Is Percentage-Based Medical Billing Legal in Illinois?

Illinois should not be described as a state that simply bans all percentage-based billing. The Medical Practice Act contains an express billing-services exception with conditions. A therapist must also identify the rules governing their particular license before relying on a provision written for medical licensees.

What is the Illinois physician billing exception?

Under 225 ILCS 60/22.2(d), a medical licensee may pay fair market value for billing, claims preparation, or collection work through a percentage, flat fee, or other covered arrangement. The practice must retain control over fees, and collected charges must follow the statute’s practice-controlled payment requirements or its licensed-collection-agency trust-account route.

Section 22.2(f) separately restricts percentage compensation for listed activities such as management, marketing, and negotiating payment terms. Calling a bundle “billing” does not establish that every included activity fits subsection (d).

Does that exception cover every Illinois therapist?

No automatic conclusion follows for an LCSW, LCPC, LMFT, or psychologist from a statute governing medical licensees. Illinois social-work rules, for example, address compensation for services not actually rendered and illegal fee splitting. Identify the profession and relevant rules rather than importing a physician exception into a different license.

A mixed clinical group should list the professions and the vendor’s actual responsibilities. A contract that combines claims work, marketing, and business management needs a more precise review than a contract for a defined administrative service.

What should an Illinois practice ask about the contract?

First, ask which services the quoted fee purchases. Separate submission, denial work, patient balances, credentialing, management, and marketing. Ask the vendor to identify which are part of the agreement and which have another price.

Second, draw the payment path. Who receives payer deposits? Who controls the bank account? Who sets patient charges and approves adjustments? These questions make the practical arrangement visible before anyone relies on a short statement that percentage billing is allowed.

Should I choose flat, per-claim, or percentage pricing?

Once the permissible structures are established, compare the same scope using your practice’s numbers. For an illustrative $20,000 in eligible net collections, 4% is $800. A hypothetical $800 monthly fee has the same cost at that level, but the models differ when collections change. This calculation does not establish fair market value or legal compliance.

Bomi prefers a collections percentage where permitted because payment reaching the practice benefits both teams. Its applicable restricted-state per-claim arrangement is used when the percentage fee is prohibited; this article does not classify all Illinois services as restricted.

What is the practical next step?

Give Illinois healthcare counsel the agreement, clinician licenses, service list, sample invoice, and payment flow. Ask for a conclusion on the actual mix of services and fee structure. Avoid relying on an old case summary without checking the current statutory text.

This guide is educational information. Primary sources checked October 23, 2026; it does not determine compliance for a particular practice.

Frequently Asked Questions

Did Illinois ban all percentage billing arrangements?

No. The Medical Practice Act has a conditional exception for specified administrative billing and collection services. Its application to the actual license and contract still matters.

Does an Illinois physician exception automatically authorize an LCSW contract?

No. Review the rules for the clinician’s own profession and the real service arrangement.

Sources and scope

225 ILCS 60/22.2(d) and (f)

Illinois social-work rules: §1470.96 unprofessional conduct

Related questions

Read the national fee-splitting guide

See Bomi’s current pricing or talk through your practice’s billing needs.