Private Practices

Third-party billing vendors can boost private practice efficiency

There are pros and cons to securing outside help on billing. New resources and advice from the AMA will help guide you through the process.

By
Andis Robeznieks , Senior News Writer
| 4 Min Read

AMA News Wire

Third-party billing vendors can boost private practice efficiency

Mar 26, 2025

As medical billing becomes more complex and time-consuming—for both physicians and staff—physician private practices may see using a third-party billing company as an attractive option.

“In many small practices, the staff involved in billing wear many hats, offloading the billing process can enhance overall practice efficiency by redirecting team members back to patient care,” said Taylor Johnson, the AMA’s manager of physician practice development, during an episode of the “AMA STEPS Forward® Podcast.”

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The AMA is fighting to keep private practice a viable option for physicians. We're working to remove unnecessary burdens so physicians can reclaim the time they need to focus on patients. 

Sea Chen, MD, the AMA’s physician director of practice sustainability, agreed and noted that, when he was a clinical radiation oncologist in private practice, billing workload tasks and procedures had become overly burdensome and opting for a third-party billing company was “a very attractive option.”

A related CME module, “Engaging with a Third-Party Billing Company,” is enduring material and designated by the AMA for a maximum of 0.25 AMA PRA Category 1 Credit™

The module is part of the AMA Ed Hub™, an online learning platform that brings together high-quality CME, maintenance of certification, and educational content from trusted sources, all in one place—with automated credit tracking and reporting for some states and specialty boards. 

Learn about AMA CME accreditation.

“The third-party billing company can manage invoicing, collect payments, they can handle the claims processing and submission, or follow up on denied or unpaid claims,” said Johnson, who worked as a practice administrator for several physician private practices before joining the AMA.

“In addition, because they're strictly focused on billing, they can benefit practices by streamlining the billing process and, in turn, maximizing the practice's revenue and maintaining an up-to-date knowledge base of codes and regulatory changes,” she added.

On the podcast, Dr. Chen noted that hiring a third-party to handle billing tasks is not the right move for every physician private practice.

The potential downsides include:

Costs. These can vary greatly among third-party vendors, and practices have to be on guard against hidden fees.

Insecure data. It’s important for practices to have a formal business associates’ agreement that defines the full scope of expectations concerning the safety and privacy of patients’ personal health information, which should include a plan for responding to data breaches.

Loss of control. Without oversight, physician private practices can lose control of the billing process, so contracts should include a transparent, service-level agreement establishing the expectations and obligations of both parties.

“While I think third-party billing companies can offer some essential services, practice owners, practice leaders can really risk losing control over this entire billing process, being that it's very complex,” Dr. Chen noted. “You, as a practice owner, should continue to monitor and manage third-party billing companies very carefully.”

He also advised physician private practices to maintain thorough documentation of their correspondence with the billing company.

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Also essential, Johnson said, are clear policies and procedures that: 

  • Give practices insight into the steps the billing company will take to ensure claims are clean, correct and successfully submitted to the clearinghouse.
  • Ensure payers actually received the necessary files and that they have all the required confirmation numbers for each claim and each payer.
  • Cover issues or disputes that cannot be resolved through normal avenues.

It takes astute clinical judgment as well as a commitment to collaboration and solving challenging problems to succeed in independent settings that are often fluid, and the AMA offers the resources and support physicians need to both start and sustain success in private practice.

Johnson also recommended holding regularly scheduled meetings with the vendor to review the accounts receivable and monitor performance and whether the revenue cycle is running optimally. 

An example of practice-billing vendor agenda is included in a tip sheet (PDF) accompanying the podcast.

Also included are tips on conducting due diligence and researching potential third-party billing vendors, policies that vendor contracts should include, data that must be contained in accounts receivable reports, and advice on conducting routine audits.

“Obviously, this is a lot to think about,” Dr. Chen said. “But the resource that we have provides a lot of helpful information in figuring out what's best for you, your practice, your patients, and a roadmap for getting started.”

Find out about the AMA Private Practice Physicians Section, which seeks to preserve the freedom, independence and integrity of private practice.

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