What is the Difference Between Professional Billing and Institutional Billing?

What is the Difference Between Professional Billing and Institutional Billing?

To use a billing strategy, let us explore the types of medical billing in the healthcare industry. Healthcare professionals in the healthcare business distinguished between professional vs institutional billing, depending on their purpose and the services engaged in the billing process.

There is a significant difference in handling health claims between disciplines and facility types. Physician billing and hospital billing are the two types to be clearly understood before getting into the billing process. Before claiming submission, and following the steps required for the medical billing process, it’s important to clarify if that claim falls under professional billing or institutional billing.

In some places, physician billing is termed as “Professional Billing” and Hospital billing as “Institutional Billing”. However, these two come under the overall medical billing process.

What is the Difference Between Professional Billing and Institutional Billing?

Let’s find out the purpose of both physician billing and hospital billing and the key difference between them.

Professional Medical Billing

Professional billing is known as physician billing which charges claims for medical services provided by physicians or healthcare professionals to people with medical coverage. A medical office covers administrative responsibilities for a medical practice such as

  • visiting patients
  • arranging consultations
  • verification and registration
  • payment processing
  • various other services such as medical billing

The confirmation is required as exceptionally specific in-patient and out-patient treatments will be invoiced under the patient’s insurance plans.

 Professional Medical Billing Purpose

  • The purpose of physician billing is to bill the claims to get paid for the medical services or procedures carried out by the physicians or healthcare providers to patients with healthcare insurance.
  • The physician billing form used for billing the claims is CMS-1500 or 837-P. Apart from billing form the CMS-1500 being a paper version and the 837-P an electronic version, there is no difference in these forms.
  • There are cases where Medicaid, Medicare, and other insurance companies accept only electronic claims as to the necessary charging strategy. The 837-P claim form is an electronic version of CMS-1500 and “P” stands for professional configuration. An expert physician billing service at times can have multiple responsibilities compared to institutional billing.
  • Physician billing is an important process that regulates many administrative tasks associated with medical practices.
  • The services billed under physician billing include both in-patient and out-patient and fall under the domains of in-patient and out-patient services that can be billed only after patient verification.
  • Verification is fundamental because very selective in-patient and out-patient services will be billed according to the insurance policies of the patient.
  • Physician billing includes the thorough medical billing process that also involves medical coding.

Institutional Medical Billing

Institutional billing also known as hospital billing is the process of charging claims for in-patient and out-patient services performed by hospitals or healthcare organizations.

In addition, hospital billing accounts for the services provided by professional nurses.  Institutional billers are occasionally assigned responsibilities that are not the same as professional billers. Most institutional billers are simply in charge of billing or do both billing and collections. It bills claims for medical services such as laboratory tests, medical supplies, equipment, imaging, etc.

The accomplishment of collecting, charging, and billing are the crucial tasks of institutional billers. The fundamental difference between professional billing and institutional billing is that institutional billing focuses only on the medical billing procedure rather than medical coding. On the other hand, professional billing includes medical coding.

Institutional Billing Purpose

  • The purpose of hospital billing is to bill the claims for services provided by hospitals or healthcare organizations.
  • Additionally, hospital billing also bills for the services rendered by skilled nurses or medical facilities such as laboratory services, medical equipment, and supplies, radiology, etc.
  • Hospital billing uses the claim form UB-04 or 837-I form. The UB-04 is the paper version and the 837-I form remains as the electronic version. “I” stands for the institutional configuration.
  • The appointed medical biller for hospitals only performs duties of billing and collections. Compared to physician billing, hospital billing is much more complicated.

How to Boost revenue by using professional billing and institutional billing?

Both professional billing and institutional billing remain distinct in revenue distributions or growing revenue reimbursements. However, their processes play a significant role in preventing denials and frauds cases. It becomes the primary responsibility of the physician biller to ensure that no claims or treatments go overlooked or unbilled. However, while filing the claims, the person must be careful about medical billing and coding problems due to a variety of causes, including technological errors.

One of the primary responsibilities of institutional or hospital billers is to complete collections and control billing and it must be handled by billing professionals. So to bypass errors and revenue loss, hospitals and other health care providers usually choose to outsource professional billing and institutional billing services.

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