Professional Billing vs Institutional Billing – What Is the Difference?

If you are applying for a position in medical billing, you must grasp the nature of work at various types of hospitals. There is a clear distinction between billing in healthcare and billing in other professions. Most medical billers will tell you that there are significant disparities in handling health claims between disciplines and facility types.

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Healthcare professionals in the healthcare business distinguished between these two names, professional vs institutional billing, depending on their purpose and the services engaged in the billing process.

Let’s look at the objective of both professional billing and hospital billing to see how they differ.

What is Professional Medical Billing?

Professional billing charges claims for medical services or treatments provided by physicians or healthcare professionals to people with medical coverage. For the same reason, professional billing is known as physician billing. A medical office covers administrative responsibilities for a medical practice such as visiting patients, arranging consultations, verification and registration, money collection, and various other services such as medical billing.

Professional billing is a necessary procedure governing many administrative duties related to medical practices, such as scheduling appointments, greeting patients, verification and registration, and payment processing. The proof is required as extremely specific in-patient and out-patient treatments will be invoiced under the patient’s insurance plans.

What is Institutional Medical Billing?

Institutional billing is the process of charging claims for in-patient and out-patient services performed by hospitals or healthcare organizations. For the same reason, hospital billing is often known as institutional billing.

In addition, hospital billing accounts for the services provided by professional nurses. It also bills claims for medical services such as laboratory tests, medical supplies, equipment, imaging, etc. 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. The achievement of collecting, charging, and billing are the critical tasks of institutional billers.

The fundamental difference between professional billing and institutional billing is that hospital or institutional billing focuses only on the medical billing procedure rather than medical coding. On the other hand, professional billing includes medical coding.

Capabilities of Professional Billing and Institutional Billing

Medical billers play a vital role in the healthcare industry, whether in professional or institutional billing. All billers must understand critical areas:

  • Medical providers have access to large amounts of data for each insurance company to file medical claims effectively.
  • Medical billing staff have access to sensitive, confidential client health information and must be aware of HIPAA privacy and security standards.
  • Experience with the billing system saves time, reduces mistakes, and eliminates problems.
  • Understanding the importance of benefits verification involves knowing what is covered in patient’s plan and how to bill claims correctly to avoid payment delays.
You may also be interested to read about Best Practices For Improving Patient’s Appointments

Types of Medical Billing Claims for Institutional and Professional Billing

There are different types of healthcare claims. Now we discuss two types of medical billing claims one is for professional billing and the other one is for institutional billing.

1. CMS-1500 For Professional Billing

CMS-1500 form is used for professional billing. The 837-P, which is the electronic counterpart of the CMS 1500 form, is used in professional billing. The letter “P” refers to professional configuration.

2. UB-04 For Institutional Billing

The UB-04 form is used for institutional billing. The 837-I is used for electronic claims in institutional billing. The letter “I” represents the institutional configuration.

How might professional billing and institutional billing be used to increase revenue?

Both physician and hospital billing remain distinct in revenue distributions or rising revenue reimbursements. Nonetheless, their processes play a significant role in preventing denials and frauds actions. It becomes the primary responsibility of the physician biller to ensure that no claims or treatments go unbilled or unnoticed. However, while filing the claims, the personnel must be wary of medical billing and coding problems. Problems can occur for a variety of causes, including technological errors.

To avoid mistakes and billing loss, most hospitals and other health care providers choose to outsource professional billing and institutional billing services. One of the primary responsibilities of institutional or hospital billers is to complete collections and control billing. Hospital coding is supposed to be far more sophisticated than physician coding, so institutional matters are handled only by coding professionals.


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