How to replace your medical billing company.
Leaving a billing company is mostly a logistics problem. The claims keep coming while the notice runs, the payer enrollments point at the old vendor, and the first month in-house is when denials spike. You can plan for each of those before it costs you, and decide what the agent takes over once you have switched.
1. Read the contract first.
Check five things before anything else.
- Notice. 60 to 90 days is typical. Find the date it has to be given by and whether it auto-renews.
- Tail claims. Who works claims submitted before the end date but paid after, and does the vendor get its percentage on them? Most contracts say yes for 60 to 120 days. Budget for it.
- Your data. You own the claims data. The contract should say when you get a usable data export at exit. A PDF doesn’t count. Some vendors hold it until the last invoice is paid.
- Logins and enrollments. Clearinghouse account, payer portals, electronic remittance and funds transfer enrollments. If they are in the vendor’s name, they have to be moved, and that takes payers weeks.
- Exit fees. There should be none beyond the tail. If there are, they are negotiable.
If the contract is a percentage of collections and you are in New York, or bill Medicaid, this is also the moment to ask a lawyer about it. Why.
2. Get your baseline.
You cannot tell whether the new arrangement is working without the old numbers. Pull these from the vendor’s reports and your clearinghouse for the last twelve months, before you give notice.
| Measure | Where it comes from | Benchmark |
|---|---|---|
| First-pass denial rate | Clearinghouse or vendor report | 7% to 8% typical, under 5% achievable |
| Net collection rate | Payments ÷ charges net of contractual adjustments | 95% minimum, 97% to 99% optimal |
| Days in A/R | Total A/R ÷ average daily charges | 30 to 40 |
| A/R over 90 days | Aging report | Under 10% |
| Claims a week | Clearinghouse | Your own number |
| All-in fee | Last 12 invoices, extras included | What the calculator compares against |
A vendor that cannot produce the first four was not tracking them.
3. Decide what stays with people.
An agent does the repetitive work on every claim. A person keeps the judgment. The split we use:
| Task | Agent | Person |
|---|---|---|
| Eligibility check before the visit | Does it | Handles the exceptions |
| Codes against the note | Flags what the note does and does not support | Decides |
| Scrub against payer rules | Does it, every claim | Approves corrections |
| Submit and read acknowledgements | Does it | |
| Claim status checks | Does it, on a schedule | |
| Payment posting | Posts to the encounter | Reviews the variances |
| Underpayment checks against the contract | Finds them, drafts the dispute | Sends it |
| Denials | Sorts by reason, resubmits the clear fixes, drafts appeals | Signs appeals, handles the clinical ones |
| Patient calls and statements | Prepares | Talks to patients |
The agent changes nothing on a claim until a person accepts the finding. Where the note is silent, the agent holds the claim and asks the clinician. How we set up claim review.
4. Do the staffing math.
Claims a year divided by claims per biller gives the desk without an agent. The only published figure is 6,700 a year; the practice in our case ran 11,700 and was behind. Five providers at 90 claims a week each is 23,400 claims, or three and a half billers at 6,700. If an agent takes 70% of the hours, the calculator’s default, that is about one person, doing review and appeals rather than data entry. In our case the agent gave back 35 hours a week across two billers, and both stayed.
Most practices leaving a vendor have no billers at all. Hire one experienced biller or billing manager before you give notice. They own the transition and the exceptions. The calculator prices both desks against your current fee.
5. The 90-day transition.
| Days | What happens |
|---|---|
| 1 to 30 | Give notice. Open your own clearinghouse account if the vendor’s is in their name. Start payer enrollments for electronic remittance and funds transfer to the practice. Sign the BAA and connect the agent to the EHR and clearinghouse. Hire or assign the biller. Pull the baseline. |
| 31 to 60 | Run in parallel. The agent scrubs every new claim and the vendor still submits; compare what each catches. Enrollments complete. The biller learns the exception queue. |
| 61 to 90 | Cut over by date of service: everything from the cutover date is submitted in-house. The vendor works the tail. Reconcile their final remittances against yours weekly. Get the data export and the login handover on the last day. |
Practices often skip the parallel month and regret it. That month is when you find the payer that still wants a fax and the modifier the vendor was adding by hand.
6. What to watch for the first quarter.
- First-pass denial rate, weekly. It should fall. If it rises in month one, the payer file is incomplete.
- Days in A/R, monthly. Expect a bump while the tail clears, then a fall.
- Payments posted the day they arrive, and every remittance checked against the contract. Under a percentage contract, this check usually went undone.
- The vendor’s tail. Claims they submitted and are still collecting on, until the last one closes.
- Net collection rate on a rolling twelve months, once the tail is out of it.
At the five-provider practice in our case, which already billed in-house rather than switching from a vendor, first-pass acceptance went from 84% to 96% and days in A/R from 46 to 31. The case.
Sources.
- Medical billing company contracts: terms to negotiate before you sign. AMS Solutions and other vendor guides, 2026. Vendor guidance on contract terms: a 6 to 12 month initial term, 60 to 90 days' notice and no punitive termination fee as a reasonable benchmark; define who works claims with dates of service before the start and claims submitted before termination but paid after; confirm the practice owns its claims data and gets a usable export at exit; ask which work is done offshore and who has system access. Vendor advice, consistent across several guides. Source
- Days in A/R holds steady for most practices, but payer pressure persists. MGMA Stat, 2026. Poll of 203 medical group leaders, July 2026: days in A/R the same as a year ago for 43%, higher for 32%, lower for 22%. MGMA benchmarking puts first-submission denials at 7% to 8% over the past four years and says practices can get below 5% with targeted fixes. In a January 2026 poll, 48% named denials and appeals as their largest source of revenue leakage. Source
- Top KPIs physician practices should be monitoring. MGMA with Conifer Health Solutions, 2023. April 2023 benchmark paper: net collection rate minimum 95%, optimal 97% to 99% (citing the AAFP); clean claims rate 98%; days in A/R 30 to 40, under 30 achievable; A/R over 90 days under 10%; industry average denial rate 5% to 10%; bad debt under 5%. Targets assembled from several published sources, not one survey. Source
- Biller benchmarks. Physicians Practice, 2008. An industry median of 6,700 claims processed per biller per year, no source named. Also, citing MGMA at the time: a median of 0.61 staff per full-time provider in patient accounting, general accounting and managed-care administration, costing multispecialty practices 2.7% of net medical revenue. Old, and the only claims-per-biller figure in print; the practice in our case ran 11,700 per biller and was behind on denials. Source
- New York Medical Society warns providers to avoid percentage-based fees. Mintz, 2017. New York's Medicaid Fraud Control Unit sent recoupment letters to providers whose billing companies were paid a percentage of Medicaid collections, seeking the overpayment plus 9% interest, under 18 NYCRR 360-7.5(c), which requires a billing agent's pay to be unrelated to the amounts billed and collected. The Medical Society of the State of New York warned members in February 2017 to pay billers by time or a flat fee. Source
- Claims and payments at an internal medicine practice. JRW case study, 2026. Five providers, two locations, about 450 claims a week, two billers. After an agent began scrubbing claims against payer rules, working denials and checking every payment against the contract: first-pass acceptance 84% to 96%, days in A/R 46 to 31, $68k in underpayments found in the first year, 35 hours a week of billing staff time back. One engagement. Source
Questions.
- How long does the old vendor keep collecting?
- On claims they submitted, until those claims close, usually 60 to 120 days after the end date. They are paid their percentage on them. Reconcile their remittances against your own deposits weekly until the last one.
- Do we need new billing software?
- Usually not. The agent works inside the EHR and clearinghouse you already have. If the vendor had you on their own system, you need your own clearinghouse account, which takes days, and the enrollments, which take weeks.
- What if we have no billers at all?
- Hire one before giving notice. The calculator sizes the desk for your claim volume, and the transition needs a person who knows your payers.
- Can the agent do the appeals?
- It drafts them from the denial reason, the chart and the payer’s policy, with the evidence attached. A person reads and signs. Clinical disputes go to the clinician.
Plan the 90 days before you give notice.
Send us your EHR, your clearinghouse and your notice date, and we’ll map the transition with you. Fixed price per automation. If the first one misses the scope we agreed, you don’t pay.
Book a call (opens in a new tab)Related: Medical billing cost calculator · What a medical billing company costs · Claim denial statistics · Claims and payments case study