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Starting a Medical Billing Business

Netrajit Laishram
Health care practitioners need medical billing professionals to manage the finances related with their practice. The medical billing business is growing along with the health care industry and is now considered to be a sound investment.
Most medical practitioners including doctors are so focused on their patients that they tend to ignore the remuneration aspect of their practice. This is where the role of medical billers comes into the picture. The rising demand for these professionals has led to a shortage of manpower, resulting in an opportunity to initiate one's own business.


Medical billing service is all about a business cycle linking doctors, health care providers, patients, insurance companies, and to an extent, even the government.
This job is about obtaining payments for a service provided by any medical professional to a patient, from the insurance company or the government, through an insurance claim. The process starts with the submission of a medical claim to the insurer, which is followed up, until monetary compensation is received from the insurance provider.
It has become a big business leading to a competitive environment among service providers. Even though there are many players in the market offering basic to advanced services, there is still room for home-based professionals.
This job can be done part-time or full-time, thus creating an opportunity for earning some extra income. Such businesses are usually proprietorships.
It requires lesser investment than other types of businesses. There is no real requirement of any infrastructure, though some funding will be necessary for acquiring technical knowledge through an accredited training.

How to Begin?

Starting a new business requires research and planning to identify various factors that can influence its success. Here, we will look at some of the common factors.


The target market will include family physicians, and specialists such as pediatrics, osteopaths, obstetricians, oncologists, mental health practitioners, etc.
However, it is not limited to just doctors, as social health workers, nursing homes, ambulance services, pharmacists, and some medical equipment providers also require such services.
Previous experience and contacts within the medical community are also taken into consideration. Many business opportunities are generated through such means. Market segmentation according to the specialization and the size of the facility needs to be researched.

Start Up Costs

The cost of setting up a business can be minimized with some effective planning. Instead of investing in an office, one can easily initiate the work from home.
Basic expenses will, of course, have to be incurred to purchase equipment, such as a computer system with a modem, a printer and fax machine, reference material, a phone with voice mail or an answering machine, stationery, office supplies, and postage.
The billing software is a very important factor, so it should be selected after deliberate study. A clearing house, in turn, does the job of transmitting the medical claims electronically to the insurance providers. They usually charge some fees, according to the type of work they process. A sign up fee for registration with the doctor may also be needed.

Operational Aspects

Careful attention needs to be paid to many aspects for the successful running of a business.
A medical coding process which includes entering patient information, name of the referral source or physician, and CPT and ICD-9 codes from the superbills and day sheets, is required and can be acquired through professional training. Also, efficient medical coding is required for swifter processing.

Payment Models

There are three ways of charging a client, as follows:
  • Percentage based: Clients are charged with a percentage fixed on the actual amount, which is collected every month. The percentage varies according to the current market rate, conditions made by the doctors, and the number of patients.
  • Claim based: This is a fixed percentage on the amount of claimed bills. This method is the most-preferred by both the parties.
  • Time based: This is charging a specific rate per hour of work. This process is the least preferred by clients, and hence, is applicable to providers with a low billing rate.

Advertising and Promotions

Most medical billing processes are advertised through client referrals, networking, or by direct contact. There can also be a direct approach to doctors with a specific specialization, and also those who are personal friends.


If you set up your medical billing work from home, then a license is required. State governments require certain businesses or industries to obtain professional/occupational licenses which differ from occupation to occupation.
Many city and county zoning and planning agencies require all home-based businesses to get a Home Occupation Permit. Without these licenses, no home-based business can be started.