Can California Therapists Pay a Percentage Billing Fee?

California’s fee-splitting law does not make every percentage-based administrative service fee unlawful. Business and Professions Code §650 distinguishes referral compensation from payment for other services. A practice still needs to review what its vendor actually does and whether the payment matches the value provided.

What does California §650 say about percentage fees?

Section 650(a) prohibits specified consideration for patient referrals. Section 650(b) provides that percentage-of-revenue compensation for services other than referrals is not unlawful under that provision when it is commensurate with the value of the services or the fair rental value of supplied premises or equipment.

That is a conditional statutory distinction, not a blanket approval for any vendor percentage. A proposed billing agreement needs a real service description and a reasoned basis for the compensation. Other applicable professional, ownership, payer, and program rules still require their own analysis.

Why does the difference between billing and referrals matter?

Picture two proposed services. One company submits claims and works payment issues for patients already in your practice. Another charges for sending you new patients and bundles that with billing. The practical service list differs, even if both invoices use a percentage.

Ask the vendor to explain the role of each service and how its fee is established. Do not assume a billing label resolves the referral question. If the agreement includes marketing, patient sourcing, clinical operations, or management, bring that complete scope to counsel.

How should I evaluate whether the price fits the work?

Start with tasks and workload: eligibility checks, original claims, payment posting, denials, patient balances, clinician count, payer mix, and reporting. Keep written proposals that show the scope and what is separately charged. A bare percentage without a service list makes a meaningful comparison difficult.

An illustrative 4% on $20,000 in eligible net collections is $800. The arithmetic establishes the invoice amount in that example; it does not prove that $800 is appropriate compensation for a particular arrangement. Compare equivalent work and get advice on the actual agreement.

Why might a California practice choose percentage billing?

A practice may prefer the billing fee to move with the collected revenue in its agreed fee base. Bomi favors that structure where permitted because both teams benefit when appropriate payment reaches the practice. A flat fee can instead offer a steady budget, while per-claim pricing follows a defined submission count.

Each model still needs accountability. Ask what happens after a rejection, who tracks an underpayment, and what records the practice receives if it changes billing teams. Those details tell you how the relationship works after the initial submission.

Does Bomi automatically charge per claim in California?

This guide does not classify California as a blanket restricted state. Bomi’s applicable arrangement depends on the services and governing restrictions. Ask for the fee structure in the proposed agreement rather than assuming that the existence of a fee-splitting statute requires per-claim pricing.

This is educational information, not a determination about your practice. California §650 checked October 23, 2026.

Frequently Asked Questions

Does California prohibit every revenue-based administrative fee?

No. Section 650(b) distinguishes non-referral services subject to its compensation-value condition. That provision does not independently settle every other rule applicable to an arrangement.

Is a percentage biller the same as paying for referrals?

The actual activities matter. Claims administration and patient sourcing are different services; review the full contract rather than relying on its title.

Sources and scope

California Business and Professions Code §650(a) and (b)

Related questions

Why fee-splitting rules need state-specific answers

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