How to start a medical billing and credentialing agency

A medical billing company gets its clients paid for the care they already gave: clean claims out, payments posted, denials worked and patient balances billed. Add credentialing and you also control the step that decides whether a provider can be paid at all. This guide covers both.

What a billing agency does

A practice hires a billing company to run the steps between the visit and the money in its bank account, usually called the revenue cycle. In a typical engagement you:

• Verify eligibility before or at the visit, so the practice knows who pays and what the patient owes.
• Enter charges and prepare claims from the practice’s visit notes or superbills, and check each claim for errors before it goes out.
• Submit claims to payers through a clearinghouse, and follow the acknowledgments and rejections that come back.
• Post payments from electronic remittance advice (ERA, the 835 file) and paper EOBs, line by line.
• Work denials and underpayments: correct and resubmit, appeal, or write off with the client’s approval.
• Follow up on accounts receivable, oldest and largest balances first.
• Bill patients for their share: statements, payment links and payment plans.
• Report to the practice every month: what was billed, collected, denied and still outstanding.

Why combine billing and credentialing

Claims for a provider who is not yet enrolled with a payer, or whose enrollment lapsed, get denied no matter how clean they are. A billing company that also does credentialing can see enrollment problems before they turn into denials, start enrollments for new providers early, and set up the electronic billing pieces (EDI, ERA and EFT) for each payer as soon as a provider is approved. Many agencies start in one and add the other because clients ask. Our guide on how to start a credentialing business covers the credentialing side in detail.

Your services menu

Write it down before you sell. A clear menu keeps scope disputes small. Common offerings:

• Full-service billing: charge entry through patient statements and monthly reporting.
• A/R clean-up: a one-time project to work an old backlog of unpaid claims.
• Denial management only, for practices that bill in-house but fall behind on denials.
• Patient billing: statements, payment plans and answering patients’ billing questions.
• Credentialing and payer enrollment: new providers, CAQH upkeep, recredentialing and revalidation.
• Coding, if you or a teammate are certified to code the specialty.
• Eligibility and prior authorizations, for specialties that need many of them.

State what you do not do as clearly as what you do: for example, you do not decide what to document or code without the provider, and you do not chase balances already sent to a collection agency.

Who your clients are

Small and mid-sized independent practices are the usual market: solo physicians and nurse practitioners, therapy and behavioral health groups, chiropractic, physical therapy and specialty clinics. Larger groups and hospitals usually bill in-house or use large firms.

Picking a niche helps. Each specialty has its own codes, payer rules and denial patterns. Behavioral health, for example, involves time-based codes, frequent telehealth and many small commercial plans. Knowing one specialty’s payers well makes you faster and makes referrals easier.

Certifications

No federal license is required to run a medical billing company, and certifications are optional. They are still worth considering, because they give you a structured body of knowledge and something concrete to show clients:

• CPB (Certified Professional Biller) from AAPC: focused on the revenue cycle, claims, payer and patient billing and collections.
• CPC (Certified Professional Coder) from AAPC: focused on assigning CPT, HCPCS and ICD-10-CM codes. Useful if you will code visits, not only bill them.
• CBCS (Certified Billing and Coding Specialist) from the National Healthcareer Association (NHA): an entry-level credential covering both billing and coding.

Each has its own exam, fees and continuing education to stay current; check the certifying body for current details. If you also offer credentialing, NAMSS offers the CPCS and CPES certifications described in our credentialing start guide.

Legal and business setup

• Business entity and EIN. Many service businesses form an LLC or corporation to separate business and personal liability, and get an EIN from the IRS for taxes and banking.
• Insurance. Ask a broker about professional liability (errors and omissions) coverage, because a billing mistake can cost a client real money, and cyber liability coverage, because you will hold patient information. Some clients will ask for proof of both.
• Client agreement. Define the services, the fee and what it is calculated on, what the practice must provide and by when (charges, documentation, payer correspondence), who approves write-offs, how either side ends the agreement, and how records are handed back.
• Collection rules. Sending statements for a practice is ordinary billing work. Collecting past-due debts is regulated: the federal Fair Debt Collection Practices Act and some state laws apply to debt collectors, and some states license collection agencies. If you plan to pursue overdue patient balances beyond regular statements, ask your attorney what applies in your state, or refer those accounts to a licensed collection agency.

HIPAA: you are a business associate

HIPAA’s definition of a business associate expressly includes someone who performs billing or claims processing for a covered entity (45 CFR 160.103). In practice that means:

• A signed Business Associate Agreement with every client before you receive any patient data. HHS publishes sample BAA provisions.
• BAAs with your own vendors that store or transmit that data: billing software, clearinghouse, email, file storage.
• The HIPAA Security Rule safeguards in your own business: a written risk analysis, access controls, encryption, multi-factor sign-in, training and an incident and breach process.
• Only the minimum access each person needs, and accounts removed when staff leave.

Clearinghouse and payer enrollment

Before you can bill electronically for a client, three separate enrollments usually have to be in place for each provider (or group) and each payer. Plan for them in every new client’s onboarding, because they take weeks:

1. Clearinghouse account. The clearinghouse routes your claims (837 files) to payers and returns acknowledgments, rejections and remittances. You sign up as the billing company and add each client.
2. EDI (claim) enrollment per payer. Some payers accept claims from any clearinghouse; many, including Medicare, require the provider to enroll for electronic claims. For Medicare this is done with the provider’s Medicare Administrative Contractor (see CMS’s electronic billing and EDI pages), and the provider authorizes you or your clearinghouse to submit on its behalf.
3. ERA and EFT enrollment per payer. Electronic remittance advice (the 835) tells you what was paid and why; electronic funds transfer puts the money in the practice’s account. Medicare EFT uses the CMS-588 form, signed by the provider or an authorized official, and ERA is set up separately with the contractor. Commercial payers each have their own enrollment portal or use a payment vendor.

Payments should go to the practice’s bank account, not yours. Your fee is invoiced separately.

Software you will need

At minimum: a practice management or billing system to enter charges and track claims, a clearinghouse, secure document storage, a way to track credentialing and enrollment if you offer it, and a way to invoice your own clients. Every piece that holds patient information needs a BAA.

Many new agencies use a different system for each job, or work inside each client’s own EHR. That works, but you end up re-keying data and building reports by hand. Look for software built for agencies: separate records per client, a client portal, and reports you can send without copying numbers between tools.

Pricing your services

There is no standard price list, and published figures come mostly from vendor and industry articles rather than formal surveys. Use them as a sanity check, then price from your own costs and the time each client really takes.

• Percentage of collections. The most common model: you earn a share of what the practice actually collects, so you are paid for results. Figures quoted by a billing software vendor in June 2026 put it at about 4% to 10% of collections, with most practices paying 5% to 7% (Carepatron, June 2026). Define exactly what “collections” means: insurance and patient payments, net of refunds, in the month they are posted.
• Per claim. A fixed fee for each claim you submit, quoted by the same vendor at $3 to $10 per claim (Carepatron, June 2026). Simple to explain, but you are paid the same whether the claim is paid or denied, and follow-up work needs its own price.
• Flat monthly fee, per provider or per practice. Predictable for both sides; set limits on volume and revisit when the practice grows.
• Hybrid. A base monthly fee plus a lower percentage, or a percentage with a monthly minimum, so small months still cover your costs.

Fees vary by specialty, claim volume and the services included, so treat any published range as a rough check and price from your own cost per claim; our guide on how to price credentialing services shows how to build a price from your costs and scope.

Price one-time work separately: onboarding and enrollment set-up, A/R clean-up on old claims (often a higher percentage of what you recover), and credentialing, which many agencies charge per application or per provider. Our guide on how to price credentialing services covers that side.

Finding your first clients

• Your network. Practices, providers and office managers you have worked with already know your work.
• New practices. A practice that is opening needs credentialing and billing set up at the same time, which is exactly the combined offer.
• Practices billing in-house and falling behind: growing A/R, an office manager doing three jobs, a biller who left.
• Credentialing agencies without a billing service, and the reverse. Referral partners are a common early source of work.
• A niche. Being known for one specialty or region makes you easier to recommend.

Before a client signs, ask for a recent A/R aging report and a denial summary. They tell you how much clean-up work you are taking on, and give you a baseline to report improvement against.

Your first 90 days

1. Form the business, get the EIN, open a business bank account and buy E&O and cyber coverage.
2. Write your service menu, prices, client agreement and BAA.
3. Do your HIPAA risk analysis and write your security policies; set up encrypted devices and multi-factor sign-in.
4. Choose your software and clearinghouse, and sign their BAAs.
5. Build a standard client intake: practice and provider details, payer list, enrollment status, EDI, ERA and EFT status per payer, and system access. Our client onboarding checklist is a starting point.
6. Start the clearinghouse, EDI and ERA enrollments for your first client right away; they are the slowest part.
7. Decide your monthly report: charges, payments, collection rate, denials and A/R by age, and send the first one on time.
8. Track how long each payer takes to pay and to process enrollments for you. That history becomes your best planning and sales tool.

Common mistakes

• Starting work before the BAA is signed. Signing it is the first step, not paperwork for later.
• Underpricing to win the first clients. Low percentages leave no room for follow-up, which is where most of the money is recovered.
• Vague scope. “Billing” without a list of services leads to unpaid extra work, especially old A/R and patient phone calls.
• Forgetting enrollment. Claims for a provider who is not enrolled, or without ERA set up, stall no matter how clean they are.
• Letting denials pile up. Appeals and corrections have payer deadlines. Work denials weekly, with the deadline on each one.
• Payments into your own account. Insurance and patient payments belong to the practice; keep your fee on a separate invoice.
• No reporting. Clients who never see the numbers leave at the first problem. A monthly report is part of the service.

Sources

• AAPC: Certified Professional Biller (CPB) and Certified Professional Coder (CPC).
• National Healthcareer Association: Certified Billing and Coding Specialist (CBCS).
• eCFR: 45 CFR 160.103, definition of business associate.
• HHS: Sample business associate agreement provisions and the HIPAA Security Rule.
• CMS: Electronic billing & EDI transactions and the CMS-588 EFT authorization agreement.
• Carepatron, How much do medical billing services cost? (June 2026; figures quoted by a billing software vendor).

Sources checked October 15, 2026.