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These two types of billing are critical components of healthcare revenue cycles, and knowing how they work can help ensure accurate reimbursement and reduce the likelihood of claim denials.
What is Professional Billing?
Professional billing refers to the process of billing for services provided by individual healthcare providers, such as doctors, nurse practitioners, and specialists.
It covers services rendered in a variety of settings, including:
- Office visits
- Consultations
- Surgeries performed by a physician
- Diagnostic tests and procedures
In professional billing, the focus is on the healthcare provider’s services.
The billing process involves using the CMS-1500 claim form, which is a standard claim form used to bill Medicare carriers and Medicaid agencies.
Example Scenario: Imagine a patient visits a dermatologist for a skin evaluation.
The dermatologist performs an examination, perhaps orders a biopsy, and provides a treatment plan.
The dermatologist’s office will then bill for these services using professional billing procedures.
What is Institutional Billing?
On the other hand, institutional billing pertains to billing for services provided by healthcare facilities such as hospitals, nursing homes, and outpatient centers.
This type of billing covers a wide range of services, including:
- Room and board charges
- Medical equipment used during treatment
- Laboratory tests conducted by the facility
- Nursing services
Institutional billing involves using the UB-04 claim form, also known as the CMS-1450 form, which is specifically designed for billing institutional services to Medicare and Medicaid.
Example Scenario: Consider a patient who is admitted to the hospital for surgery.
The hospital charges for the patient’s room, nursing care, surgical supplies, and post-operative care.
These charges are billed through institutional billing.
Key Differences Between Professional and Institutional Billing
- Claim Forms: Professional billing uses the CMS-1500 form, while institutional billing uses the UB-04 form.
- Services Billed: Professional billing is for individual healthcare providers’ services, whereas institutional billing covers facility-related services.
- Billing Entities: Professional billing is typically handled by private practices and independent physicians, while institutional billing is managed by hospitals, long-term care facilities, and outpatient centers.
- Payer Interactions: In professional billing, providers usually interact directly with insurance payers. Institutional billing often involves more complex interactions, including negotiations with insurance companies regarding bundled services and facility fees.
Why Understanding the Difference Matters
Understanding the distinction between professional and institutional billing is important for healthcare providers, billing specialists, and even patients.
Accurate billing can directly impact the speed and accuracy of reimbursements, which in turn affects the revenue cycle.
Misidentifying which type of billing to use can lead to errors, delays, and even claim denials.
For instance, a physician’s office might mistakenly use an institutional billing form for a service that should be billed professionally.
This could result in the claim being denied, forcing the office to re-submit the claim correctly, which delays payment.
The Role of Certified Healthcare Billing
At Certified Healthcare Billing, we specialize in professional billing services with a deep understanding of how to streamline these processes for healthcare providers. Our focus is on minimizing errors, maximizing reimbursements, and offering comprehensive accounts receivable management services.
By staying current with the latest billing guidelines and payer requirements, we ensure that your claims are processed accurately and efficiently.
We recognize that whether you’re billing for a single consultation or a series of specialized medical procedures, the accuracy of your claims is crucial to maintaining a healthy revenue cycle.
Our services are tailored to support both individual practitioners and group practices in managing their billing needs with precision and care.
Contact Us
If you’re ready to enhance your billing process and ensure your revenue cycle is managed by experts, we’re here to assist you. Reach out to Certified Healthcare Billing today to discuss your specific needs and discover how our specialized services can make a significant difference for your practice.
FAQ Section
What is the main difference between professional and institutional billing?
The main difference lies in what is being billed. Professional billing refers to billing for services provided by individual healthcare providers, while institutional billing covers services provided by healthcare facilities like hospitals.
Why are different claim forms used in professional and institutional billing?
Different claim forms are used because professional and institutional billing involve different types of services and entities. The CMS-1500 form is used for individual healthcare providers, while the UB-04 form is used for facility-related services.
Can a healthcare provider use both professional and institutional billing?
Yes, a healthcare provider can use both types of billing if they are involved in different types of care settings. For example, a physician who works in both a private practice and a hospital may need to use professional billing for office visits and institutional billing for hospital-based services.
How can errors in billing affect the revenue cycle?
Errors in billing can lead to claim denials, delayed payments, and reduced revenue. Correctly identifying the type of billing needed and using the appropriate claim forms can help avoid these issues.
