How to Start a Medical Billing Business: User Guide

Running a home-based business comes with many benefits: no daily commute, being your own boss, flexible schedule and comfort.

But you should make sure that billing and coding is something you want to do before you invest your time, money and effort into creating a medical billing business.  Getting the business up and running is not easy and you’ll need a few things such as a thorough certification course. 

However, a successful medical billing business is lucrative and worth it. You can decide how much you want the company to grow and you’ll enjoy a healthy work-life balance.

So here is all the information you need.

Medical Billing Business: What Is It?

Private care professionals, hospitals and medical centers all bill people for services and appointments. The services include treatments, testing, procedures, check-ups, among others. 

Medical billing involves translating the services into a bill as well as sending and following up with insurance companies. 

But why do healthcare providers and doctors outsource the billing process?

Medicaid, Medicare and health insurance companies require the medical bills to be processed under strict provisions and rules via extensive software. 

According to these rules, coders and billers have to submit the claims with particular codes unique to the medical procedure. This ensures that the claims billing process is organized and streamlined. 

But that’s not all.

Revenue cycle procedures include:

  • Compliance
  • Billing
  • Management
  • Collections
  • Data analytics
  • Coding
  • Payer contracting
  • Provider enrollment

Medical coders and billers are responsible for carrying out the revenue cycle tasks. They monitor the payment actions of the patient from the first appointment to the final bill payment. 

Coding and billing specialists use their billing and coding abilities as well as their extensive knowledge of what insurance companies require to help healthcare providers earn revenue in time. 

Using medical reports, they can process accurate bills at a much faster pace than healthcare professionals.

Faster processing translates to decreased accounts receivables and more cash flow for the care providers. 

Should You Start a Medical Billing Business?

Here are some of the skills you’ll need:

  • Management skills
  • Data entry skills
  • Time 
  • Focus
  • Organization
  • Dedication
  • Self-drive

These skills are necessary if you want your business to be a success. 

Next, decide whether you are interested in the healthcare industry.

Would it be fun for you to go through medical records in order to generate claim codes?

Would you enjoy working with insurance companies and healthcare providers and get paid for your services?

Would you be frustrated if claims are rejected or complications arise? How about un-collectibles?

Are you interested in learning about and understanding medical procedures?

Do you have any experience working in the medical field? 

The medical billing process can be complicated and frustrating in the U.S. So having passion is important.

Are Your Services Needed?

Before you start investing money and time, see whether there are people who need third-party billing where you live. 

Talk to healthcare providers and doctors and ask the following questions:

  • Do you get and bill many patients daily?
  • Do you outsource any of your processes? If yes, which ones?
  • What software programs would you recommend?
  • Do you handle your billing yourself or do you outsource?

Note: hospitals and nursing homes also outsource medical billing services. 

By asking the questions above, you will:

  • Know the number of claims to expect from potential clients.
  • Get tips on the best software.
  • Get an idea of whether your services are needed.

How Much Does It Cost to Start a Medical Billing Business?

If you are starting a solo-run business you’re in luck because the process is easy and you don’t need a lot of money. The startup costs range from $2,000 to about $10,000.

When you’re running your business from home, you don’t have to worry about training or hiring employees, getting office space and other overheads. 

Billing software is what will cost you. The prices typically range from about $100 to maybe $10,000. It depends on software features, number of providers, number of employees and company size. 

Here are other necessary office supplies:

  • A good computer ($500 to $3,000)
  • A fax machine and a printer ($150 or more)
  • Software licensing ($1,500 to $3,500 per user)

Consider the following costs too:

  • IT support (about $100 per hour)
  • Ethernet wires and switches ($50 to $100 per wire)
  • Backup hard drives ($50 to $150 per drive)
  • Software upgrades ($500 to $3500 per year)

If your business grows to become a large or medium company, you will need professional in-house systems which may cost about $50,000. 

Training and servers can cost $3,000+ each.

A: How to Start Your Medical Billing Business

The process can be extensive and each process is important. 

1: Get a Medical Role for Hands-On Experience

Working in the medical field, even for a few months, is highly recommended before you start your business. You could get a job in a hospital or medical office’s billing department. 

This allows you to experience the billing process and the medical industry in general first-hand. 

Additionally, this step will help you build a network and make it easy to get clients once you start your business. 

2: Medical Billing Training

Is this training necessary?

Medical billing is not like other invoice types in that:

Before you send the bill to the patients, they have to go through the insurer.

Medical bills usually require specialized descriptions and codes.

Different medical procedures can have similar names. You will need in-depth knowledge when it comes to health insurance terms and medical terms. 

Most colleges offer certification courses in-person and online. The course can take 9 to 18 months to complete. It requires 18 credits.

Primary Coding Manuals and Certification Exams

Make sure you pick a program that includes all the important exam preparations and code manuals. 

Here are three primary code manuals that should be covered:

  • Healthcare Common Procedure Coding System: HCPCS
  • International Statistical Classification of Diseases and Related Health Problems: ICD-10-CM
  • Current Procedural Terminology: CPT

You should also be ready to take exams after the course, which are offered by these three coding and billing businesses:

  • American Academy of Professional Coders (AAPC) – Certified Professional Coder’s board exam
  • American Health Information Management Association (AHIMA) – Certified Coding Associate
  • American Medical Billing Association (AMBA) – Certified Medical Reimbursement Specialist exam

3: Beware of Scams

There are tons of medical billing opportunities for entrepreneurs looking for help to start their third-party billing business.

A company, for instance, a list of clients, proper electronic billing tools and training to get you started. 

While it sounds too good to be true, some of the companies are legit. But there are also tons of scams. 

If this is the route you want to take, you should be careful and do your research.

According to the Federal Trade Commission, you should check to see whether there are unresolved complaints about the company. Check the Better Business Bureau, the consumer protection agency and the Attorney General’s office in your state.

4: Create Your Business Plan

First, determine the kind of business you’d like to start. Would you like a partnership with someone else or a sole proprietorship?

Do you want your business to be a large corporation or an LLC?

Talk to a certified public accountant so you understand the option that is right for you. 

Then ask yourself the following questions:

What does the business need to get started?

What will you name the business?

How much income do you expect to earn?

What will be the initial costs?

Do you know your target audience?

5: Other Essentials

You also have to accomplish the following before you start your business. 

  • Start an LLC
  • Get insurance for your business
  • Get the necessary licenses and permits
  • Set up accounting
  • Open a business bank account
  • Register for taxes
  • Get a business license

B: What You Require to Get Your Business Up and Running

There are a few things that are necessary if you want to smoothly run your medical billing business. 

1: Clearinghouse

This is a financial institution that will facilitate and process the transactions. For your medical billing business, it is the company that will electronically receive and transmit claims billing. 

How much will the service cost?

The cost typically starts from $100 or less to several hundred dollars. It depends on the services they offer. Other clearinghouses will charge you an extra fee every time you add a new account or medical care provider. 

2: Medical Billing Software

This is the costliest part of starting your business. 

You can have customized medical billing software made for you if you’d like specific features and software for your business. 

The cost of billing software ranges from a few hundred dollars to about $10,000. Some have features such as lead generation and marketing plans while others are pretty basic.

The good news is that most software companies offer free trials. So you can try your top choices before you invest a lot of money. 

3: Other Forms and Equipment

Here are other important things you will need:

  • A good computer and a reliable internet connection
  • A fax machine, printer and phone
  • Medical insurance forms
  • Reference books (HCPCS Expert 2000, CPT and ICD-10 coding books)
  • A good work environment

If you start to get more clients, you may also want to get invoicing software and electronic billing.

C: Picking a Billing Software

The pricing of medical billing software will vary depending on your business size and the software features. 

Check out some of the popular billing software.


This one is a cloud-based management system. Its billing features include health insurance verification, code and charge entry, claims scrubbing, medical claims processing and much more.


  • Large practice: $12,425/month
  • Mid-sized: $4,990/month
  • Solo practice: $499/month

CareCloud EHR 

This is another cloud-based management system. Its integrated billing app features invoice history, health insurance verification, charge and code entry, claims scrubbing, claims processing and more.


  • Large Practice: $8,725 to $15,725/month
  • Mid-Sized: $3,490 to $6,290/month
  • Solo Practice: $349 to $649/month

Kareo EHR

This one is a mobile and web available software that uses cloud technology to manage patient billing. Its billing features include dunning management, health insurance verification, claims scrubbing and processing, etc. 

  • Large Practice: $7,500/month
  • Mid-Sized: $3,000/month
  • Solo Practice: $300/month


This is an affordable, efficient and simple cloud-based software for your billing business. Its billing features include remittance advice, health insurance verification, claims scrubbing, claims processing and more. 


  • Large Practice: $4,125 to $8,625/month
  • Mid-Sized: $1,650 to $3,450/month
  • Solo Practice: $165 to $345/month

Note: the pricing for individual businesses may vary based on features, number of clients and number of users. 

D: Charging Clients

You have a number of options when it comes to charging your clients. 

Hourly fees: these are useful for businesses that offer complementary services. In the U.S, the average medical billing clerk employee earns $18 an hour. Independent contractors earn more. 

Per-claim fee: with this method, you charge a fixed fee for every submitted claim, paid or unpaid. 

Percentage of collections: this method is the most popular and has the highest returns.

Tracking Billing Hours

If you decide to go with the hourly approach, Time Doctor is great for tracking work hours. It also monitors your team and the websites they visit while they’re clocked in. 

E: Income Potential

Just like with any other business, the size and success of the company will determine your income. Factors like how you run the business, whether or not you specialize and your partners are also important. 

F: Specialize Yourself

If you specialize in one or two fields, you can increase your knowledge and boost your income. 


Your credibility largely depends on your knowledge and expertise of medical services and the industry. You will also be using fewer billing codes.  

The more knowledgeable you are, the more care providers will want to hire you. 

Consider the following areas of specialty:

  • Psychiatrists
  • Dentists
  • Family practitioners
  • Chiropractors
  • Veterinarians
  • Cardiologists

Note: just because a healthcare provider charges a high copay doesn’t mean you will earn more with them. Those with a low copay usually have a high patient billing volume. This means more insurance claims for you.

G: Create a Strong Marketing Plan

Your business can’t grow itself. 

The medical billing industry is heavily saturated. If you want to succeed, you will need a thorough marketing plan. 

The biggest challenge will be acquiring your first client. But you will have an advantage if you have worked with healthcare providers below and maintained positive relationships.

Personally visiting healthcare providers and giving them your marketing material is a great way to put yourself out there and establish relationships.  

You can also create business cards and a website for your business as well as offer incentives to attract clients. 

Check out the following incentives suggestions:

  • A consultation to assess whether they comply with OIG and HIPAA.
  • Analyzing their accounts receivables and Superbill to why claims get rejected.
  • One free claim process for them to see how your services save them time.
  • A code review. Check whether they have incorrect or out-of-date codes and how much revenue these codes have cost them. 
  • An assessment to show the benefits of hiring a third-party billing business. 

If you are having trouble getting your first client, offer other incentives and maybe a discount for a while. This could be something like 20% off the first month.

H: Network and Grow

You can easily achieve your goals if you know the right people. You also want positive personal testimonies and word-of-mouth referrals. They are great for business. 

Network with other medical professionals by talking to the medical providers you already know, joining professional organizations or getting a job in a medical office where you can meet different healthcare providers. 

If you expand your network, you will have higher chances of getting new clients.

I: Bonus: Alternative Business Opportunity

Alternatively, you can buy an existing medical business. 

You can do this via a broker or privately. You will avoid the challenges that come with starting a business from scratch. You can get a higher income without the tedious initial work. 

But before you invest your money, ask yourself the following questions:

  • How many clients does the business have?
  • What payment method do they use?
  • What do they pay?
  • Are they under any contract?
  • Have they been customers for long?

Final Thoughts

Starting a billing business can be fun and rewarding. 

But know that working from home requires organization, dedication and commitment. On the upside, being your own boss has its benefits. 

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