A new practice can book a full schedule in month one and still run short on cash by month four.
It happens more than owners like to admit. The visits are real, but the claims go out late, go out wrong, or land with a payer that never enrolled you in the first place.
This guide covers private practice medical billing setup in the order you should do it, starting about 120 days before opening day. Claimstone Billing has 10+ years of collective experience getting new practices paid, and the pattern never changes: practices that finish this list before the first patient arrives collect faster than the ones that don’t.
Here’s the list.
1. Get your identifiers in order
Nothing else moves until these exist: an NPI, an EIN, your state license, and a business bank account.
Your individual NPI (Type 1) is free through the NPPES website, and online applications often come back within days. Form an LLC or a professional corporation? Then the group needs its own Type 2 NPI as well. The EIN comes from the IRS, also free, and the online application issues the number on the spot. Open the bank account before you file anything with payers, since they’ll ask where to send the money.
Then there’s CAQH ProView. Most commercial payers pull your credentialing data from that profile, and you have to re-attest it every 120 days. Let it lapse and applications stall for no visible reason.
2. Start payer enrollment earlier than feels reasonable
This is the slowest item on the list. Start now.
Commercial payers often take 60 to 120 days to process an application, and one missing document can restart the clock. Medicare enrollment runs through PECOS (or the paper CMS-855I) and frequently takes 60 days or more. Medicaid depends on your state, sometimes wildly.
Your effective date is what matters. Medicare generally lets you bill back only about 30 days before the date you file, and anything earlier is gone for good. Commercial plans are usually stricter.
And patients won’t wait for your paperwork. If someone with UnitedHealthcare books for your first week and you aren’t in network yet, you either turn them away or see them out of network. Neither one builds a practice.
3. Treat the Payer Contract Like Your Lease
To be honest, new owners lose more money here than anywhere else. And so a payer sends a contract with a fee schedule, and the owner signs because patients are waiting, and the rates end up sitting below what it costs to deliver the visit.
Download the rates for your top 10 most common CPT codes. For a primary care practice, that probably means up near the top 99213 and 99214. Compare against the Medicare Physician Fee Schedule CMS releases every year.
If a payer is only paying 80% of Medicare for an office visit, you could be losing money on every patient. Request a rate review. Sometimes new practices get traction in underserved areas, and it costs nothing to ask.
Verify the timely filing limit as well as the appeal window. Medicare allows you to file a claim within 12 months of the date of service. Some commercial plans give as little as 90 days to do so.
4. Get one fee schedule for everyone
Your charge master (list of what you bill each CPT code) should be the same for all patients, regardless of insurance. The fee at many practices ranges from 150 to 200 percent of the Medicare rate. If your charge is too low there is a limit to what you can collect. Contracted rates are discounts off your charge and some payers will pay the lesser of your charge or their allowed amount. .
Decide your self-pay discount now too, and write it down. A front desk that makes up discounts on the fly creates compliance problems you don’t want.
5. Select a software and clearinghouse that communicate with each other
You need a practice management system to do scheduling and charges, an EHR to do the chart, and a clearinghouse to send claims to payers. Many vendors bundle the three together. Either way you go, ask for a demonstration that follows one claim from the visit all the way to the payment posting.
On the clearinghouse side, ask which payers it connects to. Then ask about what happens if the connection is lost. In February 2024, a ransomware attack on Change Healthcare disrupted providers nationwide from submitting claims or receiving payment and took weeks to recover.
While you’re at it, sign up for electronic funds transfers (EFT) and electronic remittance advice (ERA) with each payer. Medicare EFT is done using CMS-588. Skip this and you’ll be posting paper EOBs manually and waiting on
6. Select the billing manager.
In-house or external? The truth is, a full-time hire costs the same in a slow month as in a busy one. Most outsourced billing is a percentage of collections (4% to 8% is typical), so the cost increases as your revenue increases.
If you use outside vendors, make sure you have a HIPAA business associate agreement signed before anyone sees any patient data. Require monthly reports showing days in A/R and denial rate. And ask about who owns the payer portal logins if you ever leave.
If you hire someone internally, be prepared to learn about payer peculiarities over the course of several months, and make plans for coverage in the event that they are not available.
7. Build the front-desk routine
Many denials trace back to the front desk: a wrong member ID, an inactive policy, a missing referral.
Set the routine now. Verify eligibility 48 to 72 hours before each visit. Scan both sides of the insurance card and a photo ID. Collect the copay at check-in, not afterward (collection gets much harder once the patient has left the building). Get a signed financial policy and assignment of benefits at the first visit.
Self-pay and uninsured patients need a good faith estimate under the No Surprises Act, in effect since January 2022. Build that form into scheduling so nobody forgets it.
8. Make documentation and coding match
Starting in 2021, the level of office visit (99202-99205 for new patients and 99212-99215 for established patients) is based on medical decision making or total time on the date of the encounter. Doctors trained under the old rules often undercode, out of caution, and that adds up fast. “The answer is accuracy. If you overcode, you can get audited.
Look over the details that trip people up. Place of service 11 for office visits, the right modifiers, diagnosis codes that actually support the level billed.
Create a note form for recording time and decision-making. Then get a coder to look at your first 50 charts before claims go out. A few notes and an hour early can save you months of clean-up down the road.
9. Run a dry run before the doors open
Run a mock encounter through the whole chain: schedule, check-in, chart, charge, claim, and the clearinghouse scrubber. Confirm that your NPI, taxonomy code, tax ID, and billing address match what each payer has on file. A mismatch in any one gets claims rejected before a human ever sees them.
The week before opening, confirm these:
- Written effective dates from every payer you’ll bill on day one
- ERA and EFT enrollment complete
- Fee schedule loaded in the software
- Eligibility check run for a test patient
- Encounter form matching the CPT codes you expect to use most
10. Budget for the gap
Even with perfect setup, first payments usually land 30 to 45 days after the first visits, and denials push some of them further out.
Many practice advisors suggest holding three to six months of operating expenses before your first claim pays. Arrange a line of credit before you open, too. It’s far easier to get when your books look healthy than when cash is tight.
11. Track four numbers for the first 90 days
Every 2 weeks pull them.
First-pass acceptance rate is the percentage of claims a payer accepts on the first submission, with 95 percent or higher being the typical goal. The majority of benchmarks have A/R days around 30-40. Watch your denial rate and why. Typically a few reasons account for most of the denials. Net collection rate, what you collect against what you were owed after contract adjustments, should be 95% or better.
Worse than that After ninety days? Something upstream is wrong. Find it when the claim volume is low.
Questions often asked
How long will it take to set up billing for a new private practice?
Allow 90-120 days from start to finish. Most of that time is spent on payer enrollment. The rest—identifiers, software, fee schedule, front-desk routines—can usually be done in four to six weeks, if you work steadily at it.
What do I need before I make my first claim?
An NPI and EIN An effective date with the payer you’re billing A clearinghouse or billing system that connects to the payer You also need a completed encounter with documentation supporting the codes, and the patient’s demographics and verified insurance information. Fail any of those and the claim falls to the ground.
Am I able to bill insurance prior to my credentialing being completed?
Usually, but not as an in-network provider. According to Medicare, you can bill back approximately 30 days prior to your filing date, but not before. Some commercial payers will backdate an effective date to your application date and some will not. Get their policy in writing before you see their members.
Do I outsource the invoicing or hire in-house?
Outsourcing is cheaper for most new practices until your volume justifies a full-time biller. There’s no recruiting, training, or software licensing to purchase for the role, and you largely pay when you collect. An in-house hire can make sense with a heavy patient load across several providers.
How much does outsourcing billing cost?
Many billing companies charge 4% to 8% of collections, depending on specialty, volume and how much of the cycle they perform. Others charge a flat fee per month. Ask what percent is covered, as coding review, appeals and patient statements are sometimes billed separately.
What billing software does a new practice require?
Most new practices are using a system that combines an EHR, practice management and a claims connection, all in one. Look for three things. A tie to a clearinghouse that gives you your payers, reports for days in A/R and denial rates, and the ability to export your data if you change vendors.
What is the difference between a denied claim and a rejected claim?
A rejected claim is one that fails formatting or data checks before it is processed by the payer. This is often due to a typo, wrong ID or a field that is missing. It’s not quaint. you fix it and re-submit it. You can appeal a claim that was processed and denied because it was not medically necessary or was not authorized.
How long do I have to make a claim?
Medicare allows 12 months from the date of service. Commercial payers are all over the board and some have a 90 or 180 day limit. The contract says that. File it a week or two after the visit and you hardly have to give it a thought.
Do I need a business associate agreement with my billing company ?
Yes. HIPAA mandates that you have a business associate agreement with any vendor who handles protected health information on your behalf, whether that vendor is a billing company or a clearinghouse. Get it signed before you move any patient data.
Prepare your billing before you open
You didn’t get into medicine to read payer manuals. See Patients, We Chase The Money Claimstone Billing Handles Coding Review, Claims Submission, Denial Follow-up And Patient Statements.
Send us your opening date and your payer list and we will map out what needs to be filed first.