Medical Billing Services
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The over 3,000 medical billing services firms in the US perform the billing and collection function on an outsourced basis for physician practices, hospitals, ambulatory surgery centers, and other healthcare providers. They submit claims for reimbursement for procedures performed to Medicare and Medicaid and private insurance companies. They typically earn revenue based on a percentage of the net collections they generate for the client.
Maintaining Privacy of Patient Data
Medical billing companies have direct civil and criminal liability for disclosure of personal health information (PHI) under the Health Insurance Portability and Accountability Act (HIPAA).
Increased Billing Complexity
Medicare billing codes (currently ICD-10) change periodically and all healthcare providers are required to comply in order to receive reimbursement for their services.
Industry size & Structure
The average medical billing service employs 40-50 workers and generates $1 million in annual revenue.
- The typical medical billing services company serves over 20 physician practice groups and more than 50 physicians, according to the Healthcare Billing and Management Association (HBMA).
- Medical billing services typically charge a fee of 3-10% of net collections.
- Medical billing services submit 40-45% of all claims submitted to government and private insurance payors.
- Larger medical billing services include ADP AdvanceMD, Kareo, Precision Practice Management, Medical Billing Star, and Premier Medical Billing.
Industry Forecast
Medical Billing Services Industry Growth
Recent Developments
Nov 4, 2024 - Medicare Advantage Payment Updates Finalized
- Medicare payments to Medicare Advantage plans are expected to increase an average of 3.7%, or over $16 billion in 2025, according to the Centers for Medicare & Medicaid Services. Medical billing services are likely to benefit from the increase in expenditures. The finalized the Calendar Year 2025 Rate Announcement for Medicare Advantage is projected to result in payments of between $500 and $600 billion in Medicare Advantage payments to private health plans in 2025.
- The Biden administration reached an agreement with drugmakers to lower prices on the 10 costliest prescription drugs under Medicare beginning in 2026. The agreement with drugmakers is projected to save older adults $1.5 billion in out-of-pocket costs when the new prices go into effect in 2026. The drugs are purchased through Medicare Part D, a prescription drug coverage program for Americans who are 65 and older. The 10 medications were used by 9 million patients with Medicare coverage in 2023 and accounted for $56.2 billion in total Medicare spending. The government estimates that, had the negotiated prices been in place that year, Medicare would have saved about $6 billion. Total annual spending on prescription drugs in the US exceeds $405 billion, and Part D alone accounts for more than $215 billion.
- Nearly half of American adults (46%) faced a problem with a medical bill in the last year, and almost half with low or average incomes (46%) skipped or delayed needed care because of price, according to the Commonwealth Fund 2023 International Health Policy Survey. While all nations surveyed had disparities in healthcare access between income levels, those disparities were most pronounced in the US. About 18% of US GDP goes to healthcare spending, the highest in the world.
- Medical billing services industry employment decreased slightly and average wages for nonsupervisory employees increased slightly during the first nine months of 2024, according to the US Bureau of Labor Statistics (BLS). Medical billing services industry sales are forecast to grow at a 4.46% compounded annual rate from 2024 to 2028, faster than the growth of the overall economy, according to Inforum and the Interindustry Economic Research Fund, Inc.
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