Medical Billing Expenses

by Donna
(Bel Air, MD)

What expenses does the typical at home medical biller incur if they are paid on a percentage basis? Aside from typical expenses of computer equipment, office supplies etc., do they pay for the software, software maintenance contracts, clearinghouse fees and all postage for monthly statements? I am converting to a billing agency from an hourly employee and need to know what fees I am responsible for?

Thank so much for your anticipated response?


Hi Donna.
Aside from the normal office supplies the biggest expenses are software & hardware, clearinghouse, and postage.

As you probably already know If you purchase practice management software that runs on a server or PC you can spend several hundred to thousand dollars. You also have recurring costs like software updates, off-site storage for backups, and periodic IT help (unless you are good with computers yourself).

What may be more appealing is using online billing software. There’s several different ones like Kareo, CollaborateMD, AdvancedMD, Office Ally…….. We list some of the more affordable options on our page. They usually cost no more than a few hundred dollars a month and include clearinghouse fees.

We pay $200 a month for our server to be located in a secure data center so we don’t have to worry about security, backups, etc..

Another software option is to use your providers practice management software. This saves you the money on the purchase and maintenance of hardware and software. It also makes transition much easier in that you don’t have the work and expense of transitioning to a new billing software. However it does make you entirely dependent on the provider – they control everything so if there are issues with getting connected or licenses or updates you are dependent on them to resolve. It can be frustrating when you can’t get connected to their server and you need to get work done.

Postage for patient statements and paper claims (secondary and those who don’t accept electronic claims). If you have a practice with a lot of patients this can be quite expensive. For some of our busier practices this can be over $250 a month. We use a patient statement service (there are several) who take an electronic file and create a professional looking statement which is mailed to the patient along with a payment envelope. This really a time and labor saver as printing and mailing a lot of statements is time consuming. A lot of the online software providers offer this as an option.

We also have periodic expenses such as accountant fees and business licenses. These probably average $100 a month. This is if you are set up as a business versus a direct or contract employee.

So in summary if you plan on providing the billing software and hardware make sure you price that into your fee and allow yourself a reasonable paycheck. We’ve made the mistake of underestimating these expenses for a client because we were so eager to sign them and regretted it later.

Hope this answers your questions. Feel free to comment (the link below) if you would like us to elaborate clarify anything – Thanks!

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