Do you know professional and hospital billing is always a controversial point? That is why, we are going to elaborate our both systems to make them clear for you. When both billing systems are clear for you, you can choose the right path for your hospital.
Professional billing covers charging for physician and outpatient services. On the other hand, hospital billing involves the billing charges of hospital equipment room rates, and other services.
In this blog post, we will do a detailed comparison of professional billing vs. Hospital billing. After reading this blog, you will gain the insights needed to choose the right billing path for your organization.
Understanding Professional Billing
Professional billing handles the payments of doctors, therapists, and specialists. In this system, payments are directly reimbursed to the physicians rather than the hospital owner. Billing staff fills the claims with specific codes and submits them to the insurance companies. These companies then pay the payment for the procedure to the doctors.
How does it work?
CPT Codes
Current Procedural Terminology (CPT) codes are used to describe this billing system. Each CPT code is designed for a specific procedure that shows that this procedure is done by a specific doctor. For example, a routine office visit, surgical procedure, or diagnostic evaluation would be coded separately and billed as part of professional billing.
Claim Submission
CMS-1500 forms are used to submit claims in this billing system. It is the standard format for detailing outpatient services and physician charges. On these claims, staff mention only the services provided by the physician so that they can get their payment from the payer companies.
Key Entities in Professional Billing
In the complexities of professional billing vs. Hospital billing, you should understand that these entities are used in only professional billing.
Medical Billing and Coding
Coding is used to mention the services of the healthcare provider. In this way, doctors or therapists will get the exact amount of their services without any tax cuttings.
Third-Party Payers
It includes insurance companies that claim for the payment of patient procedures. These companies thoroughly study the claim application, review it, verify it, and then accept the claim. After accepting, they reimburse the payment to the physician.
Physician Billing
Physician billing is also a part of professional billing. As the name shows, it only covers the charges for physicians, not other facility charges. In short, professional billing emphasizes precision and efficiency, as it directly affects reimbursement rates for individual healthcare provider
Understanding Institutional Billing
Hospital billing is also called institutional billing. It includes costs for inpatient stays, room rates, medical equipment, diagnostic tests, and other services provided by the hospital. In this billing system, institutional charges are accessed and managed.
How does it work?
Claim Submission
Healthcare billing systems use UB-04 forms (also known as CMS-1450) to submit claims for institutional charges. This form is filled out for facility-related costs or other investments in the hospital. For example, a hospital will include these charges for a surgery procedure: charges for the operating room, recovery room, drugs, and other resources used during the patient’s procedure.
No Codes
There are no specific codes for this billing system that indicate the service charges. Billers only put the services utilized on the billing forms. So, it seems that handling hospital billing is easy as compared to professional billing where complex CPT codes are involved. Keep in mind that insurance companies also pay for the institutional charges in the patient procedure. However, the administrative department of the hospital keeps both bills separate and processes both separately.
Key Entities in Hospital Billing
In the comparison of professional vs. Hospital billing, you should understand the important components of hospital billing. These components are:
Facility Charges
As we know, this billing system is entirely dependent on facility charges. It covers all the charges from room rent to medicines.
Healthcare Billing Systems
Healthcare billing systems focus on streamlining the complexities of complex institutional claims.
UB-04 Forms
This billing form is used especially for institutional billing claims.
Key Differences between Professional and Hospital Billing
Both billing systems are designed to secure the payments for every department. Both systems focus on doctors as well as healthcare organizations receiving accurate payment for their services. Although some key differences are present between them that show their purpose.
The main difference between the two systems is as follows:
Scope
Professional billing covers individual physician services. On the other hand, hospital billing covers facility-related charges such as room charges and equipment used.
Billing Forms
The first billing system uses the CMS-1500 form to submit claims. Alternatively, the second billing system uses the UB-04 form to submit institutional claims.
Services Covered
The physician billing system focuses on outpatient and physician services. Conversely, institutional billing focuses on inpatient stays and hospital-based services.
Claim Submission
Overall claim submission process is the same for both billing systems except for the services. In the first billing system, the claim is submitted to the insurance or third-party companies. In contrast, in hospital billing, a claim is submitted to cover institutional charges.
Revenue Cycle Management
The main function of RCM in a billing system is that it increases revenues and cash flow for the organization and healthcare providers. The results of both RCMs are the same but the purposes are different. In the comparison of professional billing vs. Hospital billing, the first one tried to increase physician reimbursements and the second one tried to cover hospital operational costs. RCM of both systems is handled effectively so that the organization cannot face financial losses.
Choosing the Right Path: Professional vs Hospital Billing
Ready to choose the appropriate billing type for your hospital? Choosing between professional and hospital billing consists of some factors. You should explore these factors because they can help you determine what is best for your finance department.
Factors to Consider:
Practice Size
Usually, small clinics rely on professional billing because they want to focus on physician services. On the other hand, large healthcare organizations rely on hospital billing because they want to cover institutional costs effectively.
Scope of Services
Outpatient services align with professional billing, while comprehensive healthcare facilities need hospital billing to cover facility charges.
Patient Volume
A large number of patients with outpatient services may lean towards professional billing, whereas hospitals managing prolonged inpatient care depend on institutional billing.
Some hospitals may need to integrate both billing systems. For example, a hospital that employs physicians for outpatient consultations must manage both professional and hospital billing to address all aspects of care..
Modern healthcare billing systems play an important role in simplifying both professional and hospital billing. These systems enhance accuracy, reduce errors, and improve the efficiency of the hospital.
Conclusion
Professional billing and hospital billing serve different yet equally important roles in the healthcare industry. Professional billing focuses on individual physician services, while hospital billing accounts for the comprehensive costs of healthcare facilities. Understanding the differences between these systems is critical for optimizing revenue cycle management and ensuring compliance with billing standards.
Choosing the right path depends on the specific needs, scale, and patient base of a practice or organization. You can enhance financial stability, streamline operations, and deliver better patient care by implementing tailored billing strategies and leveraging advanced healthcare billing systems.
In the debate of professional billing vs hospital billing, the right choice lies in aligning billing processes with organizational goals and the demands of the healthcare organization.
