Outsourcing Medical Billing: Advantages & Disadvantages for Healthcare Practices

Did you know that the healthcare industry reported around a 25% increase in the denial rate in 2025? And $25 to $117 costs healthcare practices to invest in fixing those claim denials to get back payments? For medical providers and practices, whether small or large, it’s a significant amount they lost due to those denials. It has happened because practices are juggling between the roles – billing, patient care, and financial stability.

This not only costs their revenue but also affects their mental health, because they lose revenue continuously, which hurts their financial health. While losing money, providers couldn’t focus on treating patients effectively.

And that’s why outsourcing medical billing services could help you recover that loss and stop leaving money on the table in 2026. As automation, technology, and billing software shape the world of medical billing, payers aggressively audit claims using AI, and even minor errors in the billing process can lead to claim rejections and denials.

Through this guide, you’ll know how outsourcing medical billing solutions benefits your practice and improves revenue growth. Moreover, where something benefits you, there are also some consequences, so we’ll discuss them as well. Let’s begin with the idea that you should know first.

What is Outsourcing Medical Billing?

Outsourcing medical billing means you’re choosing a third party for any part of your billing process. From patient eligibility verification to payment posting, the medical billing companies handle everything to improve your revenue cycle.

As we all know, medical billing and coding are complex processes, especially for small practices that often handle everything themselves. Due to the high patient volume, the administrative workload increases, and even a small mistake can lead to claim rejections.

Outsourcing medical billing means you’re now experienced and specialized revenue cycle management team, including billers, coders, and denial experts, who optimize your billing process. By doing this, you can pay more attention to your patients, which ultimately increases your cash flow. On the other hand, you never need to worry about billing, as the hiring RCM organizations handle it entirely.

Industry reports that after hiring revenue cycle managers, hospitals, small clinics, and even solo practitioners see 95% improvement in clean claim processing. That’s the biggest achievement, especially for small practices that faced continuous payment delays, streamlining the billing process and ensuring a smooth, efficient reimbursement cycle. Let’s dive deeply into the benefits of partnering with a professional medical billing service provider.

Benefits of Outsourcing Medical Billing in the United States

Outsourcing medical billing services in the United States brings various benefits for healthcare practices. Here are some of the top advantages of hiring a medical billing expert team.

Cost Savings

When you hire a third-party to handle your billing tasks, the most beneficial advantage you get at that time is “cost savings”. You can save money on internal staff salaries, billing software, and ongoing employee training costs.

Reduce Claim Errors

Third-party medical billing companies specialize in handling billing tasks. Before submitting claims, expert RCM managers double-check them for common medical billing errors, prior authorization checks, modifiers, and incorrect code usage, thereby reducing the risk of claim rejections and improving the chances of a clean claim ratio.

Moreover, it is reported that outsourced medical billing reduces claim errors of approximately 40% for healthcare organizations.

Do you also want to pass the first-time claim acceptance? Read about the 10 tips to improve the clean claim rate.

Increase Revenue

Outsourcing medical billing solutions helps providers and practices boost cash flow, as experts ensure that every step of the revenue cycle is compliant with payer-specific policies.

Moreover, by staying up to date with healthcare rules and billing standards, RCM experts ensure accurate claim processing, reducing errors and increasing your overall revenue.

Lessen Operational Overhead

Medical billing and coding are complex processes, especially when you’re not experienced in them. Outsourcing your medical coding would help you gain access to expert coders who know exactly where and why to use CPT and ICD-10 codes, reducing your operational workload and enhancing the reimbursement process.

Secured Patient Data

According to healthcare billing regulations across the USA, protected health information (PHI) is mandatory. If the patient’s data is breached, the provider and practice face high costs from penalties and audits.

By acquiring external medical billing support, you never need to worry about data breaches, fraud, or penalties. Medical billing professionals ensure that your patients’ data remains secure by leveraging advanced technology and cybersecurity measures within EHR portals, providing a smooth, fully compliant billing process.

Ensure HIPAA-Compliance

One of the biggest advantages you gain by deciding to outsource medical billing services is a fully HIPAA-compliant process. Whether you’re enrolled in Medicare, Medicaid, or any other commercial insurance plan, they ensure that each billing step meets HIPAA standards, improving accuracy, lowering mistakes, and streamlining the billing process.

24/7 Billing Support

Many medical billing companies, like eClaim Solution, offer 24/7 billing support across the USA. Whether it’s about payment collection or follow-up on denials, they ensure you get an answer for each query.

Access to Billing Experts

Without medical billing expertise, passing the first claim acceptance would be complicated. By outsourcing, you gain access to billing experts with years of experience in revenue cycle management. Therefore, they ensure no payment is lost and recover any denied payments by appealing as soon as possible.

Cons of Outsourcing Medical Billing

You might have heard that “nothing ventured, nothing gained,” and that’s true when you outsource medical billing. Because it also has consequences, it could be handled with proper planning and the right strategies.

Lack of Control

Outsourcing means you’ve chosen a third party to take over your revenue cycle. It means you have less control over claim reports, monitoring status, reporting, and analytics for your reimbursement cycle.

However, the best solution to overcome this is to;

Ask the billing party about weekly reports.
See the dashboard for your claim status.
Oversight analytics of each claim you processed.

Hidden & Variable Costs

Another drawback of medical billing outsourcing is that many firms charge 5 to 10% of your total fee collection, which might not be affordable for every practice. Moreover, some billing companies may have hidden charges of $300-$1,500 per provider, which can cost more than in-house billing.

To overcome this, ask about the total fee collection for your practice specialty and size so you can save money.

Patient Dissatisfaction

Outsourcing means you’ve involved a third party for your revenue management, and it means they have control over the communication with the payer and patient. It could dissatisfy patients if their health issues are disclosed to a third person, except the doctor.

Risk of Non-Compliance

Billing accuracy and compliance are the first steps every person should take in medical billing. However, if you’ve chosen a party that is unable to follow compliance standards and payer policies, then it can increase the risk of penalties,s which could hurt your practice’s reputation.

You can easily resolve this issue by leveraging their billing expertise, whether they’ve handled billing for any provider or practice before.

In-House vs. Outsourced Medical Billing: Which Works Best for Practices

In-house medical billing is the best option only when you have expertise and specialization in handling all types of claims, because even a small billing error can lead to high medical billing audits, penalties, and loss of revenue that cannot be recovered.

Outsourcing medical billing offers various advantages, including access to experts, RCM managers, certified coders, and more. And all of this comes down to the biggest one: you never lose revenue, or, more accurately, you minimize face denials.

Let’s sum up the answer for which works best for you: in-house vs. outsourced medical billing.

Then it’s all dependent on your practice size, specialty, and type.

However, the healthcare industry has found that, through outsourcing, many practices experience exceptional growth, increased revenue, and minimal denials. So they can all focus more on what matters most – the patient’s well-being.

Frequently Asked Questions

What is medical billing outsourcing, and why does it matter?

Medical billing outsourcing means involving a third party for claims handling, payment posting, and patient billing. It covers every aspect of your revenue cycle, helps you improve cash flow, reduces denials, and gets payments on time and efficiently.

Outsourcing matters because it reduces your operational overhead, reduces rework, helps you file claims on time, and manages your revenue cycle, which is the most important aspect of any practice.

Which company is best for outsourcing medical billing?

In the United States, there are multiple billing companies offering billing support for healthcare practices. For instance, BellMedex, MediBill MD, CureMD, RCM Matter, and eClaim Solution are among the best RCM companies, offering advanced, expert billing solutions that help every provider get paid for rendered services.

How can I choose the right medical billing partner?

Choosing the right medical billing partner depends on your practice’s specialty, size, and type. For instance, if you’re a behavioral therapist, look for someone who has expertise in therapy billing codes, understands the 8-minute rule, and stays up to date on code changes. Hence, you never need to worry about being denied and receiving cash on time.

How do I know when to outsource medical billing?

Whether you’re a solo practitioner or a large healthcare organization, if you face frequent denials or billing inefficiencies, and your billing manager can’t handle it, then you should look for outsourcing medical billing.

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