Hospital Billing Vs. Professional Billing: Understanding The Differences

Billing in the healthcare industry can be complicated. There are two main types of billing: hospital billing and professional physician billing. It’s important for healthcare providers to know the differences between these types in order to manage their revenue effectively. Each type has its own unique rules and regulations that affect how providers get paid.

Physician billing, alternatively referred to as professional billing including Ambulatory Surgery Center (ASC) billing, involves the submission of claims for services rendered by healthcare professionals or physicians, encompassing both inpatient and outpatient care. Below, we will provide a concise overview of professional and hospital billing.

Hospital Billing

Hospital billing involves the process of billing for services provided in a hospital. This includes things like when a patient stays overnight, have a procedure done, visit the emergency room, undergo surgery, or receive other medical treatments within the hospital. Here are some important things to know about hospital billing:

  1. Facility Fee: Hospitals charge a facility fee to cover the cost of providing comprehensive services. This fee includes things like medical equipment, nursing care, and administrative overhead.
  2. UB-04 Claim Form: Hospitals use the UB-04 claim form for billing purposes. This form includes detailed information about your stay, the procedures you had, the medications you received, and other relevant details.
  3. Diagnosis-Related Groups (DRGs): Hospital billing follows a payment system called Diagnosis-Related Groups. This means that patients with similar diagnoses are grouped together for reimbursement purposes.

Hospital coding is highly complex, especially when compared to professional billing. This complexity is one of the reasons why coding for institutional cases is typically performed by specialized coders. Therefore, it is crucial to have expert billers and coders for both hospital billing to ensure optimal reimbursement and increased profitability.

Understanding Professional Billing

Professional billing, also called physician billing, is the process of billing for services provided by individual healthcare providers like doctors, surgeons, specialists, and others who are not based in a hospital. Here are some important things to know about professional billing:

  1. Evaluation and Management (E/M) Codes: Professional billing uses E/M codes to determine the level of service provided during patient visits. These codes consider factors like the complexity of the visit, the time spent with the patient, and the medical decision-making involved.
  2. CMS-1500 Claim Form: Professional billing relies on the CMS-1500 claim form. This form includes details about the patient, the healthcare provider, the services provided, diagnosis codes, and procedure codes.
  3. Fee Schedule: Professional billing often follows a fee schedule. This schedule outlines the predetermined rates for specific services offered by the healthcare provider.

Key Differences Between Hospital And Professional Billing

  • Setting: The main difference between hospital and professional billing is the location where the services are provided. Hospital billing is for services given within a hospital facility, while professional billing is for services provided by individual healthcare providers outside of a hospital.
  • Claim Forms: Hospital billing uses the UB-04 claim form, while professional billing uses the CMS-1500 claim form.
  • Fee Structure: Hospital billing includes facility fees along with charges for specific services, whereas professional billing usually follows a fee schedule or charges based on specific procedures or services rendered.

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