Medical Billing Services NAICS 541219

        Medical Billing Services

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Industry Summary

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.


Recent Developments

Mar 4, 2025 - Health Spending Continues Increasing
  • US health spending increased 7.2% year over year in November 2024 and represented 18.1% of GDP, according to health care nonprofit organization Altarum. Medical billing services are likely to benefit from increasing health spending. Personal health care spending growth in November was 7.4%, year over year, with utilization growth continuing to outpace price growth. Growth among major spending categories continued to be highest for home health care, at 10.1%, year over year, while spending growth for prescription drugs grew the least, at 5.5%. Among the major health care categories, prices for hospitals (3.3%) and dental care (3.0%) were the fastest growing, while prescription drugs was the slowest (1.1%).
  • An application that integrates AI may help increase the efficiency of medical billing, according to the Boston Globe. Medical billing services may be negatively impacted, as the software is intended to allow health care providers to complete more billing processes in house by using AI to complete billing forms. The two Brown University students who developed the software and launched a startup to sell it were inspired by the discovery that human-driven medical billing causes lost revenue and delayed income. "We think that there are a lot of repetitive tasks that doctors don’t want to do, and they shouldn’t need to do. We can do them faster and more accurately than what the current processes entail,” said company co-founder Jay Gopal.
  • 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 increased slightly and average wages for nonsupervisory employees decreased slightly during the first month of 2025, 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.

Industry Revenue

Medical Billing Services


Industry Structure

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

                                Industry Forecast
                                Medical Billing Services Industry Growth
                                Source: Vertical IQ and Inforum

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