How to Start a Medical Claims Processing Business

Income and Pricing

What can you expect to make as a medical insurance biller? The sky's the limit, depending only on how serious you are and how willing you are to expand. Annual gross revenues for the industry range from $20,000 to $100,000. Some MIBs are happy working part time at home, bringing in enough to supplement the family income. Others have launched thriving, full-time businesses that employ dozens of assistants.

Kim H., a medical biller in rural Virginia, runs her business in conjunction with a full-time career as a high school teacher. At the other end of the spectrum, Jan D., an MIB in Walnut Creek, California, who's well into her ninth year in business with a staff of 22, is pleased with her income as well.

However you choose to tailor your business--part time or full time, at home or in an outside office--the income potential is excellent. But almost everyone in this particular industry is quick to point out that medical billing is not an easy business.

"This is definitely not something that just anybody could do," explains Curt J., a biller in Illinois. "Between the personal marketing skills and relating to professionals, and the learning curve on the code side and the computer side, it's been a challenge. [But] I enjoy a challenge."

How soon can you expect to start making money? "You have to have a business plan, and you have to be realistic about it," O'Connor advises. "We usually tell [people] 'Don't stop your full-time job because you're going to be working in the red for a while.' It's usually about five months before they start making money because it takes a while to get set up with the clearinghouse, to get the doctor's conversion done, to do everything. If you think you're going to start doing it tomorrow, it's not going to happen."

Talking Money

Medical billing services charge their clients by three methods: percentage, per claim and hourly. The percentage basis is generally used by MIBs who do full-practice management or a combination of patient billing and claims billing and, just as it sounds, the MIB charges the provider a percentage of the money he or she collects per month as opposed to the amount of money billed. The percentages you'll charge will depend on several variables: the going rate in your part of the country, the sorts of procedures your doctors are providing and their patient volume.

"We charge [the doctors] on collected revenues, not on their production levels," Jan D. explains. "The money all comes to us, and we put it into their own personal checking accounts, and then I'll bill them, depending on how big the practice is, sometimes twice a month, sometimes once a month. And they pay the bill in a timely manner or we stop doing their work."

Some MIBs prefer to charge on a per-claim basis rather than by percentage. This is the method of choice for billers whose workload consists mainly of straight claims billing with little or no practice management tasks.

The third, and least popular, method of charging clients is per hour. "I think it would be a really hard selling feature for doctors," says Felicia T. "They're already paying somebody on an hourly basis. Why would they want to hire somebody outside the office and pay them hourly as well?"

You might want to consider this option if you have a client whose billing rate is so low that charging per claim or on a percentage basis is not feasible. Or you might run into a client who's comfortable working under this arrangement and does not want to deviate from his or her norm.

How to Start a Medical Claims Processing Business

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