Quick answer: The most important questions cover whether they charge on net collections or gross charges, who specifically handles your account, what their clean claim and net collection rates are, what their contract exit terms are, and whether your data is yours if you leave. Vague answers to any of these are red flags — a confident billing company answers each specifically and in writing.
Most practices that have a bad experience with an outsourced billing company say the same thing afterward: the warning signs were there in the sales conversation, but they did not know what to listen for. These 12 questions force billing companies to be specific, put numbers on record, and explain their processes rather than their marketing.
This is the first question because the answer changes the real cost significantly. Gross charges applies the percentage to everything you bill — before write-offs and contractual adjustments. Net collections applies it only to what is actually collected.
On a 6% fee: gross charges on $200K billed = $12,000 | net collections on $130K collected = $7,800
That is a $4,200/month difference on what sounds like the same percentage — over $50,000 per year. The right answer: "We charge on net collections." Any hesitation is a red flag.
Not the company — the person. Ask for the name and background of the individual assigned to your account, whether they specialize in your specialty, and what happens to your account if that person leaves. Large billing companies often operate on a ticket-queue model where whoever is available handles your claims. That structure makes accountability impossible.
What the right answer looks like: A named account manager with a background in your specialty, a direct contact number, and a clear coverage plan for when they are unavailable.
A clean claim is accepted and paid on first submission with no rejection or rework. The industry benchmark is 95%. Below 90% means avoidable errors are costing you real money. The key detail is asking specifically for your specialty — a cardiology biller and a family medicine biller have very different rates if the coder does not know cardiology's modifier and bundling rules.
Net collection rate is the truest single measure of a billing operation — of the money you were entitled to collect, how much actually came in. The industry expectation is 95%+. Below 90% means money that was earned is being abandoned. Ask whether this is reported to clients monthly.
A billing company that does not give you monthly reporting on specific metrics is one you cannot hold accountable. Ask exactly what the report includes and request a sample. The metrics that matter: days in AR, clean claim rate, denial rate by reason, net collection rate, first-pass resolution rate, and aging AR by bucket (0–30, 31–60, 61–90, 90+ days).
Ask specifically: How quickly is a denial acted on after receipt? Who decides whether a denial is appealable? Who writes the appeal letter? Do you categorize denials by root cause and fix the upstream process? The last question separates billing companies that react to individual denials from those that reduce denial volume over time by fixing what causes them.
Ask directly: What is the contract length, termination conditions, and exit penalty? Red flags include 3-to-5-year lock-ins, liquidated damages clauses (exit penalties calculated on projected future revenue), and automatic renewal with short opt-out windows. These are common enough that you must read the contract before signing.
Your billing data belongs to your practice — always. Ask specifically: what data is provided, in what format, and within what timeframe if you terminate. Some billing companies on proprietary platforms delay data export or charge fees for it. Establish this in writing before you sign.
A BAA is a HIPAA-required contract between your practice and any vendor that handles protected health information. Any billing company that handles your claims handles PHI. A billing company that does not sign a BAA is not HIPAA-compliant and exposes your practice to liability. Ask for the BAA before signing the service agreement — not after.
If switching from an existing billing company, ask how the new biller handles open AR from your previous setup. Do they work the open claims from the previous company? What data do they need to do that? How do they ensure nothing falls through the cracks at the cut-off date? This answer tells you how experienced the company is with transitions — and how much they think about the details that do not benefit them directly. For a full transition framework, see our guide on how to switch medical billing companies without losing revenue.
Credentialing — enrolling and maintaining provider status with payers — directly affects whether claims get paid. Ask whether it is included or priced separately, and specifically about CAQH maintenance, revalidation tracking, and what happens when a new provider joins or a location is added. Credentialing lapses cost practices $18,000–$95,000 per affected provider annually. Read our full guide: how a single credentialing lapse costs up to $95,000 per year.
References from practices in your specialty, similar in size, with at least six months of history should be readily available from any billing company confident in its performance. A company that deflects — citing confidentiality, offering general testimonials, or promising to follow up and never doing so — is telling you something about how it communicates once you are a client.
A billing company that answers all 12 questions specifically, puts the answers in writing, provides a sample monthly report, and connects you with a reference is behaving like a company confident in what it delivers. One that deflects, speaks in generalities, or makes claims it cannot back with data is showing you exactly how it will behave once you are a client.
Whether they charge on net collections or gross charges. The same percentage fee produces dramatically different real costs depending on which basis it is applied to. Net collections — what is actually received after payer adjustments — is the correct basis. Gross charges inflates the fee by applying it to amounts that will never be collected.
Yes. Any vendor that handles protected health information (PHI) — which includes any medical billing company — is a business associate under HIPAA and must sign a BAA. Using a billing company without a BAA exposes your practice to HIPAA liability regardless of whether a breach occurs.
Multi-year lock-ins, liquidated damages clauses (exit penalties based on projected future revenue), automatic renewal with short opt-out windows, and any clause that restricts or charges for export of your own billing data at termination.
Bring these 12 questions to a conversation with Vector MB
Vector MB charges on net collections, assigns a named account manager to every client, reports monthly on every metric above, operates on month-to-month terms, and signs a BAA at onboarding. All answers are in writing before you sign anything. Learn about our medical billing and coding services.
