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How to Develop a Medical Billing and Claims Processing Software

Paul Kovalenko Paul Kovalenko | September 15, 2023 | 10 min

However, it could have been easily avoided if billing automation was available. Hospital billing system development can help to avoid mistakes, speed up processes from estimating the costs to receiving the payment, and take the pressure off the billing department. Hospitals are already widely using medical billing and the market for the US medical billing services is expected to reach $8 Billion by 2026.

If you want to save your medical personnel and patients from crumbling under the paper bills, keep reading and learn how the hospital billing system works, how to develop a custom medical billing software and learn about the benefits that come with a healthcare billing system development. 

How Does the Hospital Billing System Work?

Normally, the patient is registered and checked for insurance eligibility, a doctor runs all the necessary procedures, then the billing department tries to figure out what these procedures are, checks up on different departments, forms a bill, and sends it to the insurance, and hopes that the bill will be paid. 

With hospital billing software development, it looks a bit different:

  • Automated insurance eligibility check: you do not need a specific person or a whole department to run an insurance eligibility check, the system does it automatically in mere seconds and with fewer errors. Thus, healthcare organizations don’t make patients wait for a long time and can save time for the doctor too.
  • Forming a bill: hospital billing software is connected to an EHR\EMR system and, therefore, it accesses all the procedures and treatments that the patient has received. Based on that information, it creates a superbill that contains all kinds of services provided by numerous departments. The bill can also be shared with a patient so that they can check whether everything is correct and understand what they are charged for.
  • Sending claims: the claim goes to the insurance company. The software creates a file in a format that works for the insurance provider automatically.
  • Claims processing: the claim processing software receives and stores information about whether the insurance company covered the bill or whether the patient put in the payment themselves. It can also send reminders to the patients if their bill is still unpaid or when their insurance is about to expire. 

As you can see, everything is done nicely, cleanly and automatically. If you need to add an extra feature at any point, you can do so too. 

You can also develop a hospital billing system with the reporting feature: with the help of neatly organized graphs, you can see how many bills were paid or not, who your risk clients are, what your most popular operations are, your revenue, etc. The software can also give you recommendations for improvement and highlight what you are doing wrong. 

Main Steps on How to Develop Medical Billing Software

Medical claims billing software development is a complex process that requires a profound understanding of all healthcare-related processes, legal requirements in this sphere, and strong technical expertise. Keep reading to learn about physician billing software development in more detail. 


In order to develop a healthcare billing system smoothly, you will need to do a lot of preparation in advance. If you have a roadmap and a vision of your app, you can avoid changing the project halfway through and you are more likely to deliver the product faster if you have set tasks and deadlines. The solid plan of medical billing system development consists of several steps:

  • Defining needs: research the needs of end-users to understand what they want to see in the solution in terms of both design and functionality. If you create a tool for a specific hospital, make sure to profoundly analyze the particularities of their operations. 
  • Researching the market: take a look at popular medical billing and claims processing software and note how they are designed and what features they have that you might use based on the needs that we have previously defined
  • Creating a feature set and design requirements: make a final list of features and design ideas that you want to see in your custom solution
  • Choosing the best platform and tech stack: define whether you want it to be a desktop solution only or if you want it to exist in the form of an app for Android and/or iOS as well. Based on that and the feature list, the tech team would be able to define the tech stack that you will need
  • Finding a team: for patient billing system development, you will normally need developers who work with the chosen tech stack, web designers, and testers. You can also add project managers to let them handle planning and sticking to the roadmap. Consider working with business consultants as they not only know how to create a medical billing system software but also how to fully monetize your solution and reach your business goals.
  • Creating a roadmap: write down all the tasks, place them in the correct order, and sprinkle them with deadlines
  • Planning budget estimation: you know the scope of work and team pay rates so you might as well analyze how much money you will spend. You are not likely to stay within the sum perfectly, but it will help you avoid getting out of it too much. 

Creating an MVP

Whether you’re crafting a solution for a small medical practice or a sprawling enterprise, the world of medical billing software is intricate and multifaceted. However, when embarking on the journey to develop a minimal viable product (MVP), focus exclusively on incorporating essential functionalities.

Engage with select user groups to gauge their satisfaction with the MVP’s user experience and aesthetics, actively seeking their feedback. By traversing this pivotal phase, you can effectively evaluate the viability of your strategy, making timely adjustments to ensure success.

Need help building a medical billing and clames processing software?
Reach out to Langate


If you wonder how to develop physician billing software, one of your most important tasks is to find a software development team that has profound expertise in this domain. You can choose between hiring an in-house development team, outsourcing certain tasks, or working with a technology partner who would take full ownership of the process.


Testing helps to ensure that the software doesn’t crash once your business operations fully rely on it as well as that your medical billing software is compatible with your other solutions.   

In most cases, businesses need both manual and automation QA engineers:

  • Manual QA engineers execute test cases to detect bags and validate the key features. 
  • Automation QA engineers utilize automation tools and run scripts that check the performance and security of the software in various simulated scenarios.

Launch and Maintenance

After testers have reviewed the product and all the bugs have been fixed, you will finally be able to launch the software. However, make sure that you start the right way: teach the end-users to work with the software and make a smooth transition between paper-only and digital billing. It will avoid unnecessary stress and even more mistakes than usual. 

Maintenance is a huge part of your development process as well. You should update the software with new security patches, fix the bugs, and add new functionality if needed. Otherwise, the solution will become obsolete and dangerous very soon. 

Benefits of Implementing Billing Software for Medical Organizations

Are you still not convinced that you need to develop software for medical billing? Or do you need just a little push before starting the development? You may want to take a look at these benefits that no one can resist. 

Minimized Mistake Possibility

Since 2020, the amount of denied insurance claims has grown by 11%. This alarming trend underscores the importance of adopting the right medical billing tools to minimize errors and potentially avoid a significant portion of these denials. Streamlining the claims process is crucial for both healthcare institutions and patients alike.

Humans can be tired or stressed which influences their ability to work dramatically. That is why errors in medical billing occur so often and then patients start arguing with the hospital and bring the issue to social media where they ruin your reputation. Automation has no room for such errors: the software operates perfectly well 24/7 without falling sick or becoming a victim of pressure, amount of work, and burnout. It is also more likely to collect all services from all the departments which humans fail to do due to the high amount of data to sort out. 

Reduced Administrative Costs

If you do not make errors in your bills, you are less likely to spend money on lawsuits from distressed customers and reputation clearance. However, it is not the only cost reduction that comes with billing software. 

90% of healthcare providers still rely on paper documents and manual processes for payment collection. With automation tools, you will not need as many employees to run the billing and confirm insurance eligibility. You will also be able to manage unpaid bills and unresolved insurance claims better since the system will send alerts to all the parties involved. 

So even if you need to make an investment for software development upfront, you will not have to wait long for the full return of investment. 

Improved Efficiency

Automation does mean efficiency and productivity at all times. Billing software will prove a patient’s insurance eligibility in seconds, it does not need much time to create a superbill, and it is able to track claims all at once. It will make both patients and admins happier. 

Cost-Efficient Strategy in Medical Billing Software Development

The cost of medical billing software development can vary significantly depending on various factors, such as the complexity of the software, the features included, the development team’s location, and the technology stack used. Here’s a general breakdown of the cost components:

Development Team: The biggest portion of the cost often goes to the development team’s salaries and fees. This includes software developers, designers, project managers, and quality assurance testers. The cost can vary based on their experience and location.

Features and Functionality: The more features and functionalities you want to include in your medical billing software, the higher the cost. Custom features and advanced functionalities will typically increase the development expenses.

Technology Stack: The choice of technology stack (programming languages, frameworks, and tools) can impact costs. Some technologies may require higher licensing fees or specialized expertise.

Testing and Quality Assurance: Ensuring the software is bug-free and meets industry standards requires thorough testing. This includes automated testing tools and manual testing efforts.

Compliance and Security: Medical billing software must adhere to strict compliance standards (e.g., HIPAA) and maintain robust security measures, which may require additional development and ongoing maintenance costs.

Maintenance and Support: After the initial development, ongoing maintenance, updates, and user support contribute to the overall cost.

Project Timeline: The timeline for development can affect costs. Rushed projects may require additional resources, potentially increasing expenses.

To provide a specific cost estimate, it’s essential to consult with a software development professional who can assess your unique requirements and provide a tailored estimate based on your project’s scope and specifications. Costs for medical billing software development can range from tens of thousands to hundreds of thousands of dollars or more, depending on the project’s complexity and scale.

Our Projects

Langate has years of experience in healthcare technology and offers great attention to the unique needs of hospitals while finding efficient solutions to common problems. We know exactly how to develop claims processing software. That is why our client, Approved Admissions, turned to us to create an insurance eligibility verification system. We optimized their platform and made sure that eligibility checks ran smoothly, even when data from various companies and hospitals came in different formats. As a result, the company was able to streamline its processes and grow its customer base up to 700 healthcare organizations. 

Want to see more cases and thoughts from our experts? Check out the article on how to develop a medical insurance verification software.

Do you want experienced developers to help you grow and optimize your processes too? Do not hesitate to reach out to Langate and learn about the services that we offer. We can develop medical billing software from scratch if you need it. 

Final Thoughts

Custom medical claims billing software development is an absolute must if you want your financial operations to run fast and mistake-free. You can check a patient’s insurance eligibility in no time, form an accurate bill within a few seconds, and let the machine keep an eye out for unpaid bills. 

If you are willing to access all the benefits of medical billing and claim processing software, let’s talk. We can figure out a unique solution that will perfectly fit your hospital’s needs. 

Frequently Asked Questions

How much does it cost to make a billing software?

The cost of medical billing software development, including custom medical billing software development, can vary widely depending on factors such as complexity, features, compliance requirements, and development team expertise. It typically ranges from tens of thousands to hundreds of thousands of dollars. For an accurate estimate, consult with experienced software development professionals.

What are the different types of billing systems?

Billing systems in healthcare services encompass various types, including fee-for-service (FFS), capitation, and bundled payments. These systems manage payment verification, often involving insurance coverage checks, to determine the reimbursement structure for medical procedures and services. Each type has distinct features impacting healthcare revenue cycles and patient billing processes.

Which software is used for medical coding?

Medical coding software plays a crucial role in hospital billing software creation. It includes components for translating medical procedures and diagnoses into standardized codes. To develop hospital billing software, you can use dedicated coding software like Optum360 EncoderPro.com, TruCode’s Encoder Essentials, or 3M CodeFinder Software Suite, which streamline coding processes and ensure accurate billing.

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