Medical Billing

Institutional Claim vs Professional Billing: What’s the Difference?

Hospital billing vs professional billing What’s the difference

If you are willing to move your career to the billing and finance field of the healthcare industry, it is essential to explore and have information about all the medical billing types and strategies. Before stepping into the healthcare billing world, you need to understand these two types and the difference between hospital billing and professional billing.

This is because billing and submitting claims have different categories and you need to grasp the essential knowledge to figure out what types of claims should be submitted under institutional claim or professional billing.

In other terms, professional billing is also referred to as ‘Physician billing’ and ‘institute billing’ is known as hospital billing. Also, both billing services fall under medical billing procedures.

Healthcare professionals involved in the billing sector have created these categories to better understand the billing procedures and to reduce the denials due to the complexity of the codes. Let’s dig more into knowing the difference between these two billing procedures.

Hospital billing vs professional billing

Hospital billing vs professional billing

  • Physician billing and its procedures

Physician billing, also known as professional billing, is the process of submitting claims for the procedures and medical services given by healthcare providers and physicians to get paid by healthcare insurance. Physicians use the physician billing forms CMS-1500 or 837-P to claim the bills. CMS-15600 is the paper form of billing, while the 836 is the electronic form to submit claims where there’s no difference.

Healthcare insurance companies like Medicare and Medicaid and some other companies only accept electronic submission of claims as a prerequisite of charging strategy. As mentioned, 837-P is the electronic version of the form CMS -1500 where ‘P’ stands for ‘professional’. In comparison, an expert in professional medical billing has more responsibilities than an expert submitting institutional claim or hospital billing. This is because, in physician billing, some other managerial and administrative tasks are associated with greeting patients, registrations, check-in records, payment collection, and maintaining records.

The services that can be claimed under the physician billing everything about in-patients and out-patient services come under out-patient and in-patient services. However, both claims can only be billed only after the patient’s verification. Every healthcare insurance policy is different. This is why patient verification is necessary. This is also because a few things fall under in and out-patient policies defined by most insurance companies.

It is also important to note that physician billing involves medical billing based on complex medical coding. This translates to the fact that if you are a professional billing expert, you also need to understand the coding involved in medical billing procedures. On the other hand, in a hospital facility, medical billing experts and a separate coding team is hired to cater the billing activities as a daily task.

  • Hospital billing and its procedures

Hospital billing, which is also called institutional billing is based on the claims of in-patient and out-patient services provided by healthcare organizations and hospitals. In addition, in the hospital facility, the bills are claimed for the skilled nurses and the services provided by labs, medical supplies and equipment, radiology, and medical facilities, etc. to in-patient and out-patients.

Hospitals use the form UB-04 or 837- I to submit the claims. UB-04 is the paper version, and 837-I is the electronic form, where there’s no difference between them. I in the 837-I refers to the configurations used for institutions.

Where the process of billing is the same for professional and hospital billing. The only thing that differentiates the two is the coding procedure. Hospital or institutional billing works only with the medical billing process and there’s no coding involved. Whereas, physician billing involves complex medical coding procedures. If adding the claims for skilled nurses, medical equipment, radiology, etc. Medical billing for institutions is more complicated than physician billing.

How to elevate revenues with hospital and physician billing?

How to elevate revenues with hospital and physician billing

There are many dissimilarities in revenue generation and reimbursement procedures for both medical and physician billing. However, the process of submitting claims in both billing domains plays a value-driven role in avoiding fraudulent claims and denials.

It should be the top priority of the physician’s biller to check and ensure that no claim or procedure bills are missed. Also, vigilance is also needed while submitting the claims that there are no coding errors. Errors, such as technical errors or updated billing guidelines, can be other than codings. Physicians often outsource billing services to avoid every type of error. Hospitals also consider outsourcing their claim filing process to avoid denials and errors.

Outsourcing billing service providers are experts in both institutional and physician billing processes. They also are the coding experts and remain aware of the billing updates that keep changing from federal institutions. They are highly recommended when physicians and hospitals want to cut the cost of hiring professionals and experts. Also, there would be a bigger revenue loss if the claims get denied.

Hospital billing has a higher number of claims; this is why they have a larger need for accurate billing to accomplish the collections and bill accordingly. Although institutional billing is much more difficult and more intricate than physician billing, this is why only experts are hired for the institutional billing service.

Types of medical billing systems

Types of medical billing systems

After knowing the categories, it is also important to understand the types of billing systems. The Healthcare industry has three types of medical systems for billing;

  • Closed

It is not allowed to make transfers in a closed medical billing system. Which means it is represented by only one practice. EMR – Electronic Medical Record is an example of a closed medical billing system.

  • Open

Allows transfers between healthcare facilities, professionals and practices, etc. HER – Electronic health record is an example of an open medical billing system.

  • Isolated

It is the third type of medical billing system but is no longer utilized in the healthcare industry. PHR – Personal health record is an example of an isolated medical billing system.

How institutional claim is submitted?

Institutional claims are typically submitted by healthcare providers, such as hospitals, clinics, and other healthcare facilities, to insurance companies or government programs, such as Medicare or Medicaid. These claims are used to request reimbursement for healthcare services provided to patients.

The process for submitting institutional claims can vary depending on the specific insurance company or program, but generally, the following steps are involved:

  1. Obtain the necessary patient information, including the patient’s name, date of birth, insurance information, and diagnosis codes.
  2. Compile a list of services provided to the patient, including the date of service, the type of service, and the charge for each service.
  3. Complete the appropriate claim form, which may vary depending on the insurance company or program. This form should include all necessary patient and service information, as well as any required documentation, such as medical records or laboratory results.
  4. Submit the claim form and any supporting documentation to the insurance company or program. This can be done electronically or by mail.
  5. Monitor the claim status to ensure that it is processed correctly and that payment is received.

It’s important for healthcare providers to carefully follow the guidelines and requirements set by each insurance company or program to ensure that claims are processed quickly and accurately. Additionally, providers should be prepared to respond to any questions or requests for additional information that may arise during the claims process.


Hopefully, you have got all the information from the above-detailed discussion and sorted out the difference between hospital billing vs professional billing. Keep checking for more information on billing and services.