How does medical billing outsourcing work from week to week?
Outsourcing medical billing means the company takes each claim from your charge to a posted payment while you keep the clinical record and the bank account. Four handoffs make it run: charges out, claims to payers, money back to you and reports to a named reviewer.
Written by Salman Saeed, CEO and Co-Founder · Reviewed by a Certified Medical Coder · 
In short: outsourced billing runs on a routine, with named jobs for your office on a daily, weekly, monthly and yearly cycle. Keep payments going to an account in your name, reconcile deposits against posted remittances monthly, and ask for the company's own claim review each year.
How does medical billing outsourcing work?
You keep the visit, the patient and the bank account, and the billing company takes the claim from your charge to a posted payment. In practice that is four handoffs: charges go out, claims go to payers, money comes back to you, and reports come to the person who reviews them.
This post describes the routine after the contract is signed, day by day and month by month. For the decision itself, see is it safe to outsource medical billing and the guide to choosing a billing partner.
What does your office do, and what does the company do?
Each cadence below has one job for your office and one for the company, and one check that tells you the handoff worked. Assign the office tasks to named people, since an unowned task is the usual reason an outsourced arrangement slips.
| Cadence | Your office | Billing company | How you know it worked |
|---|---|---|---|
| Daily | Finish documentation, enter or send charges, answer coding questions the same day | Check eligibility, review codes, send claims, work new denials | The charge count you sent matches the claim count they report |
| Weekly | Review the denial and rejection list, supply anything missing, such as a records request | Post payments, chase unpaid claims, report what is waiting on you | Nothing on the list is waiting on you for more than a few days |
| Monthly | Compare posted payments with bank deposits, read the report pack, approve write-offs | Deliver the report pack with definitions, explain variances | Deposits and posted remittances agree, or the gap has a named cause |
| Quarterly | Trace a paid claim and a denied claim from end to end | Provide the claim-level records | Every step has a date and an owner |
| Yearly | Review who has access, re-read the agreements, ask for the company's claim review results | Show its annual review of a sample of claims | Access list matches current staff, review results are in hand |
Nothing in the table needs a billing background, only a calendar and a named person for each row. Put the monthly and quarterly dates in the same calendar as payroll, so they are treated as routine work and not as a favor to the billing company. The what-a-billing-company-does post lists the proof to ask for at each step of the claim.
Where does the money go?
It goes to an account in your name. A payer sends payment as an electronic funds transfer, and the explanation arrives separately as the remittance advice, the X12 835. Under 45 CFR 162.1601, that transaction carries the payment, the information about the transfer of funds, and the explanation of benefits or remittance advice, all from the health plan to the provider.
For Medicare the rule is stricter on who may be paid. Under 42 CFR 424.73(b)(3), payment to a billing agent is always made in the name of the provider, and the agent must act under payment disposition instructions that the provider may modify or revoke at any time. The CMS-588 EFT authorization form asks for bank documents in the legal business name of the provider, supplier or entity only. Your company needs read access to remittances, not control of the account.
Other payers set their own enrollment forms for electronic payments, so ask each one who may sign and which account it will pay. The safety guide covers account ownership in more depth.
What does a monthly reconciliation look like?
Illustrative figures for a small practice. Total posted from the company's remittance report is compared with the bank.
Most differences are timing like this one. A difference that has no cause by the next month's reconciliation is the one to raise in writing with your account lead. The reconciliation takes one person under an hour once the report format is agreed.
What slows an outsourced arrangement down?
- Charges and documentation that arrive late or incomplete, so the claim waits on a question the clinician has not answered.
- Coding queries left open over a weekend or a vacation.
- A new provider or location added to your practice without telling the company, so claims go out under the wrong or an unenrolled provider.
- Removing a user from your EHR but not from the company's access list, or the reverse.
- No named person who reads the reports, so errors in the report pack go unnoticed.
Most of these are small office habits, not billing problems. Fix them and the arrangement works on its own schedule. A missed Medicare filing limit, 1 calendar year after the date of service under 42 CFR 424.44, is the cost of leaving them alone.
What should the yearly review cover?
Ask the company for the results of its own claim review. OIG's compliance guidance for third-party billing companies recommends, at a minimum, that a valid statistical sample of claims be reviewed annually, both before and after submission, by a qualified expert in the applicable coding process. It is voluntary guidance, so ask what the company actually does.
Then check the paperwork. Confirm the business associate agreement is on file, since 45 CFR 164.502(e) requires satisfactory assurances in a written contract before a business associate handles patient information. Compare the access list with current staff, and re-read the term, notice and data return clauses in the contract checklist. The detailed HIPAA duties are in the HIPAA for billing vendors rule page.
How we handle the routine
We sign a Business Associate Agreement with every client, use two-step login on every system and keep encrypted automatic backups. Claims go out within 24 hours of charge entry and denials are worked within 48 hours, and you receive reports on the results. See the revenue cycle management service, the internal medicine billing page or book a call.
- 45 CFR 162.1601, Health care electronic funds transfers (EFT) and remittance advice transaction · eCFR
- 42 CFR 424.73, Prohibition of assignment of claims by providers · eCFR
- CMS-588 Electronic Funds Transfer Authorization Agreement · CMS
- 42 CFR 424.44, Time limits for filing claims · eCFR
- Compliance Program Guidance for Third-Party Medical Billing Companies (63 FR 70138) · HHS Office of Inspector General
- 45 CFR 164.502, Uses and disclosures of protected health information: general rules · eCFR
We check every rule, code and deadline against the official source. See our editorial policy.
Common questions
Straight answers from the team that does the work.
Ask a billing lead directly. A 20-minute call, Monday to Friday, 9am to 5pm Eastern.
01How does medical billing outsourcing work?
You send charges and documentation, the company checks eligibility, codes, sends claims, posts payments and works denials, and payers pay into an account in your name. You review reports weekly and monthly and compare deposits with posted remittances. You keep the clinical record and the bank account.
02What does my office still have to do after outsourcing billing?
Document visits, send charges the same day, answer coding questions, supply records for denials, approve write-offs and reconcile deposits each month. Someone must read the reports. The work that leaves your office is claim building, posting, denial work and follow-up.
03Who owns the bank account when billing is outsourced?
You do. Medicare pays a billing agent only in the provider's name and under instructions the provider can change or revoke at any time, under 42 CFR 424.73(b)(3). Keep deposits going to an account in your legal business name and give the company read access to remittances.
04How do I check that an outsourced billing company is working?
Compare the charges you sent with the claims they report, compare posted remittances with bank deposits monthly, and trace one paid and one denied claim each quarter. Ask for the company's own annual claim review. A step with no date or owner is a finding.
Talk to a billing lead.
A 20-minute call about your payers, volume and setup. Monday to Friday, 9am to 5pm Eastern.