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Institutional Claims vs Professional Claims in Healthcare

Navigating the maze of healthcare claims can be challenging, but understanding the differences between institutional claims vs professional claims is crucial for accurate billing and efficient reimbursement. Healthcare claims, essential for securing payments for services provided, fall into two main categories: institutional and professional. Institutional claims are submitted by hospitals and healthcare facilities, covering services like inpatient care and surgeries. On the other hand, professional claims are filed by individual healthcare providers, such as doctors and therapists, for services like consultations and outpatient procedures. 

This blog post delves into the distinctions between institutional billing vs professional billing, highlighting their significance in the medical billing and coding process. By understanding these differences, healthcare providers can optimize their billing practices, ensure timely reimbursements, and maintain financial stability.

CriteriaInstitutional ClaimsProfessional Claims
1. Claim FormUB-04 (CMS-1450)CMS-1500
2. Billing EntityHospitals, clinics, nursing homes, and other healthcare facilities.Individual healthcare professionals like doctors, therapists, and nurse practitioners.
3. Type of ServicesInpatient, outpatient, emergency room services, lab tests, radiology, and other facility-based services.Office visits, consultations, surgeries, treatments, and other direct patient care services.
4. Coding Systems UsedICD-10-CM for diagnoses, ICD-10-PCS for inpatient procedures, and HCPCS for outpatient services.ICD-10-CM for diagnoses and CPT/HCPCS for procedures and services.
5. ReimbursementTypically based on diagnosis-related groups (DRGs) for inpatient care and ambulatory payment classifications (APCs) for outpatient care.Typically based on the fee-for-service model, relative value units (RVUs), or bundled payments for specific services.
6. Submission FrequencyOften submitted for each patient stay or visit.Often submitted for each individual encounter or service provided.
7. Regulatory OversightGoverned by facility-specific regulations and standards, often involving state and federal health agencies.Governed by professional standards and licensing boards, along with state and federal regulations.
8. Documentation RequiredDetailed facility records, including patient charts, treatment plans, and discharge summaries.Detailed patient encounter notes, treatment plans, and procedure documentation.
9. Common ErrorsErrors in patient information, coding inaccuracies, and missing documentation.Coding errors, incorrect patient information, and insufficient documentation of services provided.
10. Audit ProcessOften subject to audits by Medicare, Medicaid, and other insurance payers focusing on facility compliance and billing practices.Often audited by insurance payers and regulatory bodies focusing on the accuracy of individual provider billing and service documentation.
11. Impact on PatientsAffects overall patient billing for hospital stays and facility-based services, potentially impacting total out-of-pocket costs.Directly impacts patient billing for specific services and treatments received from individual providers, affecting co-pays and deductible amounts.
Institutional Claims Vs Professional Claims

What are Institutional Claims?

Institutional claims refer to the billing requests submitted by healthcare institutions like hospitals, skilled nursing facilities, and other healthcare establishments. These claims are primarily concerned with the facility-based services provided to patients. The billing for these claims is done using the UB-04 (CMS-1450) form, which is specifically designed for institutional billing.

Institutional claims typically cover a wide range of services, including facility charges, inpatient services, room and board, and other related services provided within a healthcare institution. These claims are essential for ensuring that hospitals and other facilities receive the necessary reimbursements for the comprehensive care they provide.

Types of Institutional Claims

Outpatient

Outpatient institutional claims are for services provided to patients who do not require admission to the hospital. These services can include diagnostic tests, minor surgical procedures, and other treatments that do not necessitate an overnight stay. Outpatient claims ensure that healthcare facilities are compensated for these services without the complexities of inpatient billing.

Inpatient

Inpatient institutional claims are submitted for services provided to patients who are admitted to the hospital. These claims include charges for room and board, nursing care, surgeries, medications, and any other services rendered during the patient’s stay. Inpatient claims are generally more complex and involve higher reimbursements compared to outpatient claims.

Third-Party Payers

Institutional claims often involve third-party payers, such as insurance companies and government programs like Medicare and Medicaid. These payers reimburse healthcare facilities for the services provided to insured patients. Understanding the specific requirements and guidelines of each payer is crucial for accurate and timely reimbursement.

Employer Self-Funded Plans

Some employers opt for self-funded health plans, where they assume the financial risk of providing healthcare benefits to their employees. Institutional claims submitted under these plans require detailed documentation and adherence to the employer’s specific billing policies. These claims can be complex and require precise management to ensure proper reimbursement.

What are Professional Claims?

Professional claims refer to the billing requests submitted by individual healthcare providers such as doctors, therapists, and other non-institutional providers. These claims are concerned with the professional fees for services rendered by these practitioners. The billing for professional claims is done using the CMS-1500 form, which is specifically designed for professional billing.

Professional claims typically cover services like outpatient consultations, procedures performed in the physician’s office, and other professional services provided by individual healthcare providers. Accurate professional billing ensures that healthcare providers are compensated for their expertise and the services they offer to patients.

Types of Professional Claims

Physician Services

Physician services claims are submitted for services provided by doctors, including consultations, examinations, diagnostic tests, and treatments. These claims ensure that physicians are paid for their professional expertise and the medical care they provide to patients.

Hospital Service

Professional claims can also include services provided by individual practitioners within a hospital setting. These claims cover services like surgical procedures, anesthesia, and other specialized care provided by individual healthcare professionals in conjunction with hospital services.

Pharmaceutical Service

Pharmaceutical service claims are submitted for medications prescribed and administered by healthcare providers. These claims cover the cost of the drugs as well as the professional fees for administering them. Accurate pharmaceutical claims are essential for ensuring that both the medications and the services related to their administration are properly reimbursed.

Institutional Claims vs Professional Claims

Understanding the differences between institutional claims and professional claims is crucial for effective medical billing and coding. These differences impact the billing forms, services covered, coding systems, revenue codes, billing processes, and payment models.

1. Billing Forms

Institutional: UB-04 form

Institutional claims are billed using the UB-04 (CMS-1450) form. This form is designed to capture comprehensive information about the facility-based services provided to patients, including room and board, inpatient care, and other institutional services.

Professional: CMS-1500 form

Professional claims are billed using the CMS-1500 form. This form is tailored to capture the details of services provided by individual healthcare providers, such as consultations, outpatient procedures, and other professional services.

2. Services Covered

Institutional: Facility-based services

Institutional claims cover a wide range of facility-based services, including surgeries, extended care, diagnostics, and inpatient services. These services are typically provided within a hospital or other healthcare institution.

Professional: Services provided by individual practitioners

Professional claims cover services provided by individual healthcare practitioners, including consultations, outpatient procedures, office visits, and other professional services. These services are typically provided outside of an institutional setting.

3. Coding Systems

Institutional: ICD-10-PCS (Procedure Coding System)

Institutional claims use the ICD-10-PCS (Procedure Coding System) for coding procedures. This system is specifically designed for hospital settings and includes codes for a wide range of facility-based services.

Professional: CPT (Current Procedural Terminology) Codes

Professional claims use CPT (Current Procedural Terminology) codes for coding procedures. These codes are widely used by individual healthcare providers to describe the services they offer, including consultations, diagnostic tests, and treatments.

4. Payment Models

Institutional: Prospective payment systems, bundled payments

Institutional claims often use prospective payment systems and bundled payments. These models involve predetermined rates for specific services or episodes of care, ensuring that healthcare facilities receive consistent and predictable reimbursements.

Professional: Fee-for-service, capitation models

Professional claims typically use fee-for-service and capitation models. In the fee-for-service model, providers are reimbursed for each service they provide, while the capitation model involves a fixed payment per patient, regardless of the number of services provided.

How Can Institutional Billing and Professional Billing Be Used To Increase Revenue?

Institutional Billing Vs Professional Billing

Both institutional billing and professional billing play a crucial role in the financial health of healthcare providers. Effective billing practices can significantly increase revenue and ensure the sustainability of healthcare services. Here are some strategies to enhance revenue through institutional and professional billing.

1. Outsourcing Medical Billing Services

Outsourcing medical billing services can significantly transform operations for healthcare providers. Professional billing companies have the expertise and resources to handle complex billing processes efficiently. By outsourcing, healthcare providers can reduce administrative burdens, minimize errors, and ensure timely reimbursements. This leads to increased revenue and allows providers to focus on delivering quality care.

2. Streamlining the Medical Billing Process

Streamlining the medical billing process is essential for maximizing revenue. Implementing efficient billing systems, ensuring accurate coding, and maintaining comprehensive documentation can significantly reduce claim denials and delays. Regular training for billing staff and adopting advanced billing software can further enhance the efficiency of the billing process.

3. Leveraging Technology

Leveraging technology is crucial for optimizing institutional and professional billing. Electronic health records (EHR) systems, automated coding software, and advanced billing platforms can streamline the entire billing process, reduce errors, and improve revenue cycle management. Technology can also provide valuable insights through data analytics, helping providers identify trends and opportunities for revenue enhancement.

4. Improving Coding Accuracy

Accurate coding is essential for maximizing reimbursements. Proper training for coding staff, regular audits, and staying updated with the latest coding guidelines can ensure that all services are correctly coded. This minimizes claim denials and ensures that providers receive appropriate payments for the services rendered.

5. Enhancing Documentation

Comprehensive and accurate documentation is critical for successful billing. Ensuring that all patient encounters, services provided, and procedures performed are thoroughly documented can prevent claim denials and ensure timely reimbursements. Implementing standardized documentation practices and regular audits can significantly enhance the quality of documentation.

6. Regular Audits and Compliance

Conducting regular audits and ensuring compliance with billing regulations are crucial for maintaining the financial health of healthcare providers. Audits can identify discrepancies, prevent fraud, and ensure adherence to billing guidelines. Compliance with regulations such as HIPAA and payer-specific requirements can prevent costly penalties and safeguard revenue.

The Bottom Line

In the complex world of healthcare, understanding the differences between institutional billing vs professional billing is essential for effective revenue cycle management. Both institutional and professional claims have unique characteristics, requirements, and challenges. By leveraging technology, outsourcing medical billing services, and implementing best practices, healthcare providers can optimize their billing processes, reduce errors, and increase revenue.

Whether you are a healthcare provider, a medical billing professional, or simply interested in the intricacies of medical billing and coding, comprehending the nuances of institutional claims vs professional claims is crucial. This knowledge not only ensures accurate and timely reimbursements but also contributes to the overall efficiency and sustainability of healthcare services.

The differences between institutional and professional billing are significant, and mastering these distinctions is key to successful medical billing and coding. By focusing on accuracy, leveraging technology, and continuously improving billing practices, healthcare providers can navigate the complexities of billing and secure the financial stability needed to provide high-quality care.

Contact 1st Medical Billing for Medical Billing Services!

At 1st Medical Billing, we specialize in providing expert medical billing services in Los Angeles, California to healthcare providers. Our experienced team ensures accurate and timely processing of your claims, maximizing your revenue and reducing administrative burdens.

We stay up-to-date with the latest industry regulations to ensure compliance and efficiency. Whether you’re a small practice or a large healthcare facility, we tailor our services to meet your unique needs. Contact us today to streamline your billing process and boost your practice’s profitability!

Frequently Asked Questions

Q.1 What is the difference between professional billing and institutional billing?

Professional billing refers to the process of billing for services provided by individual healthcare providers like doctors or specialists. Institutional billing, on the other hand, involves billing for services provided by healthcare facilities such as hospitals or clinics, covering a broader range of services and expenses.

Q.2 How do institutional claims work?

Institutional claims work by healthcare facilities, like hospitals, submitting claims to insurance companies for services provided to patients. These claims cover a wide range of services, including room charges, medical procedures, and medications. The facility uses standardized forms to ensure accurate billing and reimbursement for services rendered.

Q.3 What is the institutional form for medical billing?

The institutional form for medical billing is the UB-04 form, also known as the CMS-1450. It is used by hospitals and other healthcare facilities to submit claims for services provided to patients. This standardized form ensures accurate billing and facilitates the reimbursement process from insurance companies.

Q.4 What is an example of an institutional claim?

An example of an institutional claim is a hospital submitting a UB-04 form to an insurance company for a patient’s inpatient stay. This claim includes charges for room and board, nursing care, medical procedures, medications, and any other services provided during the hospital stay.

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