How to Start a Medical Billing Company

If you have ever thought of working for yourself, but are not sure what to do, then starting you own medical billing company could be something that you should look into. Medical billing and coding is changing rapidly as the use of technology takes over from the old paper trail. Due to this it is easier to outsource this function, and this means that there are many opportunities for individuals to train and work as medical billers and coders or open their own medical billing company.

There are many medical billing software programs available today, which make the task of medical coding and billing far easier and enables billers and coders to work off-site, either in coding and billing agencies or in their own medical billing company, very often from home. These electronic programs are very user-friendly and make the task of detailing and organizing submissions to insurance companies in order to receive fees for medical services provided much easier.

Medical billing can easily be done at home, even part-time, but to run a medical billing business one needs to know not only what the medical codes are and how they need to be utilized, but also how to run and manage a business, how to market the business, how to get clients, and possess sufficient financial savvy to enable them to turn a part-time business into a successful medical billing company.

Medical coding and billing are two separate actions, and are generally done by separate people, although they do cross over in quite a few ways. The training for both is very similar, and you may want start off doing coding and then switching over to billing so that you understand everything about both sides of the medical coding and billing business. You could prefer to concentrate on doing both for one or two small clients or purely concentrate of the medical billing side.

Services Provided by a Medical Billing Company

As a medical billing professional you will be required to provide the following services:

  • Enter patient information into the billing software
  • Prepare claims to insurance companies such as Medicaid, Medicare, and other third party insurance’s such as Humana, Blue Cross Blue Shield, Great West, etc.
  • Mail patients’ statements, either electronically or by surface mail
  • Post payments onto the patients’ accounts in the billing software
  • Follow-up on unpaid insurance claims, appeals and denials
  • Conduct “soft” collection on non-paying patients, which would entail sending out “past due” statements and making phone calls to delinquent clients
  • Handle all patient billing inquiries
  • Submit detailed reports regarding number of patients per month, statements sent, the state of delinquent accounts etcetera

In order to be able to do all of the above, one needs to have specific knowledge and skills. The best way to acquire this knowledge is to do a coding and billing course, even though this is not required by law. These courses can be done on-campus or in the comfort of your own home via online courses. There are many certificate, diploma and associate degree courses on offer, and it is up to you which one you want to do.

Federal Requirements for Medical Billing Companies

Although one does not require a academic qualification or certification in order to do medical coding and billing, there are some requirements that the state has that all in the medical industry have to comply with, including medical billing companies.

Although a medical billing company does not provide services directly to patients, they are privy to patients’ sensitive health information, and it is necessary to follow certain rules of privacy and confidentiality:


The Health Insurance Portability and Accountability Act (HIPPA) was promulgated by the U.S. Congress in 1966, and sets the standards for ensuring patient privacy.

  • Under HIPAA, patient information must be kept strictly confidential.
  • Health-care claims that are dealt with by billing companies contain vital personal patient information and details about the medical services rendered
  • Employees who deal with the inbound claims must adhere to HIPAA standards or they could be charged with breaking a federal law. This means they may not discuss any patient information outside of work or disclose patient information incorrectly
  • It is incumbent upon every medical billing company to include HIPAA confidentiality rules in their Standard Operating Policies and Procedures to ensure that staff members understand the significance of this federal requirement and the penalties of disclosure.


According to the National Health Care Anti-Fraud Association’s 2007 statement, in excess of 4 billion health care claims were processed in the United States. With these high figures it is more than likely that some of them are fraudulent. A fraudulent health-care claim is a claim that does not entirely accurately represent the services rendered to a patient.

  • Medical fraud is a federal crime, and can result in financial penalties and/or a stint in jail if committed.
  • Altering or manipulating information on a medical claim such as the date, the time of the appointment, the medication that was supplied, or the type or duration of treatment rendered, is considered fraud and abuse.
  • A medical billing company must understand what constitutes fraud and abuse, and inform their employees and ensure that they act ethically at all times
  • Annual training seminars on ethics can ensure that all employees are familiar with what fraud is and what the serious consequences of committing fraud are

The Fair Debt Collection Practices Act

According to the U.S. Federal Trade Commission, the Fair Debt Collection Practices Act “prohibits debt collectors from using abusive, unfair or deceptive practices” to collect outstanding debts.

  • Some patients may not be able to pay for their medical services if their claims are denied.
  • Under the act, a medical billing company may not harass or threaten a patient in order to collect outstanding fees
  • Medical billing companies may implement alternative means of collecting outstanding monies, such as negotiating a repayment schedule that is financially more comfortable for the patient

Education Recommendations

Although the law does not require you to have a degree in order to do medical coding and billing, it is highly recommended that if you intend to open a medical billing company you do the associate degree course in medical billing and coding, as it is a more intense course, and the fact that you have a degree in your subject matter will sit well with future clients.

It is important when choosing which course to do and which educational institution to do your course through that you ensure that the program covers the following very important aspects of medical coding and billing:

  • An introduction to the national diagnostic and procedural coding systems
  • Basic medical terminology – this should cover the key systems of the human body, and building medical words with prefixes, suffixes, and combining forms
  • Basic claims processes for medical insurance and third party reimbursements – this should cover general billing and optical scanning guidelines; tracing delinquent claims; how to manually file claims; and reporting diagnoses: ICD-9-CM codes
  • CPT – Introduction, Guidelines, Evaluation and Management Specialty Fields such as Surgery, Radiology and Laboratory
  • How to complete and use common insurance forms
  • Medical office computer software training
  • Procedures and steps to appeal denied claims
  • Understanding Medicare
  • Understanding an insurance claim’s life cycle – how to develop the claim; procedures you should use for patient interviews

How to Start a Medical Billing Company

Now that you know what the legal requirements are and what the tasks are that you will be required to perform in order to do medical billing, all that is left is that you set things in motion.

Follow these simple steps and you will have your own medical billing company in no time:

  1. Enroll in a course to study medical coding and billing. You can either do this on-campus or via an online course, whichever suits you best. You can either start off with a certificate or diploma which are short course, so that you can get the business up and going quickly and then do an associate’s degree, or go straight for the associate’s degree.
  2. Decide on a name for your business; ask friends to help and come up with a name that sounds professional and is easy to remember
  3. Make sure that you apply for a license to operate a home-based business if required in your area.
  4. Purchase any office equipment that you may need and set up your home-office. You will need a computer, printer, a modem, a desk, and a comfortable chair in which to work.
  5. Purchase the medical billing and coding software if necessary (some programs provide you with this software as part of the course), and it may also be prudent to invest in some business management software.
  6. Get business cards and fliers made and drop these off at medical clinics, doctors’ offices, and with any other health care professionals in your area; do not forget your own personal physician, which may be a good place to start. Get to know the office managers in the various medical offices, as they will be important to your business.

Medical billing and coding is growing by leaps and bounds, and even thought there are many big, established firms, there is more than enough scope for the small business person to open a small home-based medical billing company. The only thing that can limit you from being an entrepreneur and working for yourself from home in this expanding field is you yourself, and it is one of the few businesses with huge potential that can be started for literally next to nothing.