Medical billing works by submitting claims to insurance companies or other payers, often using specialized software, and then tracking and following up on the claims until payment is received. The process includes various steps, such as verifying patient eligibility, submitting claims with appropriate codes, and managing denials and appeals.

Medical billing companies typically charge a percentage of the total amount collected on behalf of the healthcare provider. This is known as a percentage-based fee structure. However, some companies may charge a flat fee per claim or a monthly fee for services provided.

Common billing errors include incorrect patient information, incorrect procedure or diagnosis codes, missing or incomplete documentation, and billing for services that are not covered by the patient's insurance. These errors can lead to claim denials or delays in payment and can be costly for healthcare providers.