Medical Billing Contract

Developing a good medical billing contract is an important component for any medical billing home business. A lot goes into making the process go smoothly.

What if your client doesn’t give you the information you need to do your job? What if you don’t receive the EOBs needed to post payments? What if the client expects extra services you weren’t aware of?

You can avoid a lot of problems by having a good contract in place and reviewing it with your client so you both have the same expectations.

You can start with a basic contract, have an attorney draft one, or develop one using an online legal service.

We receive a lot of requests for a sample contract so I have included one in my Medical Billing Starter Kit on How To Do Medical Billing. It is very reasonably priced and a great way to get started.

What Should Your
Medical Billing Contract Include?

Responsible parties

The legal names of the parties involved; your business name and the client’s business name. If you or your client are incorporated, use the corporation name.

Effective Dates

Indicate the date the contract becomes effective. If the contract is short term, specify the expiration date.

If the contract is open ended, specify the terms required to terminate the contract by either party. A request to terminate the contract should be in writing. Specify the number of days notice required.


This is probably the most important part of the medical billing contract. Indicate how your fees are calculated, the due date, when the payment is late, any late fees, and the consequences if payment is not received.

Reimbursement can be calculated on a percentage of cash receipts, flat fee, or per claim basis.

If the contract is terminated, how will your services be reimbursed? A good rule of thumb for final reimbursement is to take the total accounts receivable at the time of termination /12 (months) X 3 (months).

Responsibilities of the Client

The client is responsible for providing the medical billing service with the following information: patient demographics, insurance cards, patient encounters, EOBs, and patient payments. This information must be true, accurate and provided on a timely basis.

Who will do the Coding?

Your contract should clarify this ahead of time. While many health care providers perform their own coding, others do not. If the client wants the medical billing service to do the coding, chart notes must be provided on a timely basis and the medical billing service must have the staff legally qualified to do this work.

Who will the insurance and patient payments go to?

Some physicians have the payments go directly to the medical billing service. If the payments are received at the client’s office, it is their responsibility to ensure that copies of all payments and EOBs are made available to the medical billing service.

Responsibilities of the Medical Billing Service

The medical billing service provides the following services: processing insurance claims, claim follow-up, patient statements, patient cash charges, production reports, aging reports, and any other specified reports or duties.

A time frame is usually specified for processing claims. This information can be spelled out in a separate Statement of Work. It is also important to specify how the practice records received will be maintained and returned to the client.

A good medical billing contract helps a medical billing service look professional and, most importantly, clarifies expectations for both parties. It is not only a legal aid but also provides the structure to resolve unforeseen conflicts.

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