Medical Billing Setup for a New Practice

How to set up medical billing for a new practice: start early

Knowing how to set up medical billing for a new practice is mostly a matter of sequence. Claims can only be paid once the practice and each clinician have the right identifiers, are enrolled with each payer, and have a system that can send claims and receive payments. Several of those steps depend on each other, and payer enrollment alone can take months.

This guide walks through the setup in the order most practices need it, with a printable checklist at the end. For an overview of the full claim cycle once you are running, see our medical billing process guide.

Step 1: business and provider identifiers

Before any payer application, gather the identifiers every claim and enrollment form will ask for. Mismatches between these records are a common cause of enrollment delays and later claim rejections.

Identifier	Who needs it	Notes
Employer Identification Number (EIN)	The practice entity	Issued by the IRS; used as the billing tax ID on group claims.
Type 1 NPI	Each individual clinician	Applied for through CMS's NPPES system; free of charge and stays with the clinician for life.
Type 2 NPI	The practice as an organization (for example, an incorporated group)	Also issued through NPPES; used as the billing provider on group claims.
State license	Each clinician	Payers verify it during credentialing; renewal dates should be tracked.
Taxonomy code	Each NPI	Describes the provider's specialty; should match across NPPES, payer records and claims.

Use the same legal name, service address and pay-to address everywhere. A suite number that appears on the NPI record but not on the payer application can be enough to hold up a file.

Step 2: enroll with payers before seeing patients

Payer enrollment, often called credentialing, is the longest lead-time item. Start as soon as the practice entity, NPIs and service location exist. Our provider credentialing guide covers each step in detail.

Medicare

Medicare enrollment is done online through PECOS or on the CMS-855 paper forms: the CMS-855I for individual physicians and non-physician practitioners and the CMS-855B for clinics and group practices. Clinicians joining a group also reassign their Medicare benefits to the group. Under 42 CFR 424.521, physicians and certain practitioners may in some circumstances bill for services furnished up to 30 days before their effective billing date, but that is a narrow allowance, not a plan.

Medicaid

Each state runs its own Medicaid enrollment. In Texas, providers enroll through the TMHP Provider Enrollment and Management System (PEMS), and Medicaid managed care plans have their own credentialing on top of state enrollment. Each managed care plan may also have its own timelines and document requests.

Commercial plans

Most commercial payers use the CAQH provider data profile to collect credentialing information, then run their own application and contracting steps. Keep the profile complete, upload current documents and re-attest on schedule. Ask each payer whether the network is open in your area and request the fee schedule before signing.

Step 3: choose and configure your billing system

A new practice needs a practice management (PM) system, usually paired with or built into the EHR, plus a clearinghouse connection to send claims and receive remittances. Decide these before your first patient so that charges can be entered from day one.

• Provider and location setup: enter each NPI, taxonomy, tax ID and service location exactly as enrolled.
• Payer list: add each payer with the correct payer ID from the clearinghouse, not just the name on the card.
• Clearinghouse enrollment: some payers require separate enrollment before they accept electronic claims from you.
• ERA enrollment: enroll for 835 electronic remittance advice with each payer so payments can be posted electronically.
• EFT enrollment: set up electronic funds transfer so payer deposits reach the right bank account.
• User roles: limit who can change charges, adjust balances or write off accounts.

ERA and EFT enrollments are easy to overlook and can lag behind claim enrollment. Without them, payments arrive as paper checks and paper EOBs that must be posted by hand. Our clearinghouse guide explains how claim and remittance files move.

Step 4: build your fee schedule and charge capture

Your fee schedule is the list of charges the practice bills for each CPT or HCPCS code. Set charges at or above what your best-paying contract allows, because many payers pay the lesser of the billed charge and the contracted rate. Published Medicare fee schedules and the rates in each signed contract are the usual reference points.

Then decide how charges move from the visit to the claim:

• Who selects CPT, HCPCS and ICD-10-CM codes: the clinician, a coder, or both with review.
• How modifiers are applied and checked.
• How quickly notes must be signed so charges are not held.
• How the practice confirms every scheduled visit produced either a charge or a documented no-show.

A daily reconciliation of appointments against charges is one of the simplest controls a new practice can adopt. It catches missed charges while the visit is still fresh.

Step 5: set front-desk and patient financial policies

Many denials start at registration. Write down the front-desk steps and train every person who checks patients in.

1. Collect demographics and a copy of the insurance card at scheduling or check-in.
2. Verify eligibility and benefits before the visit, including copay, deductible, and whether the plan requires a referral or prior authorization.
3. Collect copays and known patient balances at the time of service.
4. Give uninsured or self-pay patients a good faith estimate when the No Surprises Act rules require one.
5. Have patients sign the financial policy, assignment of benefits and any consent forms your payers require.

A clear written financial policy covering payment timing, payment plans, missed appointments and collections makes later conversations with patients easier.

Step 6: submit, post and follow up

Once claims are flowing, the work shifts to a daily and weekly routine:

Frequency	Task
Daily	Enter charges, review claim scrubber edits, submit claims, work clearinghouse rejections.
Daily or as received	Post ERA and EOB payments and adjustments; flag denials and underpayments.
Weekly	Work denials, follow up on claims with no response, send patient statements.
Monthly	Review AR aging, denial reasons, collections and payer mix; reconcile deposits to posted payments.

Track timely filing limits from day one. Medicare generally allows one calendar year from the date of service, while commercial and Medicaid plans set their own limits, so check each contract.

Problems that commonly hit new practices

• Seeing patients before enrollment is effective. Claims deny as out-of-network or provider not enrolled, and retroactive coverage is limited or unavailable with many payers.
• Billing under the wrong NPI. Group claims need the group NPI as billing provider and the individual NPI as rendering provider.
• No ERA enrollment. Payments arrive on paper and posting falls behind.
• Unworked rejections. Clearinghouse rejections never reach the payer; they need to be fixed and resent, not just noted.
• No one owns AR. Without a named person working unpaid claims, aging balances grow quietly.

Medical billing checklist for new practice owners

Use the table below as a medical billing checklist for a new practice. Work through it in order; items higher up tend to block the ones below them.

Stage	Checklist item
Identifiers	EIN, Type 1 NPI for each clinician, Type 2 NPI for the group, licenses, taxonomy codes
Enrollment	Medicare (PECOS), state Medicaid, managed care plans, commercial payers, CAQH profile
Systems	PM/EHR configured, clearinghouse connected, payer IDs confirmed
Payments	ERA and EFT enrollment with each payer, bank account verified
Charges	Fee schedule loaded, coding and modifier workflow defined, daily charge reconciliation
Front desk	Eligibility checks, copay collection, financial policy, good faith estimate process
Follow-up	Denial and AR owner named, timely filing limits recorded, monthly reporting set

Measuring the first months

Set a baseline early so you can see whether the setup is working. Useful measures include first-pass claim acceptance, denial rate by reason, days in AR and the share of AR older than 90 days. Our article on medical billing KPIs explains how to calculate each one.

Getting help with billing setup

If you would rather not build this in-house, Fastora's certified billing professionals can handle credentialing and payer enrollment and day-to-day claims work inside the EHR/PM system you choose. A free billing assessment is a no-commitment way to review your setup plan.

Billing and credentialing startup checklist

Credentialing is the long pole in a new-practice timeline — start it before anything else. In order:

• NPI and CAQH: get the individual NPI, set up the CAQH profile and keep it attested — most commercial applications pull from it.
• Payer enrollment: apply to Medicare, Medicaid and each commercial panel you plan to bill, and track every application separately.
• First-claims timeline: credentialing takes weeks to months per payer, so plan first patient dates around the earliest approvals and confirm which payers allow a retroactive effective date.
• Billing system: choose the EHR/PM system and clearinghouse before the first visit, so charges have somewhere to go.
• Front-desk policies: copay collection, self-pay rates and a written financial policy from day one.

Checklist

Print checklist

• Obtain EIN and confirm legal name and addresses
• Apply for Type 1 NPIs for clinicians and a Type 2 NPI for the group
• Complete the CAQH profile and submit payer applications
• Enroll in Medicare (PECOS) and state Medicaid where applicable
• Configure PM/EHR, clearinghouse and payer IDs
• Enroll for ERA and EFT with each payer
• Load the fee schedule and define the coding workflow
• Write front-desk eligibility, copay and financial policies
• Name an owner for denials and AR follow-up
• Record timely filing limits for each payer

Frequently asked questions