How do I know if my biller is losing me money?

Most practices find out their biller is losing money the same way: cash dips, someone asks why, and the monthly report still looks fine. The report looks fine because it shows what was collected, not what should have been. This page shows how to check the gap yourself, with the data you already have a right to see.

What are the signs your medical billing company is losing you money?

The clearest sign is money that should have come in and never shows up anywhere: not in deposits, not in AR, not in a denial log. Watch for these eight patterns.

1. Your biller can’t name your top three denial reasons. In the average practice we review, the top three denial reasons accounted for 58% of denied dollars. A biller who can’t name them is not working them.
2. Denials disappear instead of getting reworked. In our billing reviews, 19% of denied claims were never reworked or appealed. They leave AR as quiet write-offs.
3. AR past 90 days keeps growing. 27% of total AR sat past 90 days in the average practice we reviewed. Every month a claim sits there, it gets harder to collect.
4. Write-offs have no reason codes. A contractual adjustment should carry a CO group code from the payer’s remittance. A write-off with no code is a decision someone made, and you should know who.
5. Paid claims are never checked against your contracts. Underpayments against contracted rates appeared on 7.8% of paid claims in our claim audit.
6. Reports arrive as PDFs, never as raw data. Summary PDFs can’t be reconciled. Aging by payer, the denial log and remittance files can.
7. Timely filing write-offs show up at all. Medicare gives you one calendar year from the date of service to file. Missing that window is almost always a process failure.
8. Nobody on your side owns the numbers. In our 2026 survey, 42% said nobody owns denial follow-up full time. If your biller doesn’t own it either, nobody does.

Which medical billing KPIs show whether your biller is doing its job?

Five medical billing KPIs tell you almost everything: net collection rate, days in AR, first-pass denial rate, clean claim rate and the share of AR past 90 days. Use the HFMA MAP Keys formulas so your numbers mean the same thing as the benchmarks you compare them to.

Net collection rate

Payments collected divided by what you were contractually owed (charges minus contractual adjustments) for the same period. This is the single best test of whether your biller collects what you earned. Across our clients, net collection rate rose from 91.4% to 97.8% over the first six months, so a practice sitting near 91% is leaving real money uncollected.

Days in AR

HFMA defines net days in AR as net AR divided by average daily net patient service revenue. Our client median fell from 54 to 33 days within 120 days of onboarding. Days in AR matters less for lost money than for slow money, but a rising number is often the first visible symptom.

First-pass denial rate and clean claim rate

Denial rate is claims denied divided by claims remitted. MGMA reports an 8% single-specialty rate for claims denied on first submission. Clean claim rate is the share of claims accepted on first submission with no edits. Both measure how well your biller prevents problems, not how well it cleans them up afterward.

Cost to collect

HFMA defines cost to collect as total revenue cycle cost divided by patient service cash collected. For an outsourced practice, that is your billing fee plus any staff time you still spend on billing, divided by collections. A low fee with a low collection rate is not a bargain: 4% of a smaller number can cost more than 6% of a larger one.

Revenue cycle KPIs your biller probably doesn’t report

Ask for three extra numbers most summary reports leave out: the dollar value of denials written off without an appeal, the count of paid claims below contract, and timely filing write-offs by month. These are where leakage hides, because they never show up as a problem on a collections report.

How do you audit your medical billing company, step by step?

A medical billing audit of your own biller takes about a day if you pull the right files. You are not re-coding charts here. You are following the money from charge to deposit and looking for dollars that stop moving. For vendor due diligence and HIPAA checks, see our guide on vetting a billing company for compliance; this audit is about revenue.

1. Pull 90 days of 835 remittance files. The 835 is the HIPAA standard for payment and remittance advice, and your clearinghouse or payer portals can export them. These are the payer’s record, not your biller’s.
2. Match remittances to bank deposits. Payer EFT deposits arrive in the CCD+ format with a trace number that ties each deposit to its 835. Any payment on an 835 that never reached your account, or reached it and never got posted, is a finding.
3. Sort every adjustment by group code. X12 defines four: CO (contractual obligation), PR (patient responsibility), OA (other adjustment) and PI (payer-initiated reduction). CO adjustments larger than your contract allows and OA adjustments with no follow-up both need an answer.
4. Trace a sample of denials. Pick 30 denials older than 60 days. For each, check whether it was corrected, appealed or written off, and when. Claim adjustment reason codes (CARCs) tell you why each was denied.
5. Check 30 paid claims against your fee schedules. The average underpaid claim was short by $38 in our audit. Small per claim, large across a year.
6. Read the aging report by payer, not in total. A total can look stable while one payer’s balance ages quietly.
7. Check enrollment dates. Medicare requires revalidation every 5 years. Credentialing lapses delayed payment for 1 in 12 providers added in the prior year in our reviews.
8. Follow patient balances to a statement. Take 20 PR adjustments from the 835s and confirm each one reached a patient statement. Patient responsibility that never gets billed is money your biller left behind.

Write each finding down with the claim number, the payer and the dollar amount, then send the list to your biller and ask for a written answer within a week. Be ready for findings that cut the other way too. If the audit turns up a Medicare overpayment, federal rules give you 60 days from identifying it to report and return it, with a 6-year lookback, and that duty sits with your practice, not your biller.

How much can a leaky biller cost a practice? A worked example

Take a practice with 3 providers that sends 900 claims a month, expects about $99,000 in payments ($110 per claim on average) and collects $90,000. Apply the rates we see in billing reviews and our claim audit:

• Unworked denials: denied dollars at a 14.2% denial rate come to $14,058. If 19% are never reworked, that is $2,671 a month.
• Timely filing: timely filing causes 6% of denials, or $843 here, and only 4% of those were recovered, so $810 is lost.
• Underpayments: of about 772 paid claims, 7.8% (60 claims) come in short by $38 each: $2,280.
• Patient balances: practices lost 3.1% of collections to patient balances written off before a second statement: $2,790.

That comes to about $8,551 a month, or roughly $102,600 a year. Some of these overlap, so read it as an order of magnitude. For comparison, a billing fee of 5% of $90,000 is $4,500 a month. The leakage is almost twice the fee.

In this example, patient write-offs cost $2,790 a month, unworked denials $2,671, underpayments $2,280 and timely filing losses $810.

What causes the denials your biller should be preventing?

Most denials start at the front of the cycle, before a claim is ever coded. In our claim audit of 61,400 claims, eligibility and coverage errors caused 24% of denials, coding and modifier errors caused 21%, and missing or invalid prior authorization caused 17% of denials.

Two smaller causes point straight at the biller’s process. Duplicate claim denials made up 9% of denials, mostly from resubmitting instead of correcting. Timely filing caused 6% of denials. Neither should happen in a well-run billing office. If your denial log is full of duplicates, your biller is resending claims instead of fixing them. Our guide to denial reasons and appeals covers how to work each type.

What mistakes do practices make when checking their biller?

• Trusting gross collection rate. Collections divided by charges depends on your fee schedule, not your biller. Use net collection rate.
• Looking at totals only. A payer-level problem, such as one plan denying a common code, disappears inside a practice-wide average.
• Reading the biller’s report instead of the payer’s. The 835 and your bank statement are the source of truth. The biller’s report is a summary of them.
• Not knowing your own contract. In our survey, 44% could not name the fee basis in their current billing contract. You can’t judge incentives you can’t see.
• Ignoring how the fee is set. On a percentage-of-collections contract, a $40 underpayment earns the biller about $2 to chase, so small balances get skipped. Ask how the biller handles claims under a set dollar amount.
• Waiting too long. Practices that reviewed AR ageing monthly carried 12 fewer days in AR. A yearly look finds problems after the filing windows have closed.

Should you fix your biller, bring billing in-house or switch?

Fix first if the gaps are narrow and your biller responds with data within a week. Switch if the biller can’t produce raw files, can’t explain write-offs, or the audit shows the same leaks month after month. In our survey, 52% of practices that switched vendors cited missing denial reporting as the main reason.

In-house is not automatically cheaper. Fully loaded in-house billing cost 7.9% of collections for practices under $2M, based on 96 practices that shared payroll data, compared with 3% to 6% of collections for most outsourced full-service billing. When a new team takes over, the fastest wins come from preventing denials and cleaning up old AR:

Across 38 client practices, first-pass denial rate fell from 14.2% to 6.1% and clean claim rate rose from 89.6% to 97.3% within 90 days, while net collection rate climbed from 91.4% to 97.8% over six months.

If you do switch, have the new team work old AR right away. We recovered 61% of the dollar value of claims aged 90 to 180 days that practices had stopped working. That is the denials and AR recovery work most transitions skip. If you are comparing vendors, our directory of medical billing companies by state and our checklist for choosing a billing company as a small clinic cover what to ask. And if you are weighing a full handoff, see what an RCM company can and can’t fix or our full-service medical billing model.

Which medical billing performance metrics separate a healthy biller from a leaky one?

Ask your biller for each number below, calculated from the payer’s data. If the number is worse than the warning line, ask for the claim-level detail behind it.

Dental

Dental leakage hides in narratives and fee schedules. Dental practices wrote off a median $23,400 a year in restorative claims denied for missing narratives or X-rays, and 12% of paid PPO dental claims came in below the contracted fee. Ask your biller for a PPO underpayment report by carrier, and check how many frequency denials were appealed: frequency limitation denials made up 19% of dental denials in our claim audit.

Physical therapy

Check units and modifiers first. 8-minute rule unit errors appeared on 9% of therapy claims, across 4,300 claims, and the KX modifier was missing on 21% of Medicare therapy claims past the threshold. Both cost money without ever showing up as a denial trend. Pull 20 Medicare claims past the threshold and count the KX modifiers yourself. More on physical therapy billing.

Behavioral health

Session codes and carve-outs drive most losses. 18% of 90837 claims had documented session time under 53 minutes, which is a compliance risk as much as a revenue one. Claims sent to the medical plan instead of the behavioral health carve-out caused 12% of behavioral health denials. Solo therapists carried a median 41 days in AR, against 29 for group practices. See our notes on billing for therapists.

Ambulance

Ambulance AR ages faster than most. Ambulance agencies carried 37% of AR past 90 days in our reviews, and Physician Certification Statements were missing or unsigned on 18% of non-emergency transports. Ask your biller how many PCS-related denials are open right now. At King-American Ambulance, days in AR went from 71 to 38 once this work was owned.

Primary care

Primary care loses money it never bills. Chronic care management time went uncaptured for 58% of eligible patients, and problem-oriented visits billed with an annual wellness visit lacked modifier 25 on 12% of claims. Primary care practices carried a median 36 days in AR, so a number well above that is worth a question. More on primary care billing.