The Ultimate Guide to Medical Billing Software

The Ultimate Guide to Medical Billing Software

Medical billing is a repetitive and error-prone task. Automating this task can help practices code claims accurately, verify the patient’s insurance coverage, increase collections, post payments, and provide reports.
Billing is an integral part of revenue cycle management, a process that is notoriously cumbersome and labor intensive. A more modern approach allows greater efficiencies, paperwork reductions, more timely follow-ups, and more accurate coding.
Staff will often find that medical billing software can help in avoiding errors and providers can see their collection rates increase.
Sophisticated reporting tools can help practices gain insights on financial flows and identify problem areas. Knowing which types of claims are most often rejected, which payers take the longest to reimburse, and other observations can help in making more informed decisions and allocating resources more effectively.

Primary Features of Medical Billing Software

Medical billing service can make a practice more efficient by handling your accounts in a HIPAA approved manner. The standard features of such systems are generally as follows.

Submitting Claims

A billing service takes a record of the procedures performed and submit claims to the proper clearinghouses. Also, patients can automatically receive reports and periodic invoices for the services they receive.

Tracking Claims

Claims are much easier to track when centralized into a system that automates many routine duties. Central tracking of accounts is a valuable feature to any practice.

A good billing service will follow up on rejected claims, alert the office for information that needs updating, and guide the response. Additionally, claims that need to be forwarded to collections can be handled within the system.


Automated reports from a medical billing system are useful for a practice to ensure that all claims are accounted for and reduces the chance that revenue is misplaced.
Billing software typically can generate reports on practice income and unpaid/denied claim information. This can assist practices in researching causes of problems.

Other Services

Billing software can also integrate with practice management software for patient scheduling and Electronic Health Record (EHR) systems for dynamic patient and data management.

Important Considerations

When choosing a service as critical as medical billing for your practice, there are a number of important considerations that should be evaluated. This guide will give you some points of reference by which to compare different services.

Integrated or Stand-alone

An integrated system will connect with, and may be part of, other medical practice software. Crucial medical practice software includes EHR systems and practice management software.

Many vendors offer all three solutions in a single integrated package which can be a convenient setup.

However, many practices have long had medical billing software as stand-alone solutions and have a more modular system. Some vendors provide stand-alone medical billing solutions or as an option on a broader suite of tools.

Deployment Strategies (Cloud vs. Local)

Medical Billing software is typically deployed locally on machines in-office or hosted on the cloud with a web-based interface. Cloud solutions tend to use a subscription payment model but have lower upfront costs.

Locally deployed systems tend to have a higher immediate cost, but require subscription payments less typically.


Medical software is a security critical enterprise. Patient data must be protected from unauthorized access. Any medical software service must adhere to HIPAA regulations and safeguard patient confidentiality.

Local Access Control

Different levels of security and access should be able to be specified. Also, is the information stored in an encrypted format?

Remote Access Control

Does the software company store information on their servers? Do they allow their employees to access these records? If they do, under what circumstances and are these interactions recorded?

You should also have an understanding of how long they retain patient data if you should choose to change software vendors.

Digital Security

Web-based communication should use SSL encryption with at least a 128-bit key. Check the URL bar in your browser for the padlock symbol when visiting their site.

If another method of communication is used, ask for the steps they take to make the communication secure. Unencrypted email is not a secure method of transmitting medical information.

Physical Security

The security of your data while held by the service is also essential. Ask if they ensure the safety of the information on their site’s physical premises and data centers.

Medical software companies should be careful about their employee screening and hiring process.


Local Deployment

There are two primary models for medical billing software. Local and cloud-based. Local installations usually have a higher upfront cost but lower long-term costs. The long-term costs depend on the inclusion and duration of service contracts.

Cloud Deployment

Cloud-based medical billing software is accessed over the internet, usually by a web browser. The initial costs can be very low, or even free. These vendors often charge a subscription fee for continuing service. This practice, known as Software-as-a-Service (SaaS), is becoming increasingly common and can provide pricing that scales with the needs of the individual practice.

Fee Structure

Medical billing software can be structured in different ways, in addition to a initial deployment or subscription fee. Choose the one that makes the most financial sense for the type of practice you have.

Percentage of Claims Submitted

The service would charge a percentage of the total amount collected from payers. This generally excludes co-pays, deductibles, and other payments made in person. The advantage of this method is that the cost of the billing system directly correlates with practice income.

However, this does not monetarily incentivize the billing company to follow up on rejected claims. Make sure the software vendor has a good reputation before selecting this option.

Percentage of Claims Completed

Similar to claims submitted, claims completed would charge a percentage of the total amount collected from payers.

However, in this case, it would generally include copays, deductibles, and other payments made in person. This method is that the cost of the billing system directly correlates with practice income.

The advantage here is that the billing company is now directly incentivized to follow up on rejected claims as their percentage is tied directly to earnings of the practice, rather than just submitted claims.

Per Claim

The service might charge a flat rate for each claim submitted. This can make sense for offices that have low numbers of claims submitted or a large average value per claim.

There can also be a certain number of claims per month that are covered by the base subscription with certain types of billing costing extra. Make sure you are aware of what they are charging for and what your expected monthly costs will be.

Many billing companies are changing to this structure because some states have made percentage billing illegal.

Learn more about Medical Billing Software systems