Medical Billing Software FAQ for Billing Companies

Short answer

This FAQ answers the most common billing-company software questions with citations to X12, CMS, HHS, MGMA, and Experian. Medi is medical billing software designed around billing-company operations across multiple client practices, priced as a flat $300 per month plus EDI usage. It uses Stedi as the underlying clearinghouse for 837/835/270/271/276/277/278 transactions. It is not an EHR, not a payer portal, not a clearinghouse on its own, and not an outsourced billing service. The full FAQ below goes deeper into each term and links to the workflow guides where appropriate.

Billing-company software FAQ

What is medical billing software for billing companies?

Medical billing software built around teams that operate revenue cycle work for many client practices at once. The buyer is the billing company, not the practice. Useful evaluation criteria are tenancy model (billing company versus practice as primary), pricing structure (flat versus per-provider), cross-practice work queues, permissioning for mixed staff, and migration tooling. See the billing-company software evaluation guide for the full framework.

What is Medi?

A billing-company-first revenue cycle platform. Flat $300 per month platform fee for the billing company, unlimited providers and practices under that fee, plus EDI usage priced per transaction. Uses Stedi as the clearinghouse for 837 claim submission, 835 ERA, 270/271 eligibility, 276/277 claim status, 278 authorization, and 277CA acknowledgments. Includes denial workflows, ERA posting, A/R reporting, payment workflows, and migration tooling. Does not include an EHR, scheduling, charting, or patient engagement modules.

Is Medi a clearinghouse?

No. Medi is the billing-company operating layer on top of Stedi as the underlying clearinghouse. Clearinghouses move the EDI transactions; billing-company software owns the daily work queues, reporting, access controls, and follow-up decisions on top of those transactions.

What is the difference between a clearinghouse and billing-company software?

A clearinghouse moves the EDI traffic: 837 claims out, 835 ERAs back, 270/271 eligibility checks, 276/277 status, 278 authorizations. Examples include Stedi, Office Ally, Availity, Claim.MD, Waystar Clearinghouse. Billing-company software is the operating layer: who owns each claim, what needs review, which practice is affected, what was posted, and what follow-up remains open. Some products try to do both; most are stronger at one than the other.

How is billing-company software different from practice-management software?

Practice-management software treats the practice as the tenant. Billing-company software treats the billing company as the tenant. The difference shows up in user switching, permissions, cross-practice queues, pricing structure, and what duplicates when you add the eleventh client. See multi-practice billing-company operations for the full architectural breakdown.

Pricing and contracts

How much does Medi cost?

$300 per month flat platform fee, plus EDI usage: $0.25 first claim line item, $0.20 each additional; $0.20 per paid ERA line, $0 for denied ERA lines after the initial line; $0.20 per eligibility (270/271) inquiry; $0.20 per claim status (276/277) inquiry; $1.00 for COB, insurance discovery, or claim attachment. No contract required. See the pricing page for the full table and example monthly estimates.

How does Medi pricing compare to Tebra or AdvancedMD?

Tebra and AdvancedMD price per provider, typically in the $99 to $399 range per provider per month based on published 2026 pricing guides, with onboarding fees around $500 per provider for Tebra. Medi prices flat per billing company. The structural difference matters most as provider count grows. A fifty-provider book on Medi is about $300 plus $1,300 to $1,700 EDI usage per month; the same book on per-provider pricing is $4,950 to $19,950 per month before add-ons and onboarding. See the Medi vs Tebra comparison for the math.

Is there a setup or onboarding fee?

No separate per-provider onboarding fee. Medi runs an implementation review before production access, included in the platform fee.

EDI and clearinghouse

What is the 837 transaction?

The HIPAA-standard X12 EDI transaction for healthcare claims submission. 837P is the professional claim format; 837I is the institutional claim format; 837D is the dental claim format. Maintained by X12. Most US payers accept 837 transactions through a clearinghouse.

What is the 835 transaction (ERA)?

The HIPAA-standard X12 EDI transaction for healthcare claim payment and remittance advice (ERA). The 835 carries CARC (Claim Adjustment Reason Code) and RARC (Remittance Advice Remark Code) information for each adjusted line. CMS describes the 835 as the electronic equivalent of a paper EOB.

What is the 277CA acknowledgment?

A pre-adjudication acknowledgment from the payer indicating whether the submitted claim was accepted into the payer's adjudication system or rejected before adjudication. Distinct from a denial: a rejection on 277CA means the claim never entered adjudication; a denial on 835 means the claim was adjudicated but not paid. See the claim acknowledgment 277CA guide.

What is a 270/271 transaction?

270 is the eligibility and benefit inquiry; 271 is the response. The 271 should carry active coverage status, copay, deductible remaining, coinsurance percentage, plan name, group number, and other coverage information. CMS documents the eligibility transaction set as part of the standard HIPAA transaction set.

What is a 276/277 transaction?

276 is the claim status inquiry; 277 is the response. Used to check the status of a previously submitted claim with the payer.

ERA and payment posting

What is ERA posting?

The workflow for reviewing the 835 electronic remittance advice and applying payment, adjustment, denial, and patient-responsibility information to the correct claim. Includes auto-posting clean matches, holding exception lines for review (write-off variance over tolerance, secondary not posted, recoupment, PLB adjustment), and recording the final posting decision with audit trail. See the ERA posting guide.

What is a PLB segment?

Provider-Level Adjustment segment of the 835. Carries payer-initiated adjustments at the provider level rather than the claim level: recoupments, advances, interest, levies, withholds. Often the source of reconciliation confusion if the system treats PLB as a claim-level adjustment.

What is a recoupment?

A payer-initiated recovery of a previously paid amount, typically appearing as a negative balance forward in the PLB segment of a subsequent 835. Requires the billing system to recognize the recoupment and apply it to the originally-paid claim rather than treating it as an unrelated negative.

Denials and appeals

What is a CARC code?

Claim Adjustment Reason Code. A standardized code on the 835 ERA that explains why a payer adjusted, reduced, or denied a claim line. Maintained by X12. Always paired with a two-letter Group Code that determines responsibility: CO (contractual), PR (patient responsibility), OA (other), PI (payer initiated).

What is the difference between a CARC and a RARC?

CARC explains the category of the adjustment (why the payer adjusted). RARC explains the specifics (what additional information caused the adjustment). Both are needed for full denial context. See the denial management workflow guide for the most common codes.

What does CO-97 mean?

"The benefit for this service is included in the payment for another service or procedure." Typically a bundling denial. Investigation step: verify NCCI edits and consider modifier 59 or 25 if appropriate; appeal with documentation supporting the separate service. Per FCSO Medicare guidance on CO-97.

What does CO-45 mean?

"Charge exceeds fee schedule, maximum allowable, or contracted fee arrangement." Usually a contractual adjustment, not an appeal opportunity, unless the contracted rate the payer applied is wrong. Verify against the payer contract before adjusting.

What does PR-1 mean?

Patient responsibility for deductible. Not a denial in the appeal sense; it is an amount to collect from the patient. Route to patient statement workflow rather than queueing it for appeal.

How fast should denials be worked?

Industry practice is 7 to 14 days for high-dollar or time-sensitive denials, 30 days for lower-priority. The constraint is appeal deadline: Medicare gives 120 days for redetermination, most commercial payers give 60 to 180 days from the date of denial, Medicaid varies by state. See the denial management workflow guide for the full triage pattern.

What is the current average denial rate?

Per the MGMA 2024 Cost and Revenue Report, average initial claim denial rate is 11.8 percent, up from 10.2 percent a few years earlier. Per the Experian Health 2025 State of Claims survey, 41 percent of providers see denial rates of 10 percent or higher.

COB and eligibility

What is COB in medical billing?

Coordination of Benefits. Determines payer order, primary versus secondary responsibility, and patient coverage when more than one payer is involved. CMS publishes coordination of benefits guidance covering Medicare COB rules specifically.

What is insurance discovery?

A query (often through a third-party network) that finds active insurance coverage for a patient when the patient does not present a card or when prior coverage may have lapsed. Used to fill gaps in eligibility before claim submission.

Underpayment and contracts

What is underpayment detection?

The process of identifying payments that came in lower than the contracted rate, typically by comparing the 835 paid amount against the expected amount from the payer contract and fee schedule. Flagged variances should route to human review for investigation (correct contract loaded? secondary not posted? legitimate carve-out?) before being treated as recoverable. See the underpayment detection guide.

How big is the underpayment problem industry-wide?

Estimates vary, but MGMA and industry analyses commonly cite underpayments and contract leakage in the range of 1 to 5 percent of net revenue for typical practices, with higher percentages in specialties with complex fee schedules. The recoverable portion depends on accurate contract loading and effective contracting workflows.

AI and automation

Can AI handle medical billing without human review?

No. AI can support billing teams on specific tasks (prioritization, drafting, summarization, anomaly detection) but cannot replace human judgment on payer rules, compliance, exception handling, patient responsibility, appeals, and client relationships. See the AI medical billing reality guide for the full framing and HIPAA boundary.

Is it a HIPAA violation to use ChatGPT for billing work?

Yes, if PHI is involved. Consumer ChatGPT, Claude.ai consumer, and Gemini consumer do not sign Business Associate Agreements and cannot receive PHI without creating a reportable breach. The compliant equivalent is the same vendor's enterprise API with a signed BAA, or a model hosted inside a BAA-covered cloud platform.

Migration

How long does a typical RCM platform migration take?

30 to 45 days for a single client practice including payer enrollment, per published industry playbooks like the Medical Billers and Coders 30-Day Transition Playbook. Multi-client billing companies move practices in waves rather than all at once. Practices that rush the timeline below 21 days typically lose 8 to 12 percent of trailing A/R.

What is a legacy A/R closeout?

The arrangement where the outgoing vendor continues working claims with dates of service before cutover for 60 to 90 days after migration, while the new vendor works claims with dates of service from cutover forward. Protects trailing revenue during the transition. Should be contractually required in the outgoing vendor agreement before signing with a new platform.

What does not migrate cleanly between billing platforms?

Open-claim follow-up notes, in-flight appeals, unposted ERAs sitting in queues, payer enrollment ties, and the mid-investigation state of denials someone was working at cutover. Patient demographics, claim history, ledger balances, and clinical chart bundles typically do migrate. See the Tebra migration guide for the practical inventory.

How current is this FAQ?

Last reviewed 2026-05-17. X12 code references are from x12.org/codes. CMS guidance is from cms.gov electronic billing. HIPAA guidance is from HHS HIPAA for Professionals. Industry statistics are from MGMA and Experian sources cited inline.