Medical Billing Services

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.

Sep 2, 2026 - AMA Sued Over Copyright Of CPT Codes

• PatientRightsAdvocate.org (PRA) has filed a lawsuit against the American Medical Association (AMA) over medical code copyright and the payment to access the codes. Medical billing services may benefit from removal of the payment requirement. The AMA charges healthcare providers an upfront annual fee of $82.50, as well as an additional annual fee of $18.50 per user, to use CPT codes in their practices, according to the PRA lawsuit. PRA argues that patients, health plans, and providers should not have to pay a trade association to access codes required by federal and state law. PRA said it is seeking to make Current Procedural Terminology (CPT codes) free and available to the public. The organization has purchased a 2026 print edition of CPT that it intends to scan and post on its website. PRA also said that since the CPT is incorporated into law, it is not subject to copyright. The lawsuit argues that the AMA cannot lawfully prevent PRA from scanning and publishing the 2026 CPT codebook, as well as future editions.
• At least six states have approved measures related to patient medical debt in 2026, according to a report on legislative policy trends released by United States of Care. About 46% of adults, regardless of their health care insurance status, reported struggling to pay for medical care last year, according to the Urban Institute. Indiana, Louisiana, Maine, Oregon and Washington enacted laws this year related to medical debt. Hawaii legislators have approved a measure that is awaiting the governor’s signature, and other states have bills in committee. Legislators in 18 states have introduced or approved measures related to preserving no-cost preventive care, and a dozen states weighed legislation related to hospital facility fees.
• Single-specialty medical groups averaged an 8% first-submission claim denial rate, according to the Medical Group Management Association's 2023 DataDive. Mitigation efforts have paid off for some practices, however. Practices experiencing reduced claim denials credited enhanced staff training for front desk workers and establishing a denials task force team dedicated to improving clinical documentation, eligibility verification, and authorizations. These practices also noted either hiring additional coding and billing staff or having their coders pursue new training and/or certifications as strong denial mitigators.
• Medical billing services industry employment and average wages for nonsupervisory employees increased slightly during the first five months of 2026, according to the US Bureau of Labor Statistics (BLS). Medical billing services industry sales are forecast to increase at a 3.7% compounded annual rate from 2026 to 2030, slower than the growth of the overall economy, according to Inforum and the Interindustry Economic Research Fund, Inc.

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.