Hiring a Dental Billing Service: Contract Terms for Practice Owners

Meta description: Hiring dental billing services? Essential contract terms for practice owners outsourcing revenue cycle management.

Outsourcing revenue cycle management can be a turning point for a dental practice—fewer claim backlogs, cleaner collections, and more time focused on patient care. But the benefits depend heavily on the paperwork you sign. Before you hire a dental billing service, you need a contract that protects your revenue, your patient data, and your ability to switch vendors if performance slips.

This guide walks dental practice owners through the contract clauses that matter most in a dental billing contract (also commonly called a dental practice billing agreement) so you can avoid costly surprises and build a strong, accountable vendor relationship. You’ll also see how to negotiate common billing terms, what “normal” looks like in the market, and what red flags to watch for in an outsource dental billing contract.

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Why your dental billing contract matters more than the sales pitch

Many billing vendors promise higher collections, faster reimbursements, and fewer denials. Those outcomes don’t come from promises—they come from:

• Clear scope of work (who does what)
• Defined performance metrics and reporting
• Strong data privacy and HIPAA controls
• A fee model you can audit
• Exit rights and transition assistance if you need to move on

Without those terms, you may end up paying for services you assumed were included, losing visibility into collections, or getting stuck with a long auto-renewal when the relationship isn’t working.

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1) Scope of services: define exactly what you’re buying

The single most important section of a dental practice billing agreement is the scope. A vague “billing services” description leaves too much room for interpretation.

Common services to specify (check what you actually need):

• Eligibility verification and benefits checks (including frequency and timing)
• Claim creation and submission (what systems, what clearinghouse)
• Coding support (and whether the vendor provides coding guidance vs. final coding)
• Claim status follow-up and payer calls
• Denial management and appeals (who writes appeals, how many attempts)
• Payment posting (EOB/ERA posting, adjustments, write-offs)
• Patient billing statements and follow-up (calls, texts, letters, payment plans)
• Credit balance review and refunds
• Accounts receivable (A/R) aging management and cleanup
• Monthly reporting and analysis
• Credentialing support (if offered—often separate)
• Coordination with your front desk for missing info and documentation

Key contract tip: Ask for a scope exhibit (“Statement of Work”) with line-by-line responsibilities and frequency (daily/weekly/monthly). If it’s not written, it’s not included.

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2) Roles and responsibilities: vendor tasks vs. your team’s tasks

Even when you outsource, your staff will still play a role. Your outsource dental billing contract should clearly separate responsibilities, including:

Your practice responsibilities might include:

• Accurate clinical notes and documentation
• Confirmed insurance information at intake
• Timely charge entry (if your team enters charges)
• Access provisioning (software logins, permissions, MFA enrollment)
• Patient communications for clinical questions

Vendor responsibilities might include:

• Timely claim submission after charge entry
• Document requests with deadlines and a process
• Denial follow-up cadence
• Posting standards (how adjustments are handled)
• Patient balance workflow (when statements go out, call cadence)

Why this matters: Vendors sometimes blame delays on “practice issues.” A strong contract creates a shared workflow and reduces finger-pointing.

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3) Performance standards (SLAs): put outcomes into measurable terms

If you’re going to hire a dental billing service, insist on performance measures you can track. Not every vendor will guarantee dollars collected, but they can commit to process metrics.

Examples of Service Level Agreements (SLAs):

• Claim submission timeline: e.g., within 24–72 hours of receiving complete charge info
• Denial follow-up: first action within X business days
• A/R work cadence: all claims touched at least every X days
• Call response time: vendor responds to practice inquiries within X hours
• Monthly reporting delivery: by the Xth business day of each month

Revenue metrics to discuss (often reported, not guaranteed):

• Days in A/R
• Denial rate and top denial reasons
• Net collection rate
• Clean claim rate (if tracked)
• Patient balance aging

Contract tip: Include remedies if SLAs aren’t met—fee credits, a cure period, or termination rights for repeated failures.

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4) Fees and compensation: percentage vs. flat fee (and what’s excluded)

Billing vendors typically charge in one of these ways:

Percentage of collections

Often described as a percent of “net collections” (or sometimes “gross collections”). This sounds simple but can be a trap if definitions are unclear.

Define “collections” precisely:

• Are refunds or chargebacks deducted?
• Are collections from old A/R included?
• Are lab fees deducted first?
• Are patient payments included?
• Are insurance payments only included?
• Are membership plans included?

Flat monthly fee

More predictable, but the contract must clarify volume limits and extra charges.

Hybrid

Base fee + percentage, or separate fees for add-ons.

Common add-on fees to watch for:

• Setup/onboarding fees
• Clearinghouse fees
• Credentialing
• Appeals work
• Patient statements/mail costs
• Texting/calling platform costs
• A/R cleanup projects
• After-hours support

Audit right: Your dental billing contract should give you the right to audit invoices and calculations—especially percentage-based fees.

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5) Term, renewal, and termination: avoid getting stuck

Many practice owners focus on price and overlook the “how do I leave?” section. This is where bad contracts do the most damage.

Key clauses to negotiate:

• Initial term: 6–12 months is common; longer terms should come with stronger performance guarantees.
• Auto-renewal: If there’s auto-renewal, require advance notice (e.g., 60–90 days) and the ability to opt out easily.
• Termination for convenience: Ideally with 30–60 days’ notice after an initial period.
• Termination for cause: Immediate or short cure period for HIPAA breach, fraud, gross negligence, repeated SLA failures, non-payment, etc.
• Cure period: Reasonable (10–30 days depending on issue), but not so long you bleed cash.
• Early termination fees: Avoid or cap them; if unavoidable, tie them to unrecovered onboarding costs.

Transition assistance: A strong dental practice billing agreement includes a structured offboarding plan: data export, claims status handover, and a defined time window for cooperation.

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6) Ownership and access to data: you must control your billing records

Your practice should own:

• Patient ledgers and transaction history
• Claim data and submission logs
• Payer communications and appeal documentation
• Reports and dashboards created for your practice

Access matters too: Ensure you retain admin-level access (or at least continuous access) to the practice management system, clearinghouse, and payer portals—especially during a dispute or termination.

Contract language to seek:

• “Client owns all data; vendor is a service provider.”
• “Vendor will provide data export in readable format upon request and at termination.”

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7) HIPAA, PHI, and security: do not treat this as boilerplate

Any vendor handling PHI should sign a Business Associate Agreement (BAA). Sometimes it’s embedded; often it’s a separate document. Either way, it must be in place before PHI access begins.

Your contract package should cover:

• HIPAA compliance obligations and permitted uses/disclosures
• Security controls (encryption, MFA, access logging)
• Subcontractor rules (who else can access PHI?)
• Breach notification timelines (e.g., within 48–72 hours of discovery)
• Incident response cooperation
• Indemnification (more on that below)

Practical tip: Ask whether staff are U.S.-based, how access is provisioned, and how quickly access is removed when an employee leaves.

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8) Subcontractors and offshore billing: require transparency and approval

Many billing firms use subcontractors for posting, follow-ups, or after-hours work. That’s not inherently bad—but it must be disclosed and controlled.

Contract protections to add:

• Vendor must disclose all subcontractors who will access your PHI
• Subcontractors must sign equivalent HIPAA/BAA obligations
• You must approve material subcontractor changes
• Vendor remains fully responsible for subcontractor actions

If offshore resources are used, you may want additional security requirements, training assurances, and tighter access controls.

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9) Reporting, meetings, and visibility: you can’t manage what you can’t see

A frequent frustration with outsourced billing is reduced transparency. Your outsource dental billing contract should require consistent reporting and operational touchpoints.

Reporting requirements to include:

• Weekly claim submission totals
• Denials by payer and reason code
• Appeals submitted and outcomes
• A/R aging by bucket (0–30, 31–60, etc.)
• Top unpaid claims over a threshold
• Patient balance aging and collection efforts
• Write-offs and adjustments report
• Fee schedule and payer underpayment identification (if offered)

Governance cadence:

• Weekly operations check-in during first 60–90 days
• Monthly performance review thereafter
• Quarterly strategy review (optional but valuable)

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10) Payment posting and adjustments: prevent silent revenue leakage

Posting is where revenue can quietly leak through improper adjustments, write-offs, or misapplied payments. Your contract should define:

• Who has authority to post contractual adjustments
• Rules for write-offs (and approval thresholds)
• Refund handling and approval process
• Patient payment allocation standards
• Documentation requirements for adjustments

Best practice: Require that any non-contractual write-off over a set dollar amount needs practice approval.

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11) Dispute resolution and chargeback handling: plan for payer issues

Insurance disputes happen—coordination of benefits issues, retroactive denials, recoupments, and payer audits.

Make sure your dental billing contract addresses:

• Who handles payer recoupment disputes
• Who prepares documentation for audits
• How far back the vendor will support claims (especially if the issue predates the vendor)
• Cooperation obligations between the parties

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12) Indemnification, liability caps, and insurance: allocate risk realistically

Vendors often limit liability heavily. Some limitation is normal, but the cap should not gut your protection—especially for data breaches or gross errors.

Consider negotiating:

• Indemnification for HIPAA breaches caused by the vendor
• Indemnification for vendor misconduct, IP infringement, and violations of law
• A liability cap that makes sense relative to fees paid (e.g., 6–12 months of fees), with carve-outs for confidentiality/HIPAA breaches, fraud, and willful misconduct
• Vendor cyber liability insurance and professional liability (E&O) with proof (certificates)

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13) Non-solicitation and non-compete: avoid overreaching restrictions

Some vendors include clauses preventing you from hiring their staff. Limited non-solicitation may be reasonable, but ensure it:

• Applies only to active staff you directly interacted with
• Lasts a reasonable period (e.g., 12 months)
• Doesn’t restrict your general hiring activities or recruiting

Non-competes restricting your practice operations are generally inappropriate in this context.

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14) Pricing changes and fee increases: lock in predictability

If the vendor can raise fees mid-term “at any time,” your budgeting becomes unpredictable.

Better terms include:

• Fee increases only at renewal
• A fixed cap or indexed increase (e.g., CPI)
• Advance written notice (e.g., 60–90 days)
• Right to terminate if you don’t accept the new pricing

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15) Onboarding, implementation, and timeline: put the ramp-up in writing

Billing transitions are risky: dropped claims, delayed posting, confused workflows. Your contract should include:

• Implementation plan with milestones
• Data migration responsibilities
• Training for your team
• A “go-live” date and what “go-live” means (e.g., vendor responsible for all claims from DOS X forward)
• Parallel run period (optional)
• Responsibility for backlog or old A/R

Pro tip: If the vendor promises to “clean up old A/R,” define the timeframe, claim age limits, and success criteria.

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Common red flags in a dental practice billing agreement

Watch closely for:

• Vague scope with lots of “as needed” language
• No defined reporting cadence
• Percentage fees without defining “collections”
• Long auto-renewal with short cancellation window
• Termination penalties that feel punitive
• Vendor keeps admin control of payer portals/clearinghouse
• Weak or missing HIPAA/BAA terms
• No transition assistance at termination
• Vendor can subcontract without notice

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Practical negotiation checklist (buyer-friendly)

Before signing, request:

1. A detailed scope exhibit + exclusions list
2. A KPI/SLA exhibit + reporting samples
3. A BAA (or HIPAA addendum) reviewed alongside the main agreement
4. Clear fee definitions + audit rights
5. Termination for convenience + transition support
6. Data ownership clause + export format requirements
7. Proof of insurance (cyber + E&O)
8. Subcontractor disclosure and approval rights

If you’re comparing vendors, ask each to answer the same questions and provide a sample monthly report. Transparency early often predicts transparency later.

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Final thoughts: treat billing like a revenue partnership—then contract for it

When you hire a dental billing service, you’re not just buying admin support—you’re handing over critical steps in your cash flow. The right dental billing contract aligns incentives, protects patient data, and gives you clear visibility into performance. The wrong dental practice billing agreement can lock you into poor service, surprise fees, and preventable revenue loss.

If you want a faster way to draft and refine an outsource dental billing contract with clear scope, HIPAA-ready terms, and buyer-friendly protections, you can generate a strong first draft using Contractable, an AI-powered contract generator, at https://www.contractable.ai.

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Other questions practice owners ask (to keep learning)

• What’s a fair percentage fee structure when I outsource dental billing for a single-location practice?
• Should my dental billing service handle patient statements and collections—or should I keep that in-house?
• How do I measure whether outsourced billing is improving collections after 60–90 days?
• What reports should I require monthly from a dental billing company?
• What’s the difference between a billing service and full revenue cycle management (RCM)?
• How do I switch billing vendors without losing claims or delaying reimbursements?
• What HIPAA security controls should I ask a billing vendor to demonstrate (MFA, encryption, audit logs)?
• Should the dental billing service have access to my bank lockbox or payment processor?
• How do I structure transition assistance in the contract to protect my practice during offboarding?
• Can I include performance-based pricing or fee credits tied to SLAs in a dental billing agreement?