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 2,000 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
Mar 2, 2023 - Congress Targets Hospital "Dishonest Billing"
- The US Congress has turned its attention to scenarios in which hospitals buy doctors' offices and charge higher hospital rates for the exact same service delivered in those offices, according to Axios news service. Experts say that the issue is closely related to the long-running push for "site-neutral payments," the idea that Medicare should pay the same amount for the same service regardless of where it's performed. US Representative Annie Kuster plans to cosponsor a bill by Representative Victoria Spartz that addresses the issue when the bill is reintroduced during this Congressional session, Kuster's office said. US Senators Mike Braun, Maggie Hassan, and Tammy Baldwin are among the senators discussing bipartisan legislation on the issue, according to Axios, although there is no bill yet.
- The Biden administration plans to end in May the national and public health emergencies (PHEs) tied to the coronavirus pandemic. Some of the temporary changes enacted in the PHE have been extended, however, to ensure providers aren’t faced with sudden disruption in care and billing. “The impact will vary based on state, patient, and payer mix. Fortunately, Congress addressed most of the critical Medicare telehealth waivers in recent legislation (Consolidated Appropriations Act, 2023) by extending these waivers through 2024, which provides some predictability for practices,” Claire Ernst, director of government affairs of the Medical Group Management Association (MGMA), said. “It also gives the administration and Congress more time to gather data regarding telehealth utilization, quality outcomes and cost.”
- Litigation triggered by the Biden administration’s process for resolving surprise medical billing disputes threatens to exacerbate a growing backlog in claims, according to industry experts. Insurers and providers would likely continue to see “long delays in claim resolution and additional costs” associated with the process if a Texas federal district court strikes down the US Department of Health and Human Services’ revised process for settling disagreements between health insurers and providers over payment rates, according to attorney Jeremy Hays. The court will hear arguments in late December in a case brought by the Texas Medical Association (TMA) over a final rule outlining the independent dispute resolution process. The TMA argues the rule will close physicians’ offices because the process favors lower payment rates. The American Medical Association and the American Hospital Association back the TMA. Employers, patient advocacy groups, and insurers say the new rule establishes essential guardrails for the process.
- Medical billing costs in the US significantly exceed those in similar countries, according to a study published in Health Affairs. “We observed that high US costs are caused primarily by expensive and extensive coding activities, not higher wages paid to US personnel,” the researchers wrote in the study. Billing and insurance-related costs ranged from a low of $6 in Canada to a high of $215 in the US for an inpatient surgical bill. That represented about 3.1% of the total professional revenue for the procedure in the US. Providers also spent about 100 minutes processing the claim.
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