How to Negotiate Fees With a Medical Billing Company

Partnering with a medical billing company can greatly enhance a healthcare provider’s financial performance, reduce administrative burdens, and ensure regulatory compliance. However, one of the most crucial aspects of outsourcing billing services is the negotiation of fees. Understanding what goes into billing service costs and how to negotiate effectively can save your practice thousands of dollars annually without compromising quality.

Whether you're a small clinic or a multi-specialty group, knowing how to approach negotiations with transparency and confidence is key. In this article, we’ll explore the different pricing models, what affects billing company fees, and practical tips on how to negotiate favorable terms with a professional provider like Thrive Medical Billing.

Why Fee Negotiation Matters

Outsourcing to a medical billing company is an investment in your practice’s financial health. However, without clear fee structures or negotiation, you could be overpaying for services or signing a contract that doesn’t meet your needs. Effective fee negotiation allows you to:

• Align services with your budget

• Define performance expectations

• Reduce unnecessary costs

• Gain clarity and transparency

• Ensure a profitable long-term partnership

Understanding your value as a client and the scope of services you need is the foundation of successful negotiation.

Common Pricing Models Used by Medical Billing Companies

Before negotiating, you must understand how medical billing companies charge for their services. The three most common pricing structures are:

1. Percentage-Based Model

This is the most popular model. The medical billing company takes a percentage (typically between 4% to 9%) of your monthly collections.

Pros:

• No upfront cost

• Aligns the billing company’s incentive with your revenue growth

• Ideal for small or medium-sized practices

Cons:

• Can become expensive as revenue grows

• May not be cost-effective for high-volume providers

2. Flat Fee Model

You pay a fixed monthly fee for services, regardless of collections volume.

Pros:

• Predictable budgeting

• Cost-effective for high-volume practices

• Encourages operational efficiency

Cons:

• May not scale well for practices with fluctuating revenue

• Could result in reduced motivation for billing performance

3. Hybrid Model

Combines both flat fees and percentage-based fees, or includes additional charges for specific services like A/R recovery or credentialing.

Pros:

• Flexible and customizable

• Can be tailored to your practice needs

Cons:

• Requires clear contract language to avoid hidden fees

At Thrive Medical Billing, clients receive transparent proposals with multiple pricing options to ensure the most cost-effective solution tailored to their practice size and specialty.

Key Factors That Affect Billing Fees

When negotiating, it’s important to understand what influences the fees a medical billing company may charge:

1. Practice Size and Volume

Larger practices with higher claim volumes may negotiate lower percentage rates due to economies of scale. Smaller practices may pay slightly higher rates to offset lower revenue volume.

2. Specialty Complexity

Some specialties, like cardiology or oncology, involve more complex coding and billing requirements. This may affect pricing due to the additional expertise and time required.

3. Scope of Services

Are you only outsourcing claims submission, or do you also need insurance verification, A/R follow-up, credentialing, and reporting? The more services included, the more the company may charge—but bundling services can often lead to discounts.

4. A/R Management

If your practice has a high volume of aging claims or denials, the billing company may charge additional fees to clean up and manage your Accounts Receivable.

5. Technology Integration

EMR/EHR compatibility, custom reporting tools, and patient portals may involve setup fees or ongoing costs. At Thrive Medical Billing, these integrations are included or discounted as part of long-term contracts.

How to Prepare for Negotiations

Before approaching a medical billing company, do your homework:

1. Assess Your Needs

Identify what services you need—full-service billing, coding, claim follow-up, patient collections, etc. This helps you understand what you’re negotiating for.

2. Know Your Numbers

Understand your current collections, claim volume, average reimbursement, and denial rates. Share this data to give the billing company a clear picture of your operations.

3. Benchmark Industry Rates

Research average billing fees for practices similar to yours. This gives you leverage and ensures your expectations are realistic.

4. Review Current Contracts

If you’re switching from another billing service, analyze what’s working and what isn’t. Use this information to request improvements from your new provider.

Tips for Negotiating Fees With a Medical Billing Company

1. Request Tiered Pricing

Ask for a tiered pricing structure based on your revenue or claim volume. As your practice grows, your billing rate could decrease.

Example:

• 7% on collections up to $50,000

• 6% for collections between $50,001–$100,000

• 5% beyond $100,000

Thrive Medical Billing frequently offers tiered options for growing practices.

2. Bundle Services for Discounts

If you're purchasing multiple services—like billing, coding, A/R recovery, and patient collections—ask for a bundle discount.

3. Negotiate Trial Periods

Before signing a long-term contract, request a 60- to 90-day trial period. This allows you to evaluate performance before committing.

4. Clarify What’s Included

Ensure the following are included or clearly priced:

• Claims submission and tracking

• Denial management

• Payment posting

• Reporting and analytics

• Credentialing

• Patient statements and follow-ups

Thrive Medical Billing provides detailed breakdowns to avoid surprise fees and ensure all expectations are clear.

5. Discuss Performance Benchmarks

Link payment terms to performance standards, such as:

• Claim acceptance rate

• Denial resolution time

• Payment turnaround

• Increase in collections over time

This builds mutual accountability and ensures quality service.

6. Review Exit Terms

Make sure your contract has a fair exit clause. Avoid excessive termination fees or data access restrictions. Reputable companies like Thrive Medical Billing provide easy transitions and support even during contract conclusion.

What Sets Thrive Medical Billing Apart?

At Thrive Medical Billing, fee negotiations are approached with full transparency and flexibility. They tailor packages to your needs, specialty, and goals. Here’s what you can expect:

• Flexible pricing models—percentage, flat fee, or hybrid

• No hidden fees—all charges outlined upfront

• Dedicated account manager—who works directly with you during negotiations

• Free consultations to assess your billing health and create a custom proposal

• Specialty billing expertise—from family practice to surgery centers

Their goal is not just to win your business, but to build a partnership that grows with your success.

Final Thoughts

Negotiating with a medical billing company is not about driving the price as low as possible—it’s about finding a fair, sustainable partnership that delivers maximum value. A well-negotiated agreement gives you predictable costs, clear deliverables, and peace of mind.

With rising costs and tighter margins in healthcare, every percentage point matters. By taking the time to understand pricing models, assess your needs, and approach negotiations strategically, you can secure better terms for your practice.

And if you’re looking for a partner that combines competitive pricing with unmatched expertise, Thrive Medical Billing is the name you can trust. From transparent pricing to top-tier performance, they ensure your practice is set up for long-term financial health and operational success.