not yet submitted and how long they've been waiting
Underpayments found and appealed

Ask for the report in plain English, not just a system export. If the numbers move in the wrong direction, you want to know why and what will be done about it.

Step 8: Stay involved, even after it's working

Outsourcing billing doesn't mean losing sight of your revenue. Keep a monthly meeting or call with your billing partner, read the reports, and make sure your front desk still collects accurate insurance details and copays at check-in. Billing quality depends on what comes in at the start of the visit as much as on what happens after it.

Common mistakes to avoid

Switching without a backlog plan. Old claims quietly age past timely filing limits.
Leaving eligibility checks undefined. Eligibility problems are among the most common causes of denials.
Sharing one login. It makes access impossible to audit or revoke.
Not reading the contract's exit terms. You should always be able to get your data and reports back.

Next step

If you run an independent medical practice or clinic and want to talk through what you'd hand over, see our billing services for medical practices or read our guide to working an aged A/R report. You can also send us a short enquiry. We reply within one business day.

Billing help for medical practices

Ongoing billing starts at 3% of what we collect for you, inside the EHR or PM system you already use. We reply within one business day.

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