Losing Profit to Your Billing Partner? Warning Signs Your Medical Billing Company Isn’t Performing
Discover warning signs your medical billing services company may be hurting revenue, including slow follow-up, rising denials, and weak accountability.
Your billing partner makes a direct impact on collections, cash flow and profitability. Not all the time, when revenue begins to decline, the issue is with payer reimbursement or patient obligation. All of these factors can hurt your practice without you knowing about it, A/R follow-up issues, delayed posting of payments, preventable denials, and misposting of payments.
If you have an expert medical billing services company, your revenue cycle process should be more consistent. It should identify problems early, give you good data to explain how things are performing, and fix them before the problem becomes significant enough to lose money. The simplest question is: Is your billing partner taking care of your revenue or is it creating additional work and lost income?
The following are warning signs that you can use to measure your answer to that question.
Your Collections Are Declining Without Lower Patient Volume
When patient volume and services stay constant, a decline in collections needs to be investigated. One of the first things to check is the monthly amounts, payments, contractual adjustments and outstanding A/R. A proficient medical billing services company should explain how collections get modified. The explanation should relate specific financial results to issues that include claim denials, delayed submissions, payer behavior and unworked accounts.
Check these metrics every month:
- Gross collections
- Net collection rate
- Monthly charges
- Monthly payments
- Contractual adjustments
- Days in A/R
- A/R aging
- Charges-to-collections trends
Avoid taking anything on face value that prices were lower. You must have some information regarding the reason why the revenue loss was made and what is being done to fill the gap.
Your Accounts Receivable Keeps Getting Older
As the A/R balance goes up, it could be a sign of a larger problem in the A/R process. Unpaid claims don’t pay the bills, cover your expenses, make investments or help you grow your practice. In addition to managing claims, your medical billing services company ought to be proactive in managing accounts that have yet to be paid out. Analyze balances in 60, 90, 120 and 150+ day periods.
Older claims should be given special attention as these claims may have been delayed and are more likely to be at risk as a result:
- Timely filing problems
- Missed appeal deadlines
- Lost documentation
- Unresolved payer requests
- Patient balance confusion
- Write-offs
A/R monitoring is based on the aging category and attention should be paid to older balances, which MGMA recommends. Another significant finding from its benchmarking guidance is that practices should strive to achieve better performance with their newer A/R and reduce balances of 120 days or more. If a medical billing services company continually misses high dollar claims, it should be reviewed.
3Denials Keep Increasing Without Root-Cause Analysis
While it may be alarming that a high denial count is present, the real issue is, why are claims being denied? Failing to resolve the same type of claim more than once doesn’t help the problem. Your medical billing services company should analyze denials and look for trends in denials by payer, provider, procedure, location and even what kind of denial it was.
Common categories include:
- Eligibility errors
- Authorization problems
- Coding issues
- Medical necessity denials
- Duplicate claims
- Missing information
- Timely filing
- Documentation problems
According to MGMA, single-specialty practices had an 8% aggregate denial rate for their initial submission in 2022 and 2023. This is a benchmark and not a generic benchmark for all specialties and payer mix. The key question is if your denial rate is unchanging, increasing and controllable.
Claims Are Submitted Late or Inconsistently
Revenue timing is impacted each day from service delivery to clean claims. Although a practice has high patient volume, it may still be facing cash flow issues due to delayed claim acceptance into the payer system. An effective medical billing services company will have data on the backlog of claims on physicians by location, payer and service type. It should also be able to identify whether the delays are due to coding delay, documentation delay, charge entry delays, eligibility delays, and internal approvals delays.
It is important to pay attention to the charge lag since it indicates the efficiency of service transition to the billing process. For individual specialties, the 2022 charge-posting lag from MGMA was 7.75 days, while it was 3.8 days in 2019. The range is variable for each practice. The most significant red flag is a downward or upward trend that is going on continuously without any adjustments.
Your Billing Company Cannot Explain Its Numbers
You can’t see if your practice is money-making unless you read each issue of that monthly claim count report. Reporting is necessary that links billings to the actual revenue performance.
Your medical billing services company should provide clear visibility into:
- Charges submitted
- Payments received
- Adjustments
- Denials
- A/R aging
- Days in A/R
- Collection rates
- Claim status
- Outstanding appeals
- Patient balances
It is always crucial to understand the distinction between activity reporting and outcome reporting. “2,000 claims submitted” takes into account activity. “$850,000 billed, $720,000 collected, $64,000 in preventable denials” provides you with information to help you make decisions. The best medical billing services company should also afford you the benefit of understanding what the numbers indicate and what should be done.
Your Team Keeps Fixing Billing Errors
Your internal team shouldn’t be working many hours to address issues that come from an external billing system. That’s one of the primary motivators for outsourcing revenue-cycle work.
If your medical billing services company has a tendency to generate more work, monitor your employees’ frequency of contact with:
- Corrected claims
- Eligibility problems
- Payment posting corrections
- Patient balance disputes
- Missing documentation requests
- Coding clarification
- Claim status follow-up
These tasks are at a hidden expense. Reach in your employees are lost on rework rather than on patient support, scheduling, operations, and practice growth. The ideal medical billing services company must ease the burden on administrative staff, not pass off the responsibility for resolving issues back on them.
Payment Posting Is Slow or Inaccurate
Payment posting is no longer just about bookkeeping. Late or incorrect posting will affect your financial reports’ reliability and may result in an imbalance of A/R. Faulty adjustments in contracts can also cause patient balances to be incorrect. That is an unnecessary source of questions and extra admin work for the patient. Your medical billing services company should have a recon process when e-remits, paper checks are issued as well as denials, adjustments, refunds and patient responsibility.
Ask these questions:
- How quickly are payments posted?
- How are posting errors identified?
- Who reconciles deposits?
- How are unidentified payments handled?
- How are incorrect adjustments corrected?
- How often are posting reports reviewed?
Accurate posting gives leadership a clearer view of the practice’s actual financial position.
Your Billing Partner Has No Clear Denial Recovery Strategy
Denial management has nothing to do with working a denial queue. In an effective process it will expressly detail why the denial was made, inform on the actions that are available, offer documentation and ensure follow-up of the outcome. It is important for your medical billing services company not to mix up denial recovery with denial prevention. Recovered addresses claims of the past. Denial Prevention minimizes the amount of similar denials entering the system.
A useful denial strategy includes:
- Identify the denial category.
- Determine the root cause.
- Assign responsibility.
- Correct the workflow.
- Submit appeals or corrected claims.
- Track recovered dollars.
- Note if the denial is repeated.
Uniform denials definitions as well as denial metrics should be developed by HFMA to be used as benchmarks. To persist in denial if they come around on a monthly basis is not a strategy.
Communication Becomes Difficult When Revenue Problems Appear
The bigger the communication issue, the more costly the problem becomes, particularly with revenue already tight. When your team can’t figure out the ownership of an old claim or unclaimed denial in a timely manner, you just wasted some time. Your medical billing services company should obviously have definitive control on monetary issues. There should be a clear escalation path to go through with high dollar claims, older A/R, payer escalation and other denial trends that are noted.
Look out for these red flags:
- Delayed responses
- Different answers from different representatives
- No clear account owner
- Unresolved escalation requests
- Missing claim documentation
- Repeated requests for the same information
Good communication does not mean receiving more emails. It means getting accurate answers quickly enough to make decisions.
Your Billing Partner Focuses on Volume Instead of Results
High activity does not automatically mean high performance. A vendor might submit thousands of claims while collections continue to decline. A medical billing services company should connect operational activity with financial outcomes. Measure what happened after the work was performed.
For example:
| Activity Metric | Better Performance Question |
|---|---|
| Claims submitted | How many were accepted and paid? |
| Denials worked | How many dollars were recovered? |
| Payer calls | How much A/R was resolved? |
| Appeals submitted | What percentage resulted in payment? |
| Claims corrected | Did the same errors stop recurring? |
| A/R accounts touched | Did aging balances actually decline? |
This approach shifts the conversation from “How much work did you do?” to “What financial result did that work produce?”
Your Contract Costs More While Performance Gets Worse
This does not always mean that such a low charge is going to be the total cost. The fact that a lower-cost vendor may leave claims uncollected can cost your practice more than a higher-cost vendor who will make every effort to collect them.
Don’t judge a medical billing services company by what they say their fee is. Discuss the financial implications of:
- Lost claims
- Delayed payments
- Unworked A/R
- Preventable denials
- Incorrect adjustments
- Internal staff rework
- Poor patient balance management
- Missed appeal opportunities
Your real cost of billing includes both vendor fees and revenue leakage.
It doesn’t always pay to go with the lowest percentage. It’s selecting the model that allows for a sustainable revenue performance with a reasonable total cost.
Your Billing Company Does Not Adapt to Your Practice
Payer mix is a characteristic of each practice with respect to the distribution of payers. A consistent procedure that is successful in one organization could cause issues in another. Your medical billing services company must be aware of the factors which affect your revenue cycle. These could be related to a specialty code, Medicare, prior authorization, documentation, payer policies or telehealth billing.
Ask your vendor:
- Your highest-volume payers
- Your most common denial reasons
- Specialty-specific coding requirements
- Authorization requirements
- Medicare billing rules
- Commercial payer policies
- Your provider documentation workflow
A vendor that treats every practice the same may overlook the operational details affecting your profitability.
How to Measure Your Medical Billing Company’s Performance
Finally, you’ll learn how to assess the performance of your medical billing services company. A performance review should be based on trends and not just on numbers. Review monthly results and track variations in collections, A/R, denials, claim lag and payment processing. Your medical billing services company ought to be able to offer the data that’s required for this review without you having to put in a lot of manual effort from your staff.
Industry Benchmark Table
The figures given below are guidelines only and not standards. Specialty, payer mix, service type and practice model have an impact on performance.
| KPI | Industry Reference | Warning Sign |
|---|---|---|
| First-submission denial rate | MGMA reported 8% aggregate for single-specialty practices | Persistent increase above historical performance |
| Clean claim rate | Higher is better; many RCM programs use 95% as a practical target | Frequent manual corrections or falling acceptance |
| Days in A/R | Lower is generally better; practices should compare against specialty peers | Persistent increase without volume explanation |
| A/R over 120 days | MGMA reported a 13.54% multispecialty median in 2021 | Growing older A/R without documented recovery |
| Charge lag | MGMA reported 7.75 days for its 2022 single-specialty aggregate | Increasing lag month over month |
| Net collection rate | Establish a practice-specific baseline and monitor the trend | Sustained decline without clear payer explanation |
| Denial recovery | Track dollars recovered and recovery rate | High denial workload with weak financial recovery |
| Payment posting | Monitor speed and accuracy against internal standards | Delayed posting or repeated reconciliation errors |
The following measures are recommended by MGMA to track: A/R days, A/R aging, denial rates, collection ratios, and reimbursement performance. HFMA also considers clean claim rate and charge lag as valuable indicators of performance in the revenue cycle. Avoid evaluating one KPI separately. If, for instance, a vendor has been reducing days in A/R due to writing off difficult balances, then the collection rate should be reviewed as well as the adjustments themselves.
When Should You Replace Your Medical Billing Company?
Not all of the errors need to necessitate a change in vendors. There are lots of payer rules, coding requirements, documentation and payment processes involved in billing and isolated errors do occur. However, if poor performance is a habit, then the decision changes.
Consider replacing your medical billing services company when you repeatedly see:
- Declining collections without a clear explanation
- Growing aged A/R
- Rising preventable denials
- Poor reporting
- Slow communication
- Repeated billing errors
- Weak denial recovery
- Unclear accountability
- No measurable improvement after corrective plans
- Contract terms that prevent meaningful performance management
Make note of the issues prior to any changes. Examine financial trends, claim level examples, communication records and agreed performance expectations.
What to Look for in a New Medical Billing Services Company
It only makes sense to replace a vendor if the next vendor is going to rectify the weaknesses identified. Begin on measurable skills instead of promises of sales.
A strong medical billing services company should offer:
- Transparent financial reporting
- Specialty-specific billing knowledge
- Dedicated account management
- Proactive denial management
- A/R follow-up
- Timely claim submission
- Accurate payment posting
- Eligibility and authorization support
- Payer-specific knowledge
- HIPAA-compliant processes
- Defined performance benchmarks
- Regular performance reviews
- Clear escalation procedures
Inquire from potential vendors about what they consider success to be. Their response should contain financial effects, as well as workload data. The main thing you should do before signing a contract is to get sample reports as well. This indicates if the provider provides sufficient information for managing performance.
Questions to Ask Before Switching Billing Providers
Switching billing vendors is a risk of transition, if done too quickly. Open claims/appeals coordination, patient balances/historical A/R and patient payer portals.
When it’s time to transition to another medical billing services company, follow these steps:
- How do you calculate net collection rate?
- How do you manage A/R over 90 days?
- How do you identify recurring denial causes?
- What financial reports will we receive?
- How do you monitor claim submission delays?
- Who handles payer escalations?
- How quickly do you respond to account issues?
- How do you measure denial recovery?
- How will you handle our existing A/R?
- What happens to open appeals during transition?
- What KPIs will you review with us?
- How do you protect billing and patient data?
The goal is not to hear the most impressive sales presentation. The goal is to determine whether the provider has a measurable operating system.
How to Switch Medical Billing Companies Without Disrupting Revenue
Changing billing vendors creates transition risk if the process is rushed. Open claims, appeals, payer portals, patient balances, and historical A/R all require careful coordination.
Before switching your medical billing services company, complete these steps:
1. Review the Existing Contract
High value claims, aging balances, pending appeals, denials, and accounts close to timely filing deadlines.
2. Audit Open A/R
Review termination conditions, notice periods, ownership of the data, outstanding balances, and transfer obligations.
3. Document Open Work
Know how historical claims, payment information, patient balances, and A/R information will flow among vendors.
4. Secure System Access
Verify access to bills software, clearinghouse accounts, and payers’ portals, remittance systems, reports, and other documentation.
5. Establish Data Transfer Procedures
Determine how historical claims, payment records, patient balances, and A/R information will move between vendors.
6. Define Responsibilities
Make documented job handoffs for both outgoing and incoming teams. This ensures that claims don’t “drop through the cracks” in the transition.
7. Monitor the First 30 to 90 Days
Monitor collections, claim acceptance, denial rates, A/R aging, charge lag, payment posting and outstanding accounts before and after implementation.
A controlled transition helps safeguard revenue and enables leadership to know if the new provider is performing.
Why Billing Care Solutions Is Built Around Revenue Performance
At Billing Care Solutions, medical billing isn’t just about claims processing, it’s about maximizing revenue performance. Its aim is to support practices in having better control of the processes that affect collection. This includes things like claim submission, denial management, A/R follow-up, payment posting and performance reporting. Medical billing services companies should have a much more clear picture of where revenue is being stunted or lost for practice leaders.
Billing Care Solutions’ emphasis is on tying billing activity to measurable financial results. It means problem solving, monitoring performance and solving revenue-cycle problems before they continue to impact profitability. If the vendor you’re using is asking more questions than you are getting answers, then it’s time to take a look at your billing performance. Discuss revenue-cycle requirements with Billing Care Solutions and outline the areas of your billing process that are costing too much.
Conclusion: Your Billing Partner Should Protect Your Bottom Line
Don’t measure the worth of a billing vendor with the number of claims it processes. It should be evaluated based on the financial results, visibility, accountability and support for operations it offers. When collections are down and no new patients are added, look into the revenue cycle. These items such as increasing A/R, recurring denials, delayed claims, inaccurate posting of payments, and poor reporting, are issues that cannot be ignored as they could grow into a bigger financial issue.
A top-tier medical billing services company should offer your bottom line protection and provide you with measurable processes as well as performance reporting. If their provider isn’t able to give you any information about the numbers or show any significant improvement, look at the relationship in terms of objective information. Use a billing operation that doesn’t work against your profitability, but does.
