Medical Billing & Claims: Pay Only When You Get Paid

How percentage-of-collections billing works

Traditional billing contracts come in three shapes: a flat monthly subscription per provider, a per-claim fee, or a percentage of what actually gets collected. The percentage model is the only one that structurally ties the vendor's earnings to yours.

The basic mechanic: a claim is submitted, a payer adjudicates it, money moves. Only at that point does the billing service collect its fee—calculated as a share of the payment received. No payment, no fee.

The appeal is alignment. When the biller earns only on paid claims, every denied claim is lost revenue for both parties. That creates an incentive to work denials aggressively rather than write them off.

The risk: percentage fees are percentage fees. As your revenue grows, the dollar amount you pay grows with it—even if the marginal cost of processing your claims has not changed. A practice generating $250,000 per year and one generating $1,000,000 per year may involve nearly identical billing work per claim, but the latter pays four times as much in a pure percentage model.

What the market charges

Published and independently reviewed rates for percentage-based billing services in 2025–2026:

• Industry range: 4–10% of net collections, per MGMA survey data and Best Medical Billing's 2025 guide 1Ref 1Best Medical Billing Editorial Team (2025).Guide to Medical Billing Services Cost in 2025.Industry range of 4–10% of net collections for percentage-based billing services; per-claim fees of $4–$10.2Ref 2RhinoMDs Editorial Team (2025).Average Cost of Medical Billing Services in the US: 2025 Guide.MGMA: average billing cost ~8% of collections for small-to-medium practices. AMA: solo practices average 10.9% of collections for outsourced billing.. The American Medical Association found solo practices pay an average of 10.9% of collections for outsourced billing 2Ref 2RhinoMDs Editorial Team (2025).Average Cost of Medical Billing Services in the US: 2025 Guide.MGMA: average billing cost ~8% of collections for small-to-medium practices. AMA: solo practices average 10.9% of collections for outsourced billing..
• athenahealth (athenaCollector): 4–8% of monthly collections for most independent practices, per Business.com's review updated August 2025 3Ref 3Business.com Editorial Team (2025).AthenaCollector Review and Pricing.athenahealth charges 4–8% of monthly practice revenue; does not manage all denied claims; pricing described as 'on the higher side.' Last updated August 8, 2025.. The company does not publish a rate card; smaller practices and new groups tend to land at the higher end. Implementation fees run ~$2,000–$5,000 per provider.
• Tebra (formerly Kareo): Flat monthly subscription, custom-quoted, with reported ranges of $149–$499 per provider per month depending on modules, per Pabau's 2026 pricing analysis 4Ref 4Pabau Editorial Team (2026).Tebra Pricing in 2026: Modules, Add-Ons, and Real Costs.Tebra (formerly Kareo) uses a flat monthly subscription model with reported ranges of $149–$499 per provider per month; card processing at 2.75%–3.25% per transaction.. Card processing carries an additional 2.75%–3.25% per transaction.
• SimplePractice: Flat subscription of $49–$99 per provider per month as of June 2026 5Ref 5SimplePractice (2026).SimplePractice EHR Pricing and Plans.Starter $49/mo, Essential $79/mo, Plus $99/mo as of June 2026. Insurance billing available on Essential and above. AI note taker add-on $35/mo per clinician., with additional per-claim fees starting at $0.25 and an AI documentation add-on at $35 per provider per month. Insurance billing requires at least the Essential plan at $79 per provider per month.

For context: MGMA's 2025 operating cost data puts billing and RCM at approximately 5% of collections for high-performing physician groups 6Ref 6MGMA Staff (2025).Medical practice operating costs are still rising in 2025—here's how to control them.Billing/RCM costs approximately 5% of collections for physician groups; 90% of medical groups reported operating costs higher than same point in 2024; average YoY increase ~11.1%. Published June 11, 2025., and shows that 90% of medical groups saw operating costs rise an average of 11.1% in 2025 versus the prior year.

Gale's model: cost of billing plus 15%, on paid claims only

Gale's billing structure has three rules:

Rule 1 — No software subscription. The EHR, scheduling, AI scribe (Jefferson), credentialing tracker, and claims workflow are included at $0 per month. There is no setup fee and no implementation charge.

Rule 2 — The fee is the cost of billing plus 15%, applied only to claims that actually pay. Gale passes through the actual cost of running the claim (clearinghouse, processing) and adds 15% on top of that cost—not 15% of your gross collections. If a claim is denied and not recovered, Gale earns nothing on it.

This is meaningfully different from a 7% gross-collections model. If your billing cost on a $200 claim is ~$14 (roughly 7% of the claim value in a market-rate model), Gale's fee on that same claim is the actual billing cost plus 15%—a fraction of the gross-percentage approach.

Rule 3 — Funds go directly to you. Gale uses Stripe Connect to route payments. Insurance reimbursements settle provider-direct; Gale does not front cash, hold float, or act as a pass-through bank. You receive funds in your bank account; Gale's fee is collected separately on paid claims only.

What this means in a scenario: A solo primary care provider generating ~$15,000 per month in insurance collections might pay ~$750–$1,200 per month under a 5–8% gross-collections billing service 1Ref 1Best Medical Billing Editorial Team (2025).Guide to Medical Billing Services Cost in 2025.Industry range of 4–10% of net collections for percentage-based billing services; per-claim fees of $4–$10.3Ref 3Business.com Editorial Team (2025).AthenaCollector Review and Pricing.athenahealth charges 4–8% of monthly practice revenue; does not manage all denied claims; pricing described as 'on the higher side.' Last updated August 8, 2025.. Under a cost-of-billing-plus-15% model on the same volume, the billing cost component is substantially lower than gross-percentage—though the precise figure depends on claim mix, payer, and denial rates. Gale presents this as a scenario estimate, not a guarantee; actual results depend on your payer mix and claim complexity.

The honest caveat. Gale is pre-commercial and in synthetic-demonstration phase as of June 2026. No real patient money has moved through the platform yet. The billing model described here is the designed architecture—confirmed by Gale's engineering team—but independent providers should evaluate it as a described future state while Gale moves toward launch.

What to watch in any pay-when-you-get-paid contract

The percentage model can be misrepresented in several ways that change the actual economics:

• Gross vs. net collections. Some contracts base the percentage on gross charges (what you bill), not net collections (what actually gets paid). A 5% fee on gross charges at a practice with a 50% collection rate functions as 10% on net.
• Minimum monthly fees. A clause requiring a floor payment on slow months eliminates the alignment benefit for low-volume periods.
• Who works the denials. athenahealth, for example, does not manage all denied claims—some are returned to practices 3Ref 3Business.com Editorial Team (2025).AthenaCollector Review and Pricing.athenahealth charges 4–8% of monthly practice revenue; does not manage all denied claims; pricing described as 'on the higher side.' Last updated August 8, 2025.. A true pay-when-you-get-paid service should own denial follow-up through resolution.
• Claim tail on exit. Switching billing vendors typically leaves 90–120 days of outstanding claims in transit. Understand who owns and works those claims if you terminate.
• Defined 'billing cost.' In Gale's model, ask specifically what is included in the billing cost component before the 15% markup—clearinghouse fees, claim correction, resubmission work. This should be disclosed in writing.

Where flat-fee billing still wins

Percentage-of-collections billing is not universally superior. Flat-fee or subscription models make economic sense in specific situations:

• High-volume, predictable practices. A practice collecting $80,000–$100,000 per month with a stable payer mix and minimal denial complexity will pay less under a $200/month flat-fee arrangement than under a 4% collections model (which would run ~$3,200–$4,000/month).
• In-house billing staff. Practices that employ a dedicated biller may need only software and clearinghouse access, not full-service RCM. SimplePractice's $79 Essential plan with per-claim fees may be sufficient.
• Self-pay-heavy practices. If most of your revenue is out-of-pocket (cash-pay therapy, concierge medicine), insurance collections may be a small slice of total revenue. A percentage-of-insurance-collections model benefits you less in that scenario.

The break-even point between models depends on monthly claim volume, average claim value, and denial rate. Running the math on your own numbers before choosing a model is the most reliable path to the right answer.

Credentialing, contracts, and the billing pipeline

Medical billing does not begin at claim submission. It begins when a provider is credentialed and paneled with each payer whose patients they plan to see. A billing system that handles claims but not the upstream credentialing pipeline leaves the provider managing two separate workflows.

Gale tracks licensing, credentialing, and panel status end-to-end—including expiration alerts, re-attestation reminders, and payer-specific enrollment status. This is tracking and documentation support, not auto-attestation: the provider signs every attestation and credential renewal. Gale does not attest on a provider's behalf.

This matters for billing because a credentialing gap is often the root cause of a billing denial. Claims submitted before a panel enrollment is active—or after a credential lapses—are denied at the payer level and require resubmission from scratch after the credentialing issue resolves. Keeping credentialing and billing in the same system surfaces those conflicts before claims are submitted.